-----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, O8aAqSPC4ykmuph9HpnbhsHDChWGABu1LE4HZ2YEGlkUrzpAngqDYwMzqtSFdpmi PGUqpUUM3+udviry8Aj2rg== 0000897069-99-000135.txt : 19990317 0000897069-99-000135.hdr.sgml : 19990317 ACCESSION NUMBER: 0000897069-99-000135 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990130 FILED AS OF DATE: 19990316 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: SEC FILE NUMBER: 000-06506 FILM NUMBER: 99566305 BUSINESS ADDRESS: STREET 1: 3741 S W 7TH ST CITY: OCALA STATE: FL ZIP: 34478 BUSINESS PHONE: 9047325157 MAIL ADDRESS: STREET 1: P O BOX 1659 CITY: OCALA STATE: FL ZIP: 34478-1659 10-Q 1 NOBILITY HOME, INC.'S FIRST QUARTER 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the Quarterly period ended January 30, 1999 Commission File number 0-6506 NOBILITY HOMES, INC. (Exact name of registrant as specified in its charter) Florida 59-1166102 (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) 3741 S.W. 7th Street Ocala, Florida 34474 (Address of principal executive offices) (Zip Code) (352) 732-5157 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X ; No _____. The number of shares outstanding of each of the issuer's classes of common equity as of March 16, 1999 was 4,861,491. Page 2 NOBILITY HOMES, INC. INDEX Page Number PART I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of January 30, 1999 and October 31, 1998 3 Consolidated Statements of Income for the three months ended January 30, 1999 and January 31, 1998 4 Consolidated Statements of Cash Flows for three months ended January 30, 1999 and January 31, 1998 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Conditions 8 PART II. Other Information and Signatures 11 Item 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports of Form 8-K Page 3 PART I. FINANCIAL INFORMATION NOBILITY HOMES, INC. CONSOLIDATED BALANCE SHEETS
January 30, 1999 October 31, 1998 ---------------- ---------------- ASSETS (Unaudited) Current Assets: Cash and cash equivalents $ 4,599,720 $ 5,891,994 Accounts receivable - trade 643,937 535,615 Inventories 11,273,806 10,391,340 Deferred income taxes 127,000 127,000 Prepaid expenses and other current assets 355,266 324,928 ---------- ---------- Total current assets 16,999,729 17,270,877 Property, plant and equipment, net 2,060,664 2,037,140 Investment in joint venture - Nobility 21 450,530 428,938 Deferred income taxes - noncurrent 720,200 720,200 Other assets 2,336,934 2,346,051 ---------- ---------- Total assets $ 22,568,057 $ 22,803,206 ========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,270,788 $ 1,836,608 Accrued expenses and other current liabilities 807,628 1,367,916 Accrued compensation 343,407 583,889 Income taxes payable 779,050 341,050 ---------- ---------- Total current liabilities 3,200,873 4,129,463 ---------- ---------- Commitments and contingencies Stockholders' equity: Preferred stock, $.10 par value, 500,000 shares authorized, none issued - - Common stock, $.10 par value, 10,000,000 shares authorized in 1999 and 1998; 5,364,907 and 4,922,087 shares issued, respectively, in 1999 and 1998 536,491 492,209 Additional paid in capital 8,629,146 2,197,185 Retained earnings 12,467,668 18,225,666 Less treasury stock at cost, 503,416 and 465,836 shares, respectively, in 1999 and 1998 (2,266,121) (2,241,317) ---------- ---------- Total stockholders' equity 19,367,184 18,673,743 ----------- ---------- Total liabilities and stockholders' equity $ 22,568,057 $ 22,803,206 =========== ==========
Page 4 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended January 30, January 31, 1999 1998 ----------- ----------- Net sales $ 10,080,257 $ 10,589,052 Net sales - related parties 26,645 16,913 ---------- ---------- Total net sales 10,106,902 10,605,965 Cost of goods sold (7,312,538) (7,895,612) ---------- ---------- Gross profit 2,794,364 2,710,353 Selling, general and administrative expenses (1,706,493) (1,503,891) ---------- ---------- Operating income 1,087,871 1,206,462 ---------- ---------- Other income: Interest income 52,298 63,819 Undistributed earnings in joint venture - Nobility 21 21,592 25,852 Miscellaneous income 3,484 3,182 ---------- ---------- 77,374 92,853 ---------- ---------- Income before provision for income taxes 1,165,245 1,299,315 Provision for income taxes (447,000) (499,000) ---------- --------- Net income $ 718,245 $ 800,315 ========== ========== Weighted average shares outstanding (1) Basic 4,863,039 4,899,051 Diluted 4,941,227 4,941,886 Earnings per share (1) Basic $ .15 $ .16 Diluted $ .15 $ .16 (1) Restated to reflect 10% stock dividend paid on February 19, 1999
NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended January 30, January 31, 1999 1998 ----------- ----------- Cash flows from operating activities: Net income $ 718,245 $ 800,315 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 59,091 63,649 Undistributed earnings in joint venture - Nobility 21 (21,592) (25,853) (Increase) decrease in: Accounts receivable - trade (108,322) (621,149) Inventories (882,466) (4,426) Prepaid expenses and other current assets (30,338) (814) Increase (decrease) in: Accounts payable (565,820) (276,130) Accrued expenses and other current liabilities (560,288) 70,910 Accrued compensation (240,482) (132,865) Income taxes payable 438,000 242,071 ---------- --------- Net cash provided by (used in) operating activities (1,193,972) 115,708 ---------- --------- Cash flows from investing activities: Purchase of equipment (73,498) (54,064) ---------- --------- Net cash used in investing activities (73,498) (54,064) ---------- --------- Cash flows from financing activities: Purchase of treasury stock (24,804) - --------- --------- Net cash used in financing activities (24,804) - --------- --------- (Decrease) Increase in cash and cash equivalents (1,292,274) 61,644 Cash and cash equivalents at beginning of quarter 5,891,994 6,293,924 ---------- --------- Cash and cash equivalents at end of quarter $ 4,599,720 $ 6,355,568 ========== ========= Supplemental disclosure of cash flow information Income taxes paid $ 155,000 $ 275,000 ========== =========
Page 6 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The unaudited financial information included in this report includes all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The operations for the three months ended January 30, 1999 are not necessarily indicative of the results of the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission rules and regulations governing Form 10-Q. The condensed financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Registrant's October 31, 1998 Form 10-K Annual Report. 2. Inventories Inventories are carried at the lower of cost or market. Cost of finished home inventories is determined on the specific identification method. Other inventory costs are determined on a first-in, first-out basis. Inventories at January 30, 1999 and October 31, 1998 are summarized as follows:
January 30, October 31, 1999 1998 ----------- ----------- Raw Materials $ 629,738 $ 587,057 Work-in-process 88,280 101,268 Finished homes 9,337,244 8,525,402 Pre-owned manufactured homes 598,555 621,017 Model home furniture and other 619,989 556,596 ---------- ---------- $ 11,273,806 $ 10,391,340 ========== ==========
3. Earnings Per Share Effective for the quarter ended January 31, 1998, the Company adopted Statement on Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). SFAS 128 simplifies the standards for computing earnings per share by replacing the presentation of primary earnings per share with a presentation of basic earnings per share. Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding, adjusted for dilutive potential common shares. The following reconciliation details the numerators and denominators used to calculate basic and diluted earnings per share for the respective periods: Page 7 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Three Months Ended January 30, January 31, 1999 1998 ---------- ----------- Net Income $ 718,245 $ 800,315 ========= ========= Weighted average shares outstanding: Basic 4,863,039 4,899,051 Add: common stock equivalents 78,188 42,835 --------- --------- Diluted 4,941,227 4,941,886 ========== ========= Earnings per share: Basic and Diluted $ 0.15 $ 0.16 ========= ========= 4. Stock Split On January 6, 1998, the Company's Board of Directors authorized a three-for-two stock split in the form of a 50% stock dividend payable February 20, 1998 to stockholders of record on January 30, 1998. This resulted in the issuance of 1,485,297 additional shares of common stock. Share and per share data for all periods presented herein have been adjusted to give effect to the 50% stock split. 5. Stock Dividend On December 15, 1998, the Company's Board of Directors declared a 10% stock dividend which was paid on February 19, 1999 to stockholders of record on January 15, 1999. This resulted in the issuance of 442,820 additional shares of common stock. The dividend was charged to retained earnings in the amount of approximately $6.5 million, which was based upon the fair value of the Company's common stock. All references to weighted-average shares outstanding and per share amounts included herein reflect the 10% stock dividend and its retroactive effect. Page 8 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Net sales in the first quarter of 1999 were $10,107,000 as compared to $10,606,000 for the first quarter of 1998. The decrease in sales for the first three months of 1999 was primarily due to the additional stocking of $1.2 million of new inventory homes for the Company's seven new retail