SKY 10-Q Quarterly Report Feb. 28, 2011

SKYLINE CHAMPION CORP

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10-Q 1 c15105e10vq.htm FORM 10-Q Form 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2011


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-4714

SKYLINE CORPORATION

(Exact name of registrant as specified in its charter)


Indiana		35-1038277
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


P. O. Box 743, 2520 By-Pass Road Elkhart, Indiana		46515
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:
(574) 294-6521

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. þ Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þ No

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


		Shares Outstanding
Title of Class		April 8, 2011
Common Stock		8,391,244

FORM 10-Q
INDEX


	Page No.

PART I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets as of February 28, 2011 and May 31, 2010		1

Consolidated Statements of Operations and Retained Earnings for the three-month and nine-month periods ended February 28, 2011 and 2010		3

Consolidated Statements of Cash Flows for the nine-month periods ended February 28, 2011 and 2010		4

Notes to the Consolidated Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11

Item 3. Quantitative and Qualitative Disclosures About Market Risk		26

Item 4. Controls and Procedures		27

PART II. Other Information

Item 1. Legal Proceedings		27

Item 1A. Risk Factors		27

Item 6. Exhibits		28

Signatures		28

Exhibit (31.1)
Exhibit (31.2)
Exhibit (32.1)
Exhibit (32.2)

PART I. Financial Information


Item 1.		*Financial Statements.*

Skyline Corporation and Subsidiary Companies

Consolidated Balance Sheets
(Dollars in thousands)


	February 28, 2011		May 31, 2010
	(Unaudited)

ASSETS
Current Assets:
Cash	$	4,407	$	9,268
U.S. Treasury Bills, at cost plus accrued interest		48,991		67,989
Accounts receivable		9,788		9,778
Inventories		8,090		6,756
Other current assets		3,071		4,540


Total Current Assets		74,347		98,331


Property, Plant and Equipment, at Cost:
Land		4,063		4,063
Buildings and improvements		45,561		45,296
Machinery and equipment		23,148		22,972

		72,772		72,331
Less accumulated depreciation		52,392		50,912

		20,380		21,419
Idle property, net of accumulated depreciation		4,815		5,303


Net Property, Plant and Equipment		25,195		26,722


Other Assets		5,774		5,660


Total Assets	$	105,316	$	130,713

The accompanying notes are an integral part of the consolidated financial statements.


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies
Consolidated Balance Sheets, continued
(Dollars in thousands, except share and per share amounts)


	February 28, 2011			May 31, 2010
	(Unaudited)

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:
Accounts payable, trade	$	3,357		$	3,136
Accrued salaries and wages		2,839			2,505
Accrued marketing programs		2,537			1,524
Accrued warranty and related expenses		3,324			3,339
Accrued workers’ compensation		1,153			1,083
Other accrued liabilities		1,882			1,796


Total Current Liabilities		15,092			13,383


Other Deferred Liabilities		7,611			7,623


Commitments and Contingencies — See Note 8

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		143,117			170,211
Treasury stock, at cost, 2,825,900 shares		(65,744	)		(65,744	)

Total Shareholders’ Equity		82,613			109,707


Total Liabilities and Shareholders’ Equity	$	105,316		$	130,713

The accompanying notes are an integral part of the consolidated financial statements.


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Operations and Retained Earnings
For the Three-Month and Nine-Month Periods Ended February 28, 2011 and 2010
(Dollars in thousands, except share and per share amounts)


	Three-Months Ended						Nine-Months Ended
	2011			2010			2011			2010
	(Unaudited)						(Unaudited)

OPERATIONS
Sales	$	31,776		$	25,415		$	114,224		$	95,535
Cost of sales		33,494			26,236			114,818			95,013

Gross (loss) profit		(1,718	)		(821	)		(594	)		522
Selling and administrative expenses		(7,039	)		(6,282	)		(22,020	)		(20,317	)
Income from life insurance proceeds		—			—			—			412
Gain on sale of idle property, plant and equipment		—			1,544			—			1,544

Operating loss		(8,757	)		(5,559	)		(22,614	)		(17,839	)
Interest income		15			5			51			50

Loss before income taxes		(8,742	)		(5,554	)		(22,563	)		(17,789	)

Benefit from income taxes:
Federal		—			1,714			—			5,854
State		—			143			—			523

		—			1,857			—			6,377


Net loss	$	(8,742	)	$	(3,697	)	$	(22,563	)	$	(11,412	)

Basic loss per share	$	(1.04	)	$	(.44	)	$	(2.69	)	$	(1.36	)

Cash dividends per share	$	.18		$	.18		$	.54		$	.54

Weighted average number of common shares outstanding		8,391,244			8,391,244			8,391,244			8,391,244


RETAINED EARNINGS
Balance at beginning of period	$	153,369		$	194,510		$	170,211		$	205,246
Net loss		(8,742	)		(3,697	)		(22,563	)		(11,412	)
Cash dividends paid		(1,510	)		(1,510	)		(4,531	)		(4,531	)

Balance at end of period	$	143,117		$	189,303		$	143,117		$	189,303

The accompanying notes are an integral part of the consolidated financial statements.


