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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

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

For the fiscal year ended May 31, 2003
Commission File No. 1-4714

SKYLINE CORPORATION

P. O. Box 743,  2520 By-Pass Road   Elkhart, IN 46515

Securities registered pursuant to section 12 (b) of the Act:

Securities registered pursuant to section 12 (g) of the Act:

Title of Class

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES  [X]      NO  [   ]

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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

[X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes  [X]    No  [   ]

The aggregate market value of the voting stock held by non-affiliates of registrant ( 6,818,780 shares) based on the closing price on the New York Stock Exchange on July 9, 2003 was $224,133,299.

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DOCUMENTS INCORPORATED BY REFERENCE:

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FORM 10-K
CROSS-REFERENCE INDEX

Certain information required to be included in this Form 10-K is also included in the registrant’s Proxy Statement used in connection with its 2003 Annual Meeting of Shareholders to be held on September 22, 2003 (“2003 Proxy Statement”). The following cross-reference index shows the page locations in the 2003 Proxy Statement of that information which is incorporated by reference into this Form 10-K and the page location in this Form 10-K of that information not incorporated by reference. All other sections of the 2003 Proxy Statement are not required in this Form 10-K and should not be considered a part hereof.

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FORM 10-K
CROSS-REFERENCE INDEX
(Continued)

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PART I

Item 1.   Business

			General Development of Business
			Skyline Corporation was originally incorporated in Indiana in 1959, as successor to a business founded in 1951. Skyline Corporation and its consolidated subsidiaries (the “Corporation”) design, produce and distribute manufactured housing (mobile homes and multi-sectional homes) and recreational vehicles (travel trailers, including park models and fifth wheels).
			The Corporation, which is one of the largest producers of manufactured homes in the United States, produced 7,922 manufactured homes in fiscal year 2003.
			The Corporation’s manufactured homes are marketed under a number of trademarks. They are available in lengths ranging from 36’ to 80’ and in single wide widths from 12’ to 18’, double wide widths from 20’ to 32’, and triple wide widths from 36’ to 42’.
			The Corporation’s recreational vehicles are sold under the “Nomad,” “Layton,” and “Aljo” trademarks for travel trailers and fifth wheels.
			In fiscal year 2003, manufactured homes represented 70% of total sales, while recreational vehicles accounted for the remaining 30%. In the prior year, the sales dollars were 75% manufactured homes and 25% recreational vehicles. Additional financial data relating to these industry segments is included in Note 5, Industry Segment Information, in the Notes to Consolidated Financial Statements included in this document under Item 8.
			Narrative Description of Business
			Principal Markets
			The principal markets for manufactured homes are the suburban and rural areas of the continental United States. The principal buyers continue to be young married couples and senior citizens, but the market tends to broaden when conventional housing becomes more difficult to purchase and finance.
			The recreational vehicle market is made up of primarily vacationing families, retired couples traveling around the country and sportsmen pursuing four-season hobbies.

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Item 1.     Business

			Method of Distribution
			The Corporation’s manufactured homes are distributed by approximately 460 dealers at 840 locations throughout the United States and recreational vehicles are distributed by approximately 270 dealers at 290 locations throughout the United States. These are generally not exclusive dealerships and it is believed that most dealers also sell products of other manufacturers.
			The Corporation provides the retail purchaser of its manufactured homes with a full one-year warranty against defects in materials and workmanship. Recreational vehicles are covered by a two-year warranty. The warranties are backed by a corporate service department and an extensive field service system.
			The Corporation’s products are sold to dealers either through floor plan financing with various financial institutions or on a cash basis. Payments to the Corporation are made either directly by the dealer or by financial institutions, which have agreed to finance dealer purchases of the Corporation’s products. In accordance with industry practice, certain financial institutions which finance dealer purchases require the Corporation to execute repurchase agreements which provide that in the event a dealer defaults on its repayment of the financing, the Corporation will repurchase its products from the financing institution in accordance with a declining repurchase price schedule established by the Corporation. Any loss under these agreements is the difference between the repurchase cost and the resale value of the units repurchased. Further, the risk of loss is spread over numerous dealers. There have been no material losses related to repurchases in past years. Additional information regarding these repurchase agreements is included in Note 2, Contingencies, in the Notes to Consolidated Financial Statements included in this document under Item 8.
			Raw Materials and Supplies
			The Corporation is basically an assembler of components purchased from outside sources. The major components used by the Corporation are lumber, plywood, shingles, vinyl and wood siding, steel, aluminum, insulation, home appliances, furnaces, plumbing fixtures, hardware, floor coverings and furniture. The suppliers are many and range in size from large national companies to very small local companies. At the present time, the Corporation is obtaining sufficient materials to fulfill its needs.
			Patents, Trademarks, Licenses, Franchises and Concessions
			The Corporation does not rely upon any terminable or nonrenewable rights such as patents, licenses or franchises under the trademarks or patents of others, in the conduct of any segment of its business.

