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 May 4, 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)
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 of June 11, 1996. 1,980,595
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
PART I. Financial Information Number
Item 1. Financial Statements
Consolidated Balance Sheets as of May 4,
1996 and November 4, 1995..................... 3
Consolidated Statements of Income for the
three and six months ended May 4, 1996 and
May 6, 1995................................... 5
Consolidated Statements of Cash Flows for the
six months ended May 4, 1996 and
May 6, 1995................................... 6
Notes to Consolidated Financial Statements .... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 8
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
May 4, November 4,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,271,619 $ 932,432
Accounts receivable - trade, net 901,536 544,620
Accounts receivable - trade, from
related parties 669,200 956,037
Inventories 8,173,627 6,786,159
Income taxes receivable 111,927 109,082
Other current assets 417,540 233,620
---------- ----------
Total current assets 11,545,449 9,561,950
Property, plant and equipment, net 1,080,218 994,376
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 847,005 847,005
Goodwill 214,165 147,356
----------- -----------
Total assets $15,032,565 $12,896,415
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,180,088 $ 1,453,823
Accrued expenses 948,026 866,499
Revolving credit line 661,251 -
Customer deposits 498,635 213,220
Income taxes payable 36,918 -
Deferred gross profit on related
party sales 69,229 124,695
Other current liabilities - 99,984
----------- -----------
Total current liabilities 3,394,147 2,758,221
Notes payable - cash surrender value
of life insurance 652,424 652,424
Note payable after one year - 6,644
----------- -----------
Total liabilities 4,046,571 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, 2,446,431 and
1,748,267 shares issued in 1996 and
1995, respectively 244,643 174,826
Additional paid in capital 2,444,752 2,132,568
Retained earnings 9,976,666 8,851,799
Less treasury stock, at cost; 465,836 shares (1,680,067) (1,680,067)
----------- -----------
Total stockholders' equity 10,985,994 9,479,126
----------- -----------
Commitments and contingent liabilities - -
----------- -----------
Total liabilities and stockholders'
equity $15,032,565 $12,896,415
=========== ===========
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
May 4, May 6, May 4, May 6,
1996 1995 1996 1995
Net sales $9,207,200 $7,224,122 $16,193,358 $12,556,975
Net sales-related
parties 116,305 292,766 244,125 1,062,824
---------- --------- ---------- ----------
Total net sales 9,323,505 7,516,888 16,437,483 13,619,799
Less cost of goods
sold (6,936,108) (5,558,447) (12,113,490) (10,314,714)
---------- --------- ---------- ----------
Gross profit 2,387,397 1,958,441 4,323,993 3,305,085
Selling, general and
administrative
expenses (1,355,974) (1,140,203) (2,512,248) (2,012,570)
Interest expense on
floor plan financing (3,950) (54,436) (10,789) (109,994)
---------- --------- ---------- ----------
Operating income 1,027,473 763,802 1,800,956 1,182,521
---------- --------- ---------- ----------
Other income (expenses):
Gain on sale of limited
partnerships to
related parties - - - 348,884
Interest income 1,571 2,690 4,872 11,794
Interest expense (15,104) (6,682) (19,891) (12,649)
Miscellaneous income 10,739 4,683 24,930 4,172
---------- --------- ---------- ----------
(2,794) 691 9,911 352,201
---------- --------- ---------- ----------
Income before provision
for income taxes 1,024,679 764,493 1,810,867 1,534,722
Less provision for
income taxes (389,000) (312,000) (686,000) (627,000)
---------- --------- ---------- ----------
Net income $ 635,679 $ 452,493 $ 1,124,867 $ 907,722
========== ========== =========== ==========
Weighted average
shares outstanding 1,967,594 1,916,353(1) 1,967,594 1,916,353(1)
========== ========== =========== ==========
Earnings per share
Net income $ .32 $ .24(1) $ .57 $ .48(1)
========== ========== =========== ==========
__________
(1) Restated to reflect three-for-two stock split
<PAGE>
NOBILITY HOME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
May 4, May 6,
1996 1995
Cash flows from operating activities:
Net income $ 1,124,867 $ 907,722
Adjustments to reconcile net income to net
cash flows provided by (used in) operating
activities:
Depreciation and amortization 64,486 53,342
(Increase) decrease in:
Accounts receivable-trade (336,845) (242,033)
Accounts receivable-trade-related parties 286,837 (636,216)
Inventories (1,292,495) (1,224,560)
Income taxes receivable (2,845) -
Other current assets (183,920) 113,822
Increase (decrease) in:
Accounts payable (273,735) (27,334)
Accrued expenses 81,527 (43,564)
Customer deposits 285,415 (35,166)
Income taxes payable 36,918 382,000
Deferred gain on related party sales (55,466) (348,884)
Other current liabilities (99,984) (21,373)
---------- ---------
Net cash flows used in
operating activities (365,240) (1,122,244)
---------- ---------
Cash flows from investing activities:
Purchase of equipment (80,180) (114,649)
Collections of notes and other receivables
from related parties - 297,584
---------- ---------
Net cash flows (used in) provided by
investing activities (80,180) 182,935
---------- ---------
Cash flows from financing activities:
Proceeds received from issuance of
common stock 130,000 -
Decrease in floor plan financing - (700,673)
Revolving credit line 661,251 403,711
Principal payments on note payable to
stockholders - (66,666)
Purchase of treasury stock - (66,986)
Principal payment on notes payable - other (6,644) (1,186)
---------- ---------
Net cash flows provided by (used in)
financing activities 784,607 (431,800)
---------- ---------
Increase (decrease) in cash and cash
equivalents 339,187 (1,371,109)
Cash and cash equivalents at beginning of year 932,432 1,743,102
---------- ---------
Cash and cash equivalents at end of quarter $ 1,271,619 $ 371,993
=========== ===========
Supplemental disclosure of cash flow information
Interest Paid $ 19,891 $ 12,649
=========== ===========
Income taxes paid $ 650,000 $ 245,000
=========== ===========
Supplemental disclosure of non-cash activities
Issuance of common stock for certain assets
see note 3 "Notes to consolidated financial
statements" $ 252,000 $ -
=========== ===========
<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 six months ended May 4, 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 November 4, 1995 form 10-KSB annual report.
