Skyline Champion Corp - Annual Report: 2003 (Form 10-K)
Table of Contents
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2003
Commission File No. 1-4714
SKYLINE CORPORATION
Indiana | 35-1038277 | |
|
||
(State of Incorporation) | (IRS Employer Identification No.) |
P. O. Box 743, 2520 By-Pass Road Elkhart, IN 46515
294-6521 (Registrants telephone number) |
(574) (Area Code) |
Securities registered pursuant to section 12 (b) of the Act:
Title of Class |
Shares Outstanding July 9, 2003 |
Name of each Exchange on which Registered |
||
|
||||
Common Stock | 8,391,244 | New York Stock Exchange |
Securities registered pursuant to section 12 (g) of the Act:
Title of Class
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Table of Contents
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes [X] No [ ]
The aggregate market value of the voting stock held by non-affiliates of registrant ( 6,818,780 shares) based on the closing price on the New York Stock Exchange on July 9, 2003 was $224,133,299.
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DOCUMENTS INCORPORATED BY REFERENCE:
Title | Form 10-K | |
Proxy Statement dated | Part III, Items 10 12 | |
for Annual Meeting of Shareholders to | ||
be held September 22, 2003 |
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(This page left intentionally blank)
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FORM 10-K
CROSS-REFERENCE INDEX
Certain information required to be included in this Form 10-K is also included in the registrants Proxy Statement used in connection with its 2003 Annual Meeting of Shareholders to be held on September 22, 2003 (2003 Proxy Statement). The following cross-reference index shows the page locations in the 2003 Proxy Statement of that information which is incorporated by reference into this Form 10-K and the page location in this Form 10-K of that information not incorporated by reference. All other sections of the 2003 Proxy Statement are not required in this Form 10-K and should not be considered a part hereof.
2003 | ||||||||||
Form | Proxy | |||||||||
10-K | Statement | |||||||||
PART I | ||||||||||
Item 1. | Business | 6 | ||||||||
Item 2. | Properties | 12 | ||||||||
Item 3. | Legal Proceedings | 13 | ||||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 13 | ||||||||
PART II | ||||||||||
Item 5. | Market for the Registrants Common Stock and Related Stockholder Matters | 13 | ||||||||
Item 6. | Selected Financial Data | 14 | ||||||||
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operation | 15 | ||||||||
Item 8. | Financial Statements and Supplementary Data | |||||||||
Index to Consolidated Financial Statements | 18 | |||||||||
Report of Independent Auditors | 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 | 32 |
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FORM 10-K
CROSS-REFERENCE INDEX
(Continued)
2003 | ||||||||||
Form | Proxy | |||||||||
10-K | Statement | |||||||||
PART II | ||||||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 33 | ||||||||
PART III | ||||||||||
Item 10. | Directors and Executive Officers of the Registrant | 33 | 3 4 | |||||||
Item 11. | Executive Compensation | 9 | ||||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management | 3 8 | ||||||||
Item 13. | Certain Relationships and Related Transactions | 34 | ||||||||
Item 14. | Controls and Procedures | 34 | ||||||||
PART IV | ||||||||||
Item 15. | Exhibits, Financial Statement Schedules, and Reports on Form 8-K | |||||||||
(a) | 1. Financial Statements | 34 | ||||||||
All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | ||||||||||
2. Index to Exhibits | 34 | |||||||||
(b) Reports on Form 8-K | 35 | |||||||||
SIGNATURES AND CERTIFICATIONS | 36 |
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PART I
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 Corporation) design, produce and distribute manufactured housing (mobile homes and multi-sectional homes) and recreational vehicles (travel trailers, including park models and fifth wheels). | |||
The Corporation, which is one of the largest producers of manufactured homes in the United States, produced 7,922 manufactured homes in fiscal year 2003. | |||
The Corporations 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 Corporations recreational vehicles are sold under the Nomad, Layton, and Aljo trademarks for travel trailers and fifth wheels. | |||
In fiscal year 2003, manufactured homes represented 70% of total sales, while recreational vehicles accounted for the remaining 30%. In the prior year, the sales dollars were 75% manufactured homes and 25% recreational vehicles. Additional financial data relating to these industry segments is included in Note 5, 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 families, retired couples traveling around the country and sportsmen pursuing four-season hobbies. |
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Item 1. Business
Method of Distribution | |||
The Corporations manufactured homes are distributed by approximately 460 dealers at 840 locations throughout the United States and recreational vehicles are distributed by approximately 270 dealers at 290 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 Corporation provides the retail purchaser of its manufactured homes with a full one-year warranty against defects in materials and workmanship. Recreational vehicles are covered by a two-year warranty. The warranties are backed by a corporate service department and an extensive field service system. | |||
The Corporations products are sold to dealers either through floor plan financing with various financial institutions or on a cash basis. Payments to the Corporation are made either directly by the dealer or by financial institutions, which have agreed to finance dealer purchases of the Corporations products. In accordance with industry practice, certain financial institutions which finance dealer purchases require the Corporation to execute repurchase agreements which provide that in the event a dealer defaults on its repayment of the financing, the Corporation will repurchase its products from the financing institution in accordance with a declining repurchase price schedule established by the Corporation. 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. Additional information regarding these repurchase agreements is included in Note 2, Contingencies, in the Notes to Consolidated Financial Statements included in this document under Item 8. | |||
