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 3, 1996
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)
(352) 732-5157
(Issuer's telephone number, including area code)
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 of September 16, 1996. 2,970,954
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
PART I. Financial Information Number
Item 1. Financial Statements
Consolidated Balance Sheets as of August 3,
1996 and November 4, 1995.............................. 3
Consolidated Statements of Income for the
three and nine months ended August 3, 1996 and
August 5, 1995......................................... 5
Consolidated Statements of Cash Flows for the
nine months ended August 3, 1996 and
August 5, 1995......................................... 6
Notes to Consolidated Financial Statements ............. 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 9
PART II. Other Information and Signatures
Item 6. Exhibits and Reports of Form 8-K ......................... 11
<PAGE>
PART I. FINANCIAL INFORMATION
NOBILITY HOMES, INC.
CONSOLIDATED BALANCE SHEETS
August 3, November 4,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,141,852 $ 932,432
Accounts receivable - trade, net 748,320 544,620
Accounts receivable - trade, from
related parties 686,946 956,037
Inventories 7,644,803 6,786,159
Income taxes receivable - 109,082
Other current assets 357,906 233,620
---------- ---------
Total current assets 10,579,827 9,561,950
Property, plant and equipment, net 1,141,868 994,376
Receivable from President for life
insurance premiums 478,585 478,585
Cash surrender value of life insurance 867,143 867,143
Deferred income taxes - noncurrent 848,932 847,005
Goodwill 210,472 147,356
---------- ----------
Total assets $14,126,827 $12,896,415
========== ==========
<PAGE>
Consolidated Balance Sheets (continued)
August 3, November 4,
1996 1995
(Unaudited)
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,018,171 $ 1,453,823
Accrued expenses 1,017,634 866,499
Customer deposits 400,636 213,220
Deferred gross profit on related
party sales 80,744 124,695
Other current liabilities - 99,984
---------- ----------
Total current liabilities 2,517,185 2,758,221
Notes payable - cash surrender value
of life insurance - 652,424
Note payable after one year - 6,644
---------- ----------
Total liabilities 2,517,185 3,417,289
---------- ----------
Stockholders' equity:
Preferred stock, $.10 par value,
500,000 shares authorized, none
issued
Common stock, $.10 par value, 4,000,000
shares authorized, 3,436,790 and
3,351,306 shares issued in 1996 and
1995, respectively(1) 343,679 335,130
Additional paid in capital(1) 2,345,716 1,972,264
Retained earnings 10,600,314 8,851,799
Less treasury stock, at cost; 465,836
shares (1,680,067) (1,680,067)
---------- ----------
Total stockholders' equity 11,609,642 9,479,126
---------- ----------
Commitments and contingent liabilities - -
---------- ----------
Total liabilities and stockholders'
equity $14,126,827 $12,896,415
========== ==========
(1) Information for 1995 has been restated to reflect a three-for-two
stock split payable on January 19, 1996 and a three-for-two stock
split payable on August 16, 1996.
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
August 3, August 5, August 3, August 5,
1996 1995 1996 1995
Net sales $9,737,023 $7,446,728 $25,930,381 $20,020,735
Net sales-related
parties 259,955 263,870 504,080 1,309,661
--------- --------- ---------- ----------
Total net sales 9,996,978 7,710,598 26,434,461 21,330,396
Less cost of goods sold (7,500,610)(5,656,118) (19,614,100)(15,929,075)
--------- --------- ---------- ----------
Gross profit 2,496,368 2,054,480 6,820,361 5,401,321
Selling, general and
administrative
expenses (1,557,423)(1,291,107) (4,079,671) (3,377,486)
Interest expense on
floor plan
financing (1,006)( 36,371) ( 11,796) ( 114,312)
--------- --------- --------- ---------
Operating income 937,939 727,002 2,728,894 1,909,523
--------- --------- --------- ---------
Other income (expenses):
Life insurance
proceeds 1,000,000 1,000,000
Gain on sale of
limited partner-
ships 348,884
Interest income 4,591 5,876 9,463 17,671
Interest expense (30,155) (16,343) (50,046) (28,992)
Miscellaneous 3,273 (1,968) 28,204 2,203
--------- --------- --------- ---------
(22,291) 987,565 (12,379) 1,339,766
--------- --------- --------- ---------
Income before provision
for income taxes 915,648 1,714,567 2,716,515 3,249,289
Less provision for
income taxes (282,000) (213,000) ( 968,000) (840,000)
--------- -------- ---------- ----------
Net income $ 633,648 $1,501,567 $ 1,748,515 $ 2,409,289
========= ========= ========== ==========
Weighted average
shares outstanding 2,958,116 2,877,194(1) 2,958,116 2,877,194(1)
