-----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, PMgriUQ3oyLib2pzVdRdIRJne+jcEU8wZ/zabqWO87N2AdoCH/B8RTyvJQDVdeyg 4Ja/dKm2t6BHc95hLI2rqw== 0000897069-04-001661.txt : 20040914 0000897069-04-001661.hdr.sgml : 20040914 20040914164124 ACCESSION NUMBER: 0000897069-04-001661 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040731 FILED AS OF DATE: 20040914 DATE AS OF CHANGE: 20040914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOBILITY HOMES INC CENTRAL INDEX KEY: 0000072205 STANDARD INDUSTRIAL CLASSIFICATION: MOBILE HOMES [2451] IRS NUMBER: 591166102 STATE OF INCORPORATION: FL FISCAL YEAR END: 1027 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06506 FILM NUMBER: 041029975 BUSINESS ADDRESS: STREET 1: 3741 S W 7TH ST CITY: OCALA STATE: FL ZIP: 34478 BUSINESS PHONE: 3527325157 MAIL ADDRESS: STREET 1: P O BOX 1659 CITY: OCALA STATE: FL ZIP: 34478-1659 10-Q 1 dkm338.txt FORM 10-Q FQE JULY 31, 2004 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 31, 2004 Commission File number 0-6506 NOBILITY HOMES, INC. (Exact name of registrant as specified in its charter) Florida 59-1166102 (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) 3741 S.W. 7th Street Ocala, Florida 34474 (Address of principal executive offices) (Zip Code) (352) 732-5157 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X ; No ___. Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes __; No X . The number of shares of the registrant's common stock, par value $0.10, outstanding as of September 14, 2004 was 4,018,811. NOBILITY HOMES, INC. INDEX Page Number PART I. Financial Information Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets as of July 31, 2004 and November 1, 2003 3 Consolidated Statements of Income and Comprehensive Income for the three and nine months ended July 31, 2004 and August 2, 2003 4 Consolidated Statements of Cash Flows for the three and nine months ended July 31, 2004 and August 2, 2003 5 6 Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 12 Item 4. Controls and Procedures 12 PART II. Other Information Item 6. Exhibits and Reports on Form 8-K 13 Signatures 13 2 NOBILITY HOMES, INC. CONSOLIDATED BALANCE SHEETS
July 31, November 1, 2004 2003 ----------------- ------------------ (Unaudited) Assets Current assets: Cash and cash equivalents $ 8,111,110 $ 10,641,748 Short-term investments 886,225 342,550 Accounts receivable - trade 1,992,511 2,096,128 Inventories 7,854,469 6,557,659 Deferred income taxes 472,394 485,716 Prepaid expenses and other current assets 478,080 501,014 ------------- ------------- Total current assets 19,794,789 20,624,815 Property, plant and equipment, net 3,339,858 3,136,506 Long-term investments 8,361,641 5,249,825 Investment in joint venture - Majestic 21 1,465,709 1,203,804 Deferred income taxes - noncurrent 15,050 15,050 Other assets 1,966,382 2,474,905 ------------- ------------- Total assets $ 34,943,429 $ 32,704,905 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 919,425 $ 1,484,997 Accrued expenses and other current liabilities 342,082 757,498 Accrued compensation 643,540 524,784 Income taxes payable 343,675 890,675 Customer deposits 2,978,243 2,230,633 ------------- ------------- Total current liabilities 5,226,965 5,888,587 ------------- ------------- Commitments and contingent liabilities Stockholders' equity: Preferred stock, $.10 par value, 500,000 shares authorized, none issued - - Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued 536,491 536,491 Additional paid in capital 8,651,385 8,613,640 Retained earnings 28,256,638 25,500,362 Accumulated other comprehensive income 66,602 35,516 Less treasury stock at cost, 1,346,096 and 1,354,663 shares, respectively, in 2004 and 2003 (7,794,652) (7,869,691) ------------- ------------- Total stockholders' equity 29,716,464 26,816,318 ------------- ------------- Total liabilities and stockholders' equity $ 34,943,429 $ 32,704,905 ============= =============
The accompanying notes are an integral part of these financial statements 3 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