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Cash Flows
For the Nine-Month Periods Ended February 28, 2011 and 2010
(Dollars in thousands)


	2011			2010
	(Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(22,563	)	$	(11,412	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		2,020			1,641
Gain on sale of idle property, plant and equipment		—			(1,544	)
Change in assets and liabilities:
Accrued interest receivable		2			58
Accounts receivable		(10	)		(618	)
Inventories		(1,334	)		602
Other current assets		1,469			(6,587	)
Accounts payable, trade		221			627
Accrued liabilities		1,488			(1,754	)
Other, net		13			1,044

Net cash used in operating activities		(18,694	)		(17,943	)


CASH FROM INVESTING ACTIVITIES:
Proceeds from principal payments of U.S. Treasury Bills		189,947			224,862
Purchase of U.S. Treasury Bills		(170,951	)		(209,968	)
Proceeds from sale of idle property, plant and equipment		—			4,082
Purchase of property, plant and equipment		(528	)		(610	)
Other, net		(104	)		685

Net cash provided by investing activities		18,364			19,051


CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid		(4,531	)		(4,531	)

Net cash used in financing activities		(4,531	)		(4,531	)


Net decrease in cash		(4,861	)		(3,423	)
Cash at beginning of period		9,268			9,836

Cash at end of period	$	4,407		$	6,413

The accompanying notes are an integral part of the consolidated financial statements.


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (Unaudited)

NOTE 1 Nature of Operations, Accounting Policies of Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position as of February 28, 2011, in addition to the consolidated results of operations and consolidated cash flows for the three-month and nine-month periods ended February 28, 2011 and 2010. Due to the seasonal nature of the Corporation’s business, interim results are not necessarily indicative of results for the entire year.

The unaudited interim consolidated financial statements included herein have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnote disclosures normally accompanying the annual consolidated financial statements have been omitted. The audited consolidated balance sheet as of May 31, 2010 and the unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation’s latest annual report on Form 10-K.

Certain prior period amounts have been reclassified to conform to current year presentation.

In July 2010, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” ASU 2010-20 requires entities to provide new financial statement disclosures regarding financing receivables, including credit risk exposures and the allowance for credit losses. For public entities, this ASU is effective for reporting periods ending on or after December 15, 2010 for disclosures of financing receivables as of the end of a reporting period. Financing receivables disclosures relating to activity occurring during a reporting period are required to be adopted for periods beginning on or after December 15, 2010. The Corporation adopted the financing receivables reporting requirement with no material effect on its future financial condition or results of operations. The Corporation does not expect the adoption of the disclosure requirement related to activity occurring during a reporting period to have a material effect on its future financial condition or results of operations.


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (Unaudited) — (Continued)

N OTE 2 Investments

The Corporation invests in United States Government securities, which are typically held until 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):


			Gross
	Gross		Unrealized
	Amortized		(Losses)		Fair
	Costs		Gains		Value
February 28, 2011
U. S. Treasury Bills	$	48,991	$	5	$	48,996


May 31, 2010
U. S. Treasury Bills	$	67,989	$	3	$	67,992

The fair value is determined by a secondary market for U.S. Government Securities. At February 28, 2011 and May 31, 2010, the U.S. Treasury Bills matured within five and four months, respectively.

NOTE 3 Accounts Receivable

Trade receivables are based on the amounts billed to dealers and communities. The Corporation does not accrue interest on any of its trade receivables, nor does it have an allowance for credit losses due to favorable collections experience. If a loss occurs, the Corporation’s policy is to recognize it in the period when collectability cannot be reasonably assured.

NOTE 4 Inventories

Inventories are stated at the lower of cost or market. Cost is determined under the first-in, first-out method. Physical inventory counts are taken at the end of each reporting quarter.

Total inventories consist of the following:


	February 28, 2011		May 31, 2010
	(Dollars in thousands)

Raw materials	$	5,142	$	3,774

Work in process		2,589		2,941

Finished goods		359		41

	$	8,090	$	6,756


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 5 Property, Plant and Equipment

Property, plant and equipment are 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 reporting purposes. Estimated useful lives for significant classes of property, plant and equipment, including idle property, are as follows: Building and improvements 10 to 30 years; machinery and equipment 5 to 8 years. Idle property, net of accumulated depreciation represents the net book value of idle manufacturing facilities in the following locations: Hemet, California; Ocala, Florida; Halstead, Kansas; Mocksville, North Carolina and Ephrata, Pennsylvania.

NOTE 6 Warranty

The Corporation provides the retail purchaser of its manufactured homes with a full fifteen-month warranty against defects in design, materials and workmanship. Recreational vehicles are covered by a one-year warranty. The warranties are backed by service departments located at the Corporation’s manufacturing facilities and an extensive field service system.

Estimated warranty costs are accrued at the time of sale based upon current sales, historical experience and management’s judgment regarding anticipated rates of warranty claims. The adequacy of the recorded warranty liability is periodically assessed and the amount is adjusted as necessary.

A reconciliation of accrued warranty and related expenses is as follows:


	Nine-Months Ended
	February 28,
	2011			2010
	(Dollars in thousands)

Balance at the beginning of the period	$	4,839		$	7,019
Accruals for warranties		3,692			2,560
Settlements made during the period		(3,707	)		(4,062	)

Balance at the end of the period		4,824			5,517

Non-current balance included in other deferred liabilities		1,500			2,400


Accrued warranty and related expenses	$	3,324		$	3,117


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 7 Income Taxes

The Corporation recognizes deferred tax assets based on differences between the carrying values of assets for financial and tax reporting purposes. The realization of the deferred tax assets is dependent upon the generation of sufficient future taxable income. Generally accepted accounting principles require that an entity consider both negative and positive evidence in determining whether a valuation allowance is warranted. In comparing negative and positive evidence, continual losses in recent years is considered significant, negative, objective evidence that deferred tax assets may not be realized in the future, and generally is assigned more weight than subjective positive evidence of the realizability of deferred tax assets. As a result of its extensive evaluation of both positive and negative evidence, management recorded a full valuation allowance against its deferred tax assets during the fourth quarter of fiscal 2010.

