10-Q

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 July 30, 2016

Commission File number 000-06506

NOBILITY HOMES, INC.

(Exact name of registrant as specified in its charter)

Florida	59-1166102
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer 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  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x;    No  ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	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.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Title of Class	Shares Outstanding on September 13, 2016
Common Stock	4,020,207

NOBILITY HOMES, INC.

INDEX

		Page Number
PART I.	Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of July 30, 2016 (Unaudited) and October 31, 2015		3
	Consolidated Statements of Comprehensive Income for the three and nine months ended July 30, 2016 and August 1, 2015 (Unaudited)		4
	Consolidated Statements of Cash Flows for the nine months ended July 30, 2016 and August 1, 2015 (Unaudited)		5
	Notes to Consolidated Financial Statements (Unaudited)		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 4.	Controls and Procedures		14
PART II.	Other Information
Item 6.	Exhibits		15
Signatures			16

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NOBILITY HOMES, INC.

Consolidated Balance Sheets

	July 30, 2016			October 31, 2015
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	22,308,809		$	16,769,292
Short-term investments		422,151			462,578
Accounts receivable – trade		3,077,283			2,937,922
Note receivable		500,000			—
Mortgage notes receivable		9,164			9,851
Income tax receivable		—			335
Inventories		6,280,367			6,019,705
Pre-owned homes		1,245,653			1,366,974
Prepaid expenses and other current assets		495,754			826,180
Deferred income taxes		613,568			655,193
Total current assets		34,952,749			29,048,030
Property, plant and equipment, net		4,702,882			3,964,878
Pre-owned homes		2,283,336			2,724,190
Interest receivable		27,997			—
Note receivable, less current portion		2,030,000			—
Mortgage notes receivable, long term		175,135			177,644
Other investments		1,341,263			2,243,729
Deferred income taxes		—			1,210,630
Cash surrender value of life insurance		3,050,468			2,915,469
Other assets		156,287			156,287
Total assets	$	48,720,117		$	42,440,857
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	413,320		$	704,467
Accrued compensation		378,862			390,573
Accrued expenses and other current liabilities		926,971			926,204
Income taxes payable		675,037			—
Customer deposits		1,205,072			1,323,861
Total current liabilities		3,599,262			3,345,105
Deferred income taxes		966,677			—
Total liabilities		4,565,939			3,345,105
Commitments and contingent liabilities
Stockholders’ equity:
Preferred stock, $.10 par value, 500,000 shares authorized; none issued and outstanding		—			—
Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued		536,491			536,491
Additional paid in capital		10,662,414			10,650,723
Retained earnings		42,737,630			37,493,077
Accumulated other comprehensive income		207,297			247,724
Less treasury stock at cost, 1,344,700 shares in 2016 and 1,333,338 shares in 2015		(9,989,654	)		(9,832,263	)
Total stockholders’ equity		44,154,178			39,095,752
Total liabilities and stockholders’ equity	$	48,720,117		$	42,440,857

The accompanying notes are an integral part of these financial statements

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NOBILITY HOMES, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Net sales	$	9,779,621		$	7,059,263		$	25,269,511		$	19,342,181
Cost of goods sold		(7,599,070	)		(5,495,061	)		(19,366,957	)		(15,067,042	)
Gross profit		2,180,551			1,564,202			5,902,554			4,275,139
Selling, general and administrative expenses		(940,059	)		(776,930	)		(2,732,452	)		(2,402,328	)
Operating income		1,240,492			787,272			3,170,102			1,872,811
Other income (loss):
Interest income		43,155			10,437			77,246			40,409
Undistributed earnings in joint venture – Majestic 21		28,429			37,212			97,539			106,027
Proceeds received under escrow arrangement		—			—			788,566			—
Losses from investments in retirement community limited partnerships		—			(89,053	)		—			(146,403	)
Gain on sale of investment in retirement community		—			—			3,990,000			—
Miscellaneous		5,559			1,030			25,404			39,896
Total other income (loss)		77,143			(40,374	)		4,978,755			39,929
Income before provision for income taxes		1,317,635			746,898			8,148,857			1,912,740
Income tax expense		(423,364	)		(128	)		(2,904,304	)		(5,629	)
Net income		894,271			746,770			5,244,553			1,907,111
Other comprehensive income (loss)
Unrealized investment gain (loss)		(13,176	)		28,035			(40,427	)		(1,009	)
Comprehensive income	$	881,095		$	774,805		$	5,204,126		$	1,906,102
Weighed average number of shares outstanding:
Basic		4,022,311			4,048,554			4,023,689			4,058,106
Diluted		4,023,714			4,048,994			4,024,739			4,058,540
Net income per share:
Basic	$	0.22		$	0.18		$	1.30		$	0.47
Diluted	$	0.22		$	0.18		$	1.30		$	0.47

The accompanying notes are an integral part of these financial statements

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NOBILITY HOMES, INC.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	July 30, 2016			August 1, 2015
Cash flows from operating activities:
Net income	$	5,244,553		$	1,907,111
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		90,998			70,506
Deferred income taxes		2,218,932			—
Undistributed earnings in joint venture – Majestic 21		(97,539	)		(106,027	)
Losses from investments in retirement community limited partnerships		—			146,403
Gain on sale of investment in retirement community		(3,990,000	)		—
Inventory impairment		186,583			—
Stock-based compensation		1,070			8,215
Decrease (increase) in:
Accounts receivable		(139,361	)		(834,478	)
Inventories		(260,662	)		(690,390	)
Pre-owned homes		375,592			31,747
Income tax receivable		335			5,629
Prepaid expenses and other current assets		330,426			(692,147	)
Interest receivable		(27,997	)		—
(Decrease) increase in:
Accounts payable		(291,147	)		88,085
Accrued compensation		(11,711	)		(51,141	)
Accrued expenses and other current liabilities		767			237,702
Income taxes payable		675,037			—
Customer deposits		(118,789	)		236,076
Net cash provided by operating activities		4,187,017			357,291
Cash flows from investing activities:
Purchase of property, plant and equipment		(829,002	)		(42,375	)
Distribution from joint venture – Majestic 21		1,000,005			500,000
Proceeds from sale of investment in retirement community, net		960,000			—
Collections on note receivable		500,000			—
Collections on mortgage notes receivable		3,196			431
Increase in cash surrender value of life insurance		(134,999	)		(94,500	)
Net cash provided by investing activities		1,499,200			363,556
Cash flows from financing activities:
Proceeds from exercise of employee stock options		39,616			15,820
Purchase of treasury stock		(186,386	)		(227,854	)
Net cash used in financing activities		(146,770	)		(212,034	)
Increase in cash and cash equivalents		5,539,517			508,813
Cash and cash equivalents at beginning of year		16,769,292			14,116,412
Cash and cash equivalents at end of quarter	$	22,308,809		$	14,625,225
Supplemental disclosure of cash flows information:
Income taxes paid	$	10,000		$	—
Note receivable acquired from sale of investment in retirement community	$	3,030,000		$	—