sales centers that were added in the fourth quarter of 1998. Gross profit in the first quarter of 1999 as a percentage of net sales was 27.6 percent compared to 25.5 percent for the same period last year. The increase in gross profit in the first quarter of 1999 was primarily a result of improvements in the gross margins at the retails sales centers, caused by selling a mix of higher priced homes. Selling, general and administrative expenses, as a percentage of net sales, was 16.9 percent in the first quarter of 1999 compared to 14.2 percent for the same period last year. The increase in first quarter of 1999 selling, general and administrative expenses as a percent of net sales was due to increased overhead from the seven new retail sales centers added during the fourth quarter of 1998. Other income for first quarter 1999 was $77,000 of which $52,000 was from interest on short term investments and $22,000 was undistributed earnings from the Company's financing joint venture, Nobility 21. This compares to $93,000 in the first quarter of fiscal year 1998, of which $64,000 was from short term interest and $26,000 was undistributed earnings from Nobility 21. As a result of the factors discussed above, net income for the first quarter of 1999 was $718,000 or $.15 per share, compared to $800,000 or $.16 per share in the first quarter of 1998. Earnings per share for the first quarter of 1998 has been restated to reflect a 10% stock dividend paid on February 19, 1999. Liquidity and Capital Resources Cash and cash equivalents were $4,600,000 at January 31, 1999 compared to $5,892,000 as of October 31, 1998. Working capital increased to $13,799,000 at January 31, 1999 from $13,141,000 at October 31, 1998. Inventories increased to $11,274,000 in the first quarter of 1999 from $10,391,000 at the fourth quarter of 1998. The increase in inventory was due to the additional $1.2 million of homes manufactured in the first quarter of 1999 which were used to stock the new retail sales centers added in the fourth quarter of 1998. The Company maintains a revolving credit agreement with a major bank providing for borrowings up to $4.0 million. A second revolving line of credit agreement with another bank provides for borrowings up to $1.5 million. These two agreements provide the Company with an additional $5.5 million of working capital for use in connection with its overall operations. At January 30, 1999 and October 31, 1998, there were no amounts outstanding under either of these agreements. Consistent with normal practice, the Company's operations are not expected to require significant capital expenditures during fiscal year 1999. Working capital requirements for the home inventory for new and existing sales centers will be met with internal sources. Page 9 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Forward Looking Statements Certain statements in this report are forward-looking statements within the meaning of the federal securities laws. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, competitive pricing pressures at both the wholesale and retail levels, changes in market demand, 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. Year 2000 Issue Many existing computer programs use only two digits to identify a year in the date field. As the century date change occurs, these programs may recognize the year 2000 as 1900, or not at all. If not corrected, many computer systems and applications could fail or create erroneous results by or at the year 2000 (the "Year 2000 Issue"). The Company has developed plans to address its possible exposures related to the impact of the Year 2000 Issue on its operations. These plans were implemented primarily with the use of internal resources. The Company has assessed (i) the equipment in its manufacturing operations that contains microprocessors or relies on software, and (ii) the Company's internal systems. The Company has determined that its manufacturing equipment does not have a Year 2000 Issue. The Company's internal systems consist of its central operating and accounting systems, which handles the majority of its business transactions. The Company has completed an assessment of its central operating and accounting systems which resulted in the identification of certain modifications necessary to bring these systems into year 2000 compliance. These modifications have been made, primarily through the purchase of updated hardware and updated vendor-supplied software. Based on the results of initial testing with respect to these systems, the Company does not anticipate that the Year 2000 Issue will materially impact operations or operating results. Management believes that total pretax costs incurred to date in connection with the Year 2000 Issue have not materially impacted the Company's