The Corporation’s gross deferred tax assets of approximately $27 million consist of approximately $15 million in federal net operating loss and tax credit carryforwards, $6 million in state net operating loss carryforwards, and $6 million resulting from temporary differences between financial and tax reporting. The federal net operating loss and tax credit carryforwards have a life expectancy of twenty years. The state net operating loss carryforwards have a life expectancy, depending on the state where a loss was incurred, between five and twenty years. If the Corporation, after considering future negative and positive evidence regarding the realization of deferred tax assets, determines that a lesser valuation allowance is warranted, it would record a reduction to income tax expense and the valuation allowance in the period of determination.

NOTE 8 Commitments and Contingencies

The Corporation was contingently liable at February 28, 2011 under repurchase agreements with certain financial institutions providing inventory financing for dealers of its products. Under these arrangements, which are customary in the manufactured housing and recreational vehicle industries, the Corporation agrees to repurchase units in the event of default by the dealer at declining prices over the term of the agreement. The period to potentially repurchase units is between 12 to 24 months.

The maximum repurchase liability is the total amount that would be paid upon the default of the Corporation’s independent dealers. The maximum potential repurchase liability, without reduction for the resale value of the repurchased units, was approximately $58 million at February 28, 2011 and approximately $49 million at May 31, 2010.

The risk of loss under these agreements is spread over many dealers 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 Corporation estimates the fair value of this commitment considering both the contingent losses and the value of the guarantee. This amount has historically been insignificant. The Corporation believes that any potential loss under the agreements in effect at February 28, 2011 will not be material to its financial position or results of operations.


Item 1.		*Financial Statements — (Continued).*

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 8 Commitments and Contingencies — (Continued)

The amounts of obligations from repurchased units and incurred net losses for the periods presented are as follows:


	Three-Months Ended				Nine-Months Ended
	February 28,				February 28,
	2011		2010		2011		2010
	(Dollars in thousands)

Number of units repurchased		1		2		1		8
Obligations from units repurchased	$	11	$	35	$	11	$	220
Net losses on repurchased units	$	1	$	4	$	1	$	11

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

NOTE 9 Industry Segment Information

The Corporation designs, produces and markets manufactured housing, modular housing and recreational vehicles (travel trailers, fifth wheels and park models). Manufactured housing represents homes built according to a national building code; modular housing represents homes built to a local building code. The percentage allocation of manufactured housing and recreational vehicle sales is:


	Three-Months Ended						Nine-Months Ended
	February 28,						February 28,
	2011			2010			2011			2010
Manufactured and Modular Housing
Manufactured Housing
Domestic		45	%		52	%		54	%		57	%
Canadian		1			—			1			—

		46			52			55			57
Modular Housing
Domestic		11			7			9			9
Canadian		1			1			1			3

		12			8			10			12

Total Housing		58			60			65			69
Recreational Vehicles
Domestic		31			26			26			23
Canadian		11			14			9			8

Total Recreational Vehicles		42			40			35			31

		100	%		100	%		100	%		100	%

Item 1 . Financial Statements — (Continued).

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (Unaudited) — (Continued)

NOTE 9 Industry Segment Information — (Continued)


	Three-Months Ended						Nine-Months Ended
	February 28,						February 28,
	2011			2010			2011			2010
	(Dollars in thousands)						(Dollars in thousands)

SALES
Manufactured and Modular Housing
Manufactured Housing
Domestic	$	14,462		$	13,201		$	61,562		$	54,341
Canadian		245			18			827			182

		14,707			13,219			62,389			54,523
Modular Housing
Domestic		3,592			1,665			10,125			8,887
Canadian		198			468			1,169			2,645

		3,790			2,133			11,294			11,532

Total Housing		18,497			15,352			73,683			66,055
Recreational Vehicles
Domestic		9,852			6,608			30,282			21,940
Canadian		3,427			3,455			10,259			7,540

Total Recreational Vehicles		13,279			10,063			40,541			29,480

Total Sales	$	31,776		$	25,415		$	114,224		$	95,535


LOSS BEFORE INCOME TAXES
Operating Loss
Manufactured and modular housing	$	(5,359	)	$	(4,905	)	$	(14,305	)	$	(12,371	)
Recreational vehicles		(2,812	)		(1,601	)		(6,537	)		(5,162	)
General corporate expense		(586	)		(597	)		(1,772	)		(2,262	)
Income from life insurance proceeds		—			—			—			412
Gain on sale of idle property, plant and equipment		—			1,544			—			1,544

Total operating loss		(8,757	)		(5,559	)		(22,614	)		(17,839	)
Interest income		15			5			51			50

Loss before income taxes	$	(8,742	)	$	(5,554	)	$	(22,563	)	$	(17,789	)

Total operating loss represents operating losses before interest income and benefit from income taxes with non-traceable operating expenses being allocated to industry segments based on percentages of sales. General corporate expenses are not allocated to the industry segments.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations.*