========= ========= ========= ==========
Earnings per share
Net income $ .21 $ .52(1) $ .59 $ .84(1)
========= ========= ========== ==========
(1) Restated to reflect three-for-two stock split payable on January 19,
1996 and three-for-two stock split payable on August 16, 1996
<PAGE>
NOBILITY HOME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
August 3, August 5,
1996 1995
Cash flows from operating activities:
Net income $ 1,748,515 $ 2,409,289
Adjustments to reconcile net income to
net cash flows provided by (used in)
operating activities:
Depreciation and amortization 93,804 83,039
(Increase) decrease in:
Accounts receivable-trade (183,629) (46,471)
Accounts receivable-trade-related
parties 269,091 (1,160,050)
Inventories (763,671) (2,505,455)
Income taxes receivable 109,082 -
Other current assets (124,286) (3,144)
Increase (decrease) in:
Accounts payable (435,652) (15,683)
Accrued expenses 151,135 708,292
Customer deposits 187,416 233,429
Income taxes payable - 247,126
Deferred gain on related party sales (43,951) (348,884)
Other current liabilities (99,984) (14,467)
---------- ---------
Net cash flows provide by (used
in) operating activities 907,870 (412,979)
---------- ---------
Cash flows from investing activities:
Purchase of equipment (169,382) (132,976)
Collections of notes and other
receivables from related parties - 297,584
---------- ---------
Net cash flows (used in) provided by
investing activities (169,382) 164,608
---------- ---------
Cash flows from financing activities:
Proceeds received from issuance of
common stock 130,000 -
Increase in floor plan financing - 186,621
Principal payment on cash surrender value (652,424)
Principal payments on note payable to
stockholders - (99,999)
Purchase of treasury stock - (159,187)
Principal payment on notes payable
- other (6,644) (2,806)
---------- ---------
Net cash flows used in
financing activities (529,068) (75,371)
---------- ---------
Increase (decrease) in cash and
cash equivalents 209,420 (323,742)
Cash and cash equivalents at beginning
of year 932,432 1,743,102
---------- ---------
Cash and cash equivalents at end
of quarter $ 1,141,852 $ 1,419,630
========== =========
Supplemental disclosure of cash flow
information
Interest Paid $ 50,046 $ 28,992
========== =========
Income taxes paid $ 900,000 $ 585,000
========== =========
Supplemental disclosure of non-cash
activities
Issuance of common stock for certain
assets see note 3 "Notes to
consolidated financial statements" $ 252,000 $ 200,000
========== ==========
<PAGE>
NOBILITY HOMES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
I. 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 3, 1996 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 Form S-3 Registration Statement filed
August 9, 1996.
II. 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 3, 1996
and August 5, 1995, reflects opening and closing inventories as follows:
August 3, November 4, August 5, October 29,
1996 1995 1995 1994
Raw materials $ 541,676 $ 530,061 $ 540,358 $ 534,292
Work-in-process 82,288 73,068 90,444 58,842
Prestige inventory
and finished homes 6,212,582 5,366,658 5,812,190 3,416,878
Pre-owned homes 250,987 292,374 240,604 279,627
Model home furni-
ture and other 557,270 523,998 455,042 314,660
--------- --------- --------- ---------
$7,644,803 $6,786,159 $7,138,638 $4,604,299
========= ========= ========= =========
III. Acquisition
On November 22, 1995, the Company acquired three manufactured home
sales centers in Florida in an asset acquisition by issuing 18,000 shares
common stock valued at $252,000. This transaction was accounted for using
the purchase method of accounting; accordingly, the purchased assets have
been recorded at their estimated fair market value at the date of
acquisition. This treatment resulted in approximately $74,195 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 CONDITIONS
Results of Operations
Net sales in the third quarter of fiscal 1996 increased 30% to
$9,996,978 as compared to $7,710,598 for the third quarter of 1995. Net
sales for the first nine months of 1996 were $26,434,461, compared with
$21,330,396 for the same period last year, an increase of 24%. The
increase in sales for the three month and nine month periods of 1996 was
primarily due to the Company currently operating fifteen retail sales
centers. For the first nine months of 1995 the Company operated ten
retail sales centers with two additional retail sales centers being
acquired on May 8, 1995. Same store sales volume for the third quarter of
1996 increased to $7,118,827 compared to $6,762,195 for the third quarter
of 1995. For the first nine months of 1996 same store sales volume was
$18,829,780 compared to $17,469,590 for the same period of 1995.
