-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DME+BrM1+PnW8n//OlBKwXLlAKkJ6z6pBBBVRFlzIJwBYB8LktRBJ/TgH0q6K10b drQUtlr8seTG6I+bpi3vqw== 0000897069-05-002240.txt : 20050920 0000897069-05-002240.hdr.sgml : 20050920 20050920151214 ACCESSION NUMBER: 0000897069-05-002240 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050806 FILED AS OF DATE: 20050920 DATE AS OF CHANGE: 20050920 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOBILITY HOMES INC CENTRAL INDEX KEY: 0000072205 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 591166102 STATE OF INCORPORATION: FL FISCAL YEAR END: 1027 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06506 FILM NUMBER: 051093476 BUSINESS ADDRESS: STREET 1: 3741 S W 7TH ST CITY: OCALA STATE: FL ZIP: 34478 BUSINESS PHONE: 3527325157 MAIL ADDRESS: STREET 1: P O BOX 1659 CITY: OCALA STATE: FL ZIP: 34478-1659 10-Q 1 dkm706.txt FORM 10-Q FQE AUGUST 6, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 6, 2005 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 . Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act). Yes ; No X. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ; No X. The number of shares of the registrant's common stock, par value $0.10, outstanding as of September 20, 2005 was 4,057,817. NOBILITY HOMES, INC. INDEX Page Number PART I. Financial Information Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of August 6, 2005 and November 6, 2004 3 Consolidated Statements of Income and Comprehensive Income for the three and nine months ended August 6, 2005 and July 31, 2004 4 Consolidated Statements of Cash Flows for the nine months ended August 6, 2005 and July 31, 2004 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 Item 4. Controls and Procedures 12 PART II. Other Information Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13 Item 6. Exhibits 13 Signatures 14 2 NOBILITY HOMES, INC. CONSOLIDATED BALANCE SHEETS
August 6, November 6, 2005 2004 (Unaudited) Assets Current Assets: Cash and cash equivalents $ 10,978,105 $ 14,588,332 Short-term investments 364,399 777,042 Accounts receivable - trade 1,382,631 1,869,449 Inventories 9,414,947 6,908,557 Prepaid income taxes 62,263 - Prepaid expenses and other current assets 680,330 397,179 Deferred income taxes 366,387 392,594 ------------ ------------ Total current assets 23,249,062 24,933,153 Property, plant and equipment, net 3,801,285 3,265,042 Long-term investments 11,865,178 8,342,382 Other investments 1,727,222 1,446,012 Other assets 2,056,382 1,988,882 ------------ ------------ Total assets $ 42,699,129 $ 39,975,471 ============ =========== Liabilities and stockholders' equity Current liabilities: Accounts payable $ 1,308,661 $ 1,494,163 Accrued compensation 860,798 1,031,819 Accrued expenses and other current liabilities 969,739 977,848 Income taxes payable - 617,737 Customer deposits 4,604,163 4,327,647 ------------ ------------ Total current liabilities 7,743,361 8,449,214 Deferred income taxes 152,630 152,630 ------------ ------------ Total liabilities 7,895,991 8,601,844 ------------ ------------ Commitments and contingent liabilities 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 8,688,757 8,719,130 Retained earnings 33,189,771 29,732,071 Accumulated other comprehensive income 138,938 77,788 Less treasury stock at cost, 1,307,090 and 1,334,361 shares, respectively, in 2005 and 2004 (7,750,819) (7,691,853) ------------ ------------ Total stockholders' equity 34,803,138 31,373,627 ------------ ------------ Total liabilities and stockholders' equity $ 42,699,129 $ 39,975,471 ============ ============
The accompanying notes are an integral part of these financial statements 3 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- August 6, July 31, August 6, July 31, 2005 2004 2005 2004 ------------------ ----------------- ----------------- ---------------- Net sales $ 13,652,618 $ 12,310,878 $ 40,692,884 $ 35,621,719 Cost of goods sold (9,744,681) (9,070,731) (29,004,681) (26,461,090) ------------ ----------- ----------- ------------ Gross profit 3,907,937 3,240,147 11,688,203 9,160,629 Selling, general and administrative expenses (1,894,821) (1,569,987) (5,894,539) (4,884,624) ------------ ----------- ----------- ------------ Operating income 2,013,116 1,670,160 5,793,664 4,276,005 ------------ ----------- ----------- ------------ Other income: Interest income 162,924 83,491 426,533 249,922 Undistributed earnings in joint venture - Majestic 21 94,276 90,640 281,210 261,705 Miscellaneous income 10,428 39,847 21,119 72,744 ------------ ----------- ----------- ------------ 267,628 213,978 728,862 584,371 ------------ ----------- ----------- ------------ Income before provision for income taxes 2,280,744 1,884,138 6,522,526 4,860,376 Provision for income taxes (780,000) (664,000) (2,257,000) (1,703,000) ------------ ----------- ----------- ------------ Net income 1,500,744 1,220,138 4,265,526 3,157,376 Other comprehensive income, net of tax: Unrealized investment gain 22,254 10,283 61,150 31,086 ------------ ----------- ----------- ------------ Comprehensive income $ 1,522,998 $ 1,230,421 $ 4,326,676 $ 3,188,462 ============ =========== =========== ============ Weighted average shares outstanding Basic 4,045,982 4,018,646 4,038,405 4,014,423 Diluted 4,090,861 4,137,460 4,077,268 4,108,026 Earnings per share Basic $ 0.37 $ 0.30 $ 1.06 $ 0.79 Diluted $ 0.37 $ 0.30 $ 1.05 $ 0.77 Cash dividends paid per common share $ - $ - $ 0.20 $ 0.10