operating results and that future costs of compliance likewise will not be material. The Company believes its planning efforts are adequate to address the Year 2000 Issue and that its risk factors are primarily those that it cannot directly control, including the readiness of its major suppliers, customers and service providers. Failure on the part of these entities to timely remediate their Year 2000 Issue could result in disruptions in the Company's supply of materials, disruptions in its customers' ability to conduct business and interruptions to the Company's daily operations. Management believes that its exposure to third party risk may be minimized to some extent because it does not rely significantly on any one supplier or customer. There can be no guarantee, however, that the systems and operations relied on by such third parties will be corrected on a timely basis and will not have a material adverse effect on the Company. Page 10 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Due to the nature of the Company's manufacturing and retail operations, including the fact that the materials used by the Company in its manufactured homes are widely available, the Company does not currently have formal contingency plans or a timetable for implementing them. The Company's suppliers typically maintain a one-month supply of materials. Contingency plans will be established, if they are deemed necessary, after the Company has adequately assessed the impact on its operations should third parties fail to properly remediate their computer systems. Contingency plans would include such items as identifying alternative suppliers and increasing inventory levels prior to the year 2000 to ensure availability of supplies for the Company's manufacturing and retail operations. Page 11 Part II. OTHER INFORMATION AND SIGNATURES There were no reportable events for Item 1 through Item 3 and Item 5 Item 4. Submission of Matters to a Vote of Security Holders. a) The Annual Meeting of the Shareholders was held on February 26, 1999 b) The vote to elect a board of five directors was as follows:
For Against Abstain Not Voted --- ------- ------- --------- Terry E. Trexler 2,809,012 0 0 1,620,239 Richard C. Barberie 2,808,762 250 0 1,620,239 Robert P. Holliday 2,808,762 250 0 1,620,239 Robert P. Saltsman 2,808,392 620 0 1,620,239 Thomas W. Trexler 2,809,012 0 0 1,620,239
Item 6. Exhibits Exhibit 10 Revolving Credit Agreement dated March 4, 1998 with Suntrust Bank Exhibit 27 Financial Data Schedule Page 12 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: March 16, 1999 By: /s/ Terry E. Trexler ---------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer DATE: March 16, 1999 By: /s/ Thomas W. Trexler ---------------------------------- Thomas W. Trexler, Executive Vice President, Chief Financial Officer DATE: March 16, 1999 By: /s/ Lynn J. Cramer, Jr. ---------------------------------- Lynn J. Cramer, Jr., Treasurer and Principal Accounting Officer EX-10 2 REVOLVING CREDIT AGREEMENT REVOLVING CREDIT AGREEMENT March 4, 1998 Mr. Terry E. Trexler, President Nobility Homes, Inc. 3741 S. W. 7th ST Ocala, FL 34478 Dear Mr. Trexler: The following agreement is provided in an effort to clarify the terms, conditions and covenants relative to the $2,500,000 Line of Credit ("Line"), which was provided your organization by SunTrust Bank, North Central Florida. If requested by Nobility Homes, Inc., SunTrust Bank will increase the line to $4,000,000.00, provided however, that Nobility Homes, Inc. is not in default of any loan covenants. Nobility Homes, Inc. agrees to execute all necessary documents relative to increasing the line of credit. This agreement shall supersede the previous agreement dated March 27, 1997. The Line is offered subject to the following terms, conditions and covenants. A. TERMS OF LINE 1. Borrower: Advances under the line shall be made to Nobility Homes, Inc. ("Borrower"), which shall be responsible for the repayment of the advances. 2. Amount of Line: The maximum amount of the Line shall be Two Million, Five Hundred Thousand and No/100 Dollars ($2,500,000.00). 3. Purpose: Advances under the Line are to be used for general short-term working capital requirements which occur in the normal course of Borrower's business. 4. Term of Line: The Line shall be represented and evidenced by a promissory note or notes, payable on demand of the Bank. The Bank's obligation to advance under this Line of Credit Commitment shall expire on demand and shall be subject to the Borrower's continued banking relationship with the Bank, as well as the continued satisfactory financial condition of the Borrower, in the opinion of the Bank. 5. Interest Rate: Advances under the Line shall bear and accrue interest at a rate per annum which is defined as SunTrust Banks', Inc. Prime Rate minus 1/2% (loan rate today would be 8.00%). Interest shall be due and payable monthly. Rate basis is floating, with adjustments made the day of change. 