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 February 1, 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)
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of March 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
February 1, 1997 and November 2, 1996 3
Consolidated Statements of Income for
the three months ended February 1, 1997 4
and February 3, 1996
Consolidated Statements of Cash Flows
for three months ended February 1, 1997 5
and February 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 4. Submission of Matters to a Vote of 8
Security Holders
Item 6. Exhibits and Reports of Form 8-K 8
<PAGE>
PART I. FINANCIAL INFORMATION
NOBILITY HOMES, INC.
CONSOLIDATED BALANCE SHEETS
February 1, November 2,
1997 1996
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $1,132,723 $ 2,049,184
Accounts receivable - trade 1,586,767 642,626
Accounts receivable - trade, from
related parties 524,692 350,379
Inventories 8,150,868 7,820,908
Deferred income taxes 145,400 145,400
Other current assets 450,281 368,466
---------- ----------
Total current assets 11,990,731 11,376,963
Property, plant and equipment, net 1,214,683 1,166,429
Deferred income taxes - noncurrent 707,200 707,200
Other assets 1,617,164 1,620,046
---------- ----------
Total assets $15,529,778 $14,870,638
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 949,173 $ 1,368,168
Accrued expenses 981,411 692,737
Other liabilities 801,724 553,477
---------- ----------
Total liabilities 2,732,308 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 11,788,143 11,246,929
Less treasury stock at cost, 465,836
shares (1,680,067) (1,680,067)
---------- ----------
Total stockholders' equity 12,797,470 12,256,256
---------- ----------
Commitments and contingencies -- --
---------- ----------
Total liabilities and
stockholders' equity $15,529,778 $14,870,638
========== ==========
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
February 1, February 3,
1997 1996
Net sales $ 8,993,505 $ 6,986,157
Net sales - related parties 52,487 127,820
--------- ---------
Total net sales 9,045,992 7,113,977
Less cost of goods sold (6,826,587) (5,177,382)
--------- ---------
Gross profit 2,219,405 1,936,595
Selling, general and administrative
expenses (1,366,570) (1,166,274)
--------- ---------
Operating income 852,835 770,321
Other income (expenses):
Interest income 18,690 --
Interest expense -- (6,838)
Miscellaneous income 6,689 12,705
--------- ---------
25,379 5,867
--------- ---------
Income before provision for income taxes 878,214 776,188
Less provision for income taxes (337,000) (297,000)
--------- ---------
Net income $ 541,214 $ 479,188
========= =========
Weighted average shares outstanding 2,970,954 2,932,439
========= =========
Earnings per share
Net income $ 0.18 $ 0.16
========= =========
<PAGE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
February 1, February 3,
1997 1996
Cash flows from operating activities:
Net income $ 541,214 $ 479,188
Adjustments to reconcile net income
to net cash flows provided by
(used in) operating activities:
Depreciation and amortization 35,643 32,307
(Increase) decrease in:
Accounts receivable - trade (944,141) (432,039)
Accounts receivable - trade from
related parties (174,313) (12,254)
Inventories (329,960) (993,634)
Other current assets (81,815) (35,082)
Increase (decrease) in:
Accounts payable (418,995) (416,625)
Accrued expenses 288,674 (83,899)
Other current liabilities 248,247 296,832
--------- ---------
Net cash flows (used in)
operating activities (835,446) (1,165,206)
--------- ---------
Cash flows from investing activities:
Purchase of equipment (81,015) (30,792)
--------- ---------
Net cash flows (used in)
investing activities (81,015) (30,792)
--------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock options -- 130,000
Revolving credit line -- 436,336
Principal payment on notes payable -
other -- (6,644)
--------- ---------
Net cash flows provided by
financing activities -- 559,692
--------- ---------
Decrease in cash and cash equivalents (916,461) (636,306)
Cash and cash equivalents at beginning
of year 2,049,184 932,432
--------- ---------
Cash and cash equivalents at end
of quarter $1,132,723 $ 296,126
========= =========
Supplemental disclosure of
cash flow information
Interest paid $ -- $ 6,204
========= =========
Income taxes paid $ 125,000 $ --
========= =========
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 February 1, 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 three months ended February 1,
1997 and February 3, 1996 reflects opening and closing inventories as
follows:
February 1, November 2, February 3, November 4,
1997 1996 1996 1995
Raw Materials $ 572,049 $ 554,255 $ 529,123 $ 530,061
Work-in-process 94,894 95,279 94,517 73,068
Finished homes 6,577,947 6,302,097 6,382,737 5,366,658
Pre-owned manu-
factured home 287,866 311,133 306,950 292,374
Model home
furniture and
other 618,112 558,144 561,439 523,998
--------- --------- --------- ---------
$8,150,868 $7,820,908 $7,874,766 $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 purchas 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 in the first quarter of 1997 increased 27 percent to
$9,045,992 as compared to $7,113,977 for the first quarter of 1996. The
increase in sales for the three months of 1997 was primarily the result of
two factors. (1) Net sales to non-related dealers increased to
$1,909,484 for the first quarter of 1997 compared to $957,319 for the same
quarter last year. (2) The Company had fifteen retail sales centers in
full operation during the first quarter 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 first quarter of 1997 increased
13.4% to $6,558,375 from $5,783,133 for the first quarter of 1996.