Three Months Ended Nine Months Ended ------------------ ----------------- July 31, August 2, July 31, August 2, 2004 2003 2004 2003 ------------------ ----------------- ------------------ ------------------ Net sales $ 12,280,293 $ 9,441,504 $ 35,538,767 $ 26,278,681 Net sales - related parties 30,585 23,675 82,952 23,675 ------------- ------------ ------------- -------------- Total net sales 12,310,878 9,465,179 35,621,719 26,302,356 Cost of goods sold (9,070,731) (7,167,499) (26,461,090) (19,553,721) ------------- ------------ ------------- -------------- Gross profit 3,240,147 2,297,680 9,160,629 6,748,635 Selling, general and administrative expenses (1,569,987) (1,489,516) (4,884,624) (4,206,113) ------------- ------------ ------------- -------------- Operating income 1,670,160 808,164 4,276,005 2,542,522 ------------- ------------ ------------- -------------- Other income: Interest income 83,491 49,276 249,922 132,811 Undistributed earnings in joint venture - Majestic 21 90,640 48,160 261,705 158,723 Receipt of stock in connection with demutualization of insurance company - - - 167,551 Miscellaneous income 39,847 52,130 72,744 69,485 ------------- ------------ ------------- -------------- 213,978 149,566 584,371 528,570 ------------- ------------ ------------- -------------- Income before provision for income taxes 1,884,138 957,730 4,860,376 3,071,092 Provision for income taxes (664,000) (324,000) (1,703,000) (992,000) ------------- ------------ ------------- -------------- Net income 1,220,138 633,730 3,157,376 2,079,092 Other comprehensive income, net of tax Unrealized investment gain 10,283 11,461 31,086 23,941 ------------- ------------ ------------- -------------- Comprehensive income $ 1,230,421 $ 645,191 $ 3,188,462 $ 2,103,033 ============= ============ ============= ============== Average shares outstanding Basic 4,018,646 3,987,513 4,014,423 3,999,311 Diluted 4,137,460 4,015,417 4,108,026 4,020,333 Earnings per share Basic $ 0.30 $ 0.16 $ 0.79 $ 0.52 Diluted $ 0.30 $ 0.16 $ 0.77 $ 0.52 Divdends per commom share $ - $ - $ 0.10 $ -
The accompanying notes are an integral part of these financial statements 4 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended ----------------- July 31, August 2, 2004 2003 ----------------- --------------------- Cash flows from operating activities: Net income $ 3,157,376 $ 2,079,092 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 173,287 148,518 Deferred income taxes - 50,379 Undistributed earnings in joint venture - Majestic 21 (261,905) (158,723) Increase in cash surrender value of life insurance (88,501) (45,000) Decrease (increase) in: Accounts receivable - trade 103,617 (648,263) Inventories (1,296,810) (877,713) Prepaid expenses and other current assets 22,934 (240,743) (Decrease) increase in: Accounts payable (565,572) (263,479) Accrued expenses and other current liabilities (415,416) (207,767) Accrued compensation 118,756 (340,154) Income taxes payable (547,000) 345,101 Customer deposits 747,610 1,497,777 ------------- ------------- Net cash provided by operating activities 1,148,376 1,339,025 ------------- ------------- Cash flows from investing activities: Purchase of property, plant and equipment (376,639) (337,082) ------------- ------------- Net cash used in investing activities (376,639) (337,082) ------------- ------------- Cash flows from financing activities: Purchase of investments (3,611,083) (3,716,130) Payment of cash dividends (401,100) - Proceeds from repayment of receivable from officer 597,024 - Proceeds from exercise of employee stock options 112,784 - Purchase of treasury stock - (260,158) ------------- ------------- Net cash used in financing activities (3,302,375) (3,976,288) ------------- ------------- Decrease in cash and cash equivalents (2,530,638) (2,974,345) Cash and cash equivalents at beginning of year 10,641,748 12,481,711 ------------- ------------- Cash and cash equivalents at end of quarter $ 8,111,110 $ 9,507,366 ============= ============= Supplemental disclosure of cash flow information Interest Paid $ - $ - ============= ============= Income taxes paid $ 2,250,000 $ 620,000 ============= ============= Non-cash financing activities: Receipt of stock in connection with demutualization of insurance company $ - $ 167,930 ============= =============
The accompanying notes are an integral part of these financial statements 5 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The accompanying unaudited consolidated financial statements for the three and nine months ended July 31, 2004 and August 2, 2003 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The unaudited financial information included in this report includes all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The operations for the three and nine months ended July 31, 2004 are not necessarily indicative of the results of the full fiscal year. The condensed consolidated financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Registrant's November 1, 2003 Annual Report on Form 10-K. The receipt of stock in connection with the demutualization of an insurance company for which the Company owns life insurance was originally recorded during the second quarter of 2003 as a fair value adjustment for marketable securities and included as a component of other comprehensive income. During the fourth quarter of 2003, this amount was reclassified to