Raw Materials and Supplies | |||
The Corporation is basically an assembler of components purchased from outside sources. The major components used by the Corporation 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 Corporation is obtaining sufficient materials to fulfill its needs. | |||
Patents, Trademarks, Licenses, Franchises and Concessions | |||
The Corporation does not rely upon any terminable or nonrenewable rights such as patents, licenses or franchises under the trademarks or patents of others, in the conduct of any segment of its business. |
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Item 1. Business
Seasonal Fluctuations | |||
While the Corporation 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 Corporations northern plants. Recreational vehicle sales are generally higher in the spring and summer months than in the fall and winter months. | |||
Inventory | |||
The Corporation does not build significant inventories of either finished goods or raw materials. In addition, there are no significant inventories sold on consignment. | |||
Dependence Upon Individual Customers | |||
The Corporation does not rely upon any single dealer for a significant percentage of its business in any industry segment. | |||
Backlog | |||
The Corporation does not consider the existence and extent of backlog to be significant in its business. The Corporations production is based on a relatively short manufacturing cycle and dealers orders, which continuously fluctuate. As such, the existence of backlog is not significant at any given date and does not typically provide a reliable indication of the status of the Corporations business. | |||
Government Contracts | |||
The Corporation has had no significant government contracts during the past three years. | |||
Competitive Conditions | |||
The manufactured housing and recreational vehicle industries are highly competitive, with particular emphasis on price and features offered. The Corporations competitors are numerous, ranging from multi-billion dollar corporations to relatively small and specialized manufacturers. |
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Item 1. Business
Competitive Conditions, continued | |||
The Manufactured Housing Institute reported that the industry produced approximately 168,500 homes in calendar year 2002. In the same period, the Corporation produced 8,711 units for a 5.2% market share. In calendar year 2001, approximately 193,200 homes were manufactured by the industry. In that period, the Corporation produced 10,148 homes for a 5.3% market share. | |||
The recreational vehicle industry produced 378,700 units in calendar year 2002 compared to 321,000 units in calendar year 2001. The following table shows the Corporations competitive position in the recreational vehicle product lines it sells. |
Units Produced | Units Produced | |||||||||||||||||||||
Calendar Year 2002 | Calendar Year 2001 | |||||||||||||||||||||
Industry | Skyline | Industry | Skyline | |||||||||||||||||||
Travel Trailers | 119,700 | 6,886 | 102,200 | 6,126 | ||||||||||||||||||
Fifth Wheels | 63,500 | 1,884 | 54,700 | 1,550 | ||||||||||||||||||
Park Models | 7,700 | 391 | 7,400 | 365 |
Both the manufactured housing and recreational vehicle segments of the Corporations 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 Corporations business in the past and may do so in the future. | |||
The Corporation 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 occur, such public concerns will affect sales of the Corporations 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. |
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Item 1. Business
Environmental Quality | |||
The Corporation 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 Corporation has voluntarily subjected itself to third party inspection of all of its products nationwide in order to further assure the Corporation, its dealers, and customers of compliance with established standards. | |||
The Corporations 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 and the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act, as well as state laws and regulations. | |||
The Corporations 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 Corporations 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 corporation is also subject to many state manufacturer licensing and bonding requirements, and to dealer day in court requirements in some states. |
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Item 1. Business
Other Regulations, continued | |||
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 Corporation 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 HUDs 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 Corporation employs approximately 2,500 people at the present time. | |||
Available Information | |||
The Corporation makes available, free of charge, through the
Investors section of its internet website its annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as practicable after such material is electronically filed or furnished to the Securities Exchange Commission. The Corporations internet address is http://www.skylinecorp.com. |
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Item 2. Properties
The Corporation owns its corporate offices and design facility, which are located in Elkhart, Indiana. | |||
The Corporations 23 manufacturing plants, all of which are owned, are as follows: |
Location | Products | |
