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 2, 1998
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 5, 1998. 4,456,251
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of May 2,
1998 and November 1, 1997 3
Consolidated Statements of Income for the
three and six months ended May 2, 1998 and
May 3, 1997 4
Consolidated Statements of Cash Flows for
the three and six months ended May 2, 1998
and May 3, 1997 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>
<TABLE>
PART I. FINANCIAL INFORMATION
NOBILITY HOMES, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
May 2, 1998 November 1, 1997
----------- ----------------
ASSETS (Unaudited)
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 7,082,545 $ 6,293,924
Accounts receivable - trade 1,257,968 386,019
Inventories 8,227,500 8,041,471
Deferred income taxes 150,100 150,100
Prepaid expenses and other current assets 176,307 113,857
----------- -----------
Total current assets 16,894,420 14,985,371
Property, plant and equipment, net 1,310,539 1,285,112
Investment in joint venture 310,846 263,024
Deferred income taxes - noncurrent 697,100 697,100
Other assets 1,679,140 1,710,023
----------- -----------
Total assets $ 20,892,045 $ 18,940,630
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current liabilities:
Accounts payable $ 1,501,164 $ 1,592,980
Accrued compensation 540,898 606,651
Accrued expenses and other current liabilities 1,499,442 1,044,186
Income taxes payable 248,050 402,979
----------- -----------
Total current liabilities 3,789,554 3,646,796
----------- -----------
Stockholders' equity:
Preferred stock, $.10 par value, 500,000
shares authorized, none issued - -
Common stock, $.10 par value, 10,000,000
shares authorized, 4,922,087 shares
issued in 1998 and 1997 492,209 492,209
Additional paid in capital 2,197,185 2,197,185
Retained earnings 16,093,164 14,284,507
Less treasury stock at cost, 465,836 shares (1,680,067) (1,680,067)
----------- -----------
Total stockholders' equity 17,102,491 15,293,834
----------- -----------
Commitments and contingencies - -
----------- -----------
Total liabilities and stockholders' equity $ 20,892,045 $ 18,940,630
=========== ===========
</TABLE>
<PAGE>
<TABLE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
May 2, May 3, May 2, May 3,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 11,277,506 $ 9,506,324 $ 21,866,558 $ 18,499,829
Net sales - related parties 46,997 98,376 63,910 150,863
----------- ----------- ----------- -----------
Total net sales 11,324,503 9,604,700 21,930,468 18,650,692
Less cost of goods sold (8,284,991) (7,108,823) (16,180,605) (13,935,411)
----------- ----------- ----------- -----------
Gross profit 3,039,512 2,495,877 5,749,863 4,715,281
Selling, general and
administrative expenses (1,502,550) (1,419,325) (3,006,442) (2,785,896)
----------- ----------- ----------- -----------
Operating income 1,536,962 1,076,552 2,743,421 1,929,385
Other income:
Interest income 72,826 19,131 136,645 37,821
Undistributed earnings in
joint venture 21,970 - 47,822 -
Miscellaneous income 4,587 49,302 7,769 55,991
----------- ----------- ----------- -----------
99,383 68,433 192,236 93,812
----------- ----------- ----------- -----------
Income before provision
for income taxes 1,636,345 1,144,985 2,935,657 2,023,197
Less provision
for income taxes (628,000) (440,000) (1,127,000) (777,000)
----------- ----------- ----------- -----------
Net income $ 1,008,345 $ 704,985 $ 1,808,657 $ 1,246,197
=========== =========== =========== ===========
Weighted average shares
outstanding(1)
Basic 4,456,251 4,456,251 4,456,251 4,456,251
Diluted 4,516,234 4,456,251 4,516,234 4,456,251
Earnings per share(1)
Basic $ 0.23 $ 0.16 $ 0.41 $ 0.28
Diluted $ 0.22 $ 0.16 $ 0.40 $ 0.28
</TABLE>
(1) Restated to reflect three-for-two-stock split in the form of a stock
dividend paid on February 20, 1998
<PAGE>
<TABLE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
----------------
May 2, May 3,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,808,657 $ 1,246,197
Adjustments to reconcile net income to net
cash flows provided (used in) by operating
activities:
Depreciation and amortization 105,427 72,098
Undistributed earnings in joint venture (47,822) -
(Increase) decrease in:
Accounts receivable -trade (871,949) (276,870)
Accounts receivable -trade from related
parties - (142,972)
Inventories (186,029) (1,154,659)
Prepaid expenses and other current assets (62,450) (126,930)
Increase (decrease) in:
Accounts payable (91,816) (244,244)
Accrued compensation (65,753) -
Accrued expenses and other current liabilities 455,256 423,981
Income taxes payable (154,929) 41,409
----------- -----------
Net cash flows provided by (used in)
operating activities 888,592 (161,990)
----------- -----------
Cash flows from investing activities:
Purchase of equipment (99,971) (148,014)
----------- -----------
Net cash flows (used in) investing activities (99,971) (148,014)
----------- -----------
Increase (decrease) in cash and cash equivalents 788,621 (310,004)
Cash and cash equivalents at beginning of year 6,293,924 2,049,184
----------- -----------
Cash and cash equivalents at end of quarter $ 7,082,545 $ 1,739,180
=========== ===========
Supplemental disclosure of cash flow information
Income taxes paid $ 1,300,000 $ 712,500
=========== ===========
</TABLE>
<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 six months ended May 2, 1998 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 1, 1997 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. Inventories at May 2, 1998 and November 1, 1997 are summarized
as follows:
May 2, November 1,
1998 1997
------ -----------
Raw Materials $ 550,509 $ 540,279
Work-in-process 63,175 75,022
Finished homes 6,665,303 6,501,759
Pre-owned manufactured homes 362,089 340,751
Model home furniture and other 586,424 583,660
---------- ----------
$ 8,227,500 $ 8,041,471
========== ==========
3. Earnings Per Share
------------------
Effective for the quarter ended January 31, 1998, the Company adopted
FASB Statement on Accounting Standards No. 128, Earnings Per Share.
