NOBILITY HOMES INC
10-Q, 2000-09-18
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 August 5, 2000

                          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
              (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 12, 2000 was 4,505,838



<PAGE>

                              NOBILITY HOMES, INC.
                                      INDEX
                                                                           Page
                                                                          Number

PART I.       Financial Information

Item 1.       Financial Statements

              Consolidated Balance Sheets as of August 5, 2000
              and November 6, 1999                                            3

              Consolidated Statements of Income for the three
              and nine months ended August 5, 2000 and July 31, 1999          4

              Consolidated Statements of Cash Flows for the nine
              months ended August 5, 2000 and July 31, 1999                   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                               10

Item 6.       Exhibits





                                     Page 2
<PAGE>


<TABLE>
                          PART I. FINANCIAL INFORMATION

                              NOBILITY HOMES, INC.
                           CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                         August 5, 2000          November 6, 1999
                                                                      -------------------      -------------------
ASSETS                                                                    (UNAUDITED)
<S>                                                                      <C>                     <C>

Current Assets:
     Cash and cash equivalents                                           $   9,076,594           $   7,973,241
     Accounts receivable                                                       131,631                 167,764
     Inventories                                                             7,648,756               9,149,924
     Deferred income taxes                                                     179,900                 179,900
     Prepaid expenses and other current assets                                 346,995                 310,642
                                                                          -------------           -------------

          Total current assets                                              17,383,876              17,781,471

Property, plant and equipment, net                                           2,531,620               1,987,047
Investment in joint venture - Majestic 21                                      697,865                 431,433
Deferred income taxes - noncurrent                                             665,400                 665,400
Other assets                                                                 2,287,254               2,256,984
                                                                          -------------           -------------

          Total assets                                                   $  23,566,015           $  23,122,335
                                                                          =============           =============

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                    $     922,952           $   1,183,765
     Accrued expenses and other current liabilities                          1,376,528                 974,286
     Accrued compensation                                                      368,664                 428,343
     Income taxes payable                                                      115,150                  99,150
                                                                          -------------           -------------

          Total current liabilities                                          2,783,294               2,685,544
                                                                          -------------           -------------

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 shares issued                           536,491                 536,491
     Additional paid in capital                                              8,629,144               8,629,144
     Retained earnings                                                      16,057,324              14,540,965
     Less treasury stock at cost, 856,269 and
          633,069 shares, respectively, in 2000 and 1999                    (4,440,238)             (3,269,809)
                                                                          -------------           -------------

          Total stockholders' equity                                        20,782,721              20,436,791
                                                                          -------------           -------------

          Total liabilities and stockholders' equity                     $  23,566,015           $  23,122,335
                                                                          =============           =============
</TABLE>


    The accompanying notes are an integral part of these financial statements




                                     Page 3
<PAGE>


<TABLE>
                              NOBILITY HOMES, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


<CAPTION>
                                                              Three Months Ended                    Nine Months Ended
                                                         August 5,          July 31,           August 5,          July 31,
                                                           2000               1999               2000               1999
                                                      ----------------   ----------------   ----------------   ----------------

<S>                                                                                                <C>                <C>
Net sales                                              $  7,638,698       $  9,424,872      $  20,758,292      $  30,372,033
Net sales - related parties                                       -                  -             25,245             85,575
                                                        ------------       ------------      -------------      -------------

      Total net sales                                     7,638,698          9,424,872         20,783,537         30,457,608

Cost of goods sold                                       (5,727,020)        (7,133,791)       (15,518,677)       (22,283,408)
                                                        ------------       ------------      -------------      -------------

      Gross profit                                        1,911,678          2,291,081          5,264,860          8,174,200

Selling, general and administrative expenses             (1,373,974)        (1,735,915)        (4,051,995)        (5,330,339)

Revaluation adjustment of goodwill                                -            (78,000)           (18,000)           (78,000)
                                                        ------------       ------------      -------------      -------------

      Operating income                                      537,704            477,166          1,194,865          2,765,861
                                                        ------------       ------------      -------------      -------------

Other income:
    Interest income                                         101,432             52,828            264,552            147,446
    Undistributed earnings in joint venture -
      Majestic 21                                            56,469            172,654            266,432            367,639
    Miscellaneous  (Note 4)                                 272,721             19,859            720,511             29,023
                                                        ------------       ------------      -------------      -------------
                                                            430,622            245,341          1,251,495            544,108
                                                        ------------       ------------      -------------      -------------

Income before provision for income taxes                    968,326            722,507          2,446,360          3,309,969

Provision for income taxes                                 (363,000)          (271,000)          (930,000)        (1,244,000)
                                                        ------------       ------------      -------------      -------------

      Net income                                       $    605,326       $    451,507      $   1,516,360      $   2,065,969
                                                        ============       ============      =============      =============

Weighted average shares outstanding
    Basic                                                 4,603,412          4,805,684          4,652,835          4,839,059
    Diluted                                               4,603,412          4,806,904          4,652,835          4,885,862