Overview

The Corporation designs, produces and markets manufactured housing, modular housing and recreational vehicles (travel trailers, fifth wheels and park models) to independent dealers and manufactured housing communities located throughout the United States and Canada. Manufactured housing represents homes built according to a national building code; modular housing represents homes built to a local building code. To better serve the needs of its dealers and communities, the Corporation has fourteen manufacturing facilities in ten states; including a recreational vehicle facility that commenced operations in the third quarter of fiscal 2011. This facility, located in Elkhart, Indiana, produces and sells the “Koala”; a product that combines aerodynamic design and lightweight material composition. Manufactured housing, modular housing and recreational vehicles are sold to dealers and communities either through floor plan financing with various financial institutions or on a cash basis. While the Corporation maintains production of manufactured housing, modular homes and recreational vehicles throughout the year, seasonal fluctuations in sales do occur. Sales and production of manufactured housing and modular housing are affected by winter weather conditions at the Corporation’s northern plants. Recreational vehicle sales are generally higher in the spring and summer months than in the fall and winter months.

Sales of manufactured housing, modular housing and recreational vehicles are affected by the strength of the U.S. economy, interest rate and employment levels, consumer confidence and the availability of wholesale and retail financing. The manufactured housing industry has until recently been affected by a continuing decline in sales. This decline, caused primarily by adverse economic conditions, tightening retail and wholesale credit markets and a depressed site-built housing market, is resulting in historically low industry shipments. In calendar 2010 total shipments were approximately 50,000 units, a less than 1 percent increase from the same period a year ago.

Tight credit markets for retail and wholesale financing have become a significant challenge for the manufactured housing industry. According to the Manufactured Housing Institute, a lack of retail financing options and restrictive credit standards has negatively affected manufactured home buyers. In addition, a significant decline has occurred in wholesale financing, especially as national floor plan lenders have decreased lending to industry dealers.

Sales of recreational vehicles are influenced by changes in consumer confidence, employment levels, the availability of retail and wholesale financing and gasoline prices. Industry unit sales of travel trailers and fifth wheels have varied in recent years. From calendar 2007 to the first half of 2009 unit sales decreased as a result of recessionary conditions, decreased household wealth, tightening credit markets for retail and wholesale financing, and excess inventory of new recreational vehicles. Unit sales, however, started increasing in the last half of calendar 2009 and continues to date. The Recreational Vehicle Industry Association (RVIA), notes that slow growth in jobs and incomes, continued weakness in the housing market, and slowly improving credit to consumers could slow the pace of the recovery.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Outlook

The Corporation’s manufacturing and modular housing segment encountered increased sales in the first three quarters of fiscal 2011, and management cannot determine with certainty if the increase is sustainable. This uncertainty is based on continuing negative economic conditions previously referenced.

The recreational vehicle segment experienced increased sales in the first three quarters of fiscal 2011. Regarding the business environment for the last quarter of fiscal 2011 and the first half of fiscal 2012, the RVIA forecasts calendar 2011 travel trailer and fifth wheel sales of approximately 217,000 units; a 9 percent increase from calendar 2010’s total of approximately 199,000 units. Despite this favorable trend, business conditions for calendar 2011 could be negatively impacted by adverse factors previously referenced by the RVIA.

With a significant position in cash and U.S. Treasury Bills, no bank debt, and experienced employees, the Corporation is prepared to meet the challenges ahead.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Three-Month Period Ended February 28, 2011 Compared to Three-Month Period Ended February 28, 2010 (Unaudited)

Sales and Unit Shipments


	February 28,					February 28,					Increase
	2011		Percent			2010		Percent			(Decrease)
	(Dollars in thousands)

Sales
Manufactured and Modular Housing
Manufactured Housing
Domestic	$	14,462		45	%	$	13,201		52	%	$	1,261
Canadian		245		1			18		—			227

		14,707		46			13,219		52			1,488

Modular Housing
Domestic		3,592		11			1,665		7			1,927
Canadian		198		1			468		1			(270	)

		3,790		12			2,133		8			1,657

Total Housing		18,497		58			15,352		60			3,145
Recreational Vehicles
Domestic		9,852		31			6,608		26			3,244
Canadian		3,427		11			3,455		14			(28	)

Total Recreational Vehicles		13,279		42			10,063		40			3,216

Total Sales	$	31,776		100	%	$	25,415		100	%	$	6,361


Unit shipments
Manufactured and Modular Housing
Manufactured Housing
Domestic		329		24	%		309		30	%		20
Canadian		9		1			1		—			8

		338		25			310		30			28

Modular Housing
Domestic		55		4			30		3			25
Canadian		4		—			8		1			(4	)

		59		4			38		4			21

Total Housing		397		29			348		34			49

Recreational Vehicles
Domestic		736		54			468		46			268
Canadian		236		17			210		20			26

Total Recreational Vehicles		972		71			678		66			294

Total Unit Shipments		1,369		100	%		1,026		100	%		343


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Three-Month Period Ended February 28, 2011 Compared to Three-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Sales and Unit Shipments — (Continued)

Manufactured and modular housing sales revenue increased approximately 20 percent. The increase was the result of:

•

Domestic manufactured housing sales increasing approximately 10 percent

•

Canadian manufactured housing sales increasing twelvefold

•

Domestic modular housing sales increasing approximately 116 percent

•

Canadian modular housing sales decreasing approximately 58 percent.

In addition, total manufactured and modular housing unit shipments increased approximately 14 percent. The increase was the result of:

•

Domestic manufactured housing shipments increasing approximately 6 percent

•

Canadian manufactured housing shipments increasing eightfold

•

Domestic modular housing shipments increasing approximately 83 percent

•

Canadian modular housing shipments decreasing 50 percent.