Gross profit as a percentage of net sales for the third quarter of
1996 was 24.9% as compared to 26.6% for the same period last year. For
the nine month period of 1996 the gross profit as a percentage of net
sales was approximately the same as the first nine months of fiscal 1995.
Selling, general and administrative expenses, as a percentage of net
sales, was 15.5% in the third quarter of 1996 compared to 16.7% in 1995.
In comparing the nine month period of 1996 and 1995 selling, general and
administrative expenses, as a percentage of net sales, was approximately
the same.
Income from operations for the third quarter of 1996 was $915,648
compared to $1,714,567 for the same period a year ago. In the third
quarter of 1995 the Company had other income from key-man life insurance
proceeds of $1,000,000. For the first nine months of fiscal 1996 income
from operations was $2,716,515 compared to $3,249,289 in 1995. Included in
other income in fiscal year 1995 was income from key-man life insurance
proceeds of $1,000,000 and $348,884 gained on the sale of its limited
partnership interest.
As a result of the factors discussed above, net income for the third
quarter of 1996 was $633,648 or $.21 per share compared to $1,501,567 or
$.52 per share in 1995. Net income for the first nine months of 1996 was
$1,748,515 or $.59 per share compared to $2,409,289 or $.84 per share last
year. The earnings per share for 1995 have been restated to reflect two
three-for-two stock splits payable on January 19, 1996 and August 16,
1996, respectively.
Liquidity and Capital Resources
Cash and cash equivalents were $1,141,852 at August 3, 1996 compared
to $932,432 as of November 4, 1995. The Company maintains a Revolving
Credit Agreement with two banks which provides for aggregate borrowings of
up to $4,000,000, payable on demand, and provides for interest at LIBOR
plus 2.5% on the outstanding balance. There are no commitment fees or
compensating balance arrangements associated with the Agreement.
Inventory increased in the first nine months of 1996 primarily due to
inventory of new homes added to the three retail sales centers acquired in
November 1995. During the third quarter of 1996 the Company paid the
loans outstanding against the cash surrender value in the amount of
$652,424 plus interest on certain life insurance policies which insure the
President of the Company.
Consistent with normal practice, the Company's operations are not
expected to require significant capital expenditures during fiscal 1996.
Working capital requirements for inventory for new sales centers are met
through a combination of internal sources and revolving credit line.
<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 16, 1996 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: September 16, 1996 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: September 16, 1996 By: /s/ Lynn J. Cramer, Jr.
Lynn J. Cramer, Jr., Treasurer
and Principal Accounting
Officer
<PAGE>
EXHIBIT INDEX
Sequential
Page Number
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-START> MAY-05-1996
<PERIOD-END> AUG-03-1996
<CASH> 1,141,852
<SECURITIES> 0
<RECEIVABLES> 1,435,266
<ALLOWANCES> 0
<INVENTORY> 7,644,803
<CURRENT-ASSETS> 10,579,827
<PP&E> 2,496,608
<DEPRECIATION> 1,354,739
<TOTAL-ASSETS> 14,126,827
<CURRENT-LIABILITIES> 2,517,185
<BONDS> 0
0
0
<COMMON> 343,679
<OTHER-SE> 11,609,642
<TOTAL-LIABILITY-AND-EQUITY> 14,126,827
<SALES> 9,996,978
<TOTAL-REVENUES> 9,996,978
<CGS> 7,500,610
<TOTAL-COSTS> 1,558,429
<OTHER-EXPENSES> 22,291
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 915,648
<INCOME-TAX> 282,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 633,648
<EPS-PRIMARY> .21
<EPS-DILUTED> 0
</TABLE>