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Item 1.     Business

			Seasonal Fluctuations
			While the Corporation maintains production of manufactured homes and recreational vehicles throughout the year, seasonal fluctuations in sales do occur. Sales and production of manufactured homes are affected by winter weather conditions at the Corporation’s northern plants. Recreational vehicle sales are generally higher in the spring and summer months than in the fall and winter months.
			Inventory
			The Corporation does not build significant inventories of either finished goods or raw materials. In addition, there are no significant inventories sold on consignment.
			Dependence Upon Individual Customers
			The Corporation does not rely upon any single dealer for a significant percentage of its business in any industry segment.
			Backlog
			The Corporation does not consider the existence and extent of backlog to be significant in its business. The Corporation’s production is based on a relatively short manufacturing cycle and dealer’s orders, which continuously fluctuate. As such, the existence of backlog is not significant at any given date and does not typically provide a reliable indication of the status of the Corporation’s business.
			Government Contracts
			The Corporation has had no significant government contracts during the past three years.
			Competitive Conditions
			The manufactured housing and recreational vehicle industries are highly competitive, with particular emphasis on price and features offered. The Corporation’s competitors are numerous, ranging from multi-billion dollar corporations to relatively small and specialized manufacturers.

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Item 1.   Business

			Competitive Conditions, continued
			The Manufactured Housing Institute reported that the industry produced approximately 168,500 homes in calendar year 2002. In the same period, the Corporation produced 8,711 units for a 5.2% market share. In calendar year 2001, approximately 193,200 homes were manufactured by the industry. In that period, the Corporation produced 10,148 homes for a 5.3% market share.
			The recreational vehicle industry produced 378,700 units in calendar year 2002 compared to 321,000 units in calendar year 2001. The following table shows the Corporation’s competitive position in the recreational vehicle product lines it sells.

			Both the manufactured housing and recreational vehicle segments of the Corporation’s business are dependent upon the availability of financing to dealers and retail financing. Consequently, increases in interest rates and/or tightening of credit through governmental action or otherwise have adversely affected the Corporation’s business in the past and may do so in the future.
			The Corporation considers it impossible to predict the future occurrence, duration or severity of cost or availability problems in financing either manufactured homes or recreational vehicles. To the extent that they occur, such public concerns will affect sales of the Corporation’s products.
			Regulation
			The manufacture, distribution and sale of manufactured homes and recreational vehicles are subject to government regulations in both the United States and Canada, at federal, state or provincial and local levels.

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Item 1.      Business

			Environmental Quality
			The Corporation believes that compliance with federal, state and local requirements respecting environmental quality will not require any material capital expenditures for plant or equipment modifications which would adversely affect earnings.
			Other Regulations
			The U.S. Department of Housing and Urban Development (HUD) has set national manufactured home construction and safety standards and implemented recall and other regulations since 1976. The National Mobile Home Construction and Safety Standards Act of 1974, as amended, under which such standards and regulations are promulgated, prohibits states from establishing or continuing in effect any manufactured home standard that is not identical to the federal standards as to any covered aspect of performance. Implementation of these standards and regulations involves inspection agency approval of manufactured home designs, plant and home inspection by states or other HUD-approved third parties, manufacturer certification that the standards are met, and possible recalls if they are not or if homes contain safety hazards.
			Some components of manufactured homes may also be subject to Consumer Product Safety Commission standards and recall requirements. In addition, the Corporation has voluntarily subjected itself to third party inspection of all of its products nationwide in order to further assure the Corporation, its dealers, and customers of compliance with established standards.
			The Corporation’s travel trailers continue to be subject to safety standards and recall and other regulations promulgated by the U.S. Department of Transportation under the National Traffic and Motor Vehicle Safety Act of 1966 and the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act, as well as state laws and regulations.
			The Corporation’s operations are subject to the Federal Occupational Safety and Health Act, and are routinely inspected thereunder.
			The transportation and placement (in the case of manufactured homes) of the Corporation’s products are subject to state highway use regulations and local ordinances which control the size of units that may be transported, the roads to be used, speed limits, hours of travel, and allowable locations for manufactured homes and parks.
			The corporation is also subject to many state manufacturer licensing and bonding requirements, and to dealer day in court requirements in some states.