The accompanying notes are an integral part of these financial statements

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Nobility Homes, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 Basis of Presentation and Accounting Policies

The accompanying unaudited consolidated financial statements for the three and nine months ended July 30, 2016 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 (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The results of operations for the three and nine months ended July 30, 2016 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 Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015.

In May 2014, the FASB issued ASU 2014-09 (Revenue from Contracts with Customers (Topic 606)), which requires an entity to recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance addresses, in particular, contracts with more than one performance obligation, as well as the accounting for some costs to obtain or fulfill a contract with a customer; and provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. With respect to public entities, this update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is not permitted. We believe that our implementation of this guidance will have no material impact on our consolidated financial statements.

Note 2 Inventories

New home inventory is carried at the lower of cost or market value. The cost of finished home inventories is determined on the specific identification method and is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished home inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or market value.

Pre-owned inventory is valued at the lower of the Company’s cost to acquire the inventory plus refurbishment costs incurred to date to bring the inventory to a more saleable state. This amount is reduced by a valuation reserve which management believes results in inventory being valued at market.

Other inventory costs are determined on a first-in, first-out basis.

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A breakdown of the elements of inventory is as follows:

	July 30, 2016			October 31, 2015
Raw materials	$	676,791		$	721,751
Work-in-process		121,446			113,891
Finished homes		5,384,185			5,114,568
Model home furniture and others		97,945			69,495
Inventories, net	$	6,280,367		$	6,019,705
Pre-owned homes	$	4,668,344		$	5,516,272
Inventory impairment reserve		(1,139,355	)		(1,425,108	)
		3,528,989			4,091,164
Less homes expected to sell in 12 months		(1,245,653	)		(1,366,974	)
Pre-owned homes, long-term	$	2,283,336		$	2,724,190

Note 3 Short-term Investments

The following is a summary of short-term investments (available for sale):

	July 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	254,221	$	—	$	422,151

	October 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	294,648	$	—	$	462,578

The fair values were estimated based on quoted market prices in active markets at each respective period end.

Note 4 Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value because of the short maturity of those instruments. Short-term investments (available for sale) are carried at fair value.

FASB ASC No. 820 “Fair Value Measurements” defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e. exit price) in an orderly transaction between market participants at the measurement date. ASC No. 820 requires disclosures that categorize assets and liabilities

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measured at fair value into one of three different levels depending on the assumptions (i.e. inputs) used in the valuation. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The ASC No. 820 fair value hierarchy is defined as follows:

• Level 1 – Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

• Level 3 – Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis.

	July 30, 2016
	Level 1		Level 2		Level 3
Equity securities in a public company	$	422,151	$	—	$	—

	October 31, 2015
	Level 1		Level 2		Level 3
Equity securities in a public company	$	462,578	$	—	$	—

Note 5 Investment in Retirement Community Limited Partnerships

The Company has a 31.3% limited partnership interest in Walden Woods South LLC (“Walden Woods”), which is a retirement community. The carrying value of the Walden Woods investment was zero at July 30, 2016 and October 31, 2015, respectively.

The following is summarized financial information of Walden Woods*:

	June 30, 2016			September 30, 2015
Total Assets	$	3,604,691		$	3,638,114
Total Liabilities	$	5,744,531		$	5,444,435
Total Equity	$	(2,139,840	)	$	(1,806,321	)

*Due to Walden Woods having a calendar year-end, the summarized financial information provided is from their most recent quarter prior to the period covered by this report.

On March 31, 2016, the Company sold its 48.5% limited partnership interest in CRF III, Ltd. (“Cypress Creek”) for $3,990,000. Cypress Creek is a retirement community. The Company received $960,000 of cash, net of $40,000 of cost paid and a note receivable for $3,030,000, which is payable to the Company in $500,000 installments each July 1^st and January 1^st, plus interest at 3.0%. The Company recognized a gain of $3,990,000 for the nine months ended July 30, 2016. The Company received the first installment due January 1^st 2017 on June 8^th 2016.

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Note 6 Warranty Costs

The Company provides for a limited warranty as the manufactured homes are sold. Amounts related to these warranties are as follows:

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Beginning accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000
Less: reduction for payments		(86,789	)		(82,079	)		(387,161	)		(173,045	)
Plus: additions to accrual		86,789			82,709			387,161			173,045
Ending accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000

The Company’s limited warranty covers substantial defects in material or workmanship in specified components of the home including structural elements, plumbing systems, electrical systems, and heating and cooling systems which are supplied by the Company that may occur under normal use and service during a period of twelve (12) months from the date of delivery to the original homeowner, and applies to the original homeowner or any subsequent homeowner to whom this product is transferred during the duration of this twelve (12) month period.

The Company tracks the warranty claims per home. Based on the history of the warranty claims, the Company has determined that a majority of warranty claims usually occur within the first three months after the home is sold. The Company determines its warranty accrual using the last three months of home sales.

Note 7 Earnings Per Share

These financial statements include “basic” and “diluted” net income per share information for all periods presented. The basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding. The diluted net income per share is calculated by dividing net income by the weighted-average number of shares outstanding, adjusted for dilutive common shares.