The accompanying notes are an integral part of these financial statements 4 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended ----------------- August 6, July 31, 2005 2004 ------------------- ------------------- Cash flows from operating activities: Net income $ 4,265,526 $ 3,157,376 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 201,192 173,287 Undistributed earnings in joint venture - Majestic 21 (281,210) (261,905) Increase in cash surrender value of life insurance (67,500) (88,501) Payment of employee expense with treasury stock 2,000 - Decrease (increase) in: Accounts receivable - trade 486,818 103,617 Inventories (2,506,390) (1,296,810) Prepaid income taxes (62,263) - Prepaid expenses and other current assets (283,151) 22,934 (Decrease) increase in: Accounts payable (185,502) (565,572) Accrued compensation (171,021) (415,416) Accrued expenses and other current liabilities (8,109) 118,756 Income taxes payable (617,737) (547,000) Customer deposits 276,516 747,610 ------------ ------------ Net cash provided by operating activities 1,049,169 1,148,376 ------------ ------------ Cash flows from investing activities: Purchase of investments (3,522,796) (3,611,083) Proceeds from maturity of investments 500,000 - Purchase of property, plant and equipment (737,435) (376,639) ------------ ------------ Net cash used in investing activities (3,760,231) (3,987,722) ------------ ------------ Cash flows from financing activities: Payment of cash dividends (807,826) (401,100) Proceeds from repayment of receivable from officer - 597,024 Proceeds from exercise of employee stock options 403,586 112,784 Purchase of treasury stock (494,925) - ------------ ------------ Net cash (used in) provided by financing activities (899,165) 308,708 ------------ ------------ Decrease in cash and cash equivalents (3,610,227) (2,530,638) Cash and cash equivalents at beginning of year 14,588,332 10,641,748 ------------ ------------ Cash and cash equivalents at end of quarter $ 10,978,105 $ 8,111,110 ============ ============ Supplemental disclosure of cash flow information: Interest paid $ - $ - ============ ============ Income taxes paid $ 2,937,000 $ 2,250,000 ============ ============
The accompanying notes are an integral part of these financial statements 5 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements for the three and nine months ended August 6, 2005 and July 31, 2004 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. 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 6, 2005 are not necessarily indicative of the results of the full fiscal year. The condensed consolidated 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, 2004 Annual Report on Form 10-K. 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 6, 2005 and November 6, 2004 are summarized as follows: August 6, November 6, 2005 2004 ----------------- ---------------- (Unaudited) Raw materials $ 942,120 $ 818,762 Work-in-process 117,659 126,169 Finished homes 7,899,143 5,597,646 Pre-owned manufactured homes 330,019 240,833 Model home furniture and other 126,006 125,147 ------------- ------------ $ 9,414,947 $ 6,908,557 ============= ============ 6 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Accounting for Stock Based Compensation --------------------------------------- At August 6, 2005, the Company had a stock incentive plan (the "Plan"), which authorizes the issuance of options to purchase common stock. The Company has adopted the disclosure-only provisions of FAS 123, Accounting for Stock-Based Compensation, as amended by FAS 148, Accounting for Stock Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123, but accounts for the plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25 and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. If the Company had elected to recognize compensation expense for stock options based on the fair value at grant date, consistent with the method prescribed by FAS 123, net income and earnings per share would have been reduced to the pro forma amounts as follows:
Three Months Ended Nine Months Ended ------------------ ----------------- August 6, July 31, August 6, July 31, 2005 2004 2005 2004 ---- ---- ---- ---- Net income, as reported $ 1,500,744 $ 1,220,138 $ 4,265,526 $ 3,157,376 Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of related tax effects (5,263) (4,988) (15,789) (14,964) ----------- ----------- ----------- ----------- Pro forma net income $ 1,495,481 $ 1,215,150 $ 4,249,737 $ 3,142,412 =========== =========== =========== =========== Earnings per share Basic - as reported $ 0.37 $ 0.30 $ 1.06 $ 0.79 Basic - pro forma $ 0.37 $ 0.30 $ 1.05 $ 0.77 Earnings per share Diluted - as reported $ 0.37 $ 0.30 $ 1.05 $ 0.78 Diluted - pro forma $ 0.37 $ 0.29 $ 1.04 $ 0.76
