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 February 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)
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 March 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 February 3,
1996 and November 4, 1995..................... 3
Consolidated Statements of Income for the three
months ended February 3, 1996 and February 4,
1995.......................................... 5
Consolidated Statements of Cash Flows for the
three months ended February 3, 1996 and
February 4, 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
February 3, November 4,
1996 1995
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 296,126 $ 932,432
Accounts receivable - trade, net 996,730 544,620
Accounts receivable - trade, from
related parties 968,291 956,037
Inventories 7,874,766 6,786,159
Income taxes receivable 111,927 109,082
Other current assets 265,857 233,620
----------- ----------
Total current assets 10,513,697 9,561,950
Property, plant and equipment, net 1,059,315 994,376
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 217,858 147,356
----------- ----------
Total assets $13,983,603 $12,896,415
=========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,037,198 $ 1,453,823
Accrued expenses 782,600 866,499
Revolving credit line 436,336 -
Customer deposits 312,118 213,220
Income taxes payable 297,918 -
Deferred gross profit on related
party sales 124,695 124,695
Other current liabilities - 99,984
----------- ----------
Total current liabilities 2,990,865 2,758,221
Notes payable - cash surrender value
of life insurance 652,424 652,424
Note payable after one year - 6,644
----------- ----------
Total liabilities 3,643,289 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 2,444,751 2,132,568
Retained Earnings 9,330,987 8,851,799
Less treasury stock, at cost;
465,836 shares (1,680,067) (1,680,067)
----------- ----------
Total stockholders' equity 10,340,314 9,479,126
----------- ----------
Commitments and contingent
liabilities - -
----------- ----------
Total liabilities and
stockholders' equity $13,983,603 $12,896,415
=========== ==========
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
February 3, February 4,
1996 1995
Net sales $ 6,986,157 $ 5,332,853
Net sales - related parties 127,820 770,058
---------- ---------
Total net sales 7,113,977 6,102,911
Less cost of goods sold (5,177,382) (4,756,267)
---------- ---------
Gross profit 1,936,595 1,346,644
Selling, general and administrative
expenses (1,166,274) (872,367)
Interest expense on floor plan
financing (6,838) (55,558)
---------- ---------
Operating income 763,483 418,719
---------- ---------
Other income:
Gain on sale of limited partnerships
to related parties - 348,884
Miscellaneous income 12,705 2,626
--------- ---------
12,705 351,510
--------- ---------
Income before provision for
income taxes 776,188 770,229
Less provision for income taxes (297,000) (315,000)
---------- ---------
Net income $ 479,188 $ 455,229
========== =========
Weighted average shares outstanding 1,954,603 1,917,753(1)
========== =========
Earnings per share
Net income $ .25 $ .24(1)
========== =========
(1) Restated to reflect three-for-two stock split
<PAGE>
NOBILITY HOME, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
February 3, February 4,
1996 1995
Cash flows from operating activities:
Net income $ 479,188 $ 455,229
Adjustments to reconcile net income
to net cash flows provided by (used
in) operating activities:
Depreciation and amortization 32,307 26,671
(Increase) decrease in:
Accounts receivable-trade (432,039) (71,606)
Accounts receivable-trade from
related parties (12,254) (490,420)
Inventories (993,634) (671,352)
Income taxes receivable (2,845)
Other current assets (32,237) 11,913
Increase (decrease) in:
Accounts payable (416,625) 262,737
Accrued expenses (83,899) (179,646)
Customer deposits 98,898 13,312
Income taxes payable 297,918 315,000
Deferred gain on related party sales - (348,884)
Other current liabilities (99,984) (31,191)
---------- ---------
Net cash flows used in
operating activities (1,165,206) (708,237)
---------- ---------
Cash flows from investing activities:
Purchase of equipment (30,792) (72,904)
Collections of notes and other
receivables from related parties - 297,584
--------- ---------
Net cash flows (used in) provided
by investing activities (30,792) 224,680
--------- ---------
