NOBILITY HOMES INC
10-Q, 1999-09-14
MOBILE HOMES
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                                    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 July 31, 1999

                          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 organization)                    Identification No.)

          3741 S.W. 7th Street
              Ocala, Florida                                  34474
    (Address of principal executive offices)                (Zip Code)

                                 (352) 732-5157
              (Registrant's telephone number, including area code)


     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 _____.


The number of shares outstanding of each of the issuer's classes of common
equity as of September 14, 1999 was 4,790,591.

<PAGE>

                              NOBILITY HOMES, INC.

                                      INDEX
                                                                         Page
                                                                        Number

PART I.       Financial Information

Item 1.       Financial Statements

              Consolidated Balance Sheets as of July 31, 1999
               and October 31, 1998                                        3

              Consolidated Statements of Income for the three and
               nine months ended July 31, 1999 and August 1, 199           4

              Consolidated Statements of Cash Flows for the three and
               nine months ended July 31, 1999 and August 1, 1998          5

              Notes to Consolidated Financial Statements                   6

Item 2.       Management's Discussion and Analysis of Results
               of Operations and Financial Conditions                      8

PART II.      Other Information and Signatures                            11

Item 6.       Exhibits

<PAGE>
                          PART I. FINANCIAL INFORMATION

                              NOBILITY HOMES, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                   July 31, 1999         October 31, 1998
                                                                                ------------------       ----------------
                                                                                    (Unaudited)
<S>                                                                                <C>                    <C>
ASSETS

Current Assets:
      Cash and cash equivalents                                                    $  5,410,153           $  5,891,994
      Accounts receivable                                                               662,042                535,615
      Inventories                                                                    10,398,517             10,391,340
      Deferred income taxes                                                             127,000                127,000
      Prepaid expenses and other current assets                                         266,659                324,928
                                                                                    -----------            -----------

           Total current assets                                                      16,864,371             17,270,877

Property, plant and equipment, net                                                    2,014,400              2,037,140
Investment in joint venture - Nobility 21                                               796,577                428,938
Deferred income taxes - noncurrent                                                      720,200                720,200
Other assets                                                                          2,250,007              2,346,051
                                                                                    -----------            -----------

           Total assets                                                            $ 22,645,555           $ 22,803,206
                                                                                    ===========            ===========

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
      Accounts payable                                                             $    997,065           $  1,836,608
      Accrued expenses and other current liabilities                                  1,220,676              1,367,916
      Accrued compensation                                                              261,485                583,889
      Income taxes payable                                                               46,050                341,050
                                                                                    -----------            -----------

           Total current liabilities                                                  2,525,276              4,129,463
                                                                                    -----------            -----------

Commitments and contingencies

Stockholders' equity:
     Preferred stock, $.10 par value, 500,000
         shares authorized, none issued                                                       -                      -
     Common stock, $.10 par value, 10,000,000
          shares authorized; 5,364,907 and 4,922,087
          shares issued in 1999 and 1998, respectively                                  536,491                492,209
     Additional paid in capital                                                       8,629,146              2,197,185
     Retained earnings                                                               13,815,394             18,225,666
     Less treasury stock at cost, 574,316 and
          465,836 shares in 1999 and 1998, respectively                              (2,860,752)            (2,241,317)
                                                                                    -----------            -----------

           Total stockholders' equity                                                20,120,279             18,673,743
                                                                                    -----------            -----------

           Total liabilities and stockholders' equity                              $ 22,645,555           $ 22,803,206
                                                                                    ===========            ===========
</TABLE>

<PAGE>

                              NOBILITY HOMES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                     Three Months Ended                    Nine Months Ended
                                                                 July 31,           August 1,          July 31,         August 1,
                                                                   1999               1998               1999             1998
                                                                 --------           ---------          --------         ---------

<S>                                                           <C>                <C>               <C>                <C>
Net sales                                                     $  9,424,872       $ 11,403,117      $  30,372,033      $  33,269,675
Net sales - related parties                                              -             94,005             85,575            157,915
                                                               -----------        -----------       ------------       ------------

      Total net sales                                            9,424,872         11,497,122         30,457,608         33,427,590

Cost of goods sold                                              (7,133,791)        (8,276,954)       (22,283,408)       (24,457,559)
                                                               -----------        -----------       ------------       ------------

