FORM 10-Q
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 3, 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 June 14, 1997. 2,970,954
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
May 3, 1997 and November 2, 1996 3
Consolidated Statements of Income for
the six months ended May 3, 1997
and May 4, 1996 4
Consolidated Statements of Cash Flows
for six months ended May 3, 1997 and
May 4, 1996 5
Notes to Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Conditions 7
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
May 3, November 2,
1997 1996
------ -----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $1,739,180 $ 2,049,184
Accounts receivable - trade 919,496 642,626
Accounts receivable - trade, from
related parties 493,351 350,379
Inventories 8,975,567 7,820,908
Deferred income taxes 145,400 145,400
Other current assets 495,396 368,466
---------- ----------
Total current assets 12,768,390 11,376,963
Property, plant and equipment, net 1,248,921 1,166,429
Deferred income taxes - noncurrent 707,200 707,200
Other assets 1,613,470 1,620,046
---------- ----------
Total assets $16,337,981 $14,870,638
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,123,924 $ 1,368,168
Accrued expenses 1,116,718 692,737
Other liabilities 594,886 553,477
---------- ----------
Total liabilities 2,835,528 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 12,493,126 11,246,929
Less treasury stock at cost, 465,836
shares (1,680,067) (1,680,067)
---------- ----------
Total stockholders' equity 13,502,453 12,256,256
---------- ----------
Commitments and contingencies -- --
---------- ----------
Total liabilities and
stockholders' equity $16,337,981 $14,870,638
========== ==========
<PAGE>
<TABLE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
May 3, May 4, May 3, May 4,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $ 9,506,324 $ 9,207,200 $ 18,499,829 $ 16,193,358
Net sales - related part 98,376 116,305 150,863 244,125
----------- ----------- ------------ ------------
Total net sales 9,604,700 9,323,505 18,650,692 16,437,483
Less cost of goods sold (7,108,823) (6,936,108) (13,935,411) (12,113,490)
Gross profit 2,495,877 2,387,397 4,715,281 4,323,993
Selling, general and
administrative expenses (1,419,325) (1,359,924) (2,785,896) (2,523,037)
----------- ---------- ------------ ------------
Operating income 1,076,552 1,027,473 1,929,385 1,800,956
Other income (expenses):
Interest income 19,131 1,571 37,821 4,872
Interest expense -- (15,104) -- (19,891)
Miscellaneous income 49,302 10,739 55,991 24,930
----------- ---------- ------------ ------------
68,433 (2,794) 93,812 9,911
----------- ---------- ------------- ------------
Income before provision
for income taxes 1,144,985 1,024,679 2,023,197 1,810,867
Less provision
for income taxes (440,000) (389,000) (777,000) (686,000)
Net income $ 704,985 $ 635,679 $ 1,246,197 $ 1,124,878
=========== ========== ============ ============
Weighted average
shares outstanding 2,970,954 2,932,439 2,970,954 2,932,439
Earnings per share
Net income $ .24 $ .22 $ .42 $ .38
=========== ========== ============ ============
</TABLE>
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
May 3, May 4,
1997 1996
Cash flows from operating activities:
Net income $ 1,246,197 $ 1,124,867
Adjustments to reconcile net income
to net cash flows provided by (used
in) operating activities:
Depreciation and amortization 72,000 64,486
(Increase) decrease in:
Accounts receivable-trade (276,870) (336,845)
Accounts receivable-trade
from related parties (142,972) 286,837
Inventories (1,154,659) (1,292,495)
Other current assets (126,930) (186,765)
Increase (decrease) in:
Accounts payable (244,244) (273,735)
Accrued expenses 423,981 81,527
Other current liabilities 41,409 166,883
------------ ------------
Net cash flows (used in)
operating activities (161,990) (365,240)
------------ ------------
Cash flows from investing activities:
Purchase of equipment (148,014) (80,180)
------------ ------------
Net cash flows (used in)
investing activities (148,014) (80,180)
------------ ------------
Cash flows from financing activities:
Proceeds from exercise of stock options -- 130,000
Revolving credit line -- 661,251
Principal payment on notes payable -
other -- (6,644)
------------ ------------
Net cash flows provided by
financing activities -- 784,607
------------ ------------
Increase (Decrease) in cash and
cash equivalents (310,004) 339,187
Cash and cash equivalents at beginning
of year 2,049,184 932,432
------------ ------------
Cash and cash equivalents at end
of quarter $ 1,739,180 $ 1,271,619
============ ============
Supplemental disclosure of cash
flow information
Interest paid $ -- $ 19,891
============ ============
Income taxes paid $ 712,500 $ 650,000
============ ============
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 three months ended May 3, 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 six months ended May 3,
1997 and May 4, 1996 reflects opening and closing inventories as
follows:
May 3, November 2, May 4, November 4,
1997 1996 1996 1995
---------- ----------- ---------- -----------
Raw Materials $ 564,654 $ 554,255 $ 557,227 $ 530,061
Work-in-process 95,158 95,279 64,160 73,068
Finished homes 7,423,299 6,302,097 6,587,314 5,366,658
Pre-owned manu-
factured home 241,623 311,133 259,240 292,374
Model home
furniture and
other 650,833 558,144 705,686 523,998
--------- --------- --------- ---------
$8,975,567 $7,820,908 $8,173,627 $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.
