NEWS RELEASE

Skyline Corporation
2520 By-Pass Road
P.O. Box 743
Elkhart, Indiana 46515-0743
(574) 294-6521

Subject: FIRST QUARTER REPORT Approved by: JAMES R. WEIGAND

ELKHART, INDIANA -— OCTOBER 6, 2006

SKYLINE REPORTS FISCAL 2007 FIRST QUARTER RESULTS

     Net earnings for the first quarter of Skyline Corporation’s 2007 fiscal year were $1,896,000 compared to $2,344,000 of the first quarter of fiscal 2006. On a per share basis, net earnings for the first quarter of fiscal 2007 were $0.23 versus $0.28 for the first quarter a year ago. Net earnings for the first quarter of fiscal 2006 included a gain on sale of vacant land of $0.03 per share.

     Sales for the quarter which ended August 31, 2006 were $115,806,000 compared to $118,346,000 for the first quarter of fiscal 2006.

     For Skyline’s manufactured housing group, sales for the first quarter of fiscal 2007 were $84,483,000 compared to $92,436,000 for the first quarter a year ago.

     Skyline’s RV group recorded sales of $31,323,000 for the first three months of fiscal 2007 compared to $25,910,000 recorded for the first quarter of fiscal 2006.

     Skyline continues to maintain its traditionally strong balance sheet with no long-term debt and a healthy position in cash and temporary cash investments.

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Bringing America Home. Bringing America Fun.

SKYLINE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands except per share)
	Three Months Ended
	August 31, (Unaudited)
	2006			2005
Sales	$	115,806		$	118,346
Earnings before income taxes		3,046			3,721
Provision for income taxes		1,150			1,377
Net earnings	$	1,896		$	2,344
Basic earnings per share	$	.23		$	.28	(A)
Number of weighted average common shares outstanding		8,391,244			8,391,244
(A) Includes an after-tax gain on sale of vacant land of $.03 per share.
SKYLINE CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
	August 31, (Unaudited)
	2006			2005
ASSETS
Cash and temporary cash investments	$	131,587		$	143,163
Accounts receivable		26,252			27,903
Inventories		12,723			10,839
Other current assets		10,410			9,609
Total Current Assets		180,972			191,514
Property, Plant and Equipment, net		34,974			34,744
Other Assets		10,013			9,610
	$	225,959		$	235,868
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable, trade	$	6,016		$	7,630
Accrued liabilities		26,622			25,869
Income taxes payable		1,484			1,363
Total Current Liabilities		34,122			34,862
Other Deferred Liabilities		10,481			10,669
Common stock		312			312
Additional paid-in capital		4,928			4,928
Retained earnings		241,860			250,841
Treasury stock, at cost, 2,825,900 shares in 2006 and 2005		(65,744	)		(65,744	)
Total Shareholders’ Equity		181,356			190,337
	$	225,959		$	235,868