Earnings per share
    Basic                                              $        .13       $        .09      $         .33      $         .43
    Diluted                                            $        .13       $        .09      $         .33      $         .42
</TABLE>




    The accompanying notes are an integral part of these financial statements



                                     Page 4
<PAGE>

<TABLE>
                              NOBILITY HOMES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<CAPTION>
                                                                             Nine Months Ended
                                                                        August 5,          July 31,
                                                                           2000              1999
                                                                      ---------------   ---------------

<S>                                                                   <C>                <C>
Cash flows from operating activities:
    Net income                                                        $  1,516,360       $ 2,065,969

    Adjustments to reconcile net income to net cash
      provided by operating activities:
        Depreciation and amortization                                      190,693           186,335
        Impairment adjustment of goodwill                                   18,000            78,000
        Gain on recovery of TLT, Inc. note receivable                     (666,099)                -
        Undistributed earnings in joint venture - Majestic 21             (266,432)         (367,639)
        (Increase) decrease in:
          Accounts receivable                                               36,133          (126,427)
          Inventories                                                    1,501,168            (7,177)
          Prepaid expenses and other current assets                        (36,353)           58,269
        Increase (decrease) in:
          Accounts payable                                                (260,813)         (839,543)
          Accrued expenses and other current liabilities                   402,242          (147,240)
          Accrued compensation                                             (59,679)         (322,404)
          Income taxes payable                                              16,000          (295,000)
                                                                       ------------       ------------

    Net cash provided by operating activities                            2,391,220           283,143
                                                                       ------------       ------------

Cash flows from investing activities:
    Purchase of property and equipment                                    (708,540)         (127,126)
    Increase in receivable from officers for life insurance
      premiums                                                             (74,997)          (18,423)
                                                                       ------------       ------------
    Net cash used in investing activities                                 (783,537)         (145,549)

Cash flows from financing activities:
    Purchase of treasury stock                                          (1,170,429)         (619,435)
    Collection of TLT,Inc. note receivable                                 666,099                 -
                                                                       ------------       ------------
    Net cash used in financing activities                                 (504,330)         (619,435)

Increase (decrease) in cash and cash equivalents                         1,103,353          (481,841)

Cash and cash equivalents at beginning of year                           7,973,241         5,891,994
                                                                       ------------       ------------

Cash and cash equivalents at end of quarter                           $  9,076,594       $ 5,410,153
                                                                       ============       ============

Supplemental disclosure of cash flow information

    Income taxes paid                                                 $    914,000       $ 1,685,000
                                                                       ============       ============
</TABLE>



    The accompanying notes are an integral part of these financial statements




                                     Page 5
<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 nine months ended August 5, 2000 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 November 6, 1999 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 August 5, 2000 and November 6, 1999 are summarized as follows:

<TABLE>
<CAPTION>
                                                                  August 5,                November 6,
                                                                     2000                      1999
                                                               -----------------         -----------------

                   <S>                                         <C>                       <C>
                   Raw materials                               $      554,518            $    571,151
                   Work-in-process                                    104,100                 114,733
                   Finished homes                                   6,226,287               7,425,884
                   Pre-owned manufactured homes                       360,649                 496,593
                   Model home furniture and other                     403,201                 541,563
                                                               -----------------         ----------------
                                                               $    7,648,756            $  9,149,924
                                                               =================         ================
</TABLE>










                                     Page 6
<PAGE>

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


<TABLE>
<CAPTION>
                                                      Three Months Ended                  Nine Months Ended
                                                 August 5,           July 31,          August 5,       July 31,
                                                    2000              1999             2000              1999
                                               ---------------   ---------------   --------------    --------------
                                               ---------------   ---------------   --------------    --------------

<S>                                             <C>               <C>                <C>              <C>
     Net income                                 $   605,326       $   451,507        $ 1,516,360      $  2,065,969
                                                 ===========       ===========        ===========      ===========

     Weighted average shares outstanding:
          Basic                                   4,603,412         4,805,684          4,652,835         4,839,059
          Add:  common stock equivalents                 -              1,220                  -            46,803
                                                 -----------       -----------        -----------      -----------

          Diluted                                 4,603,412         4,806,904          4,652,835         4,885,862
                                                 ===========       ===========        ===========      ===========

     Earnings per share:
          Basic                                 $      0.13       $      0.09        $      0.33      $       0.43
                                                 ===========       ===========        ===========      ===========
          Diluted                               $      0.13       $      0.09        $      0.33      $       0.42
                                                 ===========       ===========        ===========      ===========
</TABLE>







3.   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.

4.   Affiliated Entities
     -------------------

     In the first nine months of 2000, TLT paid $666,099 to the Company for
     advances that are non-interest bearing and have been fully reserved since
     1991.  The balance of the unpaid advances at August 5, 2000, which are
     fully reserved,  total $852,655.  The amount collected has been recorded as
     gain on recovery ot the TLT, Inc. note receivable in the accompanying
     consolidated financial statements.