The Statement simplifies the standards for computing earnings per
share by replacing the presentation of primary earnings per share
with a presentation of basic earnings per share. Prior years have
been restated to reflect this change. The following reconciliation
details the numerators and denominators used to calculate basic and
diluted earnings per share for the respective periods:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
May 2, May 3, May 2, May 3,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Income $ 1,008,345 $ 704,985 $ 1,808,657 $ 1,246,197
========== ========== ========== ==========
Weighted average shares
outstanding
Basic 4,456,251 4,456,251 4,456,251 4,456,251
Add: common stock equivalents 59,983 - 59,983 -
---------- ---------- ---------- ----------
Diluted 4,516,234 4,456,251 4,516,234 4,456,251
========== ========== ========== ==========
Earning per share:
Basic $ 0.23 $ 0.16 $ 0.41 $ 0.28
========== ========== ========== ==========
$ 0.22 $ 0.16 $ 0.40 $ 0.28
========== ========== ========== ==========
</TABLE>
4. Three-for-two Stock Split
-------------------------
On January 6, 1998, the Company declared a three-for-two stock split
in the form of a stock dividend, payable on February 20, 1998 to
shareholders of record as of January 30, 1998. Fiscal 1997 stock-
holders' equity has been restated to give the retroactive recognition
to the stock split in the prior period by reclassifying from additional
paid-in-capital to common stock the par value of the 1,485,297 shares
arising from the split. In addition, all references to per share
amounts of the Company's common stock have been restated.
<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 2, 1998 increased 18 percent
to $11,324,503 from $9,604,700 for the same period last year. Net sales
for the six months also increased 18 percent to $21,930,468 from
$18,650,692 a year ago. The increase in sales in 1998 was primarily due
to the same store sales volume at the Company's Prestige Home Centers
increasing 15 percent to $8,031,914 for the second quarter of 1998 from
$6,960,955 for the same period last year and increasing 15 percent to
$15,666,304 for the six months of 1998 from $13,626,527 for the same six
month period last year.
Gross profit, as a percentage of net sales, increased to 26.8 percent
in the second quarter of 1998 from 25.9 percent for the same period last
year. For the six months gross profit, as a percentage of net sales,
increased to 26.2 percent as of May 2, 1998 from 25.3 percent for the same
six month period last year. The increase in gross profit was primarily a
result of improvements in the gross margins at both the manufacturing
plants and retails sales centers.
Selling, general and administrative expenses, as a percentage of net
sales, declined to 13.3 percent in the second quarter of 1998 from 14.8
percent for the second quarter last year. For the six months selling,
general and administrative expenses, as a percentage of net sales,
declined to 13.7 percent as of May 2, 1998 from 14.9 percent for the same
six month period last year. The decline in selling, general and
administrative expenses as a percent of net sales was primarily due to a
reduction in these expenses at the manufacturing plants.
Other income for the second quarter of 1998 was $99,383 of which
$72,826 was from interest on short term investments and $21,970
represented undistributed earnings from Nobility 21 a joint venture which
provides financing to Prestige's retail customers. For the second quarter
of 1997 other income was $68,433. For the six months other income was
$192,236 of which $136,645 was from interest on short term investments and
$47,822 was undistributed earnings from Nobility 21. For the same six
month period last year other income was $93,812.
As a result of the factors discussed above, net income for the second
quarter of 1998 increased 43% to $1,008,345 or $.23 per share, compared to
$704,985 or $.16 per share in 1997. For the six months ended May 2, 1998
net income increased 45% to $1,808,657 or $.41 per share, compared to
$1,246,197 or $.28 per share as of May 3, 1997. Earnings per share for
1997 have been restated to reflect a three-for-two stock split in the form
of a 50% stock dividend paid on February 20, 1998.
Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents were $7,082,545 at May 2, 1998 compared to
$6,293,924 as of November 1, 1997. Accounts receivable - trade increased
to $1,257,968 at May 2, 1998 from an abnormally low $386,019 at November
1, 1997, but was down from $1,412,847 in second quarter ended May 3, 1997.
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. At May 2, 1998 there were no amounts outstanding under these
agreements.
Consistent with normal practice, the Company's operations are not
expected to require significant capital expenditures during fiscal 1998.
Working capital requirements for the home inventory for new sales centers
will be met with internal sources.
<PAGE>
Part II. Other Information And Signatures
Item 1. There were no reportable events for item 1 through item 5.
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 5, 1998 By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: June 5, 1998 By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: June 5, 1998 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
QUARTER ENDED MAY 2, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> FEB-01-1998
<PERIOD-END> MAY-02-1998
<CASH> 7,082,545
<SECURITIES> 0
<RECEIVABLES> 1,257,968
<ALLOWANCES> 0
<INVENTORY> 8,227,500
<CURRENT-ASSETS> 16,894,420
<PP&E> 2,747,786
<DEPRECIATION> 1,437,247
<TOTAL-ASSETS> 20,892,045
<CURRENT-LIABILITIES> 3,789,554
<BONDS> 0
0
0
<COMMON> 492,209
<OTHER-SE> 16,610,282
<TOTAL-LIABILITY-AND-EQUITY> 20,892,045
<SALES> 11,324,503
<TOTAL-REVENUES> 11,324,503
<CGS> 8,284,991
<TOTAL-COSTS> 1,502,550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,636,345
<INCOME-TAX> 628,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,008,345
<EPS-PRIMARY> .23
<EPS-DILUTED> .22
</TABLE>
