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 o

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

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

Yes x   No o

SKYLINE CORPORATION

Form 10-Q Quarterly Report

INDEX

1

Part I.

Item 1. Financial Statements

Skyline Corporation and Subsidiary Companies

Consolidated Balance Sheets
Dollars in thousands

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

2

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Earnings and Retained Earnings
For the three-month and nine-month periods ended February 29, 2004 and February 28, 2003
(Unaudited)
Dollars in thousands except per share data

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

4

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Cash Flows
For the nine-month periods ended February 29, 2004 and February 28, 2003
Increase (Decrease) in Cash
(Unaudited)
Dollars in thousands

     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.

6

Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (continued)
For the nine-month period ended February 29, 2004
(Unaudited)

NOTE 1 Nature of Operations and Accounting Policies (continued)

The warranties are backed by a corporate service department and an extensive field service system. Estimated warranty costs are accrued at the time of sale based upon current sales, historical experience and 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 (dollars in thousands):

The Corporation was contingently liable at February 29, 2004 under repurchase agreements with certain financial institutions providing inventory financing for retailers of its products. Under these arrangements, which are customary in the manufactured housing and recreational vehicle industries, the Corporation agrees to repurchase homes and recreational vehicles in the event of default by the retailer at declining prices over the term of the agreement, generally 12 months. The maximum repurchase liability is the total amount that would be paid upon the default of all the Corporation’s independent dealers. The maximum potential repurchase liability, without reduction for the resale value of the repurchased units, was approximately $103 million at February 29, 2004 and $100 million at May 31, 2003. The risk of loss under these agreements is spread over many retailers and financial institutions. The loss, if any, under these agreements is the difference between the repurchase cost and the resale value of the units. The amounts of obligations from repurchased units and incurred net losses for the periods presented are as follows (dollars in thousands):

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Skyline Corporation and Subsidiary Companies

Notes to the Consolidated Financial Statements (continued)
For the nine-month period ended February 29, 2004
(Unaudited)

NOTE 1 Nature of Operations and Accounting Policies (continued)

The Corporation is a party to various pending legal proceedings in the normal course of business. Management believes that any losses resulting from such proceedings would not have a material adverse effect on the Corporation’s results of operations, financial position or cash flows.

NOTE 2 Industry Segment Information
Dollars in thousands

Operating (loss) earnings represent (loss) earnings before interest income and provision for income taxes with non-traceable operating expenses being allocated to industry segments based on percentages of sales.

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Report of Independent Accountants

To The Board of Directors and Shareholders of Skyline Corporation:

We have reviewed the accompanying consolidated balance sheet of Skyline Corporation and its subsidiaries as of February 29, 2004 and the related consolidated statements of earnings and retained earnings for each of the three-month and nine-month periods ended February 29, 2004 and February 28, 2003 and the consolidated statements of cash flows for the nine-month periods ended February 29, 2004 and February 28, 2003. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of May 31, 2003, and the related consolidated statements of earnings and retained earnings, and of cash flows for the year then ended (not presented herein), and in our report dated June 17, 2003 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet information as of May 31, 2003, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

PricewaterhouseCoopers LLP
Chicago, Illinois
March 19, 2004

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

Skyline Corporation and Subsidiary Companies
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the Current Quarter Compared to the Same Quarter Last Year and Fiscal Year-to-Date Compared to Last Year

Sales in the quarter ended February 29, 2004 were $90,995,000, an increase of $3,286,000 from $87,709,000 in the comparable quarter of the prior year. Fiscal 2004 sales through February 29, 2004 were $315,257,000, a decrease of $1,411,000 from prior year’s sales through February 28, 2003 of $316,668,000.

Manufactured housing sales for the third quarter totaled $64,895,000 compared to $62,355,000 at February 28, 2003. Quarterly unit sales decreased from 1,684 to 1,583. Fiscal year to date sales were $228,362,000 versus $222,061,000, while unit sales decreased from 6,078 to 5,784. Manufactured housing sales continue to be affected by difficult market conditions, restrictive retail financing, economic uncertainty and increased global tensions. During the third quarter sales were also negatively impacted by harsh winter weather conditions in certain regions of the United States.

Third quarter recreational vehicle sales increased to $26,100,000 in fiscal 2004 from $25,354,000 in fiscal 2003. Quarterly unit sales also increased from 1,730 to 1,811. Fiscal year to date sales were $86,895,000 versus $94,607,000 last year, while unit sales decreased from 6,579 to 5,977. There are primarily two reasons for the decreases. During the last twelve months consumer demand for towable metal sided recreational vehicles shifted toward product with price points lower than those historically offered by the Corporation. Recreational vehicle sales were affected by a timing issue in introducing the new 2004 product line which addressed this shift in demand. In addition, the market is dictating a higher priced bonded fiberglass exterior. The Corporation currently offers a limited number of models with similar exteriors. The following table shows the Corporation’s competitive position in the recreational vehicle product lines it sells.