Note 8 Revenues by Products and Service

Revenues by net sales from manufactured housing, pre-owned homes and insurance agent commissions are as follows:

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Manufactured housing	$	9,134,856	$	6,569,133	$	23,984,656	$	17,897,155
Pre-owned homes		581,844		434,546		1,105,503		1,276,679
Insurance agent commissions		62,921		55,584		179,352		168,347
Total net sales	$	9,779,621	$	7,059,263	$	25,269,511	$	19,342,181

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Note 9 Commitments and Contingent Liabilities

Majestic 21 – The Company is a 50% guarantor on a $5 million note payable entered into by Majestic 21, a joint venture in which the Company owns a 50% interest. This guarantee was a requirement of the bank that provided a $5 million loan to Majestic 21. The $5 million guarantee of Majestic 21’s debt is for the life of the note which matures on the earlier of May 31, 2019 or when the principal balance is less than $750,000. The amount of the guarantee declines with the amortization and repayment of the loan. As collateral for the loan, 21^st Mortgage Corporation (our joint venture partner) has granted the lender a security interest in a pool of loans encumbering homes sold by Prestige Homes Centers, Inc. If the pool of loans securing this note should decrease in value so that the notes outstanding principal balance is in excess of 80% of the principal balance of the pool of loans, then Majestic 21 would have to pay down the note’s principal balance to an amount that is no more than 80% of the principal balance of the pool of loans. The Company and 21^st Mortgage Corporation are obligated jointly to contribute the amount necessary to bring the loan balance back down to 80% of the collateral provided. On April 28, 2016 the Company received a distribution of $1,000,005 from the joint venture. We do not anticipate any required contributions as the pool of loans securing the note have historically been in excess of 100% of the required collateral value. As of July 30, 2016, the outstanding principal balance of the note was $1,010,067 and the amount of collateral held by our joint venture partner for the Majestic 21 note payable was $1,847,205. Based upon management’s analysis, the fair value of the guarantee is not material and as a result, no liability for the guarantee has been recorded in the accompanying balance sheets of the Company.

Note 10 Proceeds Received Under Escrow Arrangement

In April 2016, the Company received $788,566 under an escrow arrangement related to a Finance Revenue Sharing Agreement between 21^st Mortgage Corporation and the Company. These distributions from the escrow account, related to certain loans financed by 21^st Mortgage Corporation, are recorded in income by the Company as received, which has been the Company’s past practice.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Total revenues in the third quarter of 2016 were $9,779,621 up 39% compared to $7,059,263 in the third quarter of 2015. Total net sales for the first nine months of 2016 were $25,269,511 up 31% compared to $19,342,181 for the first nine months of 2015.

The following table summarizes certain key sales statistics and percent of gross profit.

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Homes sold through Company owned sales centers:
New homes		84			63			201			157
Pre-owned homes		11			9			21			29
Homes sold to independent dealers		56			55			188			183
Total new factory built homes produced		124			129			424			382
Average new manufactured home price – retail	$	71,935		$	63,164		$	70,532		$	64,926
Average new manufactured home price – wholesale	$	39,144		$	34,578		$	37,473		$	34,005
As a percent of net sales:
Gross profit from the Company owned retail sales centers		16	%		16	%		17	%		16	%
Gross profit from the manufacturing facilities – including intercompany sales		19	%		16	%		18	%		16	%

Sales to two publicly traded REITs and other companies which own multiple retirement communities in our market area accounted for approximately 19% and 24% of our sales for the first nine months ended July 30, 2016 and August 1, 2015, respectively. Accounts receivable due from these customers were approximately $1,877,755 at July 30, 2016.

The demand for affordable manufactured housing in Florida and the U.S. is improving. According to the Florida Manufactured Housing Association, shipments in Florida for the period from November 2015 through July 2016 were up approximately 22% from the same period last year. Our sales and earnings continue to be affected by the challenging housing environment, the uncertainty of the U.S. and world economy, employment levels, consumer confidence and, in particular, the lack of available retail and wholesale financing. Constrained consumer credit and the lack of lenders in the industry, partly as a result of an increase in government regulations, have limited many affordable manufactured housing buyers from purchasing homes.

We understand that during this uncertain economic environment, maintaining our strong financial position is vital for future growth and success. Because of the recent years of very challenging business conditions in our market area, management will continue to evaluate all expenses and react in a manner consistent with maintaining our strong financial position.

The Company has specialized for 49 years in the design and production of quality, affordable manufactured homes at its plant located in central Florida. With multiple retail sales centers, an insurance subsidiary, and investments in retirement manufactured home communities, we are the only vertically integrated manufactured home company headquartered in Florida.

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Insurance agent commission revenues in the third quarter of 2016 were $62,921 compared to $55,584 in the third quarter of 2015. Total insurance agent commission revenues for the first nine months of 2016 were $179,352 compared to $168,347 for the first nine months of 2015. The insurance agent commissions resulted from new policies and renewals generated. The Company establishes appropriate reserves for policy cancellations based on numerous factors, including past transaction history with customers, historical experience and other information, which is periodically evaluated and adjusted as deemed necessary. In the opinion of management, no reserve was deemed necessary for policy cancellations at July 30, 2016 and October 31, 2015.

Gross profit as a percentage of net sales was 22% in third quarter of 2016 compared to 22% in the third quarter of 2015 and was 23% for the first nine months of 2016 compared to 22% for the first nine months of 2015. The gross profit in third quarter of 2016 was $2,180,551 compared to $1,564,202 in the third quarter of 2015 and was $5,902,554 for the first nine months of 2016 compared to $4,275,139 for the first nine months of 2015. The gross profit is dependent on the sales mix of wholesale and retail homes and number of pre-owned homes sold.

Selling, general and administrative expense as a percent of net sales was 10% in third quarter of 2016 compared to 11% in the third quarter of 2015 and was 11% for the first nine months of 2016 compared to 12% for the first nine months of 2015. Selling, general and administrative expense in third quarter of 2016 was $940,059 compared to $776,930 in the third quarter of 2015 and was $2,732,452 for the first nine months of 2016 compared to $2,402,328 for the first nine months of 2015. The increase in expense resulted from the increase in compensation expense directly related to our increased sales.