California, San Jacinto California, Hemet California, Hemet California, Woodland Florida, Ocala Florida, Ocala Florida, Ocala Indiana, Bristol Indiana, Elkhart Indiana, Goshen Kansas, Arkansas City Kansas, Halstead Louisiana, Bossier City North Carolina, Mocksville Ohio, Sugarcreek Oregon, McMinnville Oregon, McMinnville Pennsylvania, Ephrata Pennsylvania, Leola Pennsylvania, Leola Texas, Mansfield Vermont, Fair Haven Wisconsin, Lancaster |
Manufactured Housing Recreational Vehicles Recreational Vehicles Manufactured Housing Manufactured Housing Manufactured Housing Manufactured Housing Manufactured Housing Recreational Vehicles Manufactured Housing Manufactured Housing Manufactured Housing Manufactured Housing Manufactured Housing Manufactured Housing Manufactured Housing Recreational Vehicles Manufactured Housing Manufactured Housing Recreational Vehicles Recreational Vehicles Manufactured Housing Manufactured Housing |
The above facilities range in size from approximately 50,000 square feet to approximately 160,000 square feet. | |||
The Corporation also has one property that is not currently in use and is available for sale. The net book value of this property is not significant to the assets of the Corporation. | |||
It is extremely difficult to determine the unit productive capacity of the Corporation because of the ever-changing product mix. | |||
The Corporation believes that its plant facilities, machinery and equipment are well maintained and are in good operating condition. |
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Item 3. Legal Proceedings
Neither the Corporation nor any of its subsidiaries is a party to any pending legal proceedings which could have a material effect on operations. |
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 fiscal year ended May 31, 2003. |
PART II |
Item 5. Market for the Registrants Common Stock and Related Stockholder Matters |
Skyline Corporation (SKY) is traded on the New York Stock Exchange. A quarterly cash dividend of 18 cents ($0.18) per share was paid in fiscal 2003 and 2002. At May 31, 2003, there were approximately 1,200 holders of record of Skyline Corporation common stock. A quarterly summary of the market price is listed for the fiscal years ended May 31, 2003 and 2002. |
2003 | 2002 | |||||||||||||||
Quarter | High | Low | High | Low | ||||||||||||
First |
$ | 34.40 | $ | 27.20 | $ | 28.50 | $ | 23.84 | ||||||||
Second |
$ | 31.10 | $ | 26.30 | $ | 30.40 | $ | 22.80 | ||||||||
Third |
$ | 30.10 | $ | 24.60 | $ | 32.25 | $ | 27.45 | ||||||||
Fourth |
$ | 30.33 | $ | 24.60 | $ | 37.76 | $ | 29.30 |
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Item 6. Selected Financial Data
Dollars in thousands except per share data |
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
FOR THE YEAR |
||||||||||||||||||||
Sales |
$ | 419,817 | $ | 450,722 | $ | 463,824 | $ | 579,551 | $ | 653,169 | ||||||||||
Net earnings |
$ | 6,193 | $ | 12,254 | $ | 11,170 | $ | 15,028 | $ | 25,561 | ||||||||||
Cash dividends paid |
$ | 6,041 | $ | 6,042 | $ | 6,124 | $ | 6,410 | $ | 6,043 | ||||||||||
Capital expenditures |
$ | 1,523 | $ | 3,330 | $ | 2,499 | $ | 4,115 | $ | 7,113 | ||||||||||
Depreciation |
$ | 3,785 | $ | 3,884 | $ | 3,919 | $ | 4,022 | $ | 3,838 | ||||||||||
Weighted average
common shares
outstanding |
8,391,244 | 8,391,244 | 8,468,321 | 8,858,628 | 9,136,116 | |||||||||||||||
AT YEAR END |
||||||||||||||||||||
Working capital |
$ | 158,795 | $ | 156,360 | $ | 149,591 | $ | 123,401 | $ | 147,398 | ||||||||||
Current ratio |
5.4:1 | 5.3:1 | 4.8:1 | 4.2:1 | 4.2:1 | |||||||||||||||
U.S. Treasury Notes |
$ | | $ | | $ | 25,006 | $ | 25,072 | $ | | ||||||||||
Property, plant and
equipment, net |
$ | 39,131 | $ | 41,477 | $ | 42,044 | $ | 44,188 | $ | 44,102 | ||||||||||
Total assets |
$ | 239,141 | $ | 238,752 | $ | 235,678 | $ | 235,666 | $ | 240,982 | ||||||||||
Shareholders equity |
$ | 198,385 | $ | 198,233 | $ | 192,021 | $ | 192,949 | $ | 191,692 | ||||||||||
Treasury stock |
$ | 65,744 | $ | 65,744 | $ | 65,744 | $ | 59,770 | $ | 52,409 | ||||||||||
PER SHARE |
||||||||||||||||||||
Basic earnings |
$ | .74 | $ | 1.46 | $ | 1.32 | $ | 1.70 | $ | 2.80 | ||||||||||
Cash dividends paid |
$ | .72 | $ | .72 | $ | .72 | $ | .72 | $ | .66 | ||||||||||
Shareholders equity |
$ | 23.64 | $ | 23.62 | $ | 22.88 | $ | 22.22 | $ | 21.30 |
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations - Fiscal 2003 Compared to Fiscal 2002 | |||
Sales in 2003 were $419,817,000, a decrease of $30,905,000 from $450,722,000 in 2002. Manufactured housing sales totaled $293,448,000 for 2003 compared to $339,260,000 in 2002. Manufactured housing unit sales decreased to 7,922 from 9,849. Recreational vehicle sales increased from $111,462,000 in 2002 to $126,369,000 in 2003. Recreational vehicle unit sales increased from 8,028 in 2002 to 8,720 in 2003. Manufactured housing sales continue to be affected by difficult market conditions, restrictive retail financing, economic uncertainty and increased global tensions. The increase in recreational vehicle sales is a reflection of an industry-wide improvement in market conditions for towable recreational vehicles. This trend began in early calendar year 2002. There was, however, a softening of demand in the Corporations fourth fiscal quarter. Fourth quarter sales for the recreational vehicle segment totaled $31,762,000 versus $36,527,000 from the prior year. | |||
Cost of sales in 2003 was 87.3% compared to 85.9% in 2002. Manufactured housing cost of sales in 2003 decreased to 81.0% from 84.9% in 2002. The decrease is primarily attributable to the Corporations effort to control manufacturing costs. Recreational vehicle cost of sales increased to 89.8% of sales from 89.0% in 2002 due to increased raw material cost and a shift in model mix within this segment. | |||
Selling and administrative expenses as a percentage of sales increased slightly to 10.7% in 2003 from 10.5% in 2002, while expenditures decreased $2,702,000. | |||
