FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarterly period ended August 5, 1995
Commission File number 0-6506
NOBILITY HOMES, INC.
(Name of small business issuer in its charter)
Florida 59-1166102
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
3741 S.W. 7th Street
Ocala, Florida 34474
(Address of principal executive offices) (Zip Code)
(904) 732-5157
(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 par value
(Title of Class)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 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 .
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's
classes of common equity, as September 18, 1995. 1,282,431
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
PART I. Financial Information Number
Item 1. Financial Statements
Consolidated Balance Sheets as of August 5, 1995
and October 29, 1994 . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income for the
three and nine months ended August 5, 1995 and
July 30, 1994 . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for the
nine months ended August 5, 1995 and July 30,
1994 . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Consolidated Financial Statements . . . . . . . 9
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Conditions . . . . . . . . . 10
PART II. Other Information and Signatures
Item 6. Exhibits and Reports of Form 8-K . . . . . . . . . . . . . 13
<PAGE>
PART I. FINANCIAL INFORMATION
NOBILITY HOMES, INC.
CONSOLIDATED BALANCE SHEETS
August 5, October 29,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,419,360 $ 1,743,102
Accounts receivable - trade, net of
allowance for doubtful accounts of
$48,000 425,354 378,883
Accounts receivable - trade, from
related parties 1,952,061 792,011
Inventories 7,138,638 4,604,299
Notes receivable 35,279 47,500
Note receivable from related parties
installment sale - 297,584
Income taxes receivable 225,269 225,269
Deferred income taxes 945,730 945,730
Other current assets 177,497 162,131
---------- ----------
Total current assets 12,319,188 9,196,509
Property, plant and equipment, net 1,010,360 929,773
Receivable from related party for life
insurance premiums 458,610 458,610
Other noncurrent assets - cash surrender
value 770,081 770,081
Goodwill 140,466 -
----------- -----------
Total assets $14,698,705 $11,354,973
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,077,491 $ 1,093,174
Accrued expenses 1,346,957 638,665
Floor plan financing 1,740,223 1,553,602
Note payable to stockholders 100,000 133,333
Income taxes payable 247,126 -
Customer deposits 450,804 217,375
Deferred gain on related party
installment sales - 348,884
Deferred gross profit on related 84,633 84,633
party sales
Other liabilities 26,218 40,685
---------- ---------
Total current liabilities 5,073,452 4,110,351
Notes payable - cash surrender value 620,965 620,965
Notes payable after one year 6,643 9,449
Notes payable to stockholders after
one year 66,667 133,333
--------- ----------
Total liabilities 5,767,727 4,874,098
--------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.10 par value,
500,000 shares authorized, none
issued
Common stock, $.10 par value, 4,000,000
shares authorized, 1,748,267 shares
issued in 1995 and 1,724,738 in 1994 174,826 172,473
Additional paid in capital 2,132,569 1,934,921
Retained earnings 8,303,650 5,894,361
Less treasury stock, at cost; 465,836
shares in 1995 and 446,236 in 1994 (1,680,067) (1,520,880)
---------- ----------
Total stockholders' equity 8,930,978 6,480,875
---------- -----------
Total liabilities and stockholders'
equity $14,698,705 $11,354,973
=========== ===========
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
August 5, July 30, August 5, July 30,
1995 1994 1995 1994
Net sales $7,446,728 $5,601,862 $20,020,735 $15,961,942
Net sales-related
parties 263,870 946,634 1,309,661 1,554,368
--------- ---------- ---------- ----------
Total sales 7,710,598 6,548,496 21,330,396 17,516,310
Cost of goods sold 5,656,118 5,287,416 15,929,075 13,632,446
--------- --------- ---------- ----------
Gross profit 2,054,480 1,261,080 5,401,321 3,883,864
Selling, general and ad-