Our earnings from Majestic 21 in the third quarter of 2016 were $28,429 compared to $37,212, for the third quarter of 2015. Our earnings from Majestic 21 for the first nine months of 2016 were $97,539 compared to $106,027 for the first nine months of 2015. The earnings from Majestic 21 represent the allocation of profit and losses which are owned 50% by 21st Mortgage and 50% by the Company.

We received $788,566 under an escrow arrangement related to the finance revenue sharing agreement between 21^st Mortgage Corporation and the Company in the second quarter of 2016.

We recognized a gain on the sale of our 48.5% limited partnership interest in CRF III, Ltd. (“Cypress Creek”) in the amount of $3,990,000 for the second quarter of 2016.

We earned interest of $43,155 for the third quarter of 2016 compared to $10,437 for the third quarter of 2015. For the first nine months of 2016, interest earned was $77,246 compared to $40,409 in the first nine months of 2015. The increase is primarily due to the note receivable acquired in the sale of the investment in the Cypress Creek retirement community.

The Company recorded an income tax expense in the amount of $423,364 in the third quarter of 2016 as compared to $128 in third quarter 2015. Income tax expense for the nine months of 2016 was $2,904,304 compared to $5,629 for the third quarter of 2015. In 2015, the company had an allowance against the net deferred tax asset which was exhausted at the end of the year. Income tax expense during the year was limited due to the allowance. In 2016, the company had increased profitability and no allowance thus had substantially higher income tax expense.

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We reported net income of $894,271 for the third quarter of 2016 or $0.22 per share, compared to $746,770 or $0.18 per share, for the third quarter of 2015. For the first nine months of 2016 net income was $5,244,553 or $1.30 per share, compared to $1,907,111 or $0.47 per share, in the first nine months of 2015.

Liquidity and Capital Resources

Cash and cash equivalents were $22,308,809 at July 30, 2016 compared to $16,769,292 at October 31, 2015. Short-term investments were $422,151 at July 30, 2016 compared to $462,578 at October 31, 2015. Working capital was $31,353,487 at July 30, 2016 as compared to $25,702,925 at October 31, 2015. In January 2016, the Company purchased the land for one existing retail sales center for $750,000. We own the entire inventory for our Prestige retail sales centers which includes new, pre-owned and repossessed or foreclosed homes and do not incur any third party floor plan financing expenses. The Company has no material commitments for capital expenditures.

We view our liquidity as our total cash and short term investments. We currently have no line of credit facility and we do not believe that such a facility is currently necessary for our operations. We have no debt. We also have approximately $3.0 million of cash surrender value of life insurance which we could access as an additional source of liquidity though we have not currently viewed this to be necessary. As of July 30, 2016, the Company continued to report a strong balance sheet which included total assets of approximately $49 million and stockholders’ equity of approximately $44 million.

Critical Accounting Policies and Estimates

In Item 7 of our Form 10-K, under the heading “Critical Accounting Policies and Estimates,” we have provided a discussion of the critical accounting policies and estimates that management believes affect its more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. No significant changes have occurred since that time.

Forward-Looking Statements

Certain statements in this report are forward-looking statements within the meaning of the federal securities laws. 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, uncertain economic conditions, 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, the impact of marketing and cost-management programs, reliance on the Florida economy, impact of labor shortage, impact of materials shortage, increasing labor cost, cyclical nature of the manufactured housing industry, impact of fuel costs, catastrophic events impacting insurance costs, availability of insurance coverage for various risks to Nobility, market demographics, management’s ability to attract and retain executive officers and key personnel, increased global tensions, market disruptions resulting from terrorist or other attack and any armed conflict involving the United States and the impact of inflation.

13

Item 4. Controls and Procedures

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 – 15e and 15d – 15e under the Securities Exchange Act of 1934, as amended) (the “Exchange Act”) as of the end of the period covered by this report (the “Evaluation Date”). Based on their evaluation as of the Evaluation Date, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of July 30, 2016. Integrated Framework (2013) issued by the Company of Sponsoring Organizations of the Treadway Commission and determined that its controls were effective.

Changes in Internal Control over Financial Reporting. We made no changes in our internal control over financial reporting (as defined in Rules 13a-15(f)) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal controls that occurred during our last fiscal quarter that has materially affected, or which is reasonably likely to materially affect our internal controls over financial reporting.

14

Part II. OTHER INFORMATION AND SIGNATURES

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

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. §1350
(b)	Written Statement of Chief Financial Officer Pursuant to 18 U.S.C. §1350
101.	Interactive data filing formatted in XBRL

15

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 13, 2016	By: /s/ Terry E. Trexler
	Terry E. Trexler, Chairman, President and Chief Executive Officer

DATE: September 13, 2016	By: /s/ Thomas W. Trexler
	Thomas W. Trexler, Executive Vice President, and Chief Financial Officer

DATE: September 13, 2016	By: /s/ Lynn J. Cramer, Jr.
	Lynn J. Cramer, Jr., Treasurer and Principal Accounting Officer

16

EX-31.A

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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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 13, 2016	By: /s/ Terry E. Trexler
	Terry E. Trexler, Chairman, President and Chief Executive Officer

EX-31.B

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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) 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

(d) 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 13, 2016	By: /s/ Thomas W. Trexler
	Thomas W. Trexler, Executive Vice President, and Chief Financial Officer

EX-32.A

Exhibit 32(a)

Written Statement of the Chief Executive Officer

Pursuant to 18 U.S.C. §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 July 30, 2016 (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 13, 2016	By: /s/ Terry E. Trexler
	Terry E. Trexler, Chairman, President and Chief Executive Officer

EX-32.B

Exhibit 32(b)

Written Statement of the Chief Financial Officer

Pursuant to 18 U.S.C. §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 July 30, 2016 (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 13, 2016	By: /s/ Thomas W. Trexler
	Thomas W. Trexler, Executive Vice President, and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Jul. 30, 2016	Sep. 13, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	NOBH
Entity Registrant Name	NOBILITY HOMES INC
Entity Central Index Key	0000072205
Current Fiscal Year End Date	--10-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,020,207