      Gross profit                                               2,291,081          3,220,168          8,174,200          8,970,031

Selling, general and administrative expenses                    (1,735,349)        (1,687,594)        (5,329,773)        (4,694,036)

Revaluation adjustment of goodwill                                 (78,566)                 -            (78,566)                -

      Operating income                                             477,166          1,532,574          2,765,861          4,275,995
                                                               -----------        -----------       ------------       ------------

Other income:
    Interest income                                                 52,828             77,337            147,446            213,982
    Undistributed earnings in joint venture -
      Nobility 21                                                  172,654             32,236            367,639             80,058
    Miscellaneous                                                   19,859             34,655             29,023             42,424
                                                               -----------        -----------       ------------       ------------
                                                                   245,341            144,228            544,108            336,464
                                                               -----------        -----------       ------------       ------------

Income before provision for income taxes                           722,507          1,676,802          3,309,969          4,612,459

Provision for income taxes                                        (271,000)          (644,000)        (1,244,000)        (1,771,000)
                                                               -----------        -----------       ------------       ------------

      Net income                                              $    451,507       $  1,032,802      $   2,065,969      $   2,841,459
                                                               ===========        ===========       ============       ============

Weighted average shares outstanding (1)
    Basic                                                        4,805,684          4,899,051          4,839,059          4,899,051
    Diluted                                                      4,806,904          5,015,131          4,885,862          4,987,153

Earnings per share (1)
    Basic                                                     $        .09       $        .21      $         .43      $         .58
    Diluted                                                          $ .09              $ .21              $ .42              $ .57
</TABLE>

(1)  Restated to reflect 10% stock dividend paid on February 19, 1999


<PAGE>


                                             NOBILITY HOMES, INC.
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                 (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                July 31,           August 1,
                                                                                  1999                1998
                                                                            -----------------   -----------------

<S>                                                                           <C>                 <C>
Cash flows from operating activities:
    Net income                                                                $  2,065,969        $  2,841,459

    Adjustments to reconcile net income to net cash (used in) provided by
      operating activities:
        Depreciation and amortization                                              264,335             153,743
        Undistributed earnings in joint venture - Nobility 21                     (367,639)            (80,058)
        (Increase) decrease in:
           Accounts receivable                                                    (126,427)         (1,010,861)
           Inventories                                                              (7,177)              9,660
           Prepaid expenses and other current assets                                58,269             (72,845)
        Increase (decrease) in:
           Accounts payable                                                       (839,543)           (486,325)
           Accrued expenses and other current liabilities                         (147,240)            708,551
           Accrued compensation                                                   (322,404)            (54,021)
           Income taxes payable                                                   (295,000)           (101,929)
                                                                               -----------         -----------

    Net cash provided by operating activities                                      283,143           1,907,374
                                                                               -----------         -----------

Cash flows from investing activities:
    Increase in receivable from officer for life insurance premiuns                (18,423)                  -
    Purchase of equipment                                                         (127,126)           (603,723)
                                                                               -----------         -----------

Cash flows from financing activities:
    Purchase of treasury stock                                                    (619,435)                  -
                                                                               -----------         -----------

(Decrease) Increase in cash and cash equivalents                                  (481,841)          1,303,651

Cash and cash equivalents at beginning of year                                   5,891,994           6,293,924
                                                                               -----------         -----------

Cash and cash equivalents at end of quarter                                   $  5,410,153        $  7,597,575
                                                                               ===========         ===========

Supplemental disclosure of cash flow information

    Income taxes paid                                                         $  1,685,000        $  1,891,000
                                                                               ===========         ===========
</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 and six months ended July 31, 1999 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 and
     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 October 31, 1998 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 July 31, 1999 and October 31, 1998 are summarized as
     follows:

<TABLE>
<CAPTION>
                                                                    July 31,            October 31,
                                                                      1999                  1998
                                                                    --------            -----------

<S>                                                              <C>                   <C>
                   Raw Materials                                 $    640,622          $    587,057
                   Work-in-process                                     89,650               101,268
                   Finished homes                                   8,538,452             8,525,402
                   Pre-owned manufactured homes                       543,707               621,017
                   Model home furniture and other                     586,086               556,596
                                                                  -----------           -----------
                                                                 $ 10,398,517          $ 10,391,340
                                                                  ===========           ===========
</TABLE>


