Edgar Filing: NOBILITY HOMES INC

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Form 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 April 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.

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

June 14, 2016

Common Stock

4,023,707

NOBILITY HOMES, INC.

INDEX


		Page Number
PART I.	Financial Information

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets as of April 30, 2016 (Unaudited) and October 31, 2015		3

	Consolidated Statements of Comprehensive Income for the three and six months ended April 30, 2016 and May 2, 2015 (Unaudited)		4

	Consolidated Statements of Cash Flows for the six months ended April 30, 2016 and May 2, 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

NOBILITY HOMES, INC.

Consolidated Balance Sheets


	April 30, 2016			October 31, 2015
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	20,178,789		$	16,769,292
Short-term investments		435,327			462,578
Accounts receivable - trade		2,411,196			2,937,922
Note receivable		500,000			—
Mortgage notes receivable		9,464			9,851
Income tax receivable		—			335
Inventories		6,839,285			6,019,705
Pre-owned homes		1,146,105			1,366,974
Prepaid expenses and other current assets		1,039,387			826,180
Deferred income taxes		490,376			655,193

Total current assets		33,049,929			29,048,030

Property, plant and equipment, net		4,654,212			3,964,878
Pre-owned homes		2,734,203			2,724,190
Interest receivable		7,596			—
Note receivable, less current portion		2,530,000			—
Mortgage notes receivable, long term		175,985			177,644
Other investments		1,312,834			2,243,729
Deferred income taxes		—			1,210,630
Cash surrender value of life insurance		3,005,468			2,915,469
Other assets		156,287			156,287

Total assets	$	47,626,514		$	42,440,857

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	624,645		$	704,467
Accrued compensation		385,489			390,573
Accrued expenses and other current liabilities		938,612			926,204
Income taxes payable		414,284			—
Customer deposits		1,260,231			1,323,861

Total current liabilities		3,623,261			3,345,105

Deferred income taxes		680,874			—

Total liabilities		4,304,135			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		10,661,425			10,650,723
Retained earnings		41,843,359			37,493,077
Accumulated other comprehensive income		220,473			247,724
Less treasury stock at cost, 1,341,200 shares in 2016 and 1,333,338 shares in 2015		(9,939,369	)		(9,832,263	)

Total stockholders’ equity		43,322,379			39,095,752

Total liabilities and stockholders’ equity	$	47,626,514		$	42,440,857

The accompanying notes are an integral part of these financial statements

NOBILITY HOMES, INC.

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended						Six Months Ended
	April 30, 2016			May 2, 2015			April 30, 2016			May 2, 2015
Net sales	$	8,115,840		$	6,706,118		$	15,489,890		$	12,282,918

Cost of goods sold		(6,150,272	)		(5,167,950	)		(11,767,887	)		(9,571,981	)


Gross profit		1,965,568			1,538,168			3,722,003			2,710,937

Selling, general and administrative expenses		(1,011,699	)		(877,449	)		(1,792,393	)		(1,625,398	)


Operating income		953,869			660,719			1,929,610			1,085,539


Other income (loss):
Interest income		22,044			16,852			34,091			29,972
Undistributed earnings in joint venture - Majestic 21		35,702			35,237			69,110			68,815
Proceeds received under escrow arrangement		788,566			—			788,566			—
Losses from investments in retirement community limited partnerships		—			(51,657	)		—			(57,350	)
Gain on sale of investment in retirement community		3,990,000			—			3,990,000			—
Miscellaneous		10,076			23,696			19,845			38,866

Total other income (loss)		4,846,388			24,128			4,901,612			80,303


Income before provision for income taxes		5,800,257			684,847			6,831,222			1,165,842

Income tax expense		(2,128,376	)		(4,294	)		(2,480,940	)		(5,501	)

Net income		3,671,881			680,553			4,350,282			1,160,341

Other comprehensive income (loss)
Unrealized investment gain (loss)		42,388			41,941			(27,251	)		(29,044	)


Comprehensive income	$	3,714,269		$	722,494		$	4,323,031		$	1,131,297


Weighed average number of shares outstanding:
Basic		4,023,439			4,061,853			4,024,378			4,062,883
Diluted		4,024,181			4,062,423			4,025,069			4,063,314

Net income per share:
Basic	$	0.91		$	0.17		$	1.08		$	0.29
Diluted	$	0.91		$	0.17		$	1.08		$	0.29

The accompanying notes are an integral part of these financial statements

NOBILITY HOMES, INC.

Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended
	April 30, 2016			May 2, 2015
Cash flows from operating activities:
Net income	$	4,350,282		$	1,160,341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		60,666			47,004
Deferred income taxes		2,056,321			—
Undistributed earnings in joint venture - Majestic 21		(69,110	)		(68,815	)
Losses from investments in retirement community limited partnerships		—			57,350
Gain on sale of investment in retirement community		(3,990,000	)		—
Inventory impairment		86,583			—
Stock-based compensation		611			7,143
Decrease (increase) in:
Accounts receivable		526,726			(339,194	)
Inventories		(819,580	)		(558,716	)
Pre-owned homes		124,273			(314,523	)
Income tax receivable		335			5,501
Prepaid expenses and other current assets		(213,206	)		(656,987	)
Interest receivable		(7,596	)		—
(Decrease) increase in:
Accounts payable		(79,823	)		596,860
Accrued compensation		(5,084	)		(42,660	)
Accrued expenses and other current liabilities		12,409			264,355
Income taxes payable		414,284			—
Customer deposits		(63,630	)		302,103

Net cash provided by operating activities		2,384,461			459,762


Cash flows from investing activities:
Purchase of property, plant and equipment		(750,000	)		(20,989	)
Distribution from joint venture - Majestic 21		1,000,005			—
Proceeds from sale of investment in retirement community, net		960,000			—
Collections on mortgage notes receivable		2,045			78
Increase in cash surrender value of life insurance		(89,999	)		(63,000	)

Net cash provided by (used in) investing activities		1,122,051			(83,911	)


Cash flows from financing activities:
Proceeds from exercise of employee stock options		30,370			15,820
Proceeds from sale of treasury stock		5,001			—
Purchase of treasury stock		(132,386	)		(131,520	)

Net cash used in financing activities		(97,015	)		(115,700	)


Increase in cash and cash equivalents		3,409,497			260,151

Cash and cash equivalents at beginning of year		16,769,292			14,116,412


Cash and cash equivalents at end of quarter	$	20,178,789		$	14,376,563


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

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 six months ended April 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 six months ended April 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.

A breakdown of the elements of inventory is as follows:


	April 30, 2016			October 31, 2015
Raw materials	$	719,080		$	721,751
Work-in-process		116,463			113,891
Finished homes		5,912,154			5,114,568
Model home furniture and others		91,588			69,495

Inventories, net	$	6,839,285		$	6,019,705


Pre-owned homes	$	5,109,921		$	5,516,272
Inventory impairment reserve		(1,229,613	)		(1,425,108	)

		3,880,308			4,091,164
Less homes expected to sell in 12 months		(1,146,105	)		(1,366,974	)

Pre-owned homes, long-term	$	2,734,203		$	2,724,190

Note 3

Short-term Investments

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


	April 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Equity securities in a public company	$	167,930	$	267,397	$	—	$	435,327


	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 receivables, 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.


	April 30, 2016
	Level 1		Level 2		Level 3
Equity securities in a public company	$	435,327	$	—	$	—


	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 is zero at April 30, 2016 and October 31, 2015, respectively.

The following is summarized financial information of Walden Woods*:


	March 31, 2016			September 30, 2015
Total Assets	$	3,773,201		$	3,638,114
Total Liabilities	$	5,866,992		$	5,444,435
Total Equity	$	(2,093,791	)	$	(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 cash, net of $40,000 costs 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 three and six months ended April 30, 2016.

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						Six Months Ended
	April 30, 2016			May 2, 2015			April 30, 2016			May 2, 2015
Beginning accrued warranty expense	$	100,000		$	75,000		$	100,000		$	75,000
Less: reduction for payments		(156,905	)		(50,078	)		(300,373	)		(90,966	)
Plus: additions to accrual		156,905			50,078			300,373			90,966

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				Six Months Ended
	April 30, 2016		May 2, 2015		April 30, 2016		May 2, 2015
Manufactured housing	$	7,634,460	$	6,135,855	$	14,849,800	$	11,328,023
Pre-owned homes		416,343		509,247		523,659		842,133
Insurance agent commissions		65,037		61,016		116,431		112,762

Total net sales	$	8,115,840	$	6,706,118	$	15,489,890	$	12,282,918

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 collateral value. As of April 30, 2016, the outstanding principal balance of the note was $1,104,760 and the amount of collateral held by our joint venture partner for the Majestic 21 note payable was $1,996,176. 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.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Total revenues in the second quarter of 2016 were $8,115,840, up 21% compared to $6,706,118 in the second quarter of 2015. Total net sales for the first six months of 2016 were $15,489,890 up 26% compared to $12,282,918 for the first six months of 2015.