7 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. Earnings Per Share ------------------
Three Months Ended Nine Months Ended ------------------ ----------------- August 6, July 31, August 6, July 31, 2005 2004 2005 2004 ----------------- --------------- ----------------- ---------------- Net income $ 1,500,744 $ 1,220,138 $ 4,265,526 $ 3,157,376 ============ =========== =========== =========== Weighted average shares outstanding: Basic 4,045,982 4,018,646 4,038,405 4,014,423 Add: common stock equivalents 44,879 118,814 38,863 93,603 ------------ ----------- ----------- ----------- Diluted 4,090,861 4,137,460 4,077,268 4,108,026 ============ =========== =========== =========== Earnings per share: Basic $ 0.37 $ 0.30 $ 1.06 $ 0.79 ============ =========== =========== =========== Diluted $ 0.37 $ 0.30 $ 1.05 $ 0.77 ============ =========== =========== ===========
5. Critical Accounting Policies and Estimates ------------------------------------------ The Company applies judgment and estimates, which may have a material effect in the eventual outcome of assets, liabilities, revenues and expenses, for accounts receivable, inventory and goodwill. The following explains the basis and the procedure for each asset account where judgment and material estimates are applied. Revenue Recognition The Company recognizes revenue for its retail sales upon the occurrence of all the following: o its receipt of a down payment (or with cash sales, its receipt of total payments), o construction of the home is complete, o title having passed to the retail home buyer, o funds having been deposited into the Company's account, o the home having been delivered and set up at the retail home buyer's site, and o completion of any other significant obligations. The Company recognizes revenue to independent dealers upon receiving wholesale floor plan financing or establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent dealer. For wholesale shipments to independent dealers, the Company has no obligations to set up the home or to complete any other significant obligations. Goodwill Between 1995 and 1998 the Company acquired retail sales centers using the purchase method of accounting. As a result, goodwill is reflected on the consolidated balance sheets. A valuation was performed by the Company and it was determined that the estimated fair value of the goodwill in the accounts exceeded its book value. There is no assurance that the value of the acquired sales centers will not decrease in the future due to changing business conditions. Vendor Volume Rebates The Company receives volume rebates from its vendors based upon reaching a certain level of purchased materials during a specified period of time. Volume rebates are estimated based upon annual purchases, and are adjusted quarterly if the accrued volume rebate is applicable. 8 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Dealer Volume Rebates The Company pays a volume rebate to independent dealers based upon the dollar volume of homes purchased and paid for by the dealer in excess of a certain specific dollar amount during a specific time period. Dealer volume rebates are accrued when sales are recognized. 6. Recent Accounting Pronouncements -------------------------------- In November 2004, the FASB issued SFAS 151, Inventory Costs -- an amendment of ARB No. 43, Chapter 4 ("FAS 151"). FAS 151 amends the guidance in Accounting Research Bulletin (ARB) No. 43, Chapter 4, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). FAS 151 requires that these costs be recognized as current period charges regardless of whether they are abnormal. In addition, FAS 151 requires that allocation of fixed production overheads to the costs of manufacturing be based on the normal capacity of the production facilities. The provisions of FAS 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The Company does not expect this new standard to have a material effect on its consolidated financial position or results of operations. In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, ("FAS 123R"), which requires that the cost resulting for all share-based payment transactions be recognized in the financial statements. This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award--the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Employee share purchase plans will not result in recognition of compensation cost if certain conditions are met; those conditions are much the same as the related conditions in FAS 123. The provisions of FAS 123R are effective as of the beginning of the first annual reporting period that begins after June 15, 2005. The Company does not expect this new standard to have a material effect on its consolidated financial position or results of operations. 