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 six months ended May 4, 1996 and
May 6, 1995, reflects opening and closing inventories as follows:
May 4, November 4, May 6, October 29,
1996 1995 1995 1994
Raw materials $ 557,227 $ 530,061 $ 515,786 $ 534,292
Work-in-process 64,160 73,068 95,972 58,842
Prestige inventory
and finished homes 6,587,314 5,366,658 4,615,745 3,416,878
Pre-owned homes 259,240 292,374 281,364 279,627
Model home furni-
ture and other 705,686 523,998 319,992 314,660
---------- ---------- ---------- ----------
$8,173,627 $6,786,159 $5,828,859 $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.
NOBILITY HOMES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITIONS
Results of Operations
Net sales in the second quarter of fiscal 1996 increased 24 percent
to $9,323,505 as compared to $7,516,888 for the second quarter of 1995.
Net sales for the first six months of 1996 were $16,437,483, compared with
$13,619,799 for the same period last year, an increase of 21 percent. The
increase in sales for the three and six months of 1996 was primarily due
to the Company having twelve retail sales centers for the entire period of
1996 plus the acquisition of three existing retail sales centers on
November 22, 1995. For the first six months of 1995 the Company operated
ten retail sales centers. Same store sales volume for the second quarter
of 1996 increased 3.4% to $6,499,871 from $6,288,204 for the second
quarter of 1995. For the first six months of 1996 same store sales volume
was $11,710,953, a 9.4% increase over $10,707,396 for the same period of
1995.
Gross profit as a percentage of net sales for the second quarter of
1996 and the same period last year was approximately the same. For the
six month period gross profit as a percent of net sales increased from
24.3 last year to 26.3 this year. The increase in gross profit was
primarily due to the increased margins at the Prestige retail sales
centers, and better operating efficiencies at the Company's manufacturing
plants.
Selling, general and administrative expenses, as a percentage of net
sales, was 14.5 percent in the second quarter of 1996 compared to 15.2
percent in 1995. The decrease in selling, general and administrative
expenses was primarily due to increased sales.
Income from operations for the second quarter of 1996 was $1,027,473
compared to $763,802 for the same period a year ago. For the first six
months income from operations increased to $1,800,956 in 1996 from
$1,182,521 in 1995. The Company had other income of $348,884 gained on the
sale of its limited partnership interest in the first quarter of 1995.
As a result of the factors discussed above, net income for second
quarter of 1996 was $635,679 or $.32 per share compared to $452,493 or
$.24 per share in 1995. Net income for the first six months of 1996 was
$1,124,867 or $.57 per share compared to $907,722 or $.48 per share last
year. The earnings per share for 1995 have been restated to reflect a
three-for-two stock split on January 18, 1996.
Liquidity and Capital Resources
Cash and cash equivalents were $1,271,619 at May 4, 1996 compared to
$932,432 as of November 4, 1995. The Company also had outstanding
borrowings under its revolving credit line (described below) of $661,251
at May 4, 1996. This amount has not been netted against cash and cash
equivalents in the consolidated balance sheets. The decrease in cash and
cash equivalents is primarily due to the Company carrying inventory for
the Prestige retail sales centers through internal capital resources to
reduce third party floor plan interest cost. The Company maintains a
Revolving Credit Agreement (the "Agreement") with a bank which provides
for borrowings up to $2,500,000, 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 six months of 1996 primarily
due to inventory of new homes added to the three retail sales center
acquired in November.
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.
PART II. OTHER INFORMATION AND SIGNATURES
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule
<PAGE>
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: June 14, 1996 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: June 14, 1996 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: June 14, 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
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF NOBILITY HOMES, INC. AS OF
AND FOR THE PERIOD ENDED MAY 4, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-START> FEB-05-1996
<PERIOD-END> MAY-04-1996
<CASH> 1,271,619
<SECURITIES> 0
<RECEIVABLES> 1,570,736
<ALLOWANCES> 0
<INVENTORY> 8,173,627
<CURRENT-ASSETS> 11,545,449
<PP&E> 2,403,340
<DEPRECIATION> 1,323,122
<TOTAL-ASSETS> 15,032,565
<CURRENT-LIABILITIES> 3,394,147
<BONDS> 0
0
0
<COMMON> 244,463
<OTHER-SE> 10,741,351
<TOTAL-LIABILITY-AND-EQUITY> 15,032,565
<SALES> 9,323,505
<TOTAL-REVENUES> 9,323,505
<CGS> 6,936,108
<TOTAL-COSTS> 1,359,924
<OTHER-EXPENSES> 2,794
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,024,679
<INCOME-TAX> 389,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 635,679
<EPS-PRIMARY> .32
<EPS-DILUTED> 0
</TABLE>