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Item 1.     Business

			Other Regulations, continued
			Manufactured homes and recreational vehicles may be subject to the Magnuson-Moss Warranty – Federal Trade Commission Improvement Act, which regulates warranties on consumer products. The Corporation believes that its existing warranties meet all requirements of the Act.
			HUD has promulgated rules requiring producers of manufactured homes to utilize wood products certified by their suppliers to meet HUD’s established limits on formaldehyde emissions, and to place in each home written notice to prospective purchasers of possible adverse reaction from airborne formaldehyde in the homes. These rules are designated as preemptive of state regulation.
			Number of Employees
			The Corporation employs approximately 2,500 people at the present time.
			Available Information
			The Corporation makes available, free of charge, through the Investors section of its internet website its annual reports on Form    10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as practicable after such material is electronically filed or furnished to the Securities Exchange Commission. The Corporation’s internet address is http://www.skylinecorp.com.

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Item 2.     Properties

			The Corporation owns its corporate offices and design facility, which are located in Elkhart, Indiana.
			The Corporation’s 23 manufacturing plants, all of which are owned, are as follows:

			The above facilities range in size from approximately 50,000 square feet to approximately 160,000 square feet.
			The Corporation also has one property that is not currently in use and is available for sale. The net book value of this property is not significant to the assets of the Corporation.
			It is extremely difficult to determine the unit productive capacity of the Corporation because of the ever-changing product mix.
			The Corporation believes that its plant facilities, machinery and equipment are well maintained and are in good operating condition.

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Item 3.     Legal Proceedings

Neither the Corporation nor any of its subsidiaries is a party to any pending legal proceedings which could have a material effect on operations.

Item 4.     Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders during the fourth quarter of fiscal year ended May 31, 2003.

Skyline Corporation (SKY) is traded on the New York Stock Exchange. A quarterly cash dividend of 18 cents ($0.18) per share was paid in fiscal 2003 and 2002. At May 31, 2003, there were approximately 1,200 holders of record of Skyline Corporation common stock. A quarterly summary of the market price is listed for the fiscal years ended May 31, 2003 and 2002.

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Item 6.     Selected Financial Data

Dollars in thousands except per share data

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Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

			Results of Operations - Fiscal 2003 Compared to Fiscal 2002
			Sales in 2003 were $419,817,000, a decrease of $30,905,000 from $450,722,000 in 2002. Manufactured housing sales totaled $293,448,000 for 2003 compared to $339,260,000 in 2002. Manufactured housing unit sales decreased to 7,922 from 9,849. Recreational vehicle sales increased from $111,462,000 in 2002 to $126,369,000 in 2003. Recreational vehicle unit sales increased from 8,028 in 2002 to 8,720 in 2003. Manufactured housing sales continue to be affected by difficult market conditions, restrictive retail financing, economic uncertainty and increased global tensions. The increase in recreational vehicle sales is a reflection of an industry-wide improvement in market conditions for towable recreational vehicles. This trend began in early calendar year 2002. There was, however, a softening of demand in the Corporation’s fourth fiscal quarter. Fourth quarter sales for the recreational vehicle segment totaled $31,762,000 versus $36,527,000 from the prior year.
			Cost of sales in 2003 was 87.3% compared to 85.9% in 2002. Manufactured housing cost of sales in 2003 decreased to 81.0% from 84.9% in 2002. The decrease is primarily attributable to the Corporation’s effort to control manufacturing costs. Recreational vehicle cost of sales increased to 89.8% of sales from 89.0% in 2002 due to increased raw material cost and a shift in model mix within this segment.
			Selling and administrative expenses as a percentage of sales increased slightly to 10.7% in 2003 from 10.5% in 2002, while expenditures decreased $2,702,000.
			As a percentage of sales, operating earnings for manufactured housing were 3.8% in 2003 versus prior year’s 5.6 %. Earnings for manufactured housing declined due to the continuation of difficult market conditions noted above. Recreational vehicle operating earnings as a percentage of sales were 0.3% for 2003 and 0.8% for 2002. The decrease is due to increased cost of sales as noted above.
			Interest income amounted to $1,995,000 in 2003 compared to $4,102,000 in 2002. Interest income is directly related to the prevailing yields of U.S. Government securities and the amount available for investment.
			Results of Operations - Fiscal 2002 Compared to Fiscal 2001
			Sales in 2002 were $450,722,000, a decrease of $13,102,000 from $463,824,000 in 2001. Manufactured housing sales totaled $339,260,000 for 2002 compared to $353,610,000 in 2001. Manufactured housing unit sales decreased to 9,849 from 10,664.

