FORM 10-Q
SECURITITIES 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 2, 1997
Commission File number 0-6506
NOBILITY HOMES, INC.
(Exact name of registrant as specified 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)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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 10, 1997. 2,970,954
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
August 2, 1997 and November 2, 1996 3
Consolidated Statements of Income for
the three and nine months ended August 4
2, 1997 and August 3, 1996
Consolidated Statements of Cash Flows
for nine months ended August 2, 1997 5
and August 3, 1996
Notes to Consolidated Financial 6
Statements
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial 7
Conditions
PART II. Other Information and Signatures
Item 6. Exhibits and Reports of Form 8-K 8
<PAGE>
PART I. FINANCIAL INFORMATION
NOBILITY HOMES, INC.
CONSOLIDATED BALANCE SHEETS
August 2, November 2,
1997 1996
ASSETS (Unaudited)
Current Assets:
Cash and cash equivalents $ 2,684,407 $ 2,049,184
Accounts receivable - trade 1,065,478 642,626
Accounts receivable - trade,
from related parties 547,600 350,379
Inventories 8,770,626 7,820,908
Deferred income taxes 145,400 145,400
Other current assets 271,049 368,466
----------- ------------
Total current assets 13,484,560 11,376,963
Property, plant and equipment, net 1,329,982 1,166,429
Investment in joint venture -
Nobility 21 253,376 --
Deferred income taxes - noncurrent 654,941 707,200
Other assets 1,645,753 1,620,046
----------- ------------
Total assets $ 17,368,612 $ 14,870,638
=========== ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,064,777 $ 1,368,168
Accrued expenses 1,178,300 692,737
Other liabilities 842,482 553,477
----------- ------------
Total liabilities 3,085,559 2,614,382
----------- ------------
Stockholders' equity:
Preferred stock, $.10 par value,
500,000 shares authorized, none
issued -- --
Common stock, $.10 par value,
10,000,000 shares authorized,
3,436,790 shares issued 343,679 343,679
Additional paid in capital 2,345,715 2,345,715
Retained earnings 13,273,726 11,246,929
Less treasury stock at cost,
465,836 shares (1,680,067) (1,680,067)
----------- ------------
Total stockholders' equity 14,283,053 12,256,256
----------- ------------
Commitments and contingencies -- --
----------- ------------
Total liabilities and
stockholders' equity $ 17,368,612 $ 14,870,638
----------- ------------
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $ 10,367,297 $ 9,737,023 $ 28,867,127 $ 25,930,381
Net sales - related part 248,990 259,955 399,853 504,080
----------- ------------ ----------- -----------
Total net sales 10,616,287 9,996,978 29,266,980 26,434,461
Less cost of goods sold (7,779,104) (7,500,610) (21,714,518) (19,614,100)
----------- ------------ ----------- -----------
Gross profit 2,837,183 2,496,368 7,552,462 6,820,361
Selling, general and
administrative expenses (1,666,105) (1,558,429) (4,452,000) (4,091,467)
Operating income 1,171,078 937,939 3,100,462 2,728,894
Other income (expenses):
Interest income 35,272 4,591 73,093 9,463
Interest expense -- (30,155) -- (50,046)
Miscellaneous income 60,251 3,273 116,242 28,204
----------- ------------ ----------- -----------
95,523 (22,291) 189,335 (12,379)
----------- ------------ ----------- -----------
Income before provision
for income taxes 1,266,601 915,648 3,289,797 2,716,515
Less provision
for income taxes (486,000) (282,000) (1,263,000) (968,000)
----------- ------------ ----------- -----------
Net income $ 780,601 $ 633,648 $ 2,026,797 $ 1,748,515
=========== ============ =========== ===========
Weighted average
shares outstanding 2,970,954 2,958,116 2,970,954 2,958,116
=========== ============ =========== ===========
Earnings per share
Net income $ .26 $ .21 $ .68 $ .59
=========== ============ =========== ===========
</TABLE>
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
August 2, August 3,
1997 1996
Cash flows from operating activities:
Net income $ 2,026,797 $ 1,748,515
Adjustments to reconcile net income
to net cash flows provided by
operating activities:
Depreciation and amortization 110,178 93,804
Undistributed earnings in joint
venture - Nobility 21 (3,376) --
(Increase) decrease in:
Accounts receivable -trade (422,852) (183,629)
Accounts receivable -trade from
related parties (197,221) 269,091
Inventories (949,718) (763,671)
Other current assets 149,676 (15,204)
Increase (decrease) in:
Accounts payable (303,391) (435,652)
Accrued expenses 485,563 151,135
Other current liabilities 289,005 43,481
----------- -----------
Net cash flows provided by
operating activities 1,184,661 907,870
----------- -----------
Cash flows from investing activities:
Investment in joint venture - Nobility 21 (250,000) --
Purchase of equipment (299,438) (169,382)
----------- -----------
Net cash flows (used in)
investing activities (549,438) (169,382)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options -- 130,000
Principal payment on cash surrender value -- (652,424)
Principal payment on notes payable - other -- (6,644)
----------- -----------
Net cash flows provided by
(used in) financings activities -- (529,068)
----------- -----------
Increase in cash and cash equivalents 635,223 209,420
Cash and cash equivalents at
beginning of year 2,049,184 932,432
----------- -----------
Cash and cash equivalents at
end of quarter $ 2,684,407 $ 1,141,852
---------- -----------
Supplemental disclosure of cash flow
information
Interest paid $ -- $ 50,046
========== ===========
Income taxes paid $ 1,142,500 $ 900,000
========== ===========
Supplemental disclosure of non-cash
activities
Issuance of common stock for certain
assets and liabilities
See note 3 "Notes to consolidated
financial statements" $ -- $ 252,000
========== ===========
<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 2, 1997 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-Q. 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 2, 1996 form 10-K
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 2, 1997 and August 3, 1996 reflects opening
and closing inventories as follows:
August 2, November 2, August 3, November 2,
1997 1996 1996 1995
Raw Materials $ 600,122 $ 554,255 $ 541,676 $ 530,061
Work-in-process 70,431 95,279 82,288 73,068
Finished homes 7,145,721 6,302,097 6,212,582 5,366,658
Pre-owned manu-
factured homes 263,558 311,133 250,987 292,374
Model home
furniture and
other 690,794 558,144 557,270 523,998
---------- ---------- ---------- ----------
$ 8,770,626 $ 7,820,908 $ 7,644,803 $ 6,786,159
========== ========== ========== ==========
3. Acquisition.
On November 22, 1995, the Company acquired three manufacturing 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.
4. Joint Venture.
In July 1997 the Company invested $250,000 in a joint venture with
21st Century Corporation to provide additional mortgage financing
services to the Company's retail sales centers.
<PAGE>
Nobility Homes, Inc.
Management's Discussion And Analysis Of Results Of
Operations And Financial Condition
Results of Operations
Net sales for the three months ended August 2, 1997 increased 6
percent to $10,616,287 compared to $9,996,978 for the same period last
year. Net sales for the nine months ended of fiscal 1997 increased 11
percent to $29,266,980 as compared to $26,434,461 a year ago. This
increase in sales was primarily due to the sales to non-related dealers
increasing to $5,811,917 for the first nine months of 1997 compared to
$3,511,009 for the same period last year. The Company had fifteen retail
sales centers in full operation during the first nine months of 1997 as
compared to twelve retail sales centers in full operation for the first
quarter of 1996 plus the acquisition during that quarter of three existing
retail sales centers. In March 1997 one retail sales center was closed
due to poor performance and another retail sales center was purchased.
Same store sales volume for the first nine months of 1997, was
approximately the same as the first nine months of 1996.
Gross profit, as a percentage of net sales, was approximately 26.7
percent in the third quarter of 1997 up from 24.9 percent in the same
period last year. The increase in gross profit was primarily due to the
increased margins at the manufacturing facilities. Gross profit, as a
percentage of sales, was approximately 25.8 percent for both the first
nine months of 1997 and the same period last year.
Selling, general and administrative expenses, as a percentage of net
sales, fluctuated very little and was approximately 15 percent for the
three and nine month periods of 1997 and 1996.
Other income consists of interest income from short term investments.
As a result of the factors discussed above, net income for the third
quarter of 1997 was $780,601 or $.26 per share, compared to $633,648 or
$.21 per share in 1996. For the first nine months of fiscal 1997 net
income was $2,026,797 or $.68 per share, compared to $1,748,515 or $.59
per share for the first nine months of fiscal 1996.
Liquidity and Capital Resources
Cash and cash equivalents were $2,684,407 at August 2, 1997 compared
to $2,049,184 as of November 2, 1996. Inventories increased to $8,770,626
as of August 2, 1997 as compared to $7,820,908 at the end of fiscal year
1996. The increase in inventory is primarily due to the purchase of one
existing manufacturing home retail sales center and a larger number of
sold retail homes in the process of being closed and funded.
The Company maintains a revolving credit agreement with a major bank
providing for borrowings up to $2.5 million and a second revolving line of
credit agreement with a major bank which provides for borrowings up to
$1.5 million. These two agreements provide the Company with an additional
$4.0 million of working capital for use in connection with its overall
operations.
The Company in March 1997 acquired one additional existing
manufactured home retail sales center in North Central Florida for $85,000
cash. In November 1995 the Company acquired three retail sales centers in
Florida in an asset acquisition by issuing 18,000 shares of common stock
with a fair market value of $252,000.
In July 1997 the Company invested $250,000 in a joint venture with
21st Century Corporation to provide additional mortgage financing services
to the Company's retail sales centers.
Consistent with normal practice, the Company's operations are not
expected to require significant capital expenditures during fiscal 1997.
Working capital requirements for inventory for any new sales centers will
be met through a combination of internal sources and the revolving credit
lines discussed above.
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 or 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 10, 1997 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: September 10, 1997 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: September 10, 1997 By: /s/ Lynn J. Cramer, Jr.
Lynn J. Cramer, Jr., Treasurer
and Principal Accounting
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUDICIAL
STATEMENTS OF NOBILITY HOMES, INC. AS OF AND FOR THE THREE MONTHS ENDED AUGUST
2, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-01-1997
<PERIOD-START> MAY-04-1997
<PERIOD-END> AUG-02-1997
<CASH> 2,684,407
<SECURITIES> 0
<RECEIVABLES> 1,613,078
<ALLOWANCES> 0
<INVENTORY> 8,770,626
<CURRENT-ASSETS> 13,484,560
<PP&E> 2,702,275
<DEPRECIATION> 10,372,293
<TOTAL-ASSETS> 17,368,612
<CURRENT-LIABILITIES> 3,085,559
<BONDS> 0
0
0
<COMMON> 343,679
<OTHER-SE> 13,939,374
<TOTAL-LIABILITY-AND-EQUITY> 17,368,612
<SALES> 10,616,287
<TOTAL-REVENUES> 10,616,287
<CGS> 7,779,104
<TOTAL-COSTS> 1,666,105
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,266,601
<INCOME-TAX> 486,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 780,601
<EPS-PRIMARY> .26
<EPS-DILUTED> 0
</TABLE>