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 January 31, 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)
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of March 12, 1998. 4,456,251
<PAGE>
NOBILITY HOMES, INC.
INDEX
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
January 31, 1998 and November 1, 1997 3
Consolidated Statements of Income for
the three months ended January 31, 1998
and February 1, 1997 4
Consolidated Statements of Cash Flows
for three months ended January 31, 1998
and February 1, 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 4. Submission of Matters to a Vote of Security
Holders 8
Item 6. Exhibits and Reports of Form 8-K 8
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
NOBILITY HOMES, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
January 31, 1998 November 1, 1997
---------------- ----------------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,355,568 $ 6,293,924
Accounts receivable - trade 1,007,168 386,019
Inventories 8,045,897 8,041,471
Deferred income taxes 150,100 150,100
Prepaid expenses and other current assets 114,671 113,857
----------- -----------
Total current assets 15,673,404 14,985,371
Property, plant and equipment, net 1,302,516 1,285,112
Investment in joint venture 288,877 263,024
Deferred income taxes - noncurrent 697,100 697,100
Other assets 1,683,034 1,710,023
----------- -----------
Total assets $ 19,644,931 $ 18,940,630
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,316,850 $ 1,592,980
Accrued compensation 473,786 606,651
Accrued expenses and other current liabilities 1,115,096 1,044,186
Income taxes payable 645,050 402,979
----------- -----------
Total liabilities 3,550,782 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 15,084,822 14,284,507
Less treasury stock at cost, 465,836 shares (1,680,067) (1,680,067)
----------- -----------
Total stockholders' equity 16,094,149 15,293,834
----------- -----------
Commitments and contingencies - -
----------- -----------
Total liabilities and stockholders'
equity $ 19,644,931 $ 18,940,630
=========== ===========
</TABLE>
<PAGE>
<TABLE>
NOBILITY HOMES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended
------------------
January 31, February 1,
1998 1997
----------- -----------
<S> <C> <C>
Net sales $ 10,589,052 $ 8,993,505
Net sales - related parties 16,913 52,487
----------- -----------
Total net sales 10,605,965 9,045,992
Less cost of goods sold (7,895,612) (6,826,587)
----------- -----------
Gross profit 2,710,353 2,219,405
Selling, general and administrative
expenses (1,503,891) (1,366,570)
----------- -----------
Operating income 1,206,462 852,835
----------- -----------
Other income:
Interest income 63,819 18,690
Undistributed earnings in joint
venture 25,852 -
Miscellaneous income 3,182 6,689
----------- -----------
92,853 25,379
----------- -----------
Income before provision for
income taxes 1,299,315 878,214
Less provision for income taxes (499,000) (337,000)
----------- -----------
Net income $ 800,315 $ 541,214
=========== ===========
Weighted average shares outstanding(1)
Basic 4,456,251 4,456,251
Diluted 4,495,134 4,456,251
Earnings per share(1)
Basic $ .18 $ .12
Diluted $ .18 $ .12
</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>
Three Months Ended
------------------
January 31, February 1,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 800,315 $ 541,214
Adjustments to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization 63,649 35,643
Undistributed earnings in joint venture (25,853) -
(Increase) decrease in:
Accounts receivable -trade (621,149) (944,141)
Accounts receivable -trade from related parties - (174,313)
Inventories (4,426) (329,960)
Prepaid expenses and other current assets (814) (81,815)
Increase (decrease) in:
Accounts payable (276,130) (418,995)
Accrued compensation (132,865) -
Accrued expenses and other current liabilities 70,910 288,674
Income taxes payable 242,071 248,247
---------- ----------
Net cash flows provided by (used in) operating
activities 115,708 (835,446)
---------- ----------
Cash flows from investing activities:
Purchase of equipment (54,064) (81,015)
---------- ----------
Net cash flows (used in) investing activities (54,064) (81,015)
---------- ----------
Increase (decrease) in cash and cash equivalents 61,644 (916,461)
Cash and cash equivalents at beginning of year 6,293,924 2,049,184
---------- ----------
Cash and cash equivalents at end of quarter $ 6,355,568 $ 1,132,723
========== ==========
Supplemental disclosure of cash flow information
Interest paid $ - $ -
========== ==========
Income taxes paid $ 275,000 $ 125,000
========== ==========
</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 three months ended January 31, 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 January 31, 1998 and November 1, 1997 are
summarized as follows:
January 31, November 1,
1998 1997
----------- -----------
Raw Materials $ 550,465 $ 540,279
Work-in-process 89,277 75,022
Finished homes 6,414,422 6,501,759
Pre-owned manufactured homes 364,082 340,751
Model home furniture and other 627,651 583,660
---------- ----------
$ 8,045,897 $ 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:
Three Months Ended
------------------
January 31, February 1,
1998 1997
----------- -----------
Net income $ 800,315 $ 541,214
Weighted average shares
outstanding
Basic 4,456,251 4,456,251
Add: common stock equivalents 38,883 -
----------- -----------
Diluted 4,495,134 4,456,251
=========== ===========
Earning per share:
Basic and Diluted $ 0.18 $ 0.12
=========== ===========
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 in the first quarter of 1998 increased 17.2 percent to
$10,605,965 as compared to $9,045,992 for the first quarter of 1997.
