UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark One)

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

For the fiscal year ended		May 31, 2005

or

[  ] 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						(I.R.S. Employer
incorporation or organization)						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

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

Title of each class		Name or each exchange on which registered

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

(Title of Class)

(Title of Class)

     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.                    [X] Yes [  ] No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§ 229.405 of this chapter) 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 the Form 10-K or an amendment to this Form 10-K.                    [  ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).                    [X] Yes [  ] No

     The aggregate market value of the voting stock held by non-affiliates of registrant (6,818,980 shares) based on the closing price on the New York Stock Exchange on November 30, 2004 was $281,964,823.

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

Title of Class				Shares Outstanding July 25, 2005
Common Stock				8,391,244

DOCUMENTS INCORPORATED BY REFERENCE:

Title		Form 10-K
Proxy Statement dated August 15, 2005 for Annual Meeting of Shareholders to be held September 26, 2005		Part III, Items 10 – 14

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 2005 Annual Meeting of Shareholders to be held on September 26, 2005 (“2005 Proxy Statement”). The following cross-reference index shows the page locations in the 2005 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 2005 Proxy Statement are not required to be included in this Form 10-K and should not be considered a part hereof.

2005

Form

Proxy

10-K

Statement

PART I

Item 1.

Business

3

Item 2.

Properties

9

Item 3.

Legal Proceedings

10

Item 4.

Submission of Matters to a Vote of Security Holders.

10

PART II

Item 5.

Market for the Registrant’s Common Stock and Related Stockholder Matters.

10

Item 6.

Selected Financial Data

11

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation.

12

Item 7A.

Quantitative and Qualitative Disclosures and Market Risk

21

Item 8.

Financial Statements and Supplementary Data

Index to Consolidated Financial Statements.

22

Report of Independent Registered Public Accounting Firm.

23

Consolidated Balance Sheets

25

Consolidated Statements of Earnings and Retained Earnings

27

Consolidated Statements of Cash Flows

28

Notes to Consolidated Financial Statements

30

Articles of Incorporation

By-Laws

Code of Ethics

Subsidiaries of the Registrant

302 Certification of Chief Executive Officer

302 Certification of Chief Financial Officer

Section 906 Certification

Section 906 Certification

FORM 10-K
CROSS-REFERENCE INDEX
(Continued)

2005

Form

Proxy

10-K

Statement

PART II

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

40

Item 9A.

Controls and Procedures

40

Item 9B.

Other Information

41

PART III

Item 10.

Directors and Executive Officers of the Registrant

42

3-4

Item 11.

Executive Compensation

9-10

Item 12.

Security Ownership of Certain Beneficial Owners and Management.

3-4 8-9

Item 13.

Certain Relationships and Related Transactions

10-11

Item 14.

Principal Accounting Fees and Services

7-8

PART IV

Item 15.

Exhibits, Financial Statement Schedules

(a)

1. Financial Statements

43

2. Financial Statement Schedules

43

3. Index to Exhibits.

43

SIGNATURES AND CERTIFICATIONS

44

PART I

PART II

Overview

The Corporation sells manufactured housing and towable recreational vehicle products to independent dealers and manufactured housing communities located throughout the United States. To better serve the needs of its dealers, the Corporation has twenty-two manufacturing facilities in eleven states. Manufactured housing and recreational vehicles are sold to dealers either through floor plan financing with various financial institutions or on a cash basis. 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.

Sales in both business segments are affected by the strength of the U.S. economy, interest rate levels, consumer confidence and the availability of wholesale and retail financing. The manufactured housing segment is currently affected by an industry recession. This recession, caused primarily by restrictive retail financing and economic uncertainty has resulted in industry sales to be the lowest in decades. In the recreational vehicle segment, the Corporation sells travel trailers, fifth wheels and park models. Industry sales of travel trailers and fifth wheels have seen steady growth in recent years.

Despite the recession in the manufactured housing industry, demand for multi-section homes is increasing. This product is often sold as part of a land-home package and is financed with a conventional mortgage. Multi-section homes have an appearance similar to site-built homes and are notably less expensive. The Corporation is capitalizing on this increased demand by expanding manufacturing capabilities. Eight manufactured housing facilities have obtained approval from applicable state and local governmental entities to produce modular homes, which will extend existing product offerings.

The recreational vehicle segment in which the Corporation operates is a very competitive ever-changing market. This segment is witnessing an ongoing shift in consumer demand for both metal-sided products and products with bonded wall construction. The Corporation is positioning itself to take advantage of the available opportunities in the towable recreational vehicle segment in which it competes.