XML

Consolidated Balance Sheets - USD ($)	Jul. 30, 2016	Oct. 31, 2015
Current assets:
Cash and cash equivalents	$ 22,308,809	$ 16,769,292
Short-term investments	422,151	462,578
Accounts receivable - trade	3,077,283	2,937,922
Note receivable	500,000
Mortgage notes receivable	9,164	9,851
Income tax receivable		335
Inventories	6,280,367	6,019,705
Pre-owned homes	1,245,653	1,366,974
Prepaid expenses and other current assets	495,754	826,180
Deferred income taxes	613,568	655,193
Total current assets	34,952,749	29,048,030
Property, plant and equipment, net	4,702,882	3,964,878
Pre-owned homes	2,283,336	2,724,190
Interest receivable	27,997
Note receivable, less current portion	2,030,000
Mortgage notes receivable, long term	175,135	177,644
Other investments	1,341,263	2,243,729
Deferred income taxes		1,210,630
Cash surrender value of life insurance	3,050,468	2,915,469
Other assets	156,287	156,287
Total assets	48,720,117	42,440,857
Current liabilities:
Accounts payable	413,320	704,467
Accrued compensation	378,862	390,573
Accrued expenses and other current liabilities	926,971	926,204
Income taxes payable	675,037
Customer deposits	1,205,072	1,323,861
Total current liabilities	3,599,262	3,345,105
Deferred income taxes	966,677
Total liabilities	4,565,939	3,345,105
Commitments and contingent liabilities
Stockholders' equity:
Preferred stock, $.10 par value, 500,000 shares authorized; none issued and outstanding
Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued	536,491	536,491
Additional paid in capital	10,662,414	10,650,723
Retained earnings	42,737,630	37,493,077
Accumulated other comprehensive income	207,297	247,724
Less treasury stock at cost, 1,344,700 shares in 2016 and 1,333,338 shares in 2015	(9,989,654)	(9,832,263)
Total stockholders' equity	44,154,178	39,095,752
Total liabilities and stockholders' equity	$ 48,720,117	$ 42,440,857

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jul. 30, 2016	Oct. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.10	$ 0.10
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	5,364,907	5,364,907
Treasury stock, shares	1,344,700	1,333,338

XML

Consolidated Statements of Comprehensive Income - USD ($)	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Income Statement [Abstract]
Net sales	$ 9,779,621	$ 7,059,263	$ 25,269,511	$ 19,342,181
Cost of goods sold	(7,599,070)	(5,495,061)	(19,366,957)	(15,067,042)
Gross profit	2,180,551	1,564,202	5,902,554	4,275,139
Selling, general and administrative expenses	(940,059)	(776,930)	(2,732,452)	(2,402,328)
Operating income	1,240,492	787,272	3,170,102	1,872,811
Other income (loss):
Interest income	43,155	10,437	77,246	40,409
Undistributed earnings in joint venture - Majestic 21	28,429	37,212	97,539	106,027
Proceeds received under escrow arrangement			788,566
Losses from investments in retirement community limited partnerships		(89,053)		(146,403)
Gain on sale of investment in retirement community			3,990,000
Miscellaneous	5,559	1,030	25,404	39,896
Total other income (loss)	77,143	(40,374)	4,978,755	39,929
Income before provision for income taxes	1,317,635	746,898	8,148,857	1,912,740
Income tax expense	(423,364)	(128)	(2,904,304)	(5,629)
Net income	894,271	746,770	5,244,553	1,907,111
Other comprehensive income (loss)
Unrealized investment gain (loss)	(13,176)	28,035	(40,427)	(1,009)
Comprehensive income	$ 881,095	$ 774,805	$ 5,204,126	$ 1,906,102
Weighed average number of shares outstanding:
Basic	4,022,311	4,048,554	4,023,689	4,058,106
Diluted	4,023,714	4,048,994	4,024,739	4,058,540
Net income per share:
Basic	$ 0.22	$ 0.18	$ 1.30	$ 0.47
Diluted	$ 0.22	$ 0.18	$ 1.30	$ 0.47

XML

Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015
Cash flows from operating activities:
Net income	$ 5,244,553	$ 1,907,111
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	90,998	70,506
Deferred income taxes	2,218,932
Undistributed earnings in joint venture - Majestic 21	(97,539)	(106,027)
Losses from investments in retirement community limited partnerships		146,403
Gain on sale of investment in retirement community	(3,990,000)
Inventory impairment	186,583
Stock-based compensation	1,070	8,215
Decrease (increase) in:
Accounts receivable	(139,361)	(834,478)
Inventories	(260,662)	(690,390)
Pre-owned homes	375,592	31,747
Income tax receivable	335	5,629
Prepaid expenses and other current assets	330,426	(692,147)
Interest receivable	(27,997)
(Decrease) increase in:
Accounts payable	(291,147)	88,085
Accrued compensation	(11,711)	(51,141)
Accrued expenses and other current liabilities	767	237,702
Income taxes payable	675,037
Customer deposits	(118,789)	236,076
Net cash provided by operating activities	4,187,017	357,291
Cash flows from investing activities:
Purchase of property, plant and equipment	(829,002)	(42,375)
Distribution from joint venture - Majestic 21	1,000,005	500,000
Proceeds from sale of investment in retirement community,net	960,000
Collections on note receivable	500,000
Collections on mortgage notes receivable	3,196	431
Increase in cash surrender value of life insurance	(134,999)	(94,500)
Net cash provided by investing activities	1,499,200	363,556
Cash flows from financing activities:
Proceeds from exercise of employee stock options	39,616	15,820
Purchase of treasury stock	(186,386)	(227,854)
Net cash used in financing activities	(146,770)	(212,034)
Increase in cash and cash equivalents	5,539,517	508,813
Cash and cash equivalents at beginning of year	16,769,292	14,116,412
Cash and cash equivalents at end of quarter	22,308,809	$ 14,625,225
Supplemental disclosure of cash flows information:
Income taxes paid	10,000
Note receivable acquired from sale of investment in retirement community	$ 3,030,000

XML

Basis of Presentation and Accounting Policies

9 Months Ended

Jul. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation and Accounting Policies

Note 1 Basis of Presentation and Accounting Policies

The accompanying unaudited consolidated financial statements for the three and nine months ended July 30, 2016 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 (consisting of normal recurring adjustments) which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The results of operations for the three and nine months ended July 30, 2016 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 Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2015.