                                     Page 7
<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 August 5, 2000 decreased to
$7,638,698 from $9,424,872 for the same period last year. Net sales for the nine
months also decreased to $20,783,537 from $30,457,608 a year ago. Although third
quarter of 2000 net sales increased 24.0 and 9.2 percent over first and second
quarters of 2000 respectively, the decrease in sales from the comparable period
in 1999 was primarily due to a very competitive market caused by the industry's
excess retail inventory. This excess inventory has developed from industry
growth of new retail locations that has outpaced consumer demand. Tighter credit
standards, increasing mortgage interest rates and management's decision not to
discount homes to maintain sales volume also adversely impacted sales.

         Gross profit, as a percentage of net sales, was 25.0 percent in the
third quarter of 2000 compared to 24.3 percent for the same period last year.
For the nine months gross profit, as a percentage of net sales, was 25.3 percent
compared to 26.8 percent for the same nine month period last year. The decrease
in gross profit for the nine months was primarily due to the lower sales volume
at both the Nobility manufacturing plants and Prestige retail sales centers.

         Selling, general and administrative expenses, as a percentage of net
sales, was 18.0 percent in the third quarter of 2000 compared to 18.4 percent
for the same period last year. For the nine months selling, general and
administrative expenses, as a percentage of net sales, was 19.5 percent compared
to 17.5 percent for the same nine month period last year. The increase in
selling, general and administrative expenses, as a percent of net sales, was due
to the fixed overhead cost associated with the lower sales volume.

         Other income for third quarter 2000 was $430,622 of which $101,432 was
from interest on short term investments and $56,469 was undistributed earnings
from the Company's financing joint venture, Majestic 21. The Company also
received a $250,894 payment from TLT Communities against $1,103,548 of advances
that are non-interest bearing and have been fully reserved since 1991. For the
nine months of 2000 other income was $1,251,495 of which $264,552 was from
interest on short term investments and $266,432 was undistributed earnings from
the Company's financing joint venture, Majestic 21. The Company in fiscal year
2000 received a total of $666,099 in payments from TLT Communities. For the same
nine month period in fiscal 1999 other income was $544,108 of which $147,446 was
from interest income, $367,639 from Majestic 21 and $29,023 in miscellaneous
income. There was no payment from TLT Communities during the first nine months
of 1999.

          As a result of the factors discussed above, net income for the third
quarter of 2000 was $605,326 or $.13 per share, compared to $451,507 or $.09 per
share in the third quarter of 1999. For the nine months ended August 5, 2000 net
income was $1,516,360 or $.33 per share, compared to $2,065,969 or $.42 per
share as of July 31, 1999.

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

Cash and cash equivalents were $9,076,594 at August 5, 2000 compared to
$7,973,241 as of November 6, 1999.  Working capital was $14,600,582 at
August 5, 2000 compared to $15,095,927 at November 6, 1999.   Inventories
decreased to $7,648,756 in the third quarter of 2000 from $9,149,924 at the
fourth quarter of 1999, as a result of Prestige reducing the number of model
homes in stock at their retail sales centers.

Prestige purchased the land for two of its existing retail sales centers during
the second quarter of 2000 for $638,738. The Company had previously leased the
property from unrelated entities under operating lease agreements.

The Company repurchased 223,200 shares of its common stock in the open market
during the first nine months of 2000 for $1,170,429.

In the current nine months if fiscal 2000 Prestige closed one of its sales
centers in Chiefland, Florida, November 1999, and made an impairment adjustment
to goodwill in the amount of $18,000. For the nine months of fiscal year 1999
one sales center was closed and the Company made an impairment adjustment to
goodwill in the amount of $78,000.

The Company maintains a revolving credit agreement with a major bank providing
for borrowings up to $4.0 million. At August 5, 2000 there were no amounts
outstanding under this agreement.

Consistent with normal practice, the Company's operations are not expected to
require significant capital expenditures during fiscal year 2000. Working
capital requirements for the home inventory for new and existing sales centers
will be met with internal sources.




                                     Page 8
<PAGE>

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

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, increasing interest
rates, adverse weather conditions that reduce sales at retail centers, price
increases in raw material costs, the risk of manufacturing plant shutdowns due
to storms or other factors, and the impact of marketing and cost-management
programs.




                                     Page 9
<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 12, 2000             By:     /s/      Terry E. Trexler
                                            ------------------------------------
                                              Terry E. Trexler, Chairman,
                                              President and Chief
                                              Executive Officer


DATE:        September 12, 2000             By:     /s/      Thomas W. Trexler
                                            ------------------------------------
                                              Thomas W. Trexler, Executive
                                              Vice President, Chief Financial
                                              Officer



DATE:        September 12, 2000             By:     /s/     Lynn J. Cramer, Jr.
                                            ------------------------------------
                                              Lynn J. Cramer, Jr., Treasurer
                                              and Principal Accounting Officer








                                    Page 10


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