Results of Operations — Fiscal 2005 Compared to Fiscal 2004

Sales and Unit Shipments (Dollars in thousands)

																		Change
																		Increase
		2005				Percent				2004				Percent				(Decrease)
Sales
Manufactured Housing		$	335,394				73.8			$	311,354				71.8			$	24,040
Recreational Vehicles			118,930				26.2				122,546				28.2				(3,616	)
Total Sales		$	454,324				100.0			$	433,900				100.0			$	20,424
Unit Shipments
Manufactured Housing			7,685				49.4				7,723				48.0				(38	)
Recreational Vehicles			7,865				50.6				8,375				52.0				(510	)
Total Unit Shipments			15,550				100.0				16,098				100.0				(548	)

Manufactured housing unit sales continue to be affected by difficult market conditions, restrictive retail financing and economic uncertainty. Average sales per unit rose due to increased selling prices and a product mix shift toward multi-section homes. Selling prices increased as a result of unprecedented increases in the cost of lumber, lumber-related materials and steel. Multi-section homes represent 81.6 percent of total unit sales for fiscal 2005 versus 80.2 percent for fiscal 2004.

Recreational vehicle sales decreased as a result of a continued shift in consumer demand toward products with bonded wall construction. The Corporation currently offers a limited number of models with fiberglass exteriors. The following table shows the Corporation’s competitive position in the recreational vehicle product lines it sells relative to the recreational vehicle industry.

		Units Shipped												Units Shipped
		Calendar Year 2004												Calendar Year 2003
										Market												Market
		Industry				Skyline				Share				Industry				Skyline				Share
Travel Trailers			150,800				6,787				4.5	%			137,000				5,943				4.3	%
Fifth Wheels			91,000				1,153				1.3	%			67,400				1,609				2.4	%
Park Models			9,100				402				4.4	%			7,100				471				6.6	%

Results of Operations — Fiscal 2005 Compared to Fiscal 2004, continued

Cost of Sales
(Dollars in thousands)

																		Change
						Percent of								Percent of				Increase
		2005				Segment Sales				2004				Segment Sales				(Decrease)
Manufactured Housing		$	294,613				87.8			$	272,768				87.6			$	21,845
Recreational Vehicles			110,115				92.6				110,750				90.4				(635	)
						Percent of								Percent of
						Total Sales								Total Sales
Consolidated		$	404,728				89.1			$	383,518				88.4			$	21,210

Manufactured housing cost of sales primarily increased due to increases in the costs of lumber, lumber-related materials and steel. In addition, this segment experienced rising costs associated with workers’ compensation and warranty.

Recreational vehicle cost of sales decreased as a result of fewer units sold in fiscal 2005 versus 2004. As a percentage of sales, however, cost of sales increased resulting from higher material, warranty and workers’ compensation costs. This segment was further impacted by costs associated with an idled recreational vehicle facility.

Selling and Administrative Expenses
(Dollars in thousands)

																		Change
						Percent of								Percent of				Increase
		2005				Sales				2004				Sales				(Decrease)
Selling and Administrative Expenses		$	43,408				9.6			$	41,523				9.6			$	1,885

Expenses rose primarily due to increases in employee compensation and benefits. In addition, the Corporation incurred significant expenses related to compliance with the Sarbanes-Oxley Act of 2002.

Results of Operations — Fiscal 2005 Compared to Fiscal 2004, continued

Operating Earnings
(Dollars in thousands)

																		Change in
																		Operating
																		Earnings
						Percent of								Percent of				Increase
		2005				Segment Sales				2004				Segment Sales				(Decrease)
Manufactured Housing		$	12,296				3.7			$	13,035				4.2			$	(739	)
Recreational Vehicles		$	(2,547	)			(2.1	)		$	150				0.1			$	(2,697	)
						Percent of								Percent of
						Total Sales								Total Sales
General Corporate Expenses		$	(3,561	)			0.8			$	(4,326	)			1.0			$	765
Total Operating Earnings		$	6,188				1.4			$	8,859				2.0			$	(2,671	)

As noted above, increased costs of material, workers’ compensation and warranty negatively affected operating earnings for both segments. The recreational vehicle segment was further impacted by $816,000 in costs for a facility that was idled in the Corporation’s third quarter of fiscal 2005. General corporate expenses decreased primarily due to a one-time charge that occurred in fiscal 2004 which was related to a change in valuation of the Corporation’s liability for post-retirement benefits offered to certain employees.