As a percentage of sales, operating earnings for manufactured housing were 3.8% in 2003 versus prior years 5.6 %. Earnings for manufactured housing declined due to the continuation of difficult market conditions noted above. Recreational vehicle operating earnings as a percentage of sales were 0.3% for 2003 and 0.8% for 2002. The decrease is due to increased cost of sales as noted above. | |||
Interest income amounted to $1,995,000 in 2003 compared to $4,102,000 in 2002. Interest income is directly related to the prevailing yields of U.S. Government securities and the amount available for investment. | |||
Results of Operations - Fiscal 2002 Compared to Fiscal 2001 | |||
Sales in 2002 were $450,722,000, a decrease of $13,102,000 from $463,824,000 in 2001. Manufactured housing sales totaled $339,260,000 for 2002 compared to $353,610,000 in 2001. Manufactured housing unit sales decreased to 9,849 from 10,664. |
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations, continued
Recreational vehicle sales increased from $110,214,000 in 2001 to $111,462,000 in 2002. Recreational vehicle unit sales also dropped from 8,156 in 2001 to 8,028 in 2002. The decrease in manufactured housing sales reflects difficult market conditions that persisted throughout the year. Difficult market conditions also existed for recreational vehicle sales for most of the year. Demand, however, did increase for products in this business segment in the fourth fiscal quarter. | |||
Cost of sales in 2002 was 85.9% compared to 87.0% in 2001. Manufactured housing cost of sales in 2002 decreased to 84.9% from 86.5% in 2001. The decrease is primarily attributable to the Corporations effort to control manufacturing costs. Recreational vehicle cost of sales increased to 89.0% of sales from 88.7% in 2001. | |||
Selling and administrative expenses as a percentage of sales decreased slightly to 10.5% in 2002 from 10.8% in 2001. | |||
Manufactured housing operating earnings as a percentage of sales were 5.6% in 2002 and 3.8% in 2001. The increase is due to improved gross margins and cost control. Recreational vehicle operating earnings as a percentage of sales increased to 0.8% of sales in 2002 from 0.7% of sales in 2001. Earnings of the recreational vehicle segment were impacted by the startup of a new manufacturing process at one recreational vehicle facility. | |||
Interest income amounted to $4,102,000 in 2002 compared to $7,717,000 in 2001. Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government securities. | |||
Liquidity and Capital Resources | |||
At May 31, 2003, cash and short-term investments in U.S. Treasury Bills totaled $154,457,000, an increase of $7,431,000 from $147,026,000 at May 31, 2002. Current assets exclusive of cash and investments in U.S. Treasury Bills totaled $40,514,000 at the end of 2003, a decrease of $5,283,000 from 2002s total of $45,797,000. The decrease was primarily due to a decline in accounts receivable ($5,736,000) which is attributable to decreased fourth quarter sales. Current liabilities decreased $287,000 from $36,463,000 at May 31, 2002 to $36,176,000 at May 31, 2003. | |||
Capital expenditures totaled $1,523,000 in 2003 compared to $3,330,000 in the prior year. Capital expenditures during 2002 included $820,000 to implement a new manufacturing process at one recreational vehicle facility. Other capital expenditures in both years were made primarily to replace or refurbish machinery and equipment and improve manufacturing efficiencies. |
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations, continued
Liquidity and Capital Resources | |||
The cash provided by operating activities in fiscal 2004, along with current cash and short-term investments, is expected to be adequate to fund any capital expenditures, working capital requirements and treasury stock purchases during the year. Historically, the Corporations financing needs have been met through funds generated internally. | |||
Other Matters | |||
The provisions 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. | |||
Forward Looking Information | |||
Certain statements in this report are considered forward looking as indicated by the Private Securities Litigation Reform Act of 1995. These statements involve uncertainties that may cause actual results to materially differ from expectations as of the report date. These uncertainties include but are not limited to: |
| Cyclical nature of the manufactured housing and recreational vehicle industries | ||
| General or seasonal weather conditions affecting sales | ||
| Potential periodic inventory adjustments by independent retailers | ||
| Availability of wholesale and retail financing | ||
| Interest rate levels | ||
| Impact of inflation | ||
| Cost of labor and raw materials | ||
| Competitive pressures on pricing and promotional costs | ||
| Catastrophic events impacting insurance costs | ||
| Consumer confidence and economic uncertainty | ||
| Market demographics | ||
| Managements ability to attract and retain executive officers and key personnel | ||
| Increased global tensions, market disruption resulting from a terrorist attack and any armed conflict involving the United States. |
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Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements |
Report of Independent Auditors |
18 | |||
Consolidated Balance Sheets |
19 | |||
Consolidated Statements of Earnings and
Retained Earnings |
21 | |||
Consolidated Statements of Cash Flows |
22 | |||
Notes to Consolidated Financial Statements |
24 | |||
Financial Summary by Quarter |
31 |
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REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Skyline Corporation | |||
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings and retained earnings, and of cash flows present fairly, in all material respects, the financial position of Skyline Corporation and its subsidiaries at May 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Skyline Corporations 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 auditing standards generally accepted in the United States of America, 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 our opinion. | |||