Gross profit in the first quarter of 1997 as a percentage of net
sales was 25 percent compared to 27 percent for the same period last year.
The decrease in gross profit was primarily due to the loss of Prestige
retail profits from the approximately $1.0 million of increased sales to
the Company's non-related dealers and the additional profit bonuses
accrued for the Company's management personnel in first quarter of 1997
that were not paid in first quarter of 1996.
Selling, general and administrative expenses, as a percentage of net
sales, was 15 percent in the first quarter of 1997 compared to 16 percent
in 1996.
As a result of the factors discussed above, net income for the first
quarter of 1997 was $541,214 or $.18 per share, compared to $479,188 or
$.16 per share in 1996.
Liquidity and Capital Resources
Cash and cash equivalents were $1,132,723 at February 1, 1997
compared to $2,049,184 as of November 2, 1996. The decrease in cash and
cash equivalents is primarily due to the increase in accounts receivable -
trade from $642,626 at November 2, 1996 to $1,586,767 at the end of first
quarter of 1997 due to the increased sales to non-related dealers.
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 signed a letter of intent in March 1997 to acquire two
additional existing manufacturing home retail sales centers in North
Central Florida for 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 4. Submission of Matters to a Vote of Security Holders.
a) The Annual Meeting of the Shareholders was held on February 28,
1997
b) To elect a board of five directors.
No Not
For Against Abstain Vote Voted
Terry E. Trexler 2,667,610 70,418 0 0 232,926
Richard C. Barberie 2,667,160 70,868 0 0 232,926
Robert P. Holliday 2,667,610 70,418 0 0 232,926
Robert P. Saltsman 2,667,610 70,418 0 0 232,926
Thomas W. Trexler 2,667,610 70,418 0 0 232,926
c) To approve an amendment to Article III of the Company's Articles of
Incorporation increasing the number of authorized shares of the
Company's common stock from 4,000,000 to 10,000,000.
For Against Abstain No Vote Not Voted
2,577,806 156,705 3,517 0 232,926
d) To approve the Nobility Homes, Inc. Stock Incentive Plan
For Against Abstain No Vote Not Voted
2,163,52 71,622 12,517 0 723,286
Item 6. Exhibits And Reports On Form 8-K
Exhibit 27 Financial Data Schedule
<PAGE>
Part II. Other Information And Signatures (continued)
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: March 17, 1997 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: March 17, 1997 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: March 17, 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 FEBRUARY 1, 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> NOV-04-1996
<PERIOD-END> FEB-01-1997
<CASH> 1,132,723
<SECURITIES> 0
<RECEIVABLES> 1,586,767
<ALLOWANCES> 0
<INVENTORY> 8,150,868
<CURRENT-ASSETS> 15,529,778
<PP&E> 1,214,683
<DEPRECIATION> 1,309,631
<TOTAL-ASSETS> 15,529,778
<CURRENT-LIABILITIES> 2,732,308
<BONDS> 0
0
0
<COMMON> 343,679
<OTHER-SE> 12,453,791
<TOTAL-LIABILITY-AND-EQUITY> 15,529,778
<SALES> 9,045,992
<TOTAL-REVENUES> 9,045,992
<CGS> 6,826,587
<TOTAL-COSTS> 1,366,570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 878,214
<INCOME-TAX> 337,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 541,214
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