Interest Income
(Dollars in thousands)

														Change
														Increase
						2005				2004				(Decrease)
Interest Income						$	2,474			$	1,247			$	1,227

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

Results of Operations — Fiscal 2004 Compared to Fiscal 2003

Sales and Unit Shipments
(Dollars in thousands)

																		Change
																		Increase
		2004				Percent				2003				Percent				(Decrease)
Sales
Manufactured Housing		$	311,354				71.8			$	294,349				69.9			$	17,005
Recreational Vehicles			122,546				28.2				126,966				30.1				(4,420	)
Total Sales		$	433,900				100.0			$	421,315				100.0			$	12,585
Unit Shipments
Manufactured Housing			7,723				48.0				7,922				47.6				(199	)
Recreational Vehicles			8,375				52.0				8,720				52.4				(345	)
Total Unit Shipments			16,098				100.0				16,642				100.0				(544	)

Manufactured housing unit sales continue to be affected by difficult market conditions, restrictive retail financing and economic uncertainty. Average sales per unit increased due to a product mix shift toward multi-section homes, representing 80.2 percent of total unit sales in fiscal 2004 versus 76.6 percent in fiscal 2003.

Two factors caused the decline in recreational vehicle sales. Demand for towable metal-sided recreational vehicles shifted toward product with price points lower than those historically offered by the Corporation. This shift in demand began in the third quarter of fiscal year 2003. Sales were also affected by a timing issue in introducing the new 2004 product line. The following table shows the Corporation’s competitive position in the recreational vehicle product lines it sells relative to the recreational vehicle industry.

		Units Shipped												Units Shipped
		Calendar Year 2003												Calendar Year 2002
										Market												Market
		Industry				Skyline				Share				Industry				Skyline				Share
Travel Trailers			137,000				5,943				4.3	%			119,700				6,886				5.8	%
Fifth Wheels			67,400				1,609				2.4	%			66,100				1,884				2.9	%
Park Models			7,100				471				6.6	%			7,700				391				5.1	%

Results of Operations — Fiscal 2004 Compared to Fiscal 2003, continued

Cost of Sales
(Dollars in thousands)

																		Change
						Percent of								Percent of				Increase
		2004				Segment Sales				2003				Segment Sales				(Decrease)
Manufactured Housing		$	272,768				87.6			$	258,045				87.7			$	14,723
Recreational Vehicles			110,750				90.4				113,991				89.8				(3,241	)

						Percent of								Percent of
						Total Sales								Total Sales
Consolidated		$	383,518				88.4			$	372,036				88.3			$	11,482
The percentage increase in cost of sales for recreational vehicles is the result of a product mix shift toward lower margin models. Cost of sales for both segments was negatively affected in the fourth quarter of fiscal 2004 by an unprecedented increase in the cost of lumber, lumber-related materials and steel.
Selling and Administrative Expenses (Dollars in thousands)
																		Change
						Percent of								Percent of				Increase
		2004				Sales				2003				Sales				(Decrease)
Selling and Administrative Expenses		$	41,523				9.6			$	40,938				9.7			$	585
Operating Earnings (Dollars in thousands)
																		Change in
																		Operating
																		Earnings
						Percent of								Percent of				Increase
		2004				Segment Sales				2003				Segment Sales				(Decrease)
Manufactured Housing		$	13,035				4.2			$	11,116				3.8			$	1,919
Recreational Vehicles		$	150				0.1			$	439				0.3			$	(289	)
						Percent of								Percent of
						Total Sales								Total Sales
General Corporate Expenses		$	(4,326	)			1.0			$	(3,214	)			0.8			$	(1,112	)
Total Operating Earnings		$	8,859				2.0			$	8,341				2.0			$	518

Results of Operations — Fiscal 2004 Compared to Fiscal 2003, continued

Operating Earnings, continued

Operating earnings for manufactured housing increased due to increased sales of higher margin multi-section homes. Operating earnings for recreational vehicles declined primarily due to an overall decrease in sales, and sales of lower margin products. General corporate expenses increased primarily due to a change in valuation of the Corporation’s liability for post-retirement benefits offered to certain employees.