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


	Three Months Ended						Six Months Ended
	April 30, 2016			May 2, 2015			April 30, 2016			May 2, 2015
Homes sold through Company owned sales centers:
New homes		60			51			117			94
Pre-owned homes		7			12			9			20
Homes sold to independent dealers		59			66			132			128
Total new factory built homes produced		160			141			300			253
Average new manufactured home price – retail	$	68,636		$	61,769		$	69,525		$	66,106
Average new manufactured home price – wholesale	$	37,557		$	33,842		$	36,783		$	33,713
As a percent of net sales:
Gross profit from the Company owned retail sales centers		17	%		17	%		17	%		17	%
Gross profit from the manufacturing facilities – including intercompany sales		18	%		17	%		18	%		18	%

Sales to two publicly traded REITs and other companies which own multiple retirement communities in our market area accounted for approximately 22% and 45% of our sales for the first six months ended April 30, 2016 and May 2, 2015, respectively. Accounts receivable due from these customers were approximately $1,634,264 at April 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 April 2016 were up approximately 27% 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.

Insurance agent commission revenues in the second quarter of 2016 were $65,037 compared to $57,341 in the second quarter of 2015. Total insurance agent commission revenues for the first six months of 2016 were $116,431 compared to $104,811 for the first six 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 April 30, 2016 and October 31, 2015.

Gross profit as a percentage of net sales was 24% in second quarter of 2016 compared to 23% in the second quarter of 2015 and was 24% for the first six months of 2016 compared to 22% for the first six months of 2015. The gross profit in second quarter of 2016 was $1,965,568 compared to $1,538,168 in the second quarter of 2015 and was $3,722,003 for the first six months of 2016 compared to $2,710,937 for the first six months of 2015. The gross profit is dependent on the sales mix of wholesale and retail homes and number of pre-owned homes sold. The increase in gross profit is primarily due to the increase in new home sales, increase in the wholesale selling price and increase in the average gross profit on each retail home sold.

Selling, general and administrative expenses as a percent of net sales was 12% in second quarter of 2016 compared to 13% in the second quarter of 2016 and was 12% for the first six months of 2016 compared to 13% for the first six months of 2015. Selling, general and administrative expenses in second quarter of 2016 was $1,011,699 compared to $877,449 in the second quarter of 2015 and was $1,792,393 for the first six months of 2016 compared to $1,625,398 for the first six months of 2015. The increase in expenses resulted from the increase in compensation expenses directly related to our increased sales.

Our earnings from Majestic 21 in the second quarter of 2016 were $35,702 compared to $35,237, for the second quarter of 2015. Our earnings from Majestic 21 for the first six months of 2016 were $69,110, compared to $68,815 for the first six 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 $22,044 for the second quarter of 2016 compared to $16,852 for the second quarter of 2015. For the first six months of 2016, interest earned was $34,091 compared to $29,972 in the first six months of 2015. The increase is primarily due to the note receivable acquired in the sale of the investment in retirement community.

The Company recorded an income tax expense in the amount of $2,128,376 in the second quarter of 2016 as compared to $4,294 in second quarter 2015. Income tax expense for the six months of 2016 was $2,480,940 compared to $5,501 for the second quarter of 2015.

We reported net income of $3,671,881 for the second quarter of 2016 or $0.91 per share, compared to $680,553 or $0.17 per share, for the second quarter of 2015. For the first six months of 2016 net income was $4,350,282 or $1.08 per share, compared to $1,160,341 or $0.29 per share, in the first six months of 2015.

Liquidity and Capital Resources

Cash and cash equivalents were $20,178,789 at April 30, 2016 compared to $16,769,292 at October 31, 2015. Short-term investments were $435,327 at April 30, 2016 compared to $462,578 at October 31, 2015. Working capital was $29,426,668 at April 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 April 30, 2016, the Company continued to report a strong balance sheet which included total assets of approximately $48 million which was funded primarily by stockholders’ equity of approximately $43 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.

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 April 30, 2016. Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and determined that its internal 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.

Part II. OTHER INFORMATION AND SIGNATURES

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

Item 6.

Exhibits


10.1		Promissory note between Nobility Parks II, LLC and AKM Investments, LTD

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

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: June 14, 2016	By:	/s/ Terry E. Trexler
		Terry E. Trexler, Chairman,
		President and Chief Executive Officer

DATE: June 14, 2016	By:	/s/ Thomas W. Trexler
		Thomas W. Trexler, Executive Vice President,
		and Chief Financial Officer

DATE: June 14, 2016	By:	/s/ Lynn J. Cramer, Jr.
		Lynn J. Cramer, Jr., Treasurer
		and Principal Accounting Officer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company