<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 May 3, 1997 were $9,604,700
compared to $9,323,505 for the same period last year. Net sales for the
six months ended May 3, 1997 increased 13.5 percent to $18,650,692 as
compared to $16,437,483 a year ago. This increase in sales was
primarily due to the sales to non-related dealers increasing to
$4,032,257 for the first six months of 1997 compared to $2,210,044 for
the same period last year. The Company had fifteen retail sales
centers in full operation during the first six 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. Same store sales volume for the six
months of 1997 compared to the same period last year was approximately
the same.
Gross profit, as a percentage of net sales, was approximately 26
percent in the second quarter of 1997, up from 25.6% in the same
period last year. Gross profit, as a percentage of sales, decreased
approximately 1 percent in the first six months of 1997 versus the same
period last year. The decrease in gross profit was primarily due to the
loss of Prestige retail profits from the approximately $2.0 million of
increased sales to the Company's non-related dealers.
Selling, general and administrative expenses, as a percentage of net
sales, fluctuated very little and was approximately 15 percent for the
three and six month periods of 1997 and 1996.
As a result of the factors discussed above, net income for the
second quarter of 1997 was $704,985 or $.24 per share, compared to
$635,229 or $.22 per share in 1996. For the six months ended May 3,
1997 net income was $1,246,197 or $.42 per share, compared to $1,124,867
or $.38 per share as of May 4, 1996.
Liquidity and Capital Resources
Cash and cash equivalents were $1,739,180 at May 3, 1997 compared
to $2,049,184 as of November 2, 1996. Inventories increased to
$8,975,567 as of May 3, 1997 as compared to $7,820,908 at the end if
fiscal year 1996. The increase in inventory is primarily due to the
purchase of one existing manufacturing home retail sales center and
a greater 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.
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.
<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 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: June 13, 1997 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: June 13, 1997 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: June 13, 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
CONSOLIDATED FINANCIAL STATEMENTS OF NOBILITY HOMES, INC. AS OF AND FOR THE
PERIOD ENDED MAY 3, 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> FEB-02-1997
<PERIOD-END> APR-30-1997
<CASH> 1,739,180
<SECURITIES> 0
<RECEIVABLES> 1,412,847
<ALLOWANCES> 0
<INVENTORY> 8,975,567
<CURRENT-ASSETS> 12,768,390
<PP&E> 2,588,453
<DEPRECIATION> 1,339,532
<TOTAL-ASSETS> 16,337,981
<CURRENT-LIABILITIES> 2,835,528
<BONDS> 0
0
0
<COMMON> 343,679
<OTHER-SE> 13,158,774
<TOTAL-LIABILITY-AND-EQUITY> 16,337,981
<SALES> 9,604,700
<TOTAL-REVENUES> 9,604,700
<CGS> 7,108,823
<TOTAL-COSTS> 1,419,325
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,144,985
<INCOME-TAX> 440,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 704,985
<EPS-PRIMARY> .24
<EPS-DILUTED> 0
</TABLE>