Interest Income
(Dollars in thousands)

										Change
										Increase
		2004				2003				(Decrease)
Interest Income		$	1,247			$	1,995			$	(748	)

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

Liquidity and Capital Resources (Dollars in thousands)

										Change
		May 31,								Increase
		2005				2004				(Decrease)
Cash and U.S. Treasury Bills and Notes		$	149,525			$	150,449			$	(924	)
Current Assets Exclusive of Cash and U.S. Treasury Bills and Notes			42,537				45,031				(2,494	)
Current Liabilities			37,399				32,042				5,357
Working Capital		$	154,663			$	163,438			$	(8,775	)

The Corporation’s policy is to invest in U.S. Government Securities when cash exceeds immediate operating requirements. Current assets exclusive of cash and U.S. Treasury Bills declined as a result of a $2,813,000 decrease in other current assets. This category decreased primarily due to an amortization of a prepayment for the Corporation’s future estimated cost of workers’ compensation benefits which was paid at the end of fiscal 2004.

Various factors contributed to the increase in current liabilities. Accounts payable increased $1,745,000 due to a greater amount of sales and related raw materials purchases for May 2005 versus May 2004. Income taxes payable increased $563,000 due to the timing of tax payments at May 31, 2005 versus May 31, 2004.

Liquidity and Capital Resources, continued

Accrued marketing programs increased $1,009,000 as a result of a recreational vehicle marketing program introduced in fiscal 2005. In addition, higher sales impacted an ongoing marketing program for the manufactured housing segment. Other accrued liabilities increased $1,494,000 primarily due to the timing of payments to a workers’ compensation insurance carrier, and an increase in the reserve for health insurance.

A special dividend of $8,391,000 ($1.00 per share) was paid on November 1, 2004 to shareholders of the Corporation’s common stock at the close of business October 14, 2004.

Capital expenditures totaled $2,356,000 for fiscal 2005 compared to $1,928,000 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.

Contractual Obligations and Commitments
The following table summarizes the Corporation’s contractual obligation for operating lease agreements as of May 31, 2005 (dollars in thousands):

						Payments Due by Period
						Less Than												After
		Total				1 Year				1-3 Years				3-5 Years				5 Years
Operating Leases		$	1,725			$	713			$	783			$	180			$	49

The following table summarizes the Corporation’s commitments for repurchase agreements as of May 31, 2005 (dollars in thousands):

						Payments Due by Period
						Less Than												After
		Total				1 Year				1-3 Years				3-5 Years				5 Years
Repurchase Agreements		$	106,000			$	106,000			$	—			$	—			$	—

Additional information regarding the nature of the repurchase agreements and the operating leases is in Note 2 to the Notes to the Consolidated Financial Statements. During fiscal years 2005 and 2004, the Corporation did not experience any losses on the sale of repurchased units, while incurring losses of $50,000 during fiscal year 2003.

Critical Accounting Policies
The preparation of financial statements in conformity with generally accepted accounting principles requires the Corporation to make certain estimates that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Estimates are periodically evaluated using historical experience and various other factors believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. The following accounting policies are considered to require significant estimates:

Product Warranties
As referenced in Note 1 of the Notes to Consolidated Financial Statements, manufactured homes are sold with a fifteen-month warranty and recreational vehicles are sold with a two-year or less warranty. Estimated warranty costs are accrued at the time of sale based upon sales, historical claims experience and management’s judgment regarding anticipated rates of warranty claims. Significant changes in these factors could have a material impact on future results of operations.

Workers’ Compensation Insurance
The Corporation is insured for expenses associated with workers’ compensation. Costs are accrued based on management’s estimates of future medical claims developed by consulting actuaries at the carrier that insures the Corporation. Accruals are made up to a specified limit per individual injured and for an aggregate limit determined by the carrier.

Health Insurance
As referenced in Note 4 of the Notes to Consolidated Financial Statements, the Corporation utilizes a combination of insurance companies in offering health insurance coverage to its employees. Costs of claims incurred but not paid are accrued based on past claims experience and relevant trend factors provided by the insurance companies.

Newly Issued Accounting Standards
The effect of newly issued accounting standards on the Corporation is addressed in Note 1 of the Notes to Consolidated Financial Statements.

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. The Corporation, however, experienced in fiscal 2005 significant increases in the cost of lumber, lumber-related materials and steel. Although the Corporation was unable to recover all of the increases in the first half of fiscal 2005, on a long-term basis it has demonstrated an ability to adjust selling prices in reaction to changing costs due to inflation. The Corporation believes that except as noted above, inflation has not had a material effect on its operations during the fiscal 2005.

Other Matters, continued

The Sarbanes-Oxley Act of 2002 has introduced many new requirements applicable to the company regarding corporate governance and reporting. Section 404 of the Act requires management to report on the Corporation’s internal controls over financial reporting. The Corporation has devoted substantial time and cost during fiscal year 2005 to ensure compliance.

As addressed in Items 1 and 3, the Corporation has not had nor anticipates to have material expenditures related to environmental quality or product liability.