Total manufactured housing unit shipments increased approximately 9 percent. Industry unit shipments for these products decreased approximately 14 percent from November 2010 to January 2011 as compared to the same period a year ago. Industry data from November 2010 to January 2011 is the latest three month period available. Current industry unit shipment data for modular housing is not available.

The average sales per unit for domestic manufactured housing, Canadian manufactured housing and domestic modular housing products in the third quarter as compared to prior year increased approximately 3, 51 and 18 percent, respectively. The increase is due to consumer preference toward homes with higher price points. The average sales per unit for Canadian modular housing products decreased approximately 15 percent due to consumer preferring homes with lower price points.

Recreational vehicle sales revenue increased approximately 32 percent. The increase was the result of:

•

Domestic recreational vehicle sales increasing approximately 49 percent

•

Canadian recreational vehicle sales decreasing approximately 1 percent.

In addition, total recreational vehicle unit shipments increased approximately 43 percent. The increase was the result of:

•

Domestic recreational vehicle shipments increasing approximately 57 percent

•

Canadian recreational vehicle shipments increasing 12 percent.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Three-Month Period Ended February 28, 2011 Compared to Three-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Sales and Unit Shipments — (Continued)

Sales revenue and unit shipments were positively impacted by the opening of a new recreational vehicle facility in Elkhart, Indiana. As previously referenced, the facility produces and markets the “Koala”.

During the third quarter, unit shipments for travel trailers and fifth wheels increased approximately 44 percent as compared to prior year while industry shipments of these products from December 2010 to February 2011 increased 11 percent. Current industry unit shipment data for park models is not available.

The average sales per unit for recreational vehicle products in the third quarter as compared to prior year decreased approximately 8 percent. The decrease is primarily due to a shift in consumer preference toward recreational vehicles with lower price points, and discounting to meet competitive market conditions.

In response to higher material costs, the Corporation increased its pricing on all the Corporation’s products. Due to competitive conditions, however, the Corporation was unable to fully increase pricing to counteract all the higher material costs.

Cost of Sales


	February 28,		Percent		February 28,		Percent
	2011		of Sales*		2010		of Sales*		Increase
	(Dollars in Thousands)

Manufactured and modular housing	$	19,783		107	$	16,562		108	$	3,221
Recreational vehicles		13,711		103		9,674		96		4,037

Consolidated	$	33,494		105	$	26,236		103	$	7,258


*		The percentages for manufactured housing and recreational vehicles are based on segment sales. The percentage for consolidated cost of sales is based on total sales.

Manufactured and modular housing cost of sales, as well as recreational vehicle cost of sales, increased due to increased material costs and an improvement in unit shipments. In addition, prior year’s cost of sales included a $700,000 reduction in manufacturing costs related to reduced warranty costs in line with the lower sales level.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Three-Month Period Ended February 28, 2011 Compared to Three-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Cost of Sales — (Continued)

For the manufactured and modular housing segment, manufacturing expenses as a percentage of sales decreased due to certain costs being fixed amid rising sales. In addition, material costs and direct labor as a percentage of sales increased. The material cost percentage increased as a result of higher amounts charged for items including but not limited to steel, aluminum, copper, lumber and petroleum based products. The direct labor percentage increased due to homes sold in the current year that are more labor intensive relative to homes sold in the prior year.

As a percentage of sales, recreational vehicle cost of sales increased due to a product mix shift toward product sold in the current year that has a higher material cost percentage relative to product sold in the prior year. In addition, the cost of sales percentage increased as a result of higher material costs, discounting to meet competitive market conditions and reduced warranty costs that occurred due to lower sales levels in the prior year.

Selling and Administrative Expenses


	February 28,		Percent		February 28,		Percent
	2011		of Sales		2010		of Sales		Increase
	( Dollars in thousands)

Selling and administrative expenses	$	7,039		22	$	6,282		25	$	757

Selling and administrative expenses increased primarily due to an increase in sales based compensation, selling expenses and the commencement of operations at the new recreational vehicle facility. As a percentage of sales, selling and administrative expenses decreased due to costs being fixed amid rising sales.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Three-Month Period Ended February 28, 2011 Compared to Three-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Operating Loss


	February 28,			Percent			February 28,			Percent
	2011			of Sales*			2010			of Sales*
	(Dollars in Thousands)

Manufactured and modular housing	$	(5,359	)		(29	)	$	(4,905	)		(32	)
Recreational vehicles		(2,812	)		(21	)		(1,601	)		(16	)
General corporate expenses		(586	)		(2	)		(597	)		(2	)
Gain on sale of idle property, plant and equipment		—			—			1,544			6

Total Operating Loss	$	(8,757	)		(28	)	$	(5,559	)		(22	)


*		The percentages for manufactured housing and recreational vehicles are based on segment sales. The percentage for general corporate expenses and total operating loss earnings are based on total sales.

The operating loss for manufactured and modular housing was higher primarily due to a reduction in warranty costs that occurred in prior year.

The operating loss for recreational vehicles, increased primarily due to:

•

A product mix shift toward lower priced products. These products have lower margins relative to products sold in the prior year.

•

A reduction in warranty costs that occurred in prior year

•

Increased material costs

•

Increased discounts in order to meet competitive market conditions.