Cash flows from financing activities:
Proceeds received from issuance
of common stock 130,000 -
Decrease in floor plan financing - (107,450)
Revolving credit line 436,336 -
Principal payments on note payable
to stockholders - (33,333)
Principal payment on notes payable -
other (6,644) (1,184)
-------- ---------
Net cash flows provided by (used in)
financing activities 559,692 (141,967)
-------- ---------
Decrease in cash and cash equivalents (636,306) (625,524)
Cash and cash equivalents at beginning
of year 932,432 1,743,102
-------- ---------
Cash and cash equivalents at end
of quarter $ 296,126 $ 1,117,578
========= =========
Supplemental disclosure of cash
flow information
Interest Paid $ 6,204 $ 5,967
========= =========
Income taxes paid $ - $ -
========= =========
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 three months ended February 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 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 three months ended February 3,
1996 and February 4, 1995, reflects opening and closing inventories as
follows:
February 3, November 4, February 4, October 29,
1996 1995 1995 1994
Raw materials $ 529,123 $ 530,061 $ 465,211 $ 534,292
Work-in-process 94,517 73,068 77,487 58,842
Finished homes 6,382,737 5,366,658 4,224,992 3,416,878
Pre-owned manu-
factured homes 306,950 292,374 306,334 279,627
Model home furni-
ture and other 561,439 523,998 201,627 314,660
---------- ------- --------- ---------
$7,874,766 $6,786,159 $5,275,651 $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 first quarter of fiscal 1996 increased 16.5 percent
to $7,113,977 as compared to $6,102,911 for the first quarter of 1995.
The increase in sales for the first quarter of 1996 was primarily due to
the Company having twelve retail sales centers for the entire first
quarter plus the acquisition of three existing retail sales centers on
November 22, 1995. In the first quarter of 1995 the Company operated ten
retail sales centers.
Gross profit in the first quarter of 1996 as a percentage of net
sales increased to 27.2 percent compared to 22 percent for the same period
last 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 16.4 percent in the first quarter of 1996 compared to 14.3
percent in 1995. This increase was primarily due to the increased
advertising and other promotional expenses incurred at the retail sales
centers.
Income from operations for the first quarter of 1996 increased 82
percent to $763,483 from $418,719 for the same period a year ago. The
Company had other income of $348,884 gain from the sale of its limited
partnership interest in first quarter of 1995.
As a result of the factors discussed above, earnings for first
quarter of 1996 were $479,188 or $.25 per share compared to $455,229 or
$.24 per share in 1995. 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 $296,126 at February 3, 1996 compared
to $932,432 as of November 4, 1995. The decrease 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 also had outstanding borrowings under its revolving credit
line (described below) of $436,336 at February 3, 1996 to support
inventory. The Company maintains a Revolving Credit Agreement (the
"Agreement") with a bank which provides for borrowings up to $2,500,000.
The Agreement is effective through April 1996 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 first quarter 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
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: March 14, 1996 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: March 14, 1996 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: March 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 THREE MONTHS ENDED FEBRUARY 3, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-02-1996
<PERIOD-START> NOV-05-1995
<PERIOD-END> FEB-03-1996
<CASH> 296,126
<SECURITIES> 0
<RECEIVABLES> 1,965,021
<ALLOWANCES> 0
<INVENTORY> 7,874,766
<CURRENT-ASSETS> 10,513,697
<PP&E> 2,356,964
<DEPRECIATION> 1,297,649
<TOTAL-ASSETS> 13,983,603
<CURRENT-LIABILITIES> 2,990,865
<BONDS> 0
0
0
<COMMON> 244,643
<OTHER-SE> 10,095,671
<TOTAL-LIABILITY-AND-EQUITY> 13,983,603
<SALES> 7,113,977
<TOTAL-REVENUES> 7,113,977
<CGS> 5,177,382
<TOTAL-COSTS> 1,173,112
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 776,188
<INCOME-TAX> 297,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 479,188
<EPS-PRIMARY> .25
<EPS-DILUTED> 0
</TABLE>