Cost of sales in the third quarter of fiscal 2004 was 89.7 percent of sales compared to 89.9 percent in fiscal 2003. Cost of sales for the first nine months of fiscal 2004 was 87.4 percent versus 87.8 percent in the prior year. The decrease is due to a product mix shift toward multi-section homes, representing 39.4 percent of total unit sales and 80.2 percent of manufactured housing unit sales in fiscal 2004, which was partially offset by an excessive increase in the cost of steel and lumber. In fiscal 2003, this product line amounted to 36.2 percent of total unit sales and 75.4 percent of manufactured housing unit sales. Gross margins for multi-section homes exceed those for single section homes and recreational vehicles.

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Skyline Corporation and Subsidiary Companies
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the Current Quarter Compared to the Same Quarter Last Year and Fiscal Year-to-Date Compared to Last Year (continued)

Quarterly selling and administrative expenses as a percentage of sales decreased from 12.2 percent in fiscal 2003 to 11.9 percent in 2004. Selling and administrative expenses as a percentage of sales for fiscal 2004 totaled 11.1 percent versus 11.2 percent for fiscal 2003.

As a percentage of sales, third quarter operating earnings for manufactured housing were 0.2 percent in fiscal 2004 versus a loss of 0.2 percent in the prior year. Year to date operating earnings as a percentage of sales increased from 3.1 percent to 3.5 percent. The increase is due to a product mix shift towards multi-section homes noted above. Quarterly operating loss for recreational vehicles was 3.7 percent for fiscal 2004 versus 5.0 percent in fiscal 2003. The reduction in the loss is due to increased sales as noted above. Year to date recreational vehicle operating loss decreased slightly from 1.1 percent to 0.8 percent.

Interest income amounted to $314,000 for the third quarter compared to prior year’s $465,000. 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 February 29, 2004, cash and short-term investments in U. S. Treasury Bills totaled $155,057,000, an increase of $600,000 from $154,457,000 at May 31, 2003. Current assets exclusive of cash and investments in U.S. Treasury Bills totaled $42,900,000 at February 29, 2004, an increase of $2,386,000 from the May 31, 2003 balance of $40,514,000. The increase is due in part to a rise in accounts receivable of $930,000 caused by the timing of cash receipts. In addition, other assets increased $1,104,000 primarily from payments for state and federal income taxes exceeding the Corporation’s income tax liability at February 29, 2004.

Current liabilities increased $2,406,000 from $36,176,000 at May 31, 2003 to $38,582,000 at February 29, 2004. Various factors contributed to the increase. Accrued marketing programs increased $4,573,000 due to the timing of payments for an ongoing marketing program. Income taxes payable decreased $1,786,000 due to the timing of tax payments at February 29 versus May 31. Accrued salaries and wages declined $1,148,000 due to the timing of payments to employees at February 29 versus May 31.

Working capital at February 29, 2004 amounted to $159,375,000 compared to $158,795,000 at May 31, 2003. Capital expenditures totaled $1,468,000 during the first nine months of fiscal 2004 compared to $1,293,000 in the previous year. Capital expenditures during this period were made primarily to replace or refurbish machinery, equipment and facilities in addition to improving manufacturing efficiencies.

The cash provided by operating activities, along with current cash and other short-term investments, is expected to be adequate to fund any capital expenditures and treasury stock purchases during the year. Historically, the Corporation’s financing needs have been met through funds generated internally.

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Skyline Corporation and Subsidiary Companies
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Other Matters

The provision for federal income taxes in each year approximates the statutory rate and for state income taxes reflects current state rates effective for the period based upon activities within the taxable entities.

The consolidated financial statements included in this report reflect transactions in the dollar values in which they were incurred and, therefore, do not attempt to measure the impact of inflation. However, the Corporation believes that inflation has not had a material effect on its operations during the past three years. On a long-term basis, the Corporation has demonstrated an ability to adjust the selling prices of its products in reaction to changing costs due to inflation.

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 4. Controls and Procedures

	(a)		Evaluation of disclosure controls and procedures: The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c)) as of a date within 90 days of filing date of the quarterly report (the “Evaluation Date”), have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this quarterly report was being prepared.
	(b)		Changes in internal controls: There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such internal controls and procedures requiring corrective actions.

PART II

Item 1. Legal Proceedings

Information with respect to this Item for the period covered by this Form 10-Q has been previously reported in Item 3, entitled “Legal Proceedings” of the Form 10-K for the fiscal year ended May 31, 2003 heretofore filed by the registrant with the Commission.

Item 6. Exhibits and Reports on Form 8-K

A report on Form 8-K was filed on December 17, 2003. The purpose of the filing was to publicize the Corporation’s earnings for both the quarter and six months ending November 30, 2003.

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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 14, 2004			/s/ James R. Weigand
				James R. Weigand  V. P. Finance & Treasurer, Chief Financial Officer
DATE:	April 14, 2004			/s/ Jon S. Pilarski
				Jon S. Pilarski Corporate Controller

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