other income and included in net income; the results of this reclassification was to increase other income by approximately $168,000, increase a deferred tax liability for approximately $50,000, increase basic and diluted earnings per share by $0.03, and decrease other comprehensive income by approximately $118,000. These amounts have been properly reclassified in the accompanying financial statements for the three-month and nine-month periods ended August 2, 2003 2. Inventories ----------- Inventories are carried at the lower of cost or market. Cost of finished home inventories is determined on the specific identification method. Other inventory costs are determined on a first-in, first-out basis. Inventories at July 31, 2004 and November 1, 2003 are summarized as follows: July 31, November 1, 2004 2003 ----------------- ---------------- (Unaudited) Raw materials $ 1,069,605 $ 680,036 Work-in-process 131,710 109,947 Finished homes 6,029,441 5,272,867 Pre-owned manufactured homes 493,888 401,728 Model home furniture and other 129,825 93,081 ----------------- ---------------- $ 7,854,469 $ 6,557,659 ================= ================ 6 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. Accounting for Stock Based Compensation --------------------------------------- At July 31, 2004, the Company had a stock incentive plan (the "Plan"), which authorizes the issuance of options to purchase common stock. The Company has adopted the disclosure-only provisions of FAS 123, Accounting for Stock-Based Compensation, as amended by FAS 148, Accounting for Stock Based Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123, but accounts for the plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25 and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. If the Company had elected to recognize compensation expense for stock options based on the fair value at grant date, consistent with the method prescribed by FAS 123, net income and earnings per share would have been reduced to the pro forma amounts as follows:
Three Months Ended Nine Months Ended ------------------ ----------------- July 31, August 2, July 31, August 2, 2004 2003 2004 2003 ---- ---- ---- ---- Net Income, as reported $ 1,220,138 $ 633,730 $ 3,157,376 $ 2,079,092 Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of related tax effects (4,988) (3,837) (14,964) (10,207) ------------ ---------- ----------- ----------- Pro forma net income $ 1,215,150 $ 629,893 $ 3,142,412 $ 2,068,885 ============ ========== =========== =========== Earnings per share Basic - as reported $ 0.30 $ 0.16 $ 0.79 $ 0.52 Basic - pro forma $ 0.30 $ 0.16 $ 0.78 $ 0.52 Earnings per share Diluted - as reported $ 0.30 $ 0.16 $ 0.77 $ 0.52 Diluted - pro forma $ 0.29 $ 0.16 $ 0.76 $ 0.51
7 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. Earnings Per Share ------------------
Three Months Ended Nine Months Ended ------------------ ----------------- July 31, August 2, July 31, August 2, 2004 2002 2004 2003 ------------ ---------- ----------- ----------- Net income $ 1,220,138 $ 633,730 $ 3,157,376 $ 2,079,092 ============ ========== =========== =========== Weighted average shares outstanding: Basic 4,018,646 3,987,513 4,014,423 3,999,311 Add: common stock equivalents 118,814 27,904 93,603 21,022 ------------ ---------- ----------- ----------- Diluted 4,137,460 4,015,417 4,108,026 4,020,333 ============ ========== =========== =========== Earnings per share: Basic $ 0.30 $ 0.16 $ 0.79 $ 0.52 ============ ========== =========== =========== Diluted $ 0.30 $ 0.16 $ 0.77 $ 0.52 ============ ========== =========== ===========
NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. Critical Accounting Policies and Estimates ------------------------------------------ The Company applies judgment and estimates, which may have a material effect in the eventual outcome of assets, liabilities, revenues and expenses, for accounts receivable, inventory and goodwill. The following explains the basis and the procedure for each asset account where judgment and material estimates are applied. Revenue Recognition The Company recognizes revenue for the majority of retail sales upon the occurrence of all the following: o its receipt of a down payment, o the home buyer enters into a installment sales contract with a third party, o construction of the home is complete, o title having passed to the retail home buyer, o full sales price of home having been collected and deposited into the Company's account, o the home having been delivered and set up at the retail home buyer's site, and o completion of any other significant obligations. The Company recognizes wholesale home sales to independent dealers upon receiving wholesale floor plan financing or establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent dealer. For wholesale shipments to independent retailers, the Company has no obligation to set up the home or to complete any other significant obligations. Goodwill Between 1995 and 1998 the Company acquired retail sales centers using the purchase method of accounting. As a result, goodwill is reflected on the consolidated balance sheets. A valuation was performed by the Company and it was determined that the estimated fair value of the goodwill in the accounts exceeded its book value. There is no assurance that the value of the acquired sales centers will not decrease in the future due to changing business conditions. Vendor Rebates The Company receives volume rebates from its vendors based upon reaching a certain level of purchased materials during a specified period of time. Volume rebates are estimated based upon annual purchases, and are adjusted quarterly if the accrued volume rebate is applicable. 8 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Dealer Volume Rebates The Company pays a volume rebate to independent dealers based upon the dollar volume of homes purchased and paid for by the dealer in excess of a certain specific dollar amount during a specific time period. Dealer volume rebates are accrued when sales are recognized. 9 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - --------------------- For the three and nine month periods ended July 31, 2004 and August 2, 2003, results of operations are as follows. Total net sales in third quarter 2004 increased 30% to $12,310,878 compared to $9,465,179 in the third quarter 2003. Total net sales for the first nine months of 2004 increased 35% to $35,621,719 compared to $26,302,356 for the first nine months of 2003. The increased sales in 2004 was primarily due to the increase in sales to outside dealers coupled with an increase in Prestige same store revenues. Industry shipments in Florida, our primary market, in the latest three-month period were up approximately 16%. In spite of tight retail credit standards, high unemployment, and uncertain economic conditions in our country, management expects the demand for our homes to continue. Increase demand also could result from building replacement homes due to the recent hurricanes in Florida. In the near term, management anticipates continued pressure on both sales and earnings resulting from these factors, and record price increases in lumber, oriented strand board (OSB), sheetrock, steel and oil-related products and services. Gross profit as a percentage of net sales was 26% in third quarter 2004 compared to 24% in third quarter 2003 and was 26% for the first nine months of 2004 unchanged from 26% for the first nine months 2003. The increase in gross profit, as a percentage of sales, in third quarter 2004 was primarily due to increase in lumber surcharges to off-set higher material costs, primarily in lumber and oriented strand board (OSB), sheetrock, steel and oil-rated products and services. Selling, general and administrative expenses as a percent of net sales were 13% in third quarter of 2004 compared to 16% in the third quarter of 2003 and were 14% for the first nine months of 2004 compared to 16% for the first nine months of 2003. The decrease in selling, general and administrative expenses, as a percent of net sales, resulted from the increase in sales which had an impact on selling, general and administrative expenses as a percentage because most of these expenses are fixed, except for compensation expenses. Other income for the third quarter of 2004 was $213,978 of which $83,491 was from interest on cash equivalents and investments and $90,640 was from Nobility's equity in the earnings from the Majestic 21 joint venture. In the third quarter of 2003 other income was $149,566 of which $49,276 was from interest on cash equivalents and investments and $48,160 was from Nobility's equity in the earnings from the Majestic 21 joint venture. For the first nine months of 2004 other income was $584,371 of which $249,922 was from interest on cash equivalents and investments and $261,705 was from Nobility's equity in the earnings from the Majestic 21 joint venture. For the nine months of 2003 other income was $528,570 of which $132,811 was from interest on cash equivalents and investments and $158,723 was from Nobility's equity in the earnings from the Majestic 21 joint venture. In the second quarter of 2003, the Company recorded the receipt of stock in the amount $167,551 in connection with the demutualization of an insurance company. The increase in interest income was primarily due to a change in the investment portfolio to long-term marketable securities to obtain