ministrative expenses 1,291,107 792,159 3,377,486 2,283,003
Interest expense on
floor plan financing 36,371 56,656 114,312 143,104
---------- --------- ---------- ---------
Operating income 727,002 412,265 1,909,523 1,457,757
---------- ---------- ---------- ----------
Other income (expenses):
Life Insurance Proceeds 1,000,000 - 1,000,000 -
Gain on sale of fixed
assets - - - 231,327
Gain on sale of
limited partnerships - - 348,884 80,418
Interest income 5,876 28,264 17,671 60,086
Interest expense (16,343) (9,015) (28,992) (20,506)
Miscellaneous income (1,968) 5,878 2,203 11,763
--------- ---------- ---------- ----------
987,565 25,127 1,339,766 363,088
--------- ---------- ---------- ----------
Net income before pro-
vision for income taxes 1,714,567 437,392 3,249,289 1,820,845
Less provision for
income taxes (213,000) (164,000) (840,000) (680,000)
--------- ---------- ----------- ---------
Income before cumulative
effect 1,501,567 273,392 2,409,289 1,140,845
Cumulative effect of a
change to FAS 109 - - - 664,000
---------- -------- --------- ----------
Net income $ 1,501,567 $ 273,392 $2,409,289 $1,804,845
========== ========== ========== ==========
Weighted average shares
outstanding 1,273,554 1,290,306 1,276,264 1,290,502
========== ========= ========== ==========
Earnings per share
Income before cumula-
tive effect - - - .88
Cumulative effect - - - .52
-------- ------ -------- --------
Net income $ 1.18 $ .21 $ 1.89 $1.40
======== ====== ======== ========
<PAGE>
NOBILITY HOME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
August 5, July 30,
1995 1994
Cash flows from operating activities:
Net income $ 2,409,289 $ 1,804,845
Adjustments to reconcile net income to net
cash flows used in operating activities:
Depreciation and amortization 83,039 50,481
Gain on sale of idle facility - (231,327)
Deferred income taxes - noncurrent - (664,000)
(Increase) decrease in:
Accounts receivable-trade (46,471) 71,986
Accounts receivable-trade from
related parties (1,160,050) (958,690)
Inventories (2,505,455) 284,847
Other current assets (3,144) (28,645)
Increase (decrease) in:
Accounts payable (15,683) (13,626)
Accrued expenses 708,292 (12,609)
Customer deposits 233,429 21,289
Income taxes payable 247,126 (461,000)
Deferred gain on related party
sales (348,884) (80,418)
Other current liabilities (14,467) (46,227)
--------- ---------
Net cash flows used in
operating activities (412,979) (263,094)
---------- ---------
Cash flows from investing activities:
Purchase of equipment (132,976) (48,018)
Proceeds from sale of property and
equipment - 323,670
Collections of note receivable from related
party installment sale 297,584 80,418
--------- ---------
Net cash flows provided by
investing activities 164,608 356,070
--------- ---------
Cash flows from financing activities:
Increase (decrease) in floor plan financing 186,621 (400,077)
Principal payments on note payable to
stockholders (99,999) -
Principal payment on notes payable - other (2,806) (6,883)
Purchase of treasury stock (159,187) (57,000)
---------- ---------
Net cash flows used in
financing activities (75,371) (463,960)
---------- ---------
Decrease in cash and cash equivalents (323,742) (370,984)
Cash and cash equivalents at beginning
of year 1,743,102 2,917,670
---------- ----------
Cash and cash equivalents at end of quarter $ 1,419,360 $ 2,546,686
========== ==========
Supplemental disclosure of cash flow
information
Interest paid $ 28,992 $ 20,556
========== ==========
Income taxes paid $ 585,000 $ 1,225,000
========== ==========
Supplemental disclosure of non-cash
activities
Issuance of common stock for certain assets
and liabilities see note 3 "Notes to
consolidated financial statements" $ 200,000 _
========== ==========
<PAGE>
NOBILITY HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The unaudited financial information included in this report includes
all adjustments which are, in the opinion of management, necessary to
reflect a fair statement of the results for the interim periods. The
operations for the nine months ended August 5, 1995 are not necessarily
indicative of the results of the full fiscal year.
Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
Securities Exchange Commission rules and regulations governing form 10-
QSB. The condensed financial statements included in this report should be
read in conjunction with the financial statements and notes thereto
included in the Registrant's October 29, 1994 form 10-KSB annual report.
2. Inventories
Inventories are carried at the lower of cost or market. Cost of
finished home inventories is determined on the specific identification
method. Other inventory costs are determined on a first-in, first-out
basis. Cost components of inventories are material, labor and plant
overhead. The cost of goods sold for the nine months ended August 5, 1995
and July 30, 1994, reflects opening and closing inventories as follows:
August 5, October 29, July 30, October 30,
1995 1994 1994 1993
Raw materials $ 540,358 $ 534,292 $ 654,002 $ 473,074
Work-in-process 90,444 58,842 73,242 45,521
Finished homes 5,812,190 3,416,878 2,645,692 2,847,878
Pre-owned manufac-
tured homes 240,604 279,627 351,485 374,702
Model home furni-
ture and other 455,042 314,660 29,889 297,982
--------- ---------- ---------- ---------
$7,138,638 $4,604,299 $3,754,310 $4,039,157
========== ========== ========== ==========
3. Acquisition.
On May 8, 1995, the Company acquired two manufactured home retail
sales centers in Florida in an asset acquisition by issuing 23,529 shares
of common stock valued at $200,000 and assuming inventory floor plan
liabilities of $906,917. This transaction was accounted for using the
purchase method of accounting; accordingly, the purchased assets and
liabilities have been recorded at their estimated fair market value at the
date of acquisition. This treatment resulted in approximately $140,466 of
cost in excess of net assets acquired, which is being amortized on a
straight-line basis over 15 years. The results of operations of the
acquired businesses have been included in the consolidated financial
statements since the date of acquisition.
<PAGE>
NOBILITY HOMES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Because the Company's acquisition of Prestige Home Centers, Inc.
during the fourth quarter of fiscal 1994 has been accounted for in a
manner similar to the pooling-of-interest method, the Company's financial
statements for the periods in fiscal 1994 prior to the acquisition have
been restated on a consolidated basis to include the results of Prestige
Home Centers, Inc. as if it had been a wholly-owned subsidiary throughout
the fiscal year. The consolidated financial statements also include
Prestige Insurance Services, Inc., an independent insurance agency and
subsidiary of Prestige Home Centers, Inc.
Net sales in the third quarter of 1995 increased 18 percent to
$7,710,598 as compared to $6,548,496 for the third quarter of 1994. The
Company sold 248 homes in third quarter 1995 of which 34 homes, or
$776,514, were sold to independent dealers and 4 homes, or $105,705, were
sold to communities owned and/or operated by TLT, Inc. In third quarter
1994 the Company sold 222 homes, of which 84 homes, or $1,511,720, were
sold to independent dealers and 31 homes, or $652,677, were sold to TLT,
Inc. The balance of the Company's sales in the third quarter of 1995 and
1994 were made on a retail basis through Prestige Home Centers, Inc. For
the first nine months of fiscal 1995 net sales increased 22% to
$21,330,396 compared to net sales of $17,516,310 in the first nine months
of last fiscal year.
Gross profit in the third quarter of 1995 as a percentage of net
sales was 26.6 percent compared to 19.3 percent for the same period last
year. Gross profit for the first nine months of fiscal year 1995 as a
percentage of net sales was 25.3 percent compared to 22.2 percent for the
first nine months of 1994. This increase in gross profit is primarily due
to higher margins on sales at the retail sales centers and a decrease in
manufacturing expenses as a percentage of net sales due to the spreading
of fixed costs.
