þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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) |
Large accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o |
Shares Outstanding | ||
Title of Class | April 8, 2011 | |
Common Stock | 8,391,244 |
Page No. | ||||||||
PART I. Financial Information |
||||||||
1 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
11 | ||||||||
26 | ||||||||
27 | ||||||||
PART II. Other Information |
||||||||
27 | ||||||||
27 | ||||||||
28 | ||||||||
28 | ||||||||
Exhibit (31.1) | ||||||||
Exhibit (31.2) | ||||||||
Exhibit (32.1) | ||||||||
Exhibit (32.2) |
Item 1. | Financial Statements. |
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 | ||||
1
Item 1. | Financial Statements (Continued). |
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 | ||||
2
Item 1. | Financial Statements (Continued). |
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 | ||||||||
3
Item 1. | Financial Statements (Continued). |
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 | ||||
4
Item 1. | Financial Statements (Continued). |
5
Item 1. | Financial Statements (Continued). |
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 | ||||||
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 | |||||
6
Item 1. | Financial Statements (Continued). |
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 | ||||
7
Item 1. | Financial Statements (Continued). |
8
Item 1. | Financial Statements (Continued). |
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 |
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 | % | |||||||||
9
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 | ) | ||||
10
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations. |
11
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
12
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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 | |||||||||||||
13
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
| 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. |
| 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. |
| Domestic recreational vehicle sales increasing approximately 49 percent |
| Canadian recreational vehicle sales decreasing approximately 1 percent. |
| Domestic recreational vehicle shipments increasing approximately 57 percent |
| Canadian recreational vehicle shipments increasing 12 percent. |
14
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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. |
15
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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 |
16
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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. |
| 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. |
February 28, | February 28, | |||||||||||
2011 | 2010 | Increase | ||||||||||
(Dollars in thousands) | ||||||||||||
Interest income |
$ | 15 | $ | 5 | $ | 10 |
17
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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 | ||||||
18
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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 | |||||||||||||
19
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
| 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. |
| 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. |
| Domestic recreational vehicle sales increasing approximately 38 percent |
| Canadian recreational vehicle sales increasing approximately 36 percent |
| Domestic recreational vehicle shipments increasing approximately 43 percent |
| Canadian recreational vehicle shipments increasing 62 percent. |
20
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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. |
21
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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 |
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. |
22
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
| 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. |
February 28, | February 28, | |||||||||||
2011 | 2010 | Increase | ||||||||||
(Dollars in thousands) | ||||||||||||
Interest income |
$ | 51 | $ | 50 | $ | 1 |
23
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
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 | ||||||
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 | ) |
24
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
25
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued). |
| 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 |
| Managements 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. |
26
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
27
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 |
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 |
28
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 |
1. | I have reviewed this quarterly report on Form 10-Q of Skyline Corporation (the registrant); |
2. | Based on my knowledge, this 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 report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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) | Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Thomas G. Deranek | ||||
Thomas G. Deranek | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Skyline Corporation (the registrant); |
2. | Based on my knowledge, this 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 report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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) | Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ Jon S. Pilarski | ||||
Jon S. Pilarski | ||||
Chief Financial Officer |
1. | The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934. |
2. | The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
/s/ Thomas G. Deranek | ||||
Thomas G. Deranek | ||||
Chief Executive Officer |
1. | The periodic report containing financial statements to which this certificate is an exhibit fully complies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934. |
2. | The information contained in the periodic report to which this certificate is an exhibit fairly presents, in all material respects, the financial condition and results of operations of the Corporation. |
/s/ Jon S. Pilarski | ||||
Jon S. Pilarski | ||||
Chief Financial Officer |