3.   Earnings Per Share
     ------------------

     Effective for the quarter ended January 31, 1998, the Company adopted
     Statement on Financial Accounting Standards No. 128, Earnings Per Share
     (SFAS 128).  SFAS 128 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.  Basic earnings per share is
     calculated by dividing net income by the weighted-average number of shares
     outstanding.  Diluted earnings per share is calculated by dividing net
     income by the weighted-average number of shares outstanding, adjusted for
     dilutive potential common shares.  The following reconciliation details the
     numerators and denominators used to calculate basic and diluted earnings
     per share for the respective periods:

<PAGE>

                              NOBILITY HOMES, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                    Three Months Ended                  Nine Months Ended
                                                  July 31,         August 1,        July 31,         August 1,
                                                   1999              1998             1999              1998

<S>                                             <C>               <C>              <C>               <C>
     Net Income                                 $   451,507       $ 1,032,802      $ 2,065,969       $ 2,841,459
                                                 ==========        ==========       ==========        ==========

     Weighted average shares outstanding:
          Basic                                   4,805,684         4,899,051        4,839,059         4,899,051
          Add:  common stock equivalents              1,220           116,080           46,803            88,102
                                                 ----------        ----------       ----------        ----------

          Diluted                                 4,806,904         5,015,131        4,885,862         4,987,153
                                                 ==========        ==========       ==========        =========

     Earnings per share:
          Basic                                 $      0.09       $      0.21      $      0.43       $      0.58
                                                 ==========        ==========       ==========        ==========
          Diluted                               $      0.09       $      0.21      $      0.42       $      0.57
                                                 ==========        ==========       ==========        ==========
</TABLE>


4.   Stock Split
     -----------

     On January 6, 1998, the Company's Board of Directors authorized a three-
     for-two stock split in the form of a 50% stock dividend payable February
     20, 1998 to stockholders of record on January 30, 1998.  This resulted in
     the issuance of 1,485,297 additional shares of common stock.  Share and per
     share data for all periods presented herein have been adjusted to give
     effect to the 50% stock split.


5.   Stock Dividend
     --------------

     On December 15, 1998, the Company's Board of Directors declared a 10% stock
     dividend which was paid on February 19, 1999 to stockholders of record on
     January 15, 1999.  This resulted in the issuance of 442,820 additional
     shares of common stock.  The dividend was charged to retained earnings in
     the amount of approximately $6.5 million, which was based upon the fair
     value of the Company's common stock.  All references to weighted-average
     shares outstanding and per share amounts included herein reflect the 10%
     stock dividend and its retroactive effect.

<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 July 31, 1999 decreased 18.0 percent
to $9,424,872 from $11,497,122 for the same period last year.  Net sales for the
nine months also decreased 8.9 percent to $30,457,608 from $33,427,590 a year
ago.  Sales at the Company's Prestige Home Centers for the third quarter of 1999
decreased 8.6 percent to $8,610,495 compared to $9,427,051 for the three months
ended August 1, 1998.  Sales during the nine month period increased 4.7 percent
to $28,035,847 as compared to $26,766,694 a year ago.  Sales to outside dealers
in the third quarter of 1999 decreased approximately $1.2 million for the three
months and $4.3 million for the nine months as compared to the same periods of
1998.  The decline in sales is attributable in large part to increased
competition caused by the industry's excess inventory at the retail level.

     Gross profit, as a percentage of net sales, decreased to 24.3 percent in
the third quarter of 1999 from 28.0 percent for the same period last year.  The
decrease in gross profit was primarily a result of a decline in the Company's
outside dealer sales.  Gross profit, as percentage of net sales, for the same
nine month periods of 1999 and 1998 was 26.8 percent.

     Selling, general and administrative expenses, as a percentage of net sales,
increased to 18.4 percent in the third quarter of 1999 from 14.7 percent for the
third quarter last year.  For the nine months selling, general and
administrative expenses, as percentage of net sales, increased to 17.5 percent
from 14.0 percent for the same nine month period last year.  The increase in
selling, general and administrative expenses, as a percent of net sales, was
primarily due to increased expenses from the seven new retail sales centers
added during the fourth quarter of 1998.