5.1 Calculation of Interest: All interest under the Note or hereunder shall be calculated on the basis of a 360-day year for the actual number of days elapsed in an interest period (actual/360 method), unless the Bank shall otherwise elect. 6. Advances: The sums contemplated to be advanced may be repaid and re- advanced pursuant to the terms hereof, so long as this agreement remains in effect. The advances may be repaid in whole or in part at any time without prepayment, premium, penalty, or fee whatsoever. 7. Line of Credit Paydown: During the term of this commitment, the outstand- ings under the Line shall be paid down to a balance not to exceed One and No/100 Dollars ($1.00) for thirty (30) consecutive days. 8. Loan Security: The advances shall be extended on an unsecured basis; how- ever, the Borrower shall not, without the prior written consent of the Bank, permit or suffer to exist any lien, charge, encumbrance, or security interest in or upon the Borrower's business assets, with the exception of floor plan lines of credit occurring in the normal course of business, in as much as they do not adversely impact the financial covenants detailed in this agreement. B. REQUIREMENTS AND CONDITIONS OF LINE 1. Financial Information: Borrower shall maintain books and records in accordance with generally accepted accounting principles and shall furnish to the Bank the following periodic financial information: (a) Quarterly Reports. Within 45 days after the end of each calendar quarter, an income statement and a balance sheet prepared in accordance with generally accepted accounting principles, certified by the chief financial officer or president of Borrower as being true and accurate; (b) Annual Reports. Within 90 days after the end of each fiscal year, an income statement and a reconciliation of surplus statement of the Borrower for such year, and a balance sheet as of the end of such year, prepared in accordance with generally accepted auditing standards certified by independent certified public accountants of recognized standing selected by the Borrower and satisfactory to the Bank; and (c) No Default Certificates. Together with each report required by Sub- section (a) and (c), shall submit a certificate of its president or chief financial officer that no Default or Event of Default then exists or if a Default or Event of Default exists, the nature and duration thereof and the Borrower's intention with respect thereto. In addition, in the event of a default, the Borrower's independent auditors (if applicable) shall include, within its audit report, a statement that, in the course of such audit, it discovered any circumstances which it believes constitutes a Default or Event of Default and if it discovered any such circumstances, the nature and duration thereof. If the Borrower has Subsidiaries, the financial statements required above shall be consolidated and, if required by the Bank, consolidating form for the Borrower and all Subsidiaries required by generally accepted accounting principles to be consolidated for financial reporting purposes, and/or, (d) Other Information. In addition to the financial statements required herein, the bank reserves the right to require other or additional financial or other information concerning the Borrower and/or its Subsidiaries. 2. Conditions Precedent to Borrowing. Prior to any Advance of the proceeds of any Loan, the following conditions shall have been satisfied, in the sole opinion of the Bank and its counsel: 2.1 Conditions Precedent to Each Advance. The following conditions shall have been satisfied prior to any advance, in the sole opinion of the Bank and its counsel: (a) Advance Request. Automatic advances under the line of credit to cover cash shortfalls in the Borrower's depository accounts with Bank as provided under the automatic sweep service currently in place with Bank are permitted. In the event of the need for a manual advance under the line, the Borrower shall deliver to the Bank a written request for Advance signed by an authorized officer of the firm as stated in the corporate resolutions. (b) No Default. No default shall have occurred and be continuing or will occur upon the making of the Advance in question. (c) No Adverse Change. There shall have been no material adverse change in the condition, financial or otherwise, of the Borrower or any Subsidiary from such condition as it existed on the date of the most recent financial statements of Borrower delivered prior to date hereof. C. COVENANTS OF THE BORROWER The Borrower covenants and agrees that from the date hereof and until payment in full of the