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
	•		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.

The Corporation invests in United States Government Securities. These securities are typically 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.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Skyline Corporation:

We have completed an integrated audit of Skyline Corporation’s 2005 consolidated financial statements and of its internal control over financial reporting as of May 31, 2005 and audits of its 2005 and 2004 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Skyline Corporation and its subsidiaries at May 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements 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.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of May 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances.

Report of Independent Registered Public Accounting Firm, continued

We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP
Chicago, Illinois
July 28, 2005

Skyline Corporation and Subsidiary Companies

Consolidated Balance Sheets
May 31, 2005 and 2004
(Dollars in thousands)

ASSETS

		2005				2004
Current Assets
Cash		$	12,406			$	8,838
U.S. Treasury Bills, at cost plus accrued interest			92,465				141,611
U.S. Treasury Notes, at cost plus accrued interest			44,654				—
Accounts receivable, trade, less allowance for doubtful accounts of $100 in 2005 and $150 in 2004			26,466				26,090
Inventories			9,838				9,895
Other current assets			6,233				9,046
Total Current Assets			192,062				195,480
Property, Plant and Equipment, at Cost
Land			6,572				6,572
Buildings and improvements			64,036				63,241
Machinery and equipment			27,619				27,206
			98,227				97,019
Less accumulated depreciation			62,389				60,089
Net Property, Plant and Equipment			35,838				36,930
Other Assets			9,537				8,758
		$	237,437			$	241,168

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

Skyline Corporation and Subsidiary Companies

Consolidated Balance Sheets, continued
May 31, 2005 and 2004
(Dollars in thousands)

LIABILITIES AND SHAREHOLDERS’ EQUITY

		2005				2004
Current Liabilities
Accounts payable, trade		$	9,521			$	7,776
Accrued salaries and wages			6,409				6,222
Accrued profit sharing			2,434				2,454
Accrued marketing programs			6,377				5,368
Accrued warranty and related expenses			7,700				7,321
Other accrued liabilities			4,229				2,735
Income taxes payable			729				166
Total Current Liabilities			37,399				32,042
Other Deferred Liabilities			10,535				10,642
Commitments and Contingencies — See Note 2
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			250,007				258,988
Treasury stock, at cost, 2,825,900 shares in 2005 and 2004			(65,744	)			(65,744	)
Total Shareholders’ Equity			189,503				198,484
		$	237,437			$	241,168

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

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Earnings and Retained Earnings
For the Years Ended May 31, 2005, 2004 and 2003
(Dollars in thousands, except per share data)

		2005				2004				2003
EARNINGS
Sales		$	454,324			$	433,900			$	421,315
Cost of sales			404,728				383,518				372,036
Gross profit			49,596				50,382				49,279
Selling and administrative expenses			43,408				41,523				40,938
Operating earnings			6,188				8,859				8,341
Interest income			2,474				1,247				1,995
Earnings before income taxes			8,662				10,106				10,336
Provision for income taxes
Federal			2,790				3,330				3,545
State			420				635				598
			3,210				3,965				4,143
Net earnings		$	5,452			$	6,141			$	6,193
Basic earnings per share		$	.65			$	.73			$	.74
Weighted average common shares outstanding			8,391,244				8,391,244				8,391,244
RETAINED EARNINGS
Balance at beginning of year		$	258,988			$	258,889			$	258,737
Add net earnings			5,452				6,141				6,193
Less cash dividends paid ($1.72 in 2005 and $.72 per share in 2004 and 2003)			14,433				6,042				6,041
Balance at end of year		$	250,007			$	258,988			$	258,889

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

Skyline Corporation and Subsidiary Companies

Consolidated Statements of Cash Flows
For the Years Ended May 31, 2005, 2004 and 2003
Increase (Decrease) in Cash
(Dollars in thousands)

		2005				2004				2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings		$	5,452			$	6,141			$	6,193
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation			3,389				3,450				3,785
Working capital items:
Accrued interest receivable			(517	)			159				(14	)
Accounts receivable			(376	)			(3,798	)			5,736
Inventories			57				(481	)			218
Other current assets			2,813				(2,983	)			(186	)
Accounts payable, trade			1,745				1,786				131
Accrued liabilities			3,049				400				(1,648	)
Income taxes payable			563				(1,620	)			630
Other deferred liabilities			(107	)			1,362				1,124
Other, net			(607	)			(831	)			(929	)
Total Adjustments			10,009				(2,556	)			8,847
Net cash provided by operating activities			15,461				3,585				15,040