     During the quarter the Company reevaluated goodwill in the amount of
$78,566 in connection with the closing of one recently acquired under
performing retail sales center.

     Other income for third quarter 1999 was $245,341 of which $52,828 was from
interest on short term investments and $172,654 represented undistributed
earnings from the Company's financing joint venture, Nobility 21.  For the third
quarter of 1998 other income was $144,228.  For the nine months of 1999 other
income was $544,108 of which $147,446 was from interest on short term invest-
ments and $367,639 was undistributed earnings from Nobility 21.  For the same
nine month period last year other income was $336,464.

     As a result of the factors discussed above, net income for the third
quarter of 1999 was $451,507 or $.09 per share, compared to $1,032,802 or $.21
per share in the third quarter of 1998.  For the nine months ended July 31, 1999
net income was $2,065,969 or $.42 per share, compared to $2,841,459 or $.57 per
share as of August 1, 1998.  Earnings per share for 1998 has been restated to
reflect a 10% stock dividend paid on February 19, 1999.

<PAGE>

Liquidity and Capital Resources
- -------------------------------

     Cash and cash equivalents were $5,410,153 on July 31, 1999 compared to
$5,891,994 as of October 31, 1998.  Working capital increased to $14,339,095 at
July 31, 1999 from $13,141,414 at October 31, 1998.   Inventories decreased to
$10,398,517 in the third quarter of 1999 from $11,373,424 in the second quarter
of 1999.

     The Company maintains a revolving line of credit with a major bank
providing for borrowings up to $4.0 million. A second revolving line of credit
with another bank provides for borrowings up to $1.5 million.  These two lines
of credit provide the Company with an additional $5.5 million of working capital
for use in connection with its overall operations.  At July 31, 1999, there were
no borrowings outstanding under either of these lines.

<PAGE>
                              NOBILITY HOMES, INC.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
                 OPERATIONS AND FINANCIAL CONDITION (Continued)

     Consistent with normal practice, the Company's operations are not expected
to require significant capital expenditures during fiscal year 1999.  Working
capital requirements for the home inventory for new and existing sales centers
will be met with internal sources.

     During the fourth quarter we anticipate continued pressure on both
sales and earnings resulting from the very competitive market caused by the
industry's excess inventory. This excess inventory has developed primarily from
industry growth of new retail locations that has outpaced consumer demand.

Forward Looking Statements
- --------------------------

     Certain statements in this report are forward-looking statements within the
meaning of the federal securities laws.  Although the Company believes that the
expectations reflected in such forward-looking statements are based on
reasonable assumptions, there are risks and uncertainties that may cause actual
results to differ materially from expectations.  These risks and uncertainties
include, but are not limited to, competitive pricing pressures at both the
wholesale and retail levels, changes in market demand, adverse weather
conditions that reduce sales at retail centers, the risk of manufacturing plant
shutdowns due to storms or other factors, and the impact of marketing and cost-
management programs.

     Many existing computer programs use only two digits to identify a year in
the date field. As the century date change occurs, these programs may recognize
the year 2000 as 1900, or not at all.  If not corrected, many computer systems
and applications could fail or create erroneous results by or at the year 2000
(the "Year 2000 Issue").

     The Company has developed plans to address its possible exposures related
to the impact of the Year 2000 Issue on its operations.  These plans were
implemented primarily with the use of internal resources.  The Company has
assessed (i) the equipment in its manufacturing operations that contains micro-
processors or relies on software, and (ii) the Company's internal systems.  The
Company has determined that its manufacturing equipment does not have a Year
2000 Issue.

     The Company's internal systems consist of its central operating and
accounting systems, which handles the majority of its business transactions.
The Company has completed an assessment of its central operating and accounting
systems which resulted in the identification of certain modifications necessary
to bring these systems into year 2000 compliance.  These modifications have been
made, primarily through the purchase of updated hardware and updated vendor-
supplied software.  Based on the results of initial testing with respect to
these systems, the Company does not anticipate that the Year 2000 Issue will
materially impact operations or operating results.


<PAGE>

     The total pretax costs incurred to date in connection with the Year
2000 Issue have not materially impacted the Company's operating results and
management believes that future costs of compliance, likewise, will not be
material.