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Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

			Recreational vehicle sales increased from $110,214,000 in 2001 to $111,462,000 in 2002. Recreational vehicle unit sales also dropped from 8,156 in 2001 to 8,028 in 2002. The decrease in manufactured housing sales reflects difficult market conditions that persisted throughout the year. Difficult market conditions also existed for recreational vehicle sales for most of the year. Demand, however, did increase for products in this business segment in the fourth fiscal quarter.
			Cost of sales in 2002 was 85.9% compared to 87.0% in 2001. Manufactured housing cost of sales in 2002 decreased to 84.9% from 86.5% in 2001. The decrease is primarily attributable to the Corporation’s effort to control manufacturing costs. Recreational vehicle cost of sales increased to 89.0% of sales from 88.7% in 2001.
			Selling and administrative expenses as a percentage of sales decreased slightly to 10.5% in 2002 from 10.8% in 2001.
			Manufactured housing operating earnings as a percentage of sales were 5.6% in 2002 and 3.8% in 2001. The increase is due to improved gross margins and cost control. Recreational vehicle operating earnings as a percentage of sales increased to 0.8% of sales in 2002 from 0.7% of sales in 2001. Earnings of the recreational vehicle segment were impacted by the startup of a new manufacturing process at one recreational vehicle facility.
			Interest income amounted to $4,102,000 in 2002 compared to $7,717,000 in 2001. Interest income is directly related to the amount available for investment and the prevailing yields of U.S. Government securities.
			Liquidity and Capital Resources
			At May 31, 2003, cash and short-term investments in U.S. Treasury Bills totaled $154,457,000, an increase of $7,431,000 from $147,026,000 at May 31, 2002. Current assets exclusive of cash and investments in U.S. Treasury Bills totaled $40,514,000 at the end of 2003, a decrease of $5,283,000 from 2002’s total of $45,797,000. The decrease was primarily due to a decline in accounts receivable ($5,736,000) which is attributable to decreased fourth quarter sales. Current liabilities decreased $287,000 from $36,463,000 at May 31, 2002 to $36,176,000 at May 31, 2003.
			Capital expenditures totaled $1,523,000 in 2003 compared to $3,330,000 in the prior year. Capital expenditures during 2002 included $820,000 to implement a new manufacturing process at one recreational vehicle facility. Other capital expenditures in both years were made primarily to replace or refurbish machinery and equipment and improve manufacturing efficiencies.