In the third quarter of fiscal 2010, the Corporation sold an idle manufactured housing facility in Bossier City, Louisiana. The sale resulted in a pre-tax gain of $1,544,000.

Interest Income


	February 28,		February 28,
	2011		2010		Increase
	(Dollars in thousands)

Interest income	$	15	$	5	$	10

Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government Securities.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Three-Month Period Ended February 28, 2011 Compared to Three-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Interest Income — (Continued)

In the third quarter of fiscal 2011, the average amount available for investment was approximately $54 million with a weighted average yield of 0.07 percent. In the third quarter of fiscal 2010, the average amount available for investment was approximately $76 million with a weighted average yield of 0.02 percent.

Benefit from Income Taxes


	February 28,		February 28,		Decrease in
	2011		2010		Benefit
	(Dollars in thousands)

Federal	$	—	$	1,714	$	1,714
State		—		143		143

Total	$	—	$	1,857	$	1,857

The benefit from federal income taxes in the third quarter of fiscal 2010 approximates the statutory rate, while the benefit for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities. The benefit for federal and state income tax is the result of pretax losses that occurred in the third quarter of fiscal 2010. The Corporation recorded a full valuation allowance against its deferred tax assets at May 31, 2010 and, as a result, reflects no income tax benefit during the current period, as any benefit is directly offset by a change in the valuation allowance. Additional information regarding income taxes is located in Note 7 in Notes to Consolidated Financial Statements included in this document under Item 1.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited)

Sales and Unit Shipments


	February 28,					February 28,					Increase
	2011		Percent			2010		Percent			(Decrease)
	(Dollars in thousands)

Sales
Manufactured and Modular Housing
Manufactured Housing
Domestic	$	61,562		54	%	$	54,341		57	%	$	7,221
Canadian		827		1			182		—			645

		62,389		55			54,523		57			7,866

Modular Housing
Domestic		10,125		9			8,887		9			1,238
Canadian		1,169		1			2,645		3			(1,476	)

		11,294		10			11,532		12			(238	)

Total Housing		73,683		65			66,055		69			7,628
Recreational Vehicles
Domestic		30,282		26			21,940		23			8,342
Canadian		10,259		9			7,540		8			2,719

Total Recreational Vehicles		40,541		35			29,480		31			11,061

Total Sales	$	114,224		100	%	$	95,535		100	%	$	18,689


Unit shipments
Manufactured and Modular Housing
Manufactured Housing
Domestic		1,432		31	%		1,247		36	%		185
Canadian		32		1			6		—			26

		1,464		32			1,253		36			211

Modular Housing
Domestic		176		4			157		5			19
Canadian		22		—			50		1			(28	)

		198		4			207		6			(9	)

Total Housing		1,662		36			1,460		42			202

Recreational Vehicles
Domestic		2,225		48			1,561		45			664
Canadian		725		16			447		13			278

Total Recreational Vehicles		2,950		64			2,008		58			942

Total Unit Shipments		4,612		100	%		3,468		100	%		1,144


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Sales and Unit Shipments — (Continued)

Manufactured housing and modular housing sales revenue increased approximately 12 percent. The increase was the result of:

•

Domestic manufactured housing sales increasing approximately 13 percent

•

Canadian manufactured housing sales increasing approximately 354 percent

•

Domestic modular housing sales increasing approximately 14 percent

•

Canadian modular housing sales decreasing approximately 56 percent.

Total manufactured and modular housing unit shipments increased approximately 14 percent. The increase was the result of:

•

Domestic manufactured housing shipments increasing approximately 15 percent

•

Canadian manufactured housing shipments increasing 433 percent

•

Domestic modular shipments increasing approximately 12 percent

•

Canadian modular shipments decreasing approximately 56 percent.

Total manufactured housing unit shipments increased approximately 17 percent. Industry unit shipments for these products decreased approximately 1 percent from May 2010 to January 2011 as compared to the same period a year ago. Industry data from May 2010 to January 2011 is the latest nine month period available. Current industry unit shipment data for modular housing is not available.

The average sales per unit for domestic and Canadian manufactured housing products in the first three quarters as compared to prior year decreased approximately 1 and 15 percent, respectively. The decrease is primarily due to a shift in consumer preference towards homes with lower price points. The average sales per unit for domestic modular housing products increased 2 percent due to consumers preferring higher price points. The average price per unit for Canadian modular housing products remained unchanged from prior year.

The Corporation’s recreational vehicles sales revenue increased approximately 38 percent. The increase was the result of:

•

Domestic recreational vehicle sales increasing approximately 38 percent

•

Canadian recreational vehicle sales increasing approximately 36 percent

In addition, total recreational vehicle unit shipments increased approximately 47 percent. The increase the result of:

•

Domestic recreational vehicle shipments increasing approximately 43 percent

•

Canadian recreational vehicle shipments increasing 62 percent.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Sales and Unit Shipments — (Continued)

Sales revenue and unit shipments were positively impacted by the opening in the third quarter of a new recreational vehicle facility in Elkhart, Indiana. As previously referenced, the facility produces and markets the “Koala”.

Unit shipments for travel trailers and fifth wheels increased approximately 46 percent while industry shipments for these products from June 2010 to February 2011 increased 16 percent. Current industry unit shipment data for park models is not available.

The average sales per unit for recreational vehicle products in the first three quarters as compared to prior year decreased approximately 6 percent. The decrease is primarily due to a shift in consumer preference toward recreational vehicles with lower price points, and discounting to meet competitive market conditions.