     The Company believes its planning efforts are adequate to address the Year
2000 Issue and that its risk factors are primarily those that it cannot directly
control, including the readiness of its major suppliers, customers and service
providers. Failure on the part of these entities to timely remediate their Year
2000 Issue could result in disruptions in the Company's supply of materials,
disruptions in its customers' ability to conduct business and interruptions to
the Company's daily operations. Management believes that its exposure to third
party risk may be minimized to some extent because it does not rely
significantly on any one supplier or customer. There can be no guarantee,
however, that the systems and operations relied on by such third parties will be
corrected on a timely basis and will not have a material adverse effect on the
Company.

<PAGE>
                              NOBILITY HOMES, INC.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
                 OPERATIONS AND FINANCIAL CONDITION (Continued)

     Due to the nature of the Company's manufacturing and retail operations,
including the fact that the materials used by the Company in its manufactured
homes are widely available, the Company does not currently have formal
contingency plans or a timetable for implementing them.  The Company's suppliers
typically maintain a one-month supply of materials.  Contingency plans will be
established, if they are deemed necessary, after the Company has adequately
assessed the impact on its operations should third parties fail to properly
remediate their computer systems.  Contingency plans would include such items
as identifying alternative suppliers and increasing inventory levels prior to
the year 2000 to ensure availability of supplies for the Company's manufacturing
and retail operations.

<PAGE>

                    Part II. OTHER INFORMATION AND SIGNATURES



Item 1.   There were no reportable events for Item 1 through Item 5

Item 6.   Exhibits

          Exhibit 27        Financial Data Schedule





                                   Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                               NOBILITY HOMES, INC.


DATE:         September 14, 1999               By:  /s/ Terry E. Trexler
                                                  ------------------------------
                                                  Terry E. Trexler, Chairman,
                                                  President and Chief
                                                  Executive Officer


DATE:         September 14, 1999               By:  /s/ Thomas W. Trexler
                                                  ------------------------------
                                                  Thomas W. Trexler, Executive
                                                  Vice President, Chief
                                                  Financial Officer



DATE:         September 14, 1999               By:  /s/ Lynn J. Cramer, Jr.
                                                  ------------------------------
                                                  Lynn J. Cramer, Jr., Treasurer
                                                  and Principal Accounting
                                                  Officer


<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
     THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
     CONSOLIDATED FINANCIAL STATEMENTS OF NOBILITY HOMES, INC. AS OF AND FOR
     THE QUARTER ENDED JULY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
     REFERENCE TO SUCH FINANCIAL STATEMENTS.

</LEGEND>
<CIK>                         0000072205
<NAME>                        NOBILITY HOMES, INC.

<S>                                            <C>
<PERIOD-TYPE>                                        9-MOS
<FISCAL-YEAR-END>                              NOV-06-1999
<PERIOD-START>                                 MAY-01-1999
<PERIOD-END>                                   JUL-31-1999
<CASH>                                           5,410,153
<SECURITIES>                                             0
<RECEIVABLES>                                      662,042
<ALLOWANCES>                                             0
<INVENTORY>                                     10,398,417
<CURRENT-ASSETS>                                16,864,371
<PP&E>                                           3,703,636
<DEPRECIATION>                                   1,689,237
<TOTAL-ASSETS>                                  22,645,555
<CURRENT-LIABILITIES>                            2,525,276
<BONDS>                                                  0
                                    0
                                              0
<COMMON>                                           536,491
<OTHER-SE>                                      19,583,788
<TOTAL-LIABILITY-AND-EQUITY>                    22,645,555
<SALES>                                         30,457,608
<TOTAL-REVENUES>                                30,457,608
<CGS>                                           22,283,408
<TOTAL-COSTS>                                    5,329,773
<OTHER-EXPENSES>                                    78,566
<LOSS-PROVISION>                                         0
<INTEREST-EXPENSE>                                       0
<INCOME-PRETAX>                                  3,309,969
<INCOME-TAX>                                     1,244,000
<INCOME-CONTINUING>                                      0
<DISCONTINUED>                                           0
<EXTRAORDINARY>                                          0
<CHANGES>                                                0
<NET-INCOME>                                     2,065,969
<EPS-BASIC>                                         0.43
<EPS-DILUTED>                                         0.42



</TABLE>


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