In May 2014, the FASB issued ASU 2014-09 (Revenue from Contracts with Customers (Topic 606)), which requires an entity to recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance addresses, in particular, contracts with more than one performance obligation, as well as the accounting for some costs to obtain or fulfill a contract with a customer; and provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. With respect to public entities, this update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is not permitted. We believe that our implementation of this guidance will have no material impact on our consolidated financial statements.

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Inventories

9 Months Ended

Jul. 30, 2016

Inventory Disclosure [Abstract]

Inventories

Note 2 Inventories

New home inventory is carried at the lower of cost or market value. The cost of finished home inventories is determined on the specific identification method and is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished home inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or market value.

Pre-owned inventory is valued at the lower of Company’s cost to acquire the inventory plus refurbishment costs incurred to date to bring the inventory to a more saleable state. This amount is reduced by a valuation reserve which management believes results in inventory being valued at market.

Other inventory costs are determined on a first-in, first-out basis.

A breakdown of the elements of inventory is as follows:

	July 30, 2016			October 31, 2015
Raw materials	$	676,791		$	721,751
Work-in-process		121,446			113,891
Finished homes		5,384,185			5,114,568
Model home furniture and others		97,945			69,495
Inventories, net	$	6,280,367		$	6,019,705
Pre-owned homes	$	4,668,344		$	5,516,272
Inventory impairment reserve		(1,139,355	)		(1,425,108	)
		3,528,989			4,091,164
Less homes expected to sell in 12 months		(1,245,653	)		(1,366,974	)
Pre-owned homes, long-term	$	2,283,336		$	2,724,190

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Short-term Investments

9 Months Ended

Jul. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Short-term Investments

Note 3 Short-term Investments

The following is a summary of short-term investments (available for sale):

	July 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	254,221	$	—	$	422,151

	October 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	294,648	$	—	$	462,578

The fair values were estimated based on quoted market prices in active markets at each respective period end.

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Fair Value of Financial Instruments

9 Months Ended

Jul. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 4 Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value because of the short maturity of those instruments. Short-term investments (available for sale) are carried at fair value.

FASB ASC No. 820 “Fair Value Measurements” defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e. exit price) in an orderly transaction between market participants at the measurement date. ASC No. 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e. inputs) used in the valuation. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The ASC No. 820 fair value hierarchy is defined as follows:

• Level 1 – Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

• Level 3 – Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis.

	July 30, 2016
	Level 1		Level 2		Level 3
Equity securities in a public company	$	422,151	$	—	$	—

	October 31, 2015
	Level 1		Level 2		Level 3
Equity securities in a public company	$	462,578	$	—	$	—

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Investment in Retirement Community Limited Partnerships

9 Months Ended

Jul. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Investment in Retirement Community Limited Partnerships

Note 5 Investment in Retirement Community Limited Partnerships

The Company has a 31.3% limited partnership interest in Walden Woods South LLC (“Walden Woods”), which is a retirement community. The carrying value of the Walden Woods investment was zero at July 30, 2016 and October 31, 2015, respectively.

The following is summarized financial information of Walden Woods*:

	June 30, 2016			September 30, 2015
Total Assets	$	3,604,691		$	3,638,114
Total Liabilities	$	5,744,531		$	5,444,435
Total Equity	$	(2,139,840	)	$	(1,806,321	)

*Due to Walden Woods having a calendar year-end, the summarized financial information provided is from their most recent quarter prior to the period covered by this report.

On March 31, 2016, the Company sold its 48.5% limited partnership interest in CRF III, Ltd. (“Cypress Creek”) for $3,990,000. Cypress Creek is a retirement community. The Company received $960,000 of cash, net of $40,000 of cost paid and a note receivable for $3,030,000, which is payable to the Company in $500,000 installments each July 1^stand January 1^st, plus interest at 3.0%. The Company recognized a gain of $3,990,000 for the nine months ended July 30, 2016. The Company received the first installment due January 1^st 2017 on June 8^th 2016.

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Warranty Costs

9 Months Ended

Jul. 30, 2016

Guarantees [Abstract]

Warranty Costs

Note 6 Warranty Costs

The Company provides for a limited warranty as the manufactured homes are sold. Amounts related to these warranties are as follows:

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Beginning accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000
Less: reduction for payments		(86,789	)		(82,079	)		(387,161	)		(173,045	)
Plus: additions to accrual		86,789			82,709			387,161			173,045
Ending accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000

The Company’s limited warranty covers substantial defects in material or workmanship in specified components of the home including structural elements, plumbing systems, electrical systems, and heating and cooling systems which are supplied by the Company that may occur under normal use and service during a period of twelve (12) months from the date of delivery to the original homeowner, and applies to the original homeowner or any subsequent homeowner to whom this product is transferred during the duration of this twelve (12) month period.

The Company tracks the warranty claims per home. Based on the history of the warranty claims, the Company has determined that a majority of warranty claims usually occur within the first three months after the home is sold. The Company determines its warranty accrual using the last three months of home sales.

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Earnings Per Share

9 Months Ended

Jul. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Note 7 Earnings Per Share

These financial statements include “basic” and “diluted” net income per share information for all periods presented. The basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding. The diluted net income per share is calculated by dividing net income by the weighted-average number of shares outstanding, adjusted for dilutive common shares.