a higher yield. Income reported for Majestic 21 results from the Company's 50% share in the equity in the earnings of this joint venture. Income for the joint venture fluctuated due to higher amortization of prepaid finance charges on the portfolio. The Company believes that its historical loss experience has been favorably impacted by its ability to resell foreclosed/repossessed homes through its network of retail sales centers. Majestic 21 is a financing joint venture accounted for under the equity method of accounting. As a result, of the factors discussed above, net income for the third quarter of 2004 was $1,220,138 or $0.30 per basic and diluted share compared to $633,730 or $0.16 per basic and diluted share for the third quarter 2003. For the first nine months of 2004, net income was $3,157,376 or $0.79 per basic and $0.77 per diluted share as compared to $2,079,092 or $0.52 per basic and diluted share for the first nine months of 2003. Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents were $8,111,110 at July 31, 2004 compared to $10,641,748 at November 1, 2003. Short and long-term investments were $9,247,866 at July 31, 2004 compared to $5,592,375 at November 1, 2003. Working capital was $14,567,824 at July 31, 2004 as compared to $14,736,228 at November 1, 2003. Nobility owns the entire inventory for its Prestige retail sales centers and does not incur any third party floor plan financing expenses. Inventories increased to $7,854,469 at July 31, 2004, from $6,557,659 at November 1, 2003, primarily due to an increase in the number of homes in inventory at the Prestige retail sales centers and increase in raw materials inventory from a large purchase of OSB to capitalize on favorable pricing. Accounts receivable trade decreased $103,617 to $1,992,511 at July 31, 2004 from $2,096,128 at November 1, 2003. 10 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Nobility maintains a revolving credit agreement with a major bank providing for borrowing up to $4,000,000. At July 31, 2004 and November 1, 2003, there were no amounts outstanding under this agreement. Consistent with normal practices, Nobility's operations are not expected to require significant capital expenditures during fiscal 2004. Working capital requirements for any increase in the new home inventory for existing and any new retail sales centers will be met with internal sources. Critical Accounting Policies and Estimates - ------------------------------------------ The Company applies judgment and estimates, which may have a material effect in the eventual outcome of assets, liabilities, revenues and expenses, for accounts receivable, inventory and goodwill. The following explains the basis and the procedure for each asset account where judgment and estimates are applied. Revenue Recognition The Company recognizes revenue for the majority of retail sales upon the occurrence of all the following: o its receipt of a down payment, o the home buyer enters into a installment sales contract with a third party, o construction of the home is complete, o title having passed to the retail home buyer, o full sales price of home having been collected and deposited into the Company's account, o the home having been delivered and set up at the retail home buyer's site, and o Completion of any other significant obligations. The Company recognizes wholesale home sales to independent dealers upon receiving wholesale floor plan financing or establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent dealer. For wholesale shipments to independent retailers, the Company has no obligation to set up the home or to complete any other significant obligations. Goodwill Between 1995 and 1998 the Company acquired retail sales centers using the purchase method of accounting. As a result, goodwill is reflected on the consolidated balance sheets. A valuation was performed by the Company and it was determined that the estimated fair value of the goodwill in the accounts exceeded its book value. There is no assurance that the value of the acquired sales centers will not decrease in the future due to changing business conditions. Vendor Rebates The Company receives volume rebates from its vendors based upon reaching a certain level of purchased materials during a specified period of time. Volume rebates are estimated based upon annual purchases, and are adjusted quarterly if the accrued volume rebate is applicable. Dealer Volume Rebates The Company pays a volume rebate to independent dealers based upon the dollar volume of homes purchased and paid for by the dealer in excess of a certain specific dollar amount during a specific time period. Dealer volume rebates are accrued when sales are