Indebtedness and the formal termination of this Agreement, unless the Bank shall otherwise consent in writing, the Borrower and each Subsidiary: 1. Use of Loan Proceeds. Shall use the proceeds of the Loan only for the commercial purposes permitted herein or otherwise permitted by the Bank and furnish the bank all evidence that it may reasonably require with respect to such use. 2. Insurance. Shall maintain such liability insurance, workers' compensation insurance, and casualty insurance as may be required by law, customary and usual for prudent businesses in its industry or as may be reasonably required by the Bank. 3. Payment of Taxes, Etc. Shall pay before delinquent all of its debts and taxes except that the Bank shall not unreasonably withhold its consent to nonpayment of taxes being actively contested in accordance with law (provided that the Bank may require bonding or other assurances). 4. Compliance; Hazardous Materials. Shall strictly comply with all laws, regulations, ordinances and other legal requirements, specifically includ- ing, without limitation, ERISA, all securities laws and all laws relating to hazardous materials and the environment. Unless approved in writing by the Bank, neither the Borrower nor any Subsidiary shall engage in the storage, manufacture, disposition, processing, handling, use or trans- portation of any hazardous or toxic materials, whether or not in compliance with applicable laws and regulations. 5. Change in Business. Shall not enter into any business which is sub- stantially different from the business or businesses in which it is presently engaged. 6. Sale of Business. Shall maintain its corporate existence, good standing and necessary qualifications to do business and shall not sell, lease, assign or otherwise dispose of any substantial portion of its assets (other than sales of obsolete or worn-out equipment and sales of Inventory in the ordinary course of business). Change in the principal ownership of the Firm will cause the Line to become immediately due and payable. 7. Financial Covenants. At all times, the Borrower shall be in compliance with the following financial covenants on a consolidated basis: (a) The tangible net worth of the Borrower shall not be less than $5,500,000 at the end of any fiscal quarter; For purposes of this Agreement, the term "tangible net worth" shall be the net worth of an Entity according to generally accepted accounting principles less any write-up of assets subsequent to October 31, 1993; deferred assets other than prepaid insurance and prepaid taxes; patents, copyrights, trademarks, trade names, non-compete agreements, franchises and other intangibles; goodwill or other amounts representing the excess of the purchase price of assets or stock over the value assigned thereto on the books of such Entity; unamortized debt discount and expense; and any other amounts categorized as intangibles under generally accepted accounting principles. (b) The ratio of current assets of the Borrower to current liabilities shall not be less than 2.0:1 as at the end of the fiscal quarter; (c) All financial terms used herein shall have the meanings assigned to them under generally accepted accounting principles unless another meaning shall be specified. 8. Events of Default. Each of the following shall constitute an Event of Default along with any events of default as contained with the promissory note: (a) Any representation or warranty made by the Borrower or any other party to any Loan Document (other than the Bank) herein or therein or in any certificate or report furnished in connection herewith or therewith shall prove to have been untrue or incorrect in any material respect when made; or (b) There shall occur any default by the Borrower in the payment, when due, of any principal of or interest on the Note, any amounts due hereunder or any other Loan Document or any other Indebtedness (not cured within the grace period provided in such Note or in the document or instrument evidencing such Indebtedness); (c) There shall occur any default by the Borrower or any other party to any Loan Document (other than the Bank) in the performance of any agreement, covenant or obligation contained in this Agreement or such Loan Document not provided for elsewhere and such default is not cured within any grace period provided in this Agreement or such other loan Document; (d) The Borrower or any Subsidiary shall (i) voluntarily liquidate or terminate operations or apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator or such Person or of all or of a substantial part of its assets, (ii) admit in writing its inability, or be generally unable, to pay its debts as the debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the federal Bankruptcy Code (as now or hereafter in