PRICEWATERHOUSECOOPERS LLP | |||
Chicago, Illinois June 17, 2003 |
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Skyline Corporation and Subsidiary Companies | |||
Consolidated Balance Sheets May 31, 2003 and 2002 Dollars in thousands |
|||
ASSETS |
2003 | 2002 | |||||||
Current Assets |
||||||||
Cash |
$ | 8,736 | $ | 8,699 | ||||
U.S. Treasury Bills, at cost plus accrued
interest |
145,721 | 138,327 | ||||||
Accounts receivable, trade, less allowance for
doubtful accounts of $150 in 2003 and $40 in
2002 |
22,292 | 28,028 | ||||||
Inventories |
9,414 | 9,632 | ||||||
Deferred income tax benefits |
8,552 | 7,986 | ||||||
Other current assets |
256 | 151 | ||||||
Total Current Assets |
194,971 | 192,823 | ||||||
Property, Plant and Equipment, At Cost |
||||||||
Land |
6,637 | 6,637 | ||||||
Buildings and improvements |
64,806 | 64,595 | ||||||
Machinery and equipment |
26,937 | 27,305 | ||||||
98,380 | 98,537 | |||||||
Less accumulated depreciation |
59,249 | 57,060 | ||||||
Net Property, Plant and Equipment |
39,131 | 41,477 | ||||||
Other Assets |
5,039 | 4,452 | ||||||
$ | 239,141 | $ | 238,752 | |||||
The accompanying notes are a part of the consolidated financial statements. | |||
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Skyline Corporation and Subsidiary Companies | |||
Consolidated Balance Sheets May 31, 2003 and 2002 Dollars in thousands except per share data |
|||
LIABILITIES AND SHAREHOLDERS EQUITY |
2003 | 2002 | |||||||
Current Liabilities |
||||||||
Accounts payable, trade |
$ | 5,990 | $ | 5,859 | ||||
Accrued salaries and wages |
6,290 | 7,405 | ||||||
Accrued profit sharing |
2,327 | 2,412 | ||||||
Accrued marketing programs |
5,397 | 6,375 | ||||||
Accrued warranty and related expenses |
10,609 | 10,100 | ||||||
Other accrued liabilities |
3,777 | 3,156 | ||||||
Income taxes payable |
1,786 | 1,156 | ||||||
Total Current Liabilities |
36,176 | 36,463 | ||||||
Other Deferred Liabilities |
4,580 | 4,056 | ||||||
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 |
258,889 | 258,737 | ||||||
Treasury stock, at cost,
2,825,900 shares in 2003 and 2002 |
(65,744 | ) | (65,744 | ) | ||||
Total Shareholders Equity |
198,385 | 198,233 | ||||||
$ | 239,141 | $ | 238,752 | |||||
The accompanying notes are a part of the consolidated financial statements. |
21
Table of Contents
Skyline Corporation and Subsidiary Companies | |||
Consolidated Statements of Earnings and Retained Earnings For the Years Ended May 31, 2003, 2002 and 2001 Dollars in thousands except per share data |
2003 | 2002 | 2001 | |||||||||||
EARNINGS |
|||||||||||||
Sales |
$ | 419,817 | $ | 450,722 | $ | 463,824 | |||||||
Cost of sales |
366,633 | 387,050 | 403,622 | ||||||||||
Gross profit |
53,184 | 63,672 | 60,202 | ||||||||||
Selling and administrative expenses |
44,843 | 47,545 | 50,055 | ||||||||||
Operating earnings |
8,341 | 16,127 | 10,147 | ||||||||||
Interest income |
1,995 | 4,102 | 7,717 | ||||||||||
Gain on sales of property, plant and
equipment |
| | 666 | ||||||||||
Earnings before income taxes |
10,336 | 20,229 | 18,530 | ||||||||||
Provision
for income taxes
|
|||||||||||||
Federal |
3,545 | 6,825 | 6,248 | ||||||||||
State |
598 | 1,150 | 1,112 | ||||||||||
4,143 | 7,975 | 7,360 | |||||||||||
Net earnings |
$ | 6,193 | $ | 12,254 | $ | 11,170 | |||||||
Basic earnings per share |
$ | .74 | $ | 1.46 | $ | 1.32 | |||||||
Weighted average common shares outstanding |
8,391,244 | 8,391,244 | 8,468,321 | ||||||||||
RETAINED EARNINGS |
|||||||||||||
Balance at beginning of year |
$ | 258,737 | $ | 252,525 | $ | 247,479 | |||||||
Add net earnings |
6,193 | 12,254 | 11,170 | ||||||||||
Less cash dividends paid ($.72 per share in
2003, 2002 and 2001) |
6,041 | 6,042 | 6,124 | ||||||||||
Balance at end of year |
$ | 258,889 | $ | 258,737 | $ | 252,525 | |||||||
The accompanying notes are a part of the consolidated financial statements. |
22
Table of Contents
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows
For the Years Ended May 31, 2003, 2002 and 2001
Increase (Decrease) in Cash
Dollars in thousands
2003 | 2002 | 2001 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||
Net earnings |
$ | 6,193 | $ | 12,254 | $ | 11,170 | ||||||||
Adjustment to reconcile net earnings to
net cash
provided by operating activities: |
||||||||||||||
Interest income earned on U.S.
Treasury Bills and Notes |
(1,995 | ) | (4,102 | ) | (7,717 | ) | ||||||||
Depreciation |
3,785 | 3,884 | 3,919 | |||||||||||
Amortization of discount or premium on
U.S. Treasury Notes |
| 6 | 66 | |||||||||||
Gain on sale of property, plant and
equipment |
| | (666 | ) | ||||||||||
Working capital items: |
||||||||||||||
Accounts receivable |
5,736 | 2,729 | 4,673 | |||||||||||
Inventories |
218 | (606 | ) | 781 | ||||||||||
Other current assets |
(671 | ) | 165 | (41 | ) | |||||||||
Accounts payable, trade |
131 | (1,328 | ) | 837 | ||||||||||
Accrued liabilities |
(1,048 | ) | (1,240 | ) | (438 | ) | ||||||||
Income taxes payable |
630 | (884 | ) | 481 | ||||||||||
Other assets |
(587 | ) | (324 | ) | (158 | ) | ||||||||
Other deferred liabilities |
524 | 314 | 60 | |||||||||||
Total Adjustments |
6,723 | (1,386 | ) | 1,797 | ||||||||||
Net cash provided by operating activities |
12,916 | 10,868 | 12,967 | |||||||||||
The accompanying notes are a part of the consolidated financial statements.
23
Table of Contents
Skyline Corporation and Subsidiary Companies
Consolidated Statements of Cash Flows, continued
For the Years Ended May 31, 2003, 2002 and 2001
Increase (Decrease) in Cash
Dollars in thousands
2003 | 2002 | 2001 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||||||||||
Proceeds from sale or maturity of U.S. Treasury Bills |
$ | 366,398 | $ | 410,274 | $ | 397,702 | |||||||
Purchase of U.S. Treasury Bills |
(371,797 | ) | (434,253 | ) | (400,456 | ) | |||||||
Maturity of U.S. Treasury Notes |
| 25,000 | | ||||||||||
Interest received from U.S.