recognized. Forward-Looking Statements - -------------------------- Certain statements in this report are forward-looking statements within the meaning of the federal securities laws, including our statement that working capital requirements will be met with internal sources. Although Nobility believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, competitive pricing pressures at both the wholesale and retail levels, increasing material costs, increase in repossessions, changes in market demand, changes in interest rates, availability of financing for retail and wholesale purchasers, consumer confidence, adverse weather conditions that reduce sales at retail centers, the risk of manufacturing plant shutdowns due to storms or other factors, and the impact of marketing and cost-management programs. 11 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Item 3. Quantitative and Qualitative Disclosures about Market Risk We do not engage in investing in or trading market risk sensitive instruments. We also do not purchase, for investing, hedging, or for purposes "other than trading", instruments that are likely to expose us to market risk, whether interest rate, foreign currency exchange, commodity price or equity price risk. We have not entered into any forward or futures contracts, purchased any options or entered into any interest rate swaps. We do not currently have any indebtedness as of July 31, 2004. If we were to borrow from our revolving line of credit facility, we would be exposed to changes in interest rates. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. Item 4. Controls and Procedures a. Evaluation of Disclosure Controls and Procedures. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a - 14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of July 31, 2004 (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's reports filed or submitted under the Exchange Act. Since the Evaluation Date there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect such controls. 12 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 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 32. (a) Written Statement of Chief Executive Officer Pursuant to 18 U.S.C. ss.1350 (b) Written Statement of Chief Financial Officer Pursuant to 18 U.S.C. ss.1350 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOBILITY HOMES, INC. DATE: September 14, 2004 By: /s/ Terry E. Trexler ------------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer DATE: September 14, 2004 By: /s/ Thomas W. Trexler ------------------------------------- Thomas W. Trexler, Executive Vice President, and Chief Executive Officer DATE: September 14, 2004 By: /s/ Lynn J. Cramer, Jr. ------------------------------------- Lynn J. Cramer, Jr., Treasurer and Principal Accounting Officer 13 EX-31 2 dkm338a.txt EXHIBIT 31(A) - CERTIFICATION OF CEO Exhibit 31(a) Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 I, Terry E. Trexler, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Nobility Homes, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. DATE: September 14, 2004 By: /s/ Terry E. Trexler ---------------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer EX-31 3 dkm338b.txt EXHIBIT 31(B) - CERTIFICATION OF CFO Exhibit 31(b) Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 I, Thomas W. Trexler, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Nobility Homes, Inc; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. DATE: September 14, 2004 By: /s/ Thomas W. Trexler ---------------------------------------- Thomas W. Trexler, Executive Vice President, and Chief Financial Officer EX-32 4 dkm338c.txt EXHIBIT 32(A) - WRITTEN STATEMENT OF CEO Exhibit 32(a) Written Statement of the Chief Executive Officer Pursuant to 18 U.S.C. ss.1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman and Chief Executive Officer of Nobility Homes, Inc. (the "Company"), hereby certify that: 1. The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2004 (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 14, 2004 By: /s/ Terry E. Trexler ---------------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer EX-32 5 dkm338d.txt EXHIBIT 32(B) - WRITTEN STATEMENT OF THE CFO Exhibit 32(b) Written Statement of the Chief Financial Officer Pursuant to 18 U.S.C. ss.1350 Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief Financial Officer of Nobility Homes, Inc. (the "Company"), hereby certify that: 1. The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2004 (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 14, 2004 By: /s/ Thomas W. Trexler ---------------------------------------- Thomas W. Trexler, Executive Vice President, and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----