effect), (v) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency; or (e) Without its application, approval or consent, a proceeding shall be commenced, in any court of competent jurisdiction, seeking in respect of such Person any remedy under the federal Bankruptcy Code, the liquidation, reorganization, dissolution, winding-up, or composition or readjustment of debt, the appointment of a trustee, receiver, liquidator or the like of such Person, or of all or any substantial part of the assets of such Person, or other like relief under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts. 9. Remedies. If any Default shall occur, the Bank may, without notice to the Borrower, at its option, withhold further Advances to the Borrower of proceeds of the Loans. Should any Event of Default occur and not be cured upon demand following delivery of written notice from the bank to the Borrower complete upon hand or overnight delivery or upon facsimile delivery or mailing by certified mail, return receipt requested, the Bank may declare any or all Indebtedness to be immediately due and payable, bring suit against the Borrower to collect the Indebtedness, exercise any remedy available to the Bank hereunder and take any action or exercise any remedy provided herein or in any other Loan Document or under applicable law. No remedy shall be exclusive of other remedies or impair the right of the Bank to exercise any other remedies. 10. Severability No failure on the part of the Bank to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and are in addition to any other remedies provided by law, any Loan Document or otherwise. 10.1. Notices. Any notice or other communication hereunder to any party hereto shall be by hand delivery, overnight delivery, facsimile, telegram, telex or registered certified mail and unless otherwise provided herein shall be deemed to have been given or made when delivered, telegraphed, telexed, faxed or deposited in the mails, postage prepaid, addressed to the party at its address specified below (or at any other address that the party may hereafter specify to the other parties in writing): The Bank: SunTrust Bank, North Central Florida Corporate Lending Division 203 E. Silver Springs Blvd. Ocala, FL 34470 The Borrower: Nobility Homes, Inc. 3741 S. W. 7th Street Ocala, FL 34474 10.2 Valid Existence and Power. The Borrower and each subsidiary is a corpora- tion duly organized, validly existing and in good standing under the laws of the State of Florida and is duly qualified or licensed to transact business in all places where the failure to be so qualified would have a material adverse effect on it. The Borrower and each other Entity which is a party to any Loan Document (other than the Bank) has the power to make and perform the Loan Documents executed by it and all such instruments will constitute the legal, valid and binding obligations of such Entity, enforceable in accordance with their respective terms, subject only to bankruptcy and similar laws affecting creditors' rights generally. 11. Survival of Representations. All representations and warranties made herein shall survive the making of the loans hereunder and the delivery of the Notes, and shall continue in full force and effect so long as any Indebtedness is outstanding, there exists any commitment by the Bank to the Borrower, and until this Agreement is formally terminated in writing. 12. Commitment Expiration: This commitment shall expire unless it has been accepted in writing and the acceptance received by the undersigned on or before March 16, 1998. Please indicate your acceptance of this commitment and the terms and conditions contained herein by executing your acceptance immediately below and returning one executed copy of the Commitment Letter and Agreement to the Bank. We would like to express our appreciation for the opportunity you have given us to meet your financial needs, and look forward to an ongoing mutually satisfactory relationship. Sincerely, Loren M. Thrasher Vice President Corporate Lending Division LMT/lr BORROWER'S ACCEPTANCE OF COMMITMENT AND AGREEMENT The above Revolving Credit Agreement is hereby accepted on the terms and conditions outlined therein. Nobility Homes, Inc. By: __________________________________ Terry E. Trexler, President Date: _______________________________ EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF NOBILITY HOMES, INC. AS OF AND FOR THE QUARTER ENDED JANUARY 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS NOV-06-1999 NOV-01-1998 JAN-30-1999 4,599,720 0 643,937 0 11,273,806 16,999,729 3,649,987 1,589,323 22,568,057 3,200,873 0 0 0 536,491 18,830,693 22,568,057 10,106,902 10,106,902 7,312,538 1,706,493 0 0 0 1,165,245 447,000 0 0 0 0 718,245 0.15 0.15
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