Treasury Notes |
| 719 | 1,438 | ||||||||||
Proceeds from sale of property,
plant and equipment |
84 | 13 | 1,390 | ||||||||||
Purchase of property, plant and
equipment |
(1,523 | ) | (3,330 | ) | (2,499 | ) | |||||||
Net cash used in investing activities |
(6,838 | ) | (1,577 | ) | (2,425 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||||||||
Cash dividends paid |
(6,041 | ) | (6,042 | ) | (6,124 | ) | |||||||
Purchase of treasury stock |
| | (5,974 | ) | |||||||||
Net cash used in financing activities |
(6,041 | ) | (6,042 | ) | (12,098 | ) | |||||||
Net increase (decrease) in cash |
37 | 3,249 | (1,556 | ) | |||||||||
Cash at beginning of year |
8,699 | 5,450 | 7,006 | ||||||||||
Cash at end of year |
$ | 8,736 | $ | 8,699 | $ | 5,450 | |||||||
The accompanying notes are a part of the consolidated financial statements.
24
Table of Contents
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-section 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 that 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 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition--Substantially all of the Corporations products are made to order. Revenue is recognized upon shipment.
Freight billed to customers is considered sales revenue, and the related freight costs are cost of sales. Volume based rebates paid to dealers are classified as a reduction in sales revenue.
Consolidated statements of cash flows--For purposes of the statements of cash flows, investments in treasury bills are included as investing activities. The Corporations cash flows from operating activities were reduced by income taxes paid of $4,079,000, $8,870,000 and $6,943,000 in 2003, 2002 and 2001, respectively.
Inventory--Inventories are stated at cost, determined under the first-in, first-out method, which is not in excess of market. Physical inventory counts are taken at the end of each reporting quarter.
25
Table of Contents
Skyline Corporation and Subsidiary
Companies
Notes to Consolidated Financial Statements
NOTE 1 Nature of Operations and Accounting Policies, continued
Total inventories for the periods presented consisted of (dollars in thousands):
May 31, 2003 | May 31, 2002 | |||||||
Raw Materials |
$ | 4,132 | $ | 4,280 | ||||
Work In Process |
5,282 | 5,183 | ||||||
Finished Goods |
| 169 | ||||||
$ | 9,414 | $ | 9,632 | |||||
Property, plant and equipment--Property, plant and equipment is stated at cost. 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 carrying value of U.S. Treasury Bills, which approximates their fair market value, totaled $145,721,000 and $138,327,000 at May 31, 2003 and 2002, respectively. These securities mature within one year. The Corporation does not have any other financial instruments which have market values differing from recorded values.
Warranty--The Corporation provides the retail purchaser of its manufactured homes with a one-year warranty against defects in design, materials and workmanship. Recreational vehicles are covered by a two-year warranty. The warranties are backed by a corporate service department and an extensive field service system. Estimated warranty costs are accrued at the time of sale based upon current sales, historical experience and managements judgment regarding anticipated rates of warranty claims. The adequacy of the recorded warranty liability is periodically assessed and the amount is adjusted as necessary.
26
Table of Contents
Skyline Corporation and Subsidiary
Companies
Notes to Consolidated Financial Statements
Note 1 Nature of Operations and Accounting Policies, continued
A reconciliation of accrued warranty and related expenses is a follows (dollars in thousands):
Year Ended | Year Ended | |||||||
May 31, 2003 | May 31, 2002 | |||||||
Balance at the beginning of the period |
$ | 10,100 | $ | 10,084 | ||||
Accruals for warranties |
11,425 | 12,853 | ||||||
Settlements made during the period |
(10,916 | ) | (12,837 | ) | ||||
Balance at the end of the period |
$ | 10,609 | $ | 10,100 | ||||
Income taxes--The difference between the Corporations statutory federal income tax rate and the effective income tax rate is due primarily to state income taxes.
The Corporations 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.
Recently issued accounting pronouncements--During fiscal 2002 the Financial Accounting Standards Board, (FASB), enacted FAS No.143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. This statement provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. The Corporation will adopt FAS No. 143 in fiscal year 2004, and anticipates no material impact on the consolidated financial statements.
The Corporation has determined that the effects on the financial statements from any other recently issued accounting standards are not applicable.
27
Table of Contents
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 2 Contingencies
The Corporation was contingently liable at May 31, 2003 under repurchase agreements with certain financial institutions providing inventory financing for retailers of its products. Under these arrangements, which are customary in the manufactured housing and recreational vehicle industries, the Corporation agrees to repurchase homes and recreational vehicles in the event of default by the retailer at declining prices over the term of the agreement, generally 12 months. The maximum repurchase liability is the total amount that would be paid upon the default of the Corporations independent dealers. The maximum potential repurchase liability, without reduction for the resale value of the repurchase units, was approximately $100 million at May 31, 2003 and $120 million at May 31, 2002. The risk of loss under these agreements is spread over many retailers and financial institutions. The loss, if any, under these agreements is the difference between the repurchase cost and the resale value of the units. The allowance for doubtful accounts includes a reserve for potential net losses on repurchased units. The amounts of obligations from repurchased units and incurred net losses for the periods presented are as follows (dollars in thousands):
Year Ended May 31, | ||||||||||||
2003 | 2002 | 2001 | ||||||||||
Obligations from units repurchased |
$ | 1,001 | $ | 922 | $ | 2,019 | ||||||
Net losses on repurchased units |
50 | 179 | 152 |
The Corporation leases office and manufacturing equipment under operating lease agreements. Leases generally provide that the Corporation pays the cost of insurance, taxes and maintenance. Rent expense for each of the fiscal years ended May 31, 2003, 2002 and 2001 was approximately $1,200,000. Future minimum lease commitments under operating leases are as follows (dollars in thousands):
Year Ending | ||||
May 31, | Amount | |||
2004 |
$ | 1,028 | ||
2005 |
620 | |||
2006 |
256 | |||
2007 |
145 | |||
2008 |
62 | |||
Thereafter |
| |||
$ | 2,111 | |||
28
Table of Contents
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 2 Contingencies, continued
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 Corporations results of operations or financial position.