9 Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition Results of Operations - --------------------- For the three and nine month periods ended August 6, 2005 and July 31, 2004, results of operations are as follows. Total net sales in third quarter 2005 increased 11% to $13,652,618 compared to $12,310,878 in the third quarter 2004. Total net sales for the first nine months of 2005 increased 14% to $40,692,884 compared to $35,621,719 for the first nine months of 2004. The increased sales in 2005 were primarily due to the increase in Prestige same store sales. Third quarter sales of fiscal 2005, continued to be adversely impacted by tight retail credit standards, high, although improving unemployment and uncertain economic conditions present in the country. Although Nobility continues to out-perform the manufactured housing industry, in the near term we anticipate continued pressure on both sales and earnings resulting from these factors, plus volatile pricing in lumber, OSB, sheetrock, steel and oil related products and services. Overall, most construction materials have increased or fluctuated widely in price over the past year and with the latest hurricane in New Orleans and the Gulf Coast we anticipate little price stability in the future. With an improving economy, declining unemployment claims, and increasing but still low interest rates in 2005, management expects the demand for our homes to improve. Increased demand should also result from building replacement homes due to last year's hurricanes in Florida. Gross profit as a percentage of net sales was 28.6% in third quarter 2005 compared to 26.3% in third quarter 2004 and was 28.7% for the first nine months of 2005 compared to 25.7% for the first nine months of 2004. The increase in gross profit, as a percentage of sales, in 2005 was primarily due to increased gross profits from the Prestige retail operation. Selling, general and administrative expenses as a percent of net sales was 13.9% in third quarter of 2005 compared to 12.8% in the third quarter of 2004 and was 14.5% for the first nine months of 2005 compared to 13.7% for the first nine months of 2004. The increase in selling, general and administrative expenses resulted from the increase in accrued compensation expenses directly related to the increased sales at the prestige retail operations. Other income for the third quarter of 2005 was $267,628 of which $162,924 was from interest on cash equivalents and investments and $94,276 was from Nobility's equity in the earnings from the Majestic 21 joint venture. In the third quarter of 2004, other income was $213,978 of which $83,491 was from interest on cash equivalents and investments and $90,640 was from Nobility's equity in the earnings from the Majestic 21 joint venture. For the first nine months of 2005, other income was $728,862 of which $426,533 was from interest on cash equivalents and investments and $281,210 was from Nobility's equity in the earnings from the Majestic 21 joint venture. For the nine months of 2004, other income was $584,371 of which $249,922 was from interest on cash equivalents and investments and $261,705 was from Nobility's equity in the earnings from the Majestic 21 joint venture. The increase in interest income was primarily due to a change in the investment portfolio to long-term investments to obtain a higher yield and a higher rate on the floating rate investments. Income reported for Majestic 21 results from the Company's 50% share in the equity in the earnings of this joint venture. Majestic 21 is a financing joint venture accounted for under the equity method of accounting. Income for the joint venture fluctuated due to higher amortization of prepaid finance charges on the portfolio. The Company believes that its historical loss experience for this portfolio has been favorably impacted by its ability to resell foreclosed/repossessed homes through its network of retail sales centers. As a result of the factors discussed above, net income for the third quarter of 2005 were $1,500,744 or $0.37 per diluted share compared to $1,220,138 or $0.30 per diluted share for the third quarter 2004. For the first nine months of 2005, net income was $4,265,526 or $1.05 per diluted share as compared to $3,157,376 or $0.77 per diluted share for the first nine months of 2004. Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents were $10,978,105 at August 6, 2005 compared to $14,588,332 at November 6, 2004. Short and long-term investments were $12,229,577 at August 6, 2005 compared to $9,119,424 at November 6, 2004. Working capital was $15,505,701 at August 6, 2005 as compared to $16,483,939 at November 6, 2004. Nobility owns the entire inventory for its Prestige retail sales centers and does not incur any third party floor plan financing expenses. Inventories increased to $9,414,947 at August 6, 2005, from $6,908,557 at November 6, 2004 primarily due to an increase in the number of homes in inventory at the Prestige retail sales centers. Accounts receivable trade decreased $486,818 to $1,382,631 at August 6, 2005 from $1,869,449 at November 6, 2004 Nobility paid an annual cash dividend of $0.20 per common share for fiscal year 2004 on January 14, 2005 for $807,826. On January 12, 2004, the Company paid an annual cash dividend of $0.10 per common share for fiscal year 2003 in the amount of $401,100. 