The increase in sales for the three months of 1998 was primarily due
to the same store sales volume at the Company's Prestige Home Centers
increasing 14.5% to $7,634,390 from $6,665,533 for the first quarter
of 1997.
Gross profit in the first quarter of 1998 as a percentage of net
sales was 25.5 percent compared to 24.5 percent for the same period last
year. The increase in gross profit in first quarter 1998 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, was 14.2 percent in the first quarter of 1998 compared to 15.1
percent for the same period last year. The decline in first quarter 1998
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 first quarter 1998 was $92,853 of which $63,819 was
from interest on short term investments and $25,852 was undistributed
earnings from the Nobility 21 financing joint venture, versus $25,379 in
other income for the first quarter of last fiscal year.
As a result of the factors discussed above, net income for the first
quarter of 1998 was $800,315 or $.18 per share, compared to $541,214 or
$.12 per share in 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 $6,355,568 at January 31, 1998
compared to $6,293,924 as of November 1, 1997. Accounts receivable -
trade increased to $1,007,168 at January 31, 1998 from an abnormally low
$386,019 at November 1, 1997, but was down from $1,586,767 in first
quarter ended February 1, 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 January 31, 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 3 and
Item 5.
Item 4. Submission of Matters to a Vote of Security Holders.
a) The Annual Meeting of the Shareholders was held on February 27, 1998.
b) The vote to elect a board of five directors was as follows:
<TABLE>
<CAPTION>
For Against Abstain Not Voted
--- ------- ------- ---------
<S> <C> <C> <C> <C>
Terry E. Trexler 2,739,006 1,056 0 230,838
Richard C. Barberie 2,738,873 1,189 0 230,838
Robert P. Holliday 2,739,006 1,056 0 230,838
Robert P. Saltsman 2,739,006 1,056 0 230,838
Thomas W. Trexler 2,739,006 1,056 0 230,838
</TABLE>
Item 6. Exhibits And Reports On Form 8-K
Exhibit 27 Financial Data Schedule
<PAGE>
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 12, 1998 By: /s/ Terry E. Trexler
--------------------------------
Terry E. Trexler, Chairman,
President and Chief
Executive Officer
DATE: March 12, 1998 By: /s/ Thomas W. Trexler
--------------------------------
Thomas W. Trexler, Executive
Vice President, Chief
Financial Officer
DATE: March 12, 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
FIRST QUARTER ENDED JANUARY 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-02-1997
<PERIOD-END> JAN-31-1998
<CASH> 6,355,568
<SECURITIES> 0
<RECEIVABLES> 1,007,168
<ALLOWANCES> 0
<INVENTORY> 8,045,897
<CURRENT-ASSETS> 15,673,404
<PP&E> 2,702,491
<DEPRECIATION> 1,399,975
<TOTAL-ASSETS> 19,644,931
<CURRENT-LIABILITIES> 3,550,782
<BONDS> 0
0
0
<COMMON> 492,209
<OTHER-SE> 15,601,940
<TOTAL-LIABILITY-AND-EQUITY> 19,644,931
<SALES> 10,605,965
<TOTAL-REVENUES> 10,605,965
<CGS> 7,895,612
<TOTAL-COSTS> 1,503,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,299,315
<INCOME-TAX> 499,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 800,315
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