NOTE 3 Purchase of Treasury Stock
The Corporations board of directors from time to time has authorized the repurchase of shares of the Corporations common stock, in the open market or through negotiated transactions, at such times and at such prices as management may decide.
In fiscal 2003 and 2002, the Corporation did not acquire any shares of its common stock. In fiscal 2001 it acquired 291,700 shares of its common stock for $5,974,000.
The effect of the aggregate repurchases on basic earnings per share was $.19 per share in 2003, $.37 per share in 2002 and $.32 per share in 2001. At May 31, 2003, the Corporation had authorization to repurchase an additional 391,300 shares of its common stock.
NOTE 4 Employee Benefits
A) PROFIT SHARING AND 401(K) 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, 2003, 2002 and 2001, contributions to the Plans were $2,356,000, $2,413,000 and $2,484,000, respectively.
The Corporation has an employee savings plan (the 401(k) Plan) that is intended to provide participating employees with an additional method of saving for retirement. The 401(k) Plan covers all employees who meet certain minimum participation requirements. The Corporation does not currently provide a matching contribution to the 401(k) Plan.
29
Table of Contents
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 4 Employee Benefits, continued
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 or annuity 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 6.0% in 2003, 7.0% in 2002 and 8.0% in 2001. The amount charged to operations under these arrangements was $252,000 in fiscal year 2003, $352,000 in fiscal 2002 and $252,000 in fiscal year 2001.
30
Table of Contents
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 5 Industry Segment Information
Dollars in thousands
2003 | 2002 | 2001 | ||||||||||||
SALES |
||||||||||||||
Manufactured housing |
$ | 293,448 | $ | 339,260 | $ | 353,610 | ||||||||
Recreational vehicles |
126,369 | 111,462 | 110,214 | |||||||||||
Total sales |
$ | 419,817 | $ | 450,722 | $ | 463,824 | ||||||||
EARNINGS BEFORE INCOME TAXES |
||||||||||||||
OPERATING EARNINGS |
||||||||||||||
Manufactured housing |
$ | 11,116 | $ | 19,107 | $ | 13,412 | ||||||||
Recreational vehicles |
439 | 925 | 824 | |||||||||||
General corporate expenses |
(3,214 | ) | (3,905 | ) | (4,089 | ) | ||||||||
Total operating earnings |
8,341 | 16,127 | 10,147 | |||||||||||
Interest income |
1,995 | 4,102 | 7,717 | |||||||||||
Gain on sale of property,
plant and
equipment |
| | 666 | |||||||||||
Earnings before income taxes |
$ | 10,336 | $ | 20,229 | $ | 18,530 | ||||||||
IDENTIFIABLE ASSETS |
||||||||||||||
OPERATING ASSETS |
||||||||||||||
Manufactured housing |
$ | 71,225 | $ | 77,846 | $ | 80,182 | ||||||||
Recreational vehicles |
22,195 | 22,579 | 19,525 | |||||||||||
Total operating assets |
93,420 | 100,425 | 99,707 | |||||||||||
U.S. TREASURY BILLS |
145,721 | 138,327 | 110,965 | |||||||||||
U. S. TREASURY NOTES |
| | 25,006 | |||||||||||
Total assets |
$ | 239,141 | $ | 238,752 | $ | 235,678 | ||||||||
DEPRECIATION |
||||||||||||||
Manufactured housing |
$ | 3,103 | $ | 3,268 | $ | 3,344 | ||||||||
Recreational vehicles |
682 | 616 | 575 | |||||||||||
Total depreciation |
$ | 3,785 | $ | 3,884 | $ | 3,919 | ||||||||
CAPITAL EXPENDITURES |
||||||||||||||
Manufactured housing |
$ | 1,230 | $ | 2,085 | $ | 2,213 | ||||||||
Recreational vehicles |
293 | 1,245 | 286 | |||||||||||
Total capital expenditures |
$ | 1,523 | $ | 3,330 | $ | 2,499 | ||||||||
31
Table of Contents
Skyline Corporation and Subsidiary Companies
Notes to Consolidated Financial Statements
NOTE 5 Industry Segment Information
Dollars in thousands
Operating earnings represent earnings before interest income, gain on sale of property, plant and equipment and provision for income taxes with non-traceable operating expenses being allocated to industry segments based on percentages of sales.
Identifiable assets, depreciation and capital expenditures, by industry segment, are those items that are used in operations in each industry segment, with jointly used items being allocated based on a percentage of sales.