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Revenues by Products and Service

9 Months Ended

Jul. 30, 2016

Segment Reporting [Abstract]

Revenues by Products and Service

Note 8 Revenues by Products and Service

Revenues by net sales from manufactured housing, pre-owned homes and insurance agent commissions are as follows:

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Manufactured housing	$	9,134,856	$	6,569,133	$	23,984,656	$	17,897,155
Pre-owned homes		581,844		434,546		1,105,503		1,276,679
Insurance agent commissions		62,921		55,584		179,352		168,347
Total net sales	$	9,779,621	$	7,059,263	$	25,269,511	$	19,342,181

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Commitments and Contingent Liabilities

9 Months Ended

Jul. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingent Liabilities

Note 9 Commitments and Contingent Liabilities

Majestic 21 – The Company is a 50% guarantor on a $5 million note payable entered into by Majestic 21, a joint venture in which the Company owns a 50% interest. This guarantee was a requirement of the bank that provided a $5 million loan to Majestic 21. The $5 million guarantee of Majestic 21’s debt is for the life of the note which matures on the earlier of May 31, 2019 or when the principal balance is less than $750,000. The amount of the guarantee declines with the amortization and repayment of the loan. As collateral for the loan, 21^st Mortgage Corporation (our joint venture partner) has granted the lender a security interest in a pool of loans encumbering homes sold by Prestige Homes Centers, Inc. If the pool of loans securing this note should decrease in value so that the notes outstanding principal balance is in excess of 80% of the principal balance of the pool of loans, then Majestic 21 would have to pay down the note’s principal balance to an amount that is no more than 80% of the principal balance of the pool of loans. The Company and 21^st Mortgage Corporation are obligated jointly to contribute the amount necessary to bring the loan balance back down to 80% of the collateral provided. On April 28, 2016 the Company received a distribution of $1,000,005 from the joint venture. We do not anticipate any required contributions as the pool of loans securing the note have historically been in excess of 100% of the required collateral value. As of July 30, 2016, the outstanding principal balance of the note was $1,010,067 and the amount of collateral held by our joint venture partner for the Majestic 21 note payable was $1,847,205. Based upon management’s analysis, the fair value of the guarantee is not material and as a result, no liability for the guarantee has been recorded in the accompanying balance sheets of the Company.

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Proceeds Received Under Escrow Arrangement

9 Months Ended

Jul. 30, 2016

Text Block [Abstract]

Proceeds Received Under Escrow Arrangement

Note 10 Proceeds Received Under Escrow Arrangement

In April 2016, the Company received $788,566 under an escrow arrangement related to a Finance Revenue Sharing Agreement between 21^st Mortgage Corporation and the Company. These distributions from the escrow account, related to certain loans financed by 21^st Mortgage Corporation, are recorded in income by the Company as received, which has been the Company’s past practice.

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Basis of Presentation and Accounting Policies (Policies)

9 Months Ended

Jul. 30, 2016

Fair Value Disclosures [Abstract]

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09 (Revenue from Contracts with Customers (Topic 606)), which requires an entity to recognize revenue from the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance addresses, in particular, contracts with more than one performance obligation, as well as the accounting for some costs to obtain or fulfill a contract with a customer; and provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. With respect to public entities, this update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and early adoption is not permitted. We believe that our implementation of this guidance will have no material impact on our consolidated financial statements.

Fair Value Measurements

FASB ASC No. 820 “Fair Value Measurements” defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e. exit price) in an orderly transaction between market participants at the measurement date. ASC No. 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e. inputs) used in the valuation. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The ASC No. 820 fair value hierarchy is defined as follows:

• Level 1 – Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly.

• Level 3 – Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

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Inventories (Tables)

9 Months Ended

Jul. 30, 2016

Inventory Disclosure [Abstract]

Summary of Breakdown of Elements of Inventory

A breakdown of the elements of inventory is as follows:

	July 30, 2016			October 31, 2015
Raw materials	$	676,791		$	721,751
Work-in-process		121,446			113,891
Finished homes		5,384,185			5,114,568
Model home furniture and others		97,945			69,495
Inventories, net	$	6,280,367		$	6,019,705
Pre-owned homes	$	4,668,344		$	5,516,272
Inventory impairment reserve		(1,139,355	)		(1,425,108	)
		3,528,989			4,091,164
Less homes expected to sell in 12 months		(1,245,653	)		(1,366,974	)
Pre-owned homes, long-term	$	2,283,336		$	2,724,190

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Short-term Investments (Tables)

9 Months Ended

Jul. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Summary of Short-term Investments

The following is a summary of short-term investments (available for sale):

	July 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	254,221	$	—	$	422,151

	October 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	294,648	$	—	$	462,578

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Jul. 30, 2016

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities Measured at Fair Value

The following tables present the Company’s assets and liabilities measured at fair value on a recurring basis.

	July 30, 2016
	Level 1		Level 2		Level 3
Equity securities in a public company	$	422,151	$	—	$	—

	October 31, 2015
	Level 1		Level 2		Level 3
Equity securities in a public company	$	462,578	$	—	$	—

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Investment in Retirement Community Limited Partnerships (Tables)

9 Months Ended

Jul. 30, 2016

Walden Woods and Cypress Creek [Member]

Summarized Financial Information

The following is summarized financial information of Walden Woods*:

	June 30, 2016			September 30, 2015
Total Assets	$	3,604,691		$	3,638,114
Total Liabilities	$	5,744,531		$	5,444,435
Total Equity	$	(2,139,840	)	$	(1,806,321	)

*Due to Walden Woods having a calendar year-end, the summarized financial information provided is from their most recent quarter prior to the period covered by this report.

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Warranty Costs (Tables)

9 Months Ended

Jul. 30, 2016

Guarantees [Abstract]

Summary of Amounts Related to Limited Warranty

Amounts related to these warranties are as follows:

	Three Months Ended						Nine Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016			August 1, 2015
Beginning accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000
Less: reduction for payments		(86,789	)		(82,079	)		(387,161	)		(173,045	)
Plus: additions to accrual		86,789			82,709			387,161			173,045
Ending accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000

 

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Revenues by Products and Service (Tables)

9 Months Ended

Jul. 30, 2016

Segment Reporting [Abstract]

Revenues by Net Sales

Revenues by net sales from manufactured housing, pre-owned homes and insurance agent commissions are as follows:

	Three Months Ended				Nine Months Ended
	July 30, 2016		August 1, 2015		July 30, 2016		August 1, 2015
Manufactured housing	$	9,134,856	$	6,569,133	$	23,984,656	$	17,897,155
Pre-owned homes		581,844		434,546		1,105,503		1,276,679
Insurance agent commissions		62,921		55,584		179,352		168,347
Total net sales	$	9,779,621	$	7,059,263	$	25,269,511	$	19,342,181