Cost of Sales


	February 28,		Percent		February		Percent
	2011		of Sales*		2010		of Sales*		Increase
	(Dollars in Thousands)

Manufactured and modular housing	$	74,374		101	$	65,962		100	$	8,412
Recreational vehicles		40,444		100		29,051		99		11,393

Consolidated	$	114,818		101	$	95,013		99	$	19,805


*		The percentages for manufactured housing and recreational vehicles are based on segment sales. The percentage for consolidated cost of sales is based on total sales.

Manufactured and modular housing cost of sales, as well as recreational vehicle cost of sales, increased due to increased material costs and higher unit shipments. In addition, prior year’s cost of sales included a $1,500,000 reduction in manufacturing costs related to reduced warranty costs in line with lower sales levels.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Cost of Sales — (Continued)

As a percentage of sales, cost of sales was negatively impacted by a product mix shift in the current year toward product that has a higher material cost percentage relative to product sold in the prior year. In addition, cost of sales as a percentage of sales increased as a result of higher material costs in the current year and reduced warranty costs that occurred due to lower sales levels in prior year. Cost of sales, as a percentage of sales, for both segments were positively impacted by certain manufacturing costs being fixed amid rising sales.

Selling and Administrative Expenses


	February 28,		Percent		February 28,		Percent
	2011		of Sales		2010		of Sales		Increase
	( Dollars in thousands)

Selling and administrative expenses	$	22,020		19	$	20,317		21	$	1,703

Selling and administrative expense increased primarily due to an increase in sales based compensation and dealer promotional programs. As a percentage of sales, selling and administrative expenses decreased due to certain costs being fixed amid rising sales.

Operating Loss


	February 28,			Percent			February 28,			Percent
	2011			of Sales*			2010			of Sales*
	(Dollars in Thousands)

Manufactured and modular housing	$	(14,305	)		(19	)	$	(12,371	)		(19	)
Recreational vehicles		(6,537	)		(16	)		(5,162	)		(18	)
General corporate expenses		(1,772	)		(2	)		(2,262	)		(2	)
Income from life insurance proceeds		—			—			412			—
Gain on sale of idle property, plant and equipment		—			—			1,544			2

Total Operating Loss	$	(22,614	)		(20	)	$	(17,839	)		(19	)


*		The percentages for manufactured housing and recreational vehicles are based on segment sales. The percentage for general corporate expenses, income from life insurance proceeds and total operating loss are based on total sales.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Operating Loss — (Continued)

The operating loss for manufactured and modular housing, as well as recreational vehicles, increased primarily due to:

•

A product mix shift toward lower priced products. These products have lower margins relative to products sold in the prior year.

•

A reduction in warranty costs that occurred in prior year

•

Increased material costs

•

Increased discounts and selling expenses in order to meet competitive market conditions.

General corporate expenses decreased due to a $600,000 charge in the prior year for the Corporation’s liability for retirement and death benefits offered to certain employees.

The Corporation owns life insurance contracts on certain employees. The Corporation realized in the first quarter of fiscal 2010 non-taxable income from life insurance proceeds in the amount of $412,000, which is separately stated in the Consolidated Statement of Operations and Retained Earnings.

In the third quarter of fiscal 2010, the Corporation sold an idle manufactured housing facility in Bossier City, Louisiana. The sale resulted in a pre-tax gain of $1,544,000.

Interest Income


	February 28,		February 28,
	2011		2010		Increase
	(Dollars in thousands)

Interest income	$	51	$	50	$	1

Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government Securities. In the first nine months of fiscal 2011, the average amount available for investment was approximately $61 million with a weighted average yield of 0.1 percent. During the same period of fiscal 2010, the average amount available for investment was approximately $78 million with a weighted average yield of .09 percent.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Benefit from Income Taxes


	February 28,		February 28,		Decrease in
	2011		2010		Benefit
	(Dollars in thousands)

Federal	$	—	$	5,854	$	5,854
State		—		523		523

Total	$	—	$	6,377	$	6,377

The benefit from federal income taxes in the first three quarters of fiscal 2010 approximates the statutory rate, while the benefit for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities. The benefit for federal and state income tax is the result of pretax losses that occurred in the first three quarters of fiscal 2010. The Corporation recorded a full valuation allowance against its deferred tax assets at May 31, 2010 and, as a result, reflects no income tax benefit during the current period, as any benefit is directly offset by a change in the valuation allowance. Additional information regarding income taxes is located in Note 7 in Notes to Consolidated Financial Statements included in this document under Item 1.

Liquidity and Capital Resources


	February 28,		May 31,		Increase
	2011		2010		(Decrease)
	(Dollars in thousands)

Cash and U.S. Treasury Bills	$	53,398	$	77,257	$	(23,859	)
Current assets, exclusive of cash and US Treasury Bills	$	20,949	$	21,074	$	(125	)
Current liabilities	$	15,092	$	13,383	$	1,709
Working capital	$	59,255	$	84,948	$	(25,693	)

The Corporation’s policy is to invest its excess cash, which exceeds its operating needs, in U.S. Government Securities. Cash and U.S. Treasury Bills decreased due primarily to a net loss of $22,563,000 and dividends paid of $4,531,000. Current assets, exclusive of cash and U.S. Treasury Bills, decreased primarily due to a $1,368,000 increase in raw materials inventory, and a $1,469,000 decrease in other current assets. Raw materials inventory increased as a result of the new recreational vehicle facility, increased material costs and to more quickly respond to orders from dealer and communities. Other current assets decreased as a result of a $1,200,000 partial refund of a workers’ compensation liability deposit.