Financial Summary by Quarter
Unaudited
Dollars in thousands except per share data
1st | 2nd | 3rd | 4th | |||||||||||||||||
2003 | Quarter | Quarter | Quarter | Quarter | Year | |||||||||||||||
Sales |
$ | 116,492 | $ | 112,467 | $ | 87,709 | $ | 103,149 | $ | 419,817 | ||||||||||
Gross profit |
14,941 | 14,911 | 8,878 | 14,454 | 53,184 | |||||||||||||||
Net earnings (loss) |
1,822 | 1,951 | (827 | ) | 3,247 | 6,193 | ||||||||||||||
Basic earnings
(loss) per share |
.22 | .23 | (.10 | ) | .39 | .74 |
1st | 2nd | 3rd | 4th | |||||||||||||||||
2002 | Quarter | Quarter | Quarter | Quarter | Year | |||||||||||||||
Sales |
$ | 122,225 | $ | 118,054 | $ | 96,080 | $ | 114,363 | $ | 450,722 | ||||||||||
Gross profit |
17,179 | 17,603 | 11,973 | 16,917 | 63,672 | |||||||||||||||
Net earnings |
3,563 | 3,748 | 869 | 4,074 | 12,254 | |||||||||||||||
Basic earnings per
share |
.42 | .45 | .10 | .49 | 1.46 |
32
Table of Contents
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | ||
None |
PART III
Item 10. | Executive Officers of the Registrant (Officers are elected annually) |
Name | Age | Position | ||||
Thomas G. Deranek | 67 | Vice Chairman and Chief Executive Officer | ||||
William H. Murschel | 58 | President Chief Operations Officer | ||||
Terrence M. Decio | 51 | Senior Executive Vice President | ||||
James R. Weigand | 48 | Vice President Finance & Treasurer and Chief Financial Officer | ||||
Christopher R. Leader | 44 | Vice President Operations | ||||
Charles W. Chambliss | 53 | Vice President Product Development and Engineering | ||||
Jon S. Pilarski | 40 | Corporate Controller |
Thomas G. Deranek, Vice Chairman and Chief Executive Officer, joined the Corporation in 1964. He served as Chief of Staff from 1991 to 2001 and was elected Vice Chairman and Chief Executive Officer in September 2001. | |||
William H. Murschel, President-Chief Operations Officer, joined the Corporation 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 Corporation in 1973. He was elected Vice President in 1985, Senior Vice President in 1991, and Senior Executive Vice President in 1993. | |||
James R. Weigand, Vice President-Finance & Treasurer and Chief Financial Officer, joined the Corporation in 1991 as Controller. He was elected an officer in 1994 and Vice President-Finance & Treasurer and Chief Financial Officer in 1997. | |||
Christopher R. Leader, Vice President-Operations, joined the Corporation in January 1997 and was elected Vice President in September 1997. |
33
Table of Contents
Item 10. | Executive Officers of the Registrant (Officers are elected annually), continued | |
Charles W. Chambliss, Vice President-Product Development and Engineering, joined the Corporation in 1973 and was elected Vice President in 1996. | ||
Jon S. Pilarski, Corporate Controller, joined the Corporation in 1994 and was elected Corporate Controller in 1997. | ||
Item 13. | Certain Relationships and Relationships and Related Transactions | |
None | ||
Item 14. | Controls and Procedures |
(a) | Evaluation of disclosure controls and procedures: The Companys Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c)) as of a date within 90 days of filing date of the annual report (the Evaluation Date), have concluded that as of the Evaluation Date, the Companys disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this annual report was being prepared. | |||
(b) | Changes in internal controls: There were no significant changes in the Companys internal controls or in other factors that could significantly affect the Companys internal controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such internal controls and procedures requiring corrective actions. |
Item 15. | 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)(i) | Articles of Incorporation | |||
(3)(ii) | By-Laws |
34
Table of Contents
(21 | ) | Subsidiaries of the Registrant | ||||||
(99.1 | ) | Certification of Chief Executive Officer pursuant to 18 U.S.C. section 1350. | ||||||
(99.2 | ) | Certification of Chief Financial Officer pursuant to 18 U.S.C. section 1350. | ||||||
(b) | Reports on Form 8K | |||||||
Form 8K was filed on March 20, 2003. The filing was made to publicize the Corporations financial results for the quarter ended February 28, 2003. |
35
Table of Contents
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 9, 2003 | BY: | |||||
|
|||||||
Thomas G. Deranek, Vice Chairman, 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 9, 2003 | BY: | |||||
|
|||||||
William H. Murschel, President and Chief Operations Officer and Director |
|||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
Terrence M. Decio, Senior Executive Vice President and Director |
|||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
James R. Weigand, Vice President-Finance & Treasurer and Chief Financial Officer |
|||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
Jon S. Pilarski, Corporate Controller |
|||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
Arthur J. Decio, Director, Chairman of the Board, serving in a non-executive officer capacity |
|||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
Jerry Hammes, Director | |||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
Ronald F. Kloska, Director | |||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
William H. Lawson, Director | |||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
David T. Link, Director | |||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
Andrew J. McKenna, Director | |||||||
DATE: | July 9, 2003 | BY: | |||||
|
|||||||
V. Dale Swikert, Director |
36
Table of Contents
CERTIFICATIONS
I, Thomas G. Deranek, Chief Executive Officer of Skyline Corporation, certify that:
1. | I have reviewed this annual report on Form 10-K of Skyline Corporation; | |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: |
a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; | ||
b) | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and | ||
c) | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and | ||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and |
6. | The registrants other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
Date: July 9, 2003
/s/ Thomas G. Deranek
Chief Executive Officer
37
Table of Contents
I, James R. Weigand, Chief Financial Officer of Skyline Corporation, certify that:
1. | I have reviewed this annual report on Form 10-K of Skyline Corporation; | |
2. | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; | |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: |
a) | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; | ||
b) | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the Evaluation Date); and | ||
c) | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and | ||
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and |
6. | The registrants other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. |
Date: July 9, 2003
/s/ James R. Weigand
Chief Financial Officer
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