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Inventories - Summary of Breakdown of Elements of Inventory (Detail) - USD ($)	Jul. 30, 2016	Oct. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 676,791	$ 721,751
Work-in-process	121,446	113,891
Finished homes	5,384,185	5,114,568
Model home furniture and others	97,945	69,495
Inventories, net	6,280,367	6,019,705
Pre-owned homes	4,668,344	5,516,272
Inventory impairment reserve	(1,139,355)	(1,425,108)
Pre-owned homes, net	3,528,989	4,091,164
Pre-owned homes, net	3,528,989	4,091,164
Less homes expected to sell in 12 months	(1,245,653)	(1,366,974)
Pre-owned homes, long-term	$ 2,283,336	$ 2,724,190

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Short-term Investments - Summary of Short-term Investments (Detail) - USD ($)	Jul. 30, 2016	Oct. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Available-for-sale Securities, Amortized Cost	$ 167,930	$ 167,930
Available-for-sale Securities, Gross Unrealized Gains	254,221	294,648
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale Securities, Estimated Fair Value	$ 422,151	$ 462,578

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Fair Values of Financial Investments - Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($)	Jul. 30, 2016	Oct. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Equity securities in a public company	$ 422,151	$ 462,578
Level 1 [Member]
Fair Value Assets And Liabilities Measured On Recurring Basis [Line Items]
Equity securities in a public company	$ 422,151	$ 462,578

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Investment in Retirement Community Limited Partnerships - Additional Information (Detail) - USD ($)		3 Months Ended	9 Months Ended
	Mar. 31, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015	Oct. 31, 2015
Investments [Line Items]
Gain (Loss) on sale of interest in partnership unit		$ (89,053)		$ (146,403)
Walden Woods South LLC [Member]
Investments [Line Items]
Percentage of limited partnership ownership interest			31.30%
Amount invested in retirement community			$ 0		$ 0
CRF III, Ltd [Member]
Investments [Line Items]
Percentage of limited partnership ownership interest	48.50%
Proceeds from sale of interest in partnership unit	$ 3,990,000
Basis spread on variable rate	3.00%
Proceeds from sale in installments			500,000
Gain (Loss) on sale of interest in partnership unit			$ 3,990,000
Sale proceeds in partnership unit description			The Company received $960,000 cash, net of $40,000 cost paid and a note receivable for $3,030,000, which is payable to the Company in $500,000 installments each July 1st and January 1st, plus interest at 3.0%.
Cost on sale of partnership interest	$ 40,000
First installment due date			Jan. 01, 2017
First installment received date			Jun. 08, 2016
CRF III, Ltd [Member] | Note Receivable [Member]
Investments [Line Items]
Proceeds from sale of interest in partnership unit	3,030,000
CRF III, Ltd [Member] | Cash [Member]
Investments [Line Items]
Proceeds from sale of interest in partnership unit	$ 960,000

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Investment in Retirement Community Limited Partnerships - Summarized Financial Information (Detail) - Walden Woods and Cypress Creek [Member] - USD ($)	Jun. 30, 2016	Sep. 30, 2015
Schedule of Equity Method Investments [Line Items]
Total Assets	$ 3,604,691	$ 3,638,114
Total Liabilities	5,744,531	5,444,435
Total Equity	$ (2,139,840)	$ (1,806,321)

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Warranty Costs - Summary of Amounts Related to Limited Warranty (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Accounting Policies [Abstract]
Beginning accrued warranty expense	$ 100,000	$ 75,000	$ 100,000	$ 75,000
Less: reduction for payments	(86,789)	(82,079)	(387,161)	(173,045)
Plus: additions to accrual	86,789	82,709	387,161	173,045
Ending accrued warranty expense	$ 100,000	$ 75,000	$ 100,000	$ 75,000

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Warranty Costs - Additional Information (Detail)	9 Months Ended
	Jul. 30, 2016
Accounting Policies [Abstract]
Warranty period of homes	12 months

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Revenues by Products and Services - Revenues by Net Sales (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Jul. 30, 2016	Aug. 01, 2015	Jul. 30, 2016	Aug. 01, 2015
Sales Information [Line Items]
Total net sales	$ 9,779,621	$ 7,059,263	$ 25,269,511	$ 19,342,181
Manufactured Housing [Member]
Sales Information [Line Items]
Total net sales	9,134,856	6,569,133	23,984,656	17,897,155
Pre-Owned Homes [Member]
Sales Information [Line Items]
Total net sales	581,844	434,546	1,105,503	1,276,679
Insurance Agent Commissions [Member]
Sales Information [Line Items]
Total net sales	$ 62,921	$ 55,584	$ 179,352	$ 168,347

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Commitments and Contingent Liabilities - Additional Information (Detail) - USD ($)		9 Months Ended
	Apr. 28, 2016	Jul. 30, 2016	Aug. 01, 2015
Commitments And Contingencies [Line Items]
Percentage of joint venture loan guaranteed by company		50.00%
Guarantee obligations note payable principal amount		$ 5,000,000
Guarantee obligations maximum limit of note payable principal amount for maturity		$ 750,000
Guarantee obligations principal balance of pool of loans percentage		80.00%
Percentage of collateral value for pool of loan securing note		100.00%
Distribution from joint venture		$ 1,000,005	$ 500,000
Guarantee obligations outstanding note payable principal amount		1,010,067
Collateral value for pool of loan securing note payable by joint venture		$ 1,847,205
Majestic 21 [Member]
Commitments And Contingencies [Line Items]
Percentage of ownership interest		50.00%
Distribution from joint venture	$ 1,000,005

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Proceeds Received Under Escrow Arrangement - Additional Information (Detail) - USD ($)	1 Months Ended	9 Months Ended
	Apr. 30, 2016	Jul. 30, 2016
Related Party Transaction [Line Items]
Proceeds received under escrow arrangement		$ 788,566
Majestic 21 [Member]
Related Party Transaction [Line Items]
Proceeds received under escrow arrangement	$ 788,566