10 In January 2005, the Company purchased land for a new Prestige retail sales center in Punta Gorda, Florida in the amount $350,000. Nobility repurchased in the open market 24,200 of its common stock for $494,925 during the first nine months of 2005. Nobility maintains a revolving credit agreement with a major bank providing for borrowing up to $4,000,000. At August 6, 2005 and November 6, 2004, there were no amounts outstanding under this revolving credit agreement. Consistent with normal practices, Nobility's operations are not expected to require significant capital expenditures during the remainder of fiscal 2005. Working capital requirements for any increase in the new home inventory for existing and any new retail sales centers will be met with internal sources. Critical Accounting Policies and Estimates - ------------------------------------------ The Company applies judgment and estimates, which may have a material effect in the eventual outcome of assets, liabilities, revenues and expenses, for accounts receivable, inventory and goodwill. The following explains the basis and the procedure for each asset account where judgment and estimates are applied. Revenue Recognition The Company recognizes revenue for its retail sales upon the occurrence of all the following: o its receipt of a down payment (or with cash sales, its receipt of total payments), o construction of the home is complete, o title having passed to the retail home buyer, o funds having been deposited into the Company's account, o the home having been delivered and set up at the retail home buyer's site, and o completion of any other significant obligations. The Company recognizes revenue to independent dealers upon receiving wholesale floor plan financing or establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent dealer. For wholesale shipments to independent dealers, the Company has no obligations to set up the home or to complete any other significant obligations. Goodwill Between 1995 and 1998 the Company acquired retail sales centers using the purchase method of accounting. As a result, goodwill is reflected on the consolidated balance sheets. A valuation was performed by the Company and it was determined that the estimated fair value of the goodwill in the accounts exceeded its book value. There is no assurance that the value of the acquired sales centers will not decrease in the future due to changing business conditions. Vendor Volume Rebates The Company receives volume rebates from its vendors based upon reaching a certain level of purchased materials during a specified period of time. Volume rebates are estimated based upon annual purchases, and are adjusted quarterly if the accrued volume rebate is applicable. Dealer Volume Rebates The Company pays a volume rebate to independent dealers based upon the dollar volume of homes purchased and paid for by the dealer in excess of a certain specific dollar amount during a specific time period. Dealer volume rebates are accrued when sales are recognized. Forward-Looking Statements - -------------------------- Certain statements in this report are forward-looking statements within the meaning of the federal securities laws, including our statement that working capital requirements will be met with internal sources. Although Nobility 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, increasing material costs, continued excess retail inventory, increase in repossessions, changes in market demand, changes in interest rates, availability of financing for retail and wholesale purchasers, consumer confidence, 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. 11 Item 3. Quantitative and Qualitative Disclosures about Market Risk Certain of the Company's financial instruments are subject to market risk, including interest rate and equity price risks; however, due to the makeup of our investment portfolio this market risk is considered minimal. The Company manages its exposure to these risks through its regular operating and financing activities. We do not engage in investing in or trading market risk sensitive financial instruments. We also do not purchase for investing, hedging, or for purposes "other than trading" financial instruments that are likely to expose us to significant market risk, whether interest rate, foreign currency, commodity price, or equity price risk. The Company's financial instruments are not currently subject to foreign currency or commodity risk. The Company has no financial instrument held for trading purposes. We do not have any indebtedness as of August 6, 2005. If we were to borrow from our revolving credit agreement, we would be exposed to changes in interest rates. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. Item 4. Controls and Procedures a. Evaluation of Disclosure Controls and Procedures. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a - 15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of August 6, 2005 (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's reports filed or submitted under the Exchange Act. There have been no changes in the Company's internal controls over financial reporting identified in connection with this evaluation that occurred during the period covered by this report and that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financing reporting. 12 Part II. OTHER INFORMATION AND SIGNATURES There were no reportable events for Item 1 and Item 3 through Item 5 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The following table reflects stock repurchases made by the Company during the quarter ended August 6, 2005: Issuer Repurchases of Securities
Maximum Number (or Total Number of Approximate $ Value) Shares Purchased of Shares that May as Part of Publicly Yet Be Purchased Total Number of Average Price Announced Plans Under the Plans or Period Shares Purchased Paid Per Share or Programs Programs(1) ------ ---------------- -------------- ----------- -------- May 8, 2005 - -- June 4, 2005 -- -- -- 100,000 June 5, 2005 - --July 2, 2005 -- -- -- 100,000 July 3, 2005 - --August 6, 2005 -- -- -- 100,000
- ----------------- (1) Since 1999, the Company's board of directors has authorized a share repurchase program that permits the Company to repurchase 100,000 shares of its common stock, subject to compliance with applicable legal restrictions and so long as the repurchases would not have the effect of causing the Company's common stock to be delisted from trading. Until revoked, the share repurchase limit is automatically reset at 100,000 shares after any repurchases are made under the share repurchase program. Item 6. Exhibits 31. (a) Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 (b) Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 32. (a) Written Statement of Chief Executive Officer Pursuant to 18 U.S.C. ss.1350 (b) Written Statement of Chief Financial Officer Pursuant to 18 U.S.C. ss.1350 13 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 20, 2005 By: /s/ Terry E. Trexler ------------------------------------------ Terry E. Trexler, Chairman, President and Chief Executive Officer DATE: September 20, 2005 By: /s/ Thomas W. Trexler ------------------------------------------ Thomas W. Trexler, Executive Vice President, and Chief Financial Officer DATE: September 20, 2005 By: /s/ Lynn J. Cramer, Jr. ------------------------------------------ Lynn J. Cramer, Jr., Treasurer and Principal Accounting Officer 14 EX-31 2 dkm706a.txt EXHIBIT 31(A) - CERTIFICATION OF CEO Exhibit 31(a) Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 I, Terry E. Trexler, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Nobility Homes, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. DATE: September 20, 2005 By: /s/ Terry E. Trexler ---------------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer 15 EX-31 3 dkm706b.txt EXHIBIT 31 (B) - CERTIFICATION OF CFO Exhibit 31(b) Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 I, Thomas W. Trexler, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Nobility Homes, Inc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. DATE: September 20, 2005 By: /s/ Thomas W. Trexler ---------------------------------------- Thomas W. Trexler, Executive Vice President, and Chief Financial Officer 16 EX-32 4 dkm706c.txt EXHIBIT 32(A) - WRITTEN STATEMENT OF CEO Exhibit 32(a) Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C. ss.1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman and Chief Executive Officer of Nobility Homes, Inc. (the "Company"), hereby certify that: 1. The Quarterly Report on Form 10-Q of the Company for the quarter ended August 6, 2005 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. DATE: September 20, 2005 By: /s/ Terry E. Trexler ---------------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer 17 EX-32 5 dkm706d.txt EXHIBIT 32(B) - WRITTEN STATEMENT OF CFO Exhibit 32(b) Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C. ss.1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief Financial Officer of Nobility Homes, Inc. (the "Company"), hereby certify that: 1. The Quarterly Report on Form 10-Q of the Company for the quarter ended August 6, 2005 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. DATE: September 20, 2005 By: /s/ Thomas W. Trexler ---------------------------------------- Thomas W. Trexler, Executive Vice President, and Chief Financial Officer 18 -----END PRIVACY-ENHANCED MESSAGE-----