Selling, general and administrative expenses, as a percentage of net
sales, was 16.7 percent in the third quarter of 1995 compared to 12.1
percent in 1994. Selling, general and administrative expenses, as a
percentage of net sales for the first nine months of 1995 was 15.8 percent
compared to 13.0 percent for the same period last year. This increase was
primarily due to the increased advertising and other selling expenses
incurred at the retail sales centers and the acquisition of two existing
retail sales centers in the third quarter of 1995.
Other income and expense includes life insurance proceeds of
$1,000,000 from the key-man life insurance carried on the former president
of Prestige Home Centers, Bertus C. Parker, who died on May 31, 1995 after
a lengthy illness.
During the quarter the Company acquired two existing retail sales
center in Inverness and Brooksville, Florida. This ongoing expansion
brings our total retail sales centers to twelve. These two new locations
had sales of approximately $443,000 but incurred losses of approximately
$67,000 for the third quarter due to a lag in sales immediately following
the acquisition. While absorbing this external growth, the Company
continued to reflect strong earnings.
As a result of the factors discussed above, net income for the third
quarter of 1995 was $1,501,567, or $1.18 per share, compared to $273,392,
or $.21 per share, in 1994. Net income for the current nine month period
was $2,409,289, or $1.89 per share, compared to $1,140,845, or $.88 per
share, before the cumulative effect of a change to FAS 109. These results
for the third quarter and nine month period in 1995 include the $1,000,000
in non-recurring income.
Liquidity and Capital Resources
Cash and cash equivalents were $1,419,360 at August 5, 1995 compared
to $371,993 as of May 6, 1995. This is primarily due to proceeds from
life insurance of $1,000,000. The Company continues to reduce third party
floor plan financing expense for inventory at the Prestige sales centers.
Accounts receivable from related parties increased to $1,952,061 from
$792,011 as of October 29, 1994. This increase is primarily due to
increased inventory sold to TLT, Inc. Inventories increased to $7,138,638
from $4,604,299 as of October 29, 1994. This increase is primarily due to
the additional new models of singlewides at each sales center and the
additional inventory purchases made in connection with the acquisition of
the two existing sales centers.
Consistent with normal practice, the Company's operations are not
expected to require significant capital expenditures during fiscal 1995.
Working capital requirements for inventory for any new sales centers will
be met through a combination of internal sources and floor plan lines.
<PAGE>
PART II. OTHER INFORMATION AND SIGNATURES
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
SIGNATURES
In accordance with Section 13 of 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the
undersigned, there unto duly authorized.
NOBILITY HOMES, INC.
DATE: September 19, 1995 By: /s/ Terry E. Trexler
____________________________________
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: September 19, 1995 By: /s/ Thomas W. Trexler
____________________________________
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: September 19, 1995 By: /s/ Lynn J. Cramer, Jr.
____________________________________
Lynn J. Cramer, Jr., Treasurer
and Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF NOBILITY HOMES, INC. AS OF AND FOR THE
PERIOD ENDED AUGUST 5, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-04-1995
<PERIOD-START> NOV-30-1994
<PERIOD-END> AUG-05-1995
<CASH> 1,419,360
<SECURITIES> 0
<RECEIVABLES> 2,412,694
<ALLOWANCES> 48,000
<INVENTORY> 7,138,638
<CURRENT-ASSETS> 12,319,188
<PP&E> 2,247,559
<DEPRECIATION> 1,237,199
<TOTAL-ASSETS> 14,698,705
<CURRENT-LIABILITIES> 5,073,452
<BONDS> 0
<COMMON> 174,826
0
0
<OTHER-SE> 8,930,978
<TOTAL-LIABILITY-AND-EQUITY> 14,698,700
<SALES> 21,330,396
<TOTAL-REVENUES> 21,330,396
<CGS> 15,929,075
<TOTAL-COSTS> 15,929,075
<OTHER-EXPENSES> 1,909,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,249,289
<INCOME-TAX> 840,000
<INCOME-CONTINUING> 2,409,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,409,289
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 0
</TABLE>