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Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations, continued

			Liquidity and Capital Resources
			The cash provided by operating activities in fiscal 2004, along with current cash and short-term investments, is expected to be adequate to fund any capital expenditures, working capital requirements and treasury stock purchases during the year. Historically, the Corporation’s financing needs have been met through funds generated internally.
			Other Matters
			The provisions for federal income taxes in each year approximates the statutory rate and for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities.
			The consolidated financial statements included in this report reflect transactions in the dollar values in which they were incurred and, therefore, do not attempt to measure the impact of inflation. However, the Corporation believes that inflation has not had a material effect on its operations during the past three years. On a long-term basis the Corporation has demonstrated an ability to adjust the selling prices of its products in reaction to changing costs due to inflation.
			Forward Looking Information
			Certain statements in this report are considered forward looking as indicated by the Private Securities Litigation Reform Act of 1995. These statements involve uncertainties that may cause actual results to materially differ from expectations as of the report date. These uncertainties include but are not limited to:

	•		Cyclical nature of the manufactured housing and recreational vehicle industries
	•		General or seasonal weather conditions affecting sales
	•		Potential periodic inventory adjustments by independent retailers
	•		Availability of wholesale and retail financing
	•		Interest rate levels
	•		Impact of inflation
	•		Cost of labor and raw materials
	•		Competitive pressures on pricing and promotional costs
	•		Catastrophic events impacting insurance costs
	•		Consumer confidence and economic uncertainty
	•		Market demographics
	•		Management’s ability to attract and retain executive officers and key personnel
	•		Increased global tensions, market disruption resulting from a terrorist attack and any armed conflict involving the United States.

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Item 8.     Financial Statements and Supplementary Data

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REPORT OF INDEPENDENT AUDITORS

			To the Shareholders and Board of Directors of Skyline Corporation
			In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings and retained earnings, and of cash flows present fairly, in all material respects, the financial position of Skyline Corporation and its subsidiaries at May 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Skyline Corporation’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
			PRICEWATERHOUSECOOPERS LLP
			Chicago, Illinois June 17, 2003

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			Skyline Corporation and Subsidiary Companies
			Consolidated Balance Sheets May 31, 2003 and 2002 Dollars in thousands
			ASSETS

			The accompanying notes are a part of the consolidated financial statements.

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			Skyline Corporation and Subsidiary Companies
			Consolidated Balance Sheets May 31, 2003 and 2002 Dollars in thousands except per share data
			LIABILITIES AND SHAREHOLDERS’ EQUITY

The accompanying notes are a part of the consolidated financial statements.

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The accompanying notes are a part of the consolidated financial statements.

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Skyline Corporation and Subsidiary Companies

Consolidated Statements of Cash Flows
For the Years Ended May 31, 2003, 2002 and 2001
Increase (Decrease) in Cash
Dollars in thousands

The accompanying notes are a part of the consolidated financial statements.

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Skyline Corporation and Subsidiary Companies

Consolidated Statements of Cash Flows, continued
For the Years Ended May 31, 2003, 2002 and 2001
Increase (Decrease) in Cash
Dollars in thousands

The accompanying notes are a part of the consolidated financial statements.

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Skyline Corporation and Subsidiary Companies

Notes to Consolidated Financial Statements

NOTE 1 Nature of Operations and Accounting Policies

Nature of operations--Skyline Corporation designs, manufactures and sells at wholesale both a broad line of single and multi-section manufactured homes and a large selection of non-motorized recreational vehicle models. Both product lines are sold through numerous independent dealers throughout the United States who often utilize floor plan financing arrangements with lending institutions.

The following is a summary of the accounting policies that have a significant effect on the consolidated financial statements.

Basis of presentation--The consolidated financial statements include the accounts of Skyline Corporation and all of its subsidiaries (Corporation), each of which is wholly-owned. All intercompany transactions have been eliminated. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenue recognition--Substantially all of the Corporation’s products are made to order. Revenue is recognized upon shipment.

Freight billed to customers is considered sales revenue, and the related freight costs are cost of sales. Volume based rebates paid to dealers are classified as a reduction in sales revenue.

Consolidated statements of cash flows--For purposes of the statements of cash flows, investments in treasury bills are included as investing activities. The Corporation’s cash flows from operating activities were reduced by income taxes paid of $4,079,000, $8,870,000 and $6,943,000 in 2003, 2002 and 2001, respectively.

Inventory--Inventories are stated at cost, determined under the first-in, first-out method, which is not in excess of market. Physical inventory counts are taken at the end of each reporting quarter.

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Skyline Corporation and Subsidiary Companies

Notes to Consolidated Financial Statements

NOTE 1 Nature of Operations and Accounting Policies, continued

Total inventories for the periods presented consisted of (dollars in thousands):