Current liabilities changed as a result of a $1,013,000 increase in accrued marketing programs. Accrued marketing programs increased due to accruals for an ongoing marketing program for the Corporation’s manufactured housing dealers. Accruals are made monthly, and the majority of payments due to dealers are paid during the Corporation’s fourth fiscal quarter.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

Results of Operations — Nine-Month Period Ended February 28, 2011 Compared to Nine-Month Period Ended February 28, 2010 (Unaudited) — (Continued)

Liquidity and Capital Resources — (Continued)

Capital expenditures totaled $528,000 for the first three quarters of fiscal 2011 as compared to $610,000 for the first three quarters of fiscal 2010. Capital expenditures were made primarily to replace or refurbish machinery and equipment in addition to improving manufacturing efficiencies. In the third quarter of fiscal 2009, the Corporation began a project to implement an enterprise resource planning (ERP) system. The project is expected to last until the end of fiscal 2012, and the cost is to be paid out of the Corporation’s normal budget for capital expenditures. The amount of capital expended for this project through February 28, 2010 is approximately $899,000. The amount of capital expended in the first nine months of fiscal 2011 was approximately $45,000, while the amount expended in the same period of fiscal 2010 was approximately $350,000. The goal of the ERP system is to obtain better decision-making information, to react quicker to changes in market conditions, and lower the Corporation’s technology costs.

The Corporation’s current cash and other short-term investments are expected to be adequate to fund any capital expenditures and treasury stock purchases during the year. The Corporation’s financing needs have been met with a combination of cash on hand and funds generated through the sale of assets.

Recently Issued Accounting Standards

The effect on newly issued account standards is addressed in Note 1 of the Notes to Consolidated Financial Statements.

Impact of Inflation

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. On a long-term basis, the Corporation has demonstrated an ability to adjust selling prices in reaction to changing costs due to inflation.


Item 2.		*Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Continued).*

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:

•

Availability of wholesale and retail financing

•

The health of the U.S. housing market as a whole

•

Cyclical nature of the manufactured housing and recreational vehicle industries

•

General or seasonal weather conditions affecting sales

•

Potential impact of hurricanes and other natural disasters on sales and raw material costs

•

Potential periodic inventory adjustments by independent retailers

•

Interest rate levels

•

Impact of inflation

•

Impact of rising fuel costs

•

Cost of labor and raw materials

•

Competitive pressures on pricing and promotional costs

•

Catastrophic events impacting insurance costs

•

The availability of insurance coverage for various risks to the Corporation

•

Consumer confidence and economic uncertainty

•

Market demographics

•

Management’s ability to attract and retain executive officers and key personnel

•

Increased global tensions, market disruption resulting from a terrorist or other attack and any armed conflict involving the United States.


Item 3.		*Quantitative and Qualitative Disclosures About Market Risk.*

The Corporation invests in United States Government Securities. These securities are held until maturity and are therefore classified as held-to-maturity and carried at amortized cost. Changes in interest rates do not have a significant effect on the fair value of these investments.


Item 4.		*Controls and Procedures.*

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures

As of February 28, 2011, the Corporation conducted an evaluation, under the supervision and participation of management including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Corporation’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures are effective for the period ended February 28, 2011.

Changes in Internal Control over Financial Reporting

No change in the Corporation’s internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the third quarter ended February 28, 2011 that materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II. Other Information


Item 1.		*Legal Proceedings.*

Information with respect to this Item for the period covered by this Form 10-Q has been reported in Item 3, entitled “Legal Proceedings” of the Form 10-K for the fiscal year ended May 31, 2011 filed by the registrant with the Commission.


Item 1A.		*Risk Factors.*

There were no material changes in the risk factors disclosed in Item 1A of the Corporation’s Form 10-K for the year ended May 31, 2010.


Item 6.		*Exhibits.*


(31.1	)	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d-14(a)

(31.2	)	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d-14(a)

(32.1	)	Certification of Periodic Financial Reports Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(32.2	)	Certification of Periodic Financial Reports Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SKYLINE CORPORATION
DATE: April 8, 2011	/s/ Jon S. Pilarski
	Jon S. Pilarski
	Chief Financial Officer

DATE: April 8, 2011	/s/ Martin R. Fransted
	Martin R. Fransted
	Corporate Controller

INDEX TO EXHIBITS


Exhibit Number		Descriptions

	31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d-14(a)

	31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002-Rule 13a-14(a)/15d-14(a)

	32.1	Certification of Periodic Financial Reports Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2	Certification of Periodic Financial Reports Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

TABLE OF CONTENTS

Part I. Financial Information Item 1. Financial Statements Item 1. Financial Statements (continued)Note 1 Nature Of Operations, Accounting Policies Of Consolidated Financial Statements Note 2 Investments Note 3 Accounts Receivable Note 4 Inventories Note 5 Property, Plant and Equipment Note 6 Warranty Note 7 Income Taxes Note 8 Commitments and Contingencies Note 8 Commitments and Contingencies (continued)Note 9 Industry Segment Information Note 9 Industry Segment Information (continued)Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations (continued)Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II. Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 6. Exhibits

Exhibits

Exhibit (31.1) Exhibit (31.2) Exhibit (32.1) Exhibit (32.2)

SKY 10-Q Quarter ended Feb. 28, 2011

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Exhibits