Nobility Homes, Inc.
2008 AnnuAl RepoRt
Inverness, Hudson, Tavares,
Jacksonville, Yulee, Fort Walton,
Pace, Panama City and Punta
Gorda. Prestige executive offices
are located at our corporate
headquarters in Ocala, Florida.
Each of Prestige’s retail sales
centers is located within 350 miles
of one of our two manufacturing
facilities.
Prestige’s wholly-owned
subsidiary, Mountain Financial,
Inc., is an independent insurance
agent, licensed mortgage lender
and mortgage broker. Mountain
Financial provides construction
loans, mortgage brokerage
services, automobile, extended
warranty coverage and property
and casualty insurance to Prestige
customers in connection with their
purchase and financing of
manufactured homes.
Nobility's joint venture and
finance revenue sharing
agreement with 21st Mortgage
Corporation provides mortgage
financing to retail customers who
purchase manufactured homes at
Prestige retail sales centers.
These agreements, which
originate and service loans, have
given Prestige more control over
the financing aspect of the retail
home sales process and allowed it
to offer better products and
services to its retail customers.
About the Company
At Nobility Homes, Inc. we
design, manufacture and sell a
broad line of manufactured homes
through a network of our own
retail sales centers throughout
Florida. We pride ourselves on
providing well-designed and
affordably-built homes that are
comfortable, pleasantly decorated,
energy efficient and engineered
for years of carefree living. The
Company has manufacturing
plants in Ocala and Belleview,
Florida and the corporate
headquarters are located in Ocala,
Florida.
We also sell our homes on a
wholesale basis to approximately
30 manufactured home
communities. The high visibility of
our models in such communities
helps to generate additional sales
of our homes.
Our homes are available in
approximately 100 active models
sold under the trade names
“Kingswood,” “Springwood,”
“Springwood Special,” “Tropic Isle
Special,” “Regency Manor
Special,” and “Special Edition.”
Our homes range in size from 700
to 2,650 square feet and contain
from one to five bedrooms.
Approximately 99% of our home
sales are multi-section homes.
The manufactured home
industry is highly competitive.
Based on number of units sold, we
rank 6th in the state of Florida out
of the top 45 manufacturers selling
manufactured homes in the state.
We estimate that of those 45
manufacturers approximately 15
manufacture homes of the same
type as Nobility and compete in
the same market area.
Prestige Home Centers and
Majestic Homes are our Company
owned retail sales centers which
operate 17 retail sales centers in
north and central Florida: Ocala
(three), Chiefland, Tallahassee,
Tampa, Lake City, Auburndale,
Contents
1 Financial Highlights
2 Shareholders’ Letter
4 Summary of Financial Data
5 Directors
5 Officers
5 General Shareholders’
Information
5 General Information
Financial Highlights
For the years ended November 1, 2008 and November 3, 2007
RESULTS FOR THE YEAR
Net sales
Net income
Earnings per share – diluted
Average shares outstanding – diluted
FINANCIAL POSITION AT END OF YEAR
Cash and cash equivalents
Short-term investments
Long-term investments
Working capital
Current ratio
Stockholders’ equity
Book value per common share
Return on average stockholders’ equity
Return on average assets
$
$
$
$
$
$
$
$
$
2008
30,065,022
1,822,156
0.45
4,091,645
2008
8,649,724
168,210
8,140,226
21,232,995
15.5:1
43,395,261
10.61
4%
4%
2007
$ 40,622,897
4,081,660
$
1.00
$
4,094,001
2007
$ 13,696,990
$
544,271
$ 10,666,321
$ 25,144,323
8.1:1
$ 43,924,958
10.75
$
10%
9%
The following graph compares the yearly change in the cumulative total stockholder return on Nobility
common stock during the five fiscal years ending November 1, 2008 with the NASDAQ index composite and a
peer group composed of companies with businesses in one or more of Nobility's primary lines of businesses: the
production and sale of manufactured homes. The companies comprising the peer group are weighted by their
respective market capitalization and include the following: Cavalier Homes, Inc., Cavco Industries, Champion
Enterprises, Inc., Fleetwood Enterprises, Inc., Liberty Homes, Inc. (Class A Common Stock), Palm Harbor
Homes, Inc. and Skyline Corporation. The comparison assumes $100 was invested on November 1, 2003 in
Nobility common stock and in each of the foregoing indices.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
300.00
250.00
200.00
150.00
100.00
50.00
0.00
S
R
A
L
L
O
D
2003
2004
2005
2006
2007
2008
NOBILITY HOMES, INC.
NASDAQ Composite - Total Returns
Peer Group Only
Nobility Homes, Inc.
NASDAQ Composite Total Returns
Peer Group Only
11/01/2003
100.00
100.00
100.00
11/06/2004
197.86
102.20
127.08
11/05/2005
249.18
110.03
144.76
11/04/2006
265.82
123.90
100.81
11/03/2007
189.69
149.56
113.77
11/01/2008
107.65
91.58
40.16
1
To Our Shareholders
Nobility’s results for fiscal year 2008 continued to reflect a seriously
declining market in the manufactured housing industry. The unstable and very
volatile housing, financial and credit markets of our country, coupled with
increasing unemployment and deteriorating consumer confidence, adversely
affected the Company’s results. The magnitude of these disruptions to your
Company’s operating results has been severe and will continue to bring
uncertainty for future results until the country’s economy and consumer
confidence can stabilize. Sales and operations were impacted by the reduced
manufactured housing shipments in Florida plus the overall decline in Florida
and the nation’s housing market. Industry shipments for manufactured homes in
Florida were down approximately 30% from the same period last year.
Net sales for Nobility during fiscal year 2008 were $30,065,022 as
compared to $40,622,897 recorded in fiscal year 2007. Income from operations
for fiscal year 2008 was $1,615,141 versus $4,323,956 in the same period a
year ago. Net income after taxes was $1,822,156 as compared to $4,081,660
for the same period last year. The net income after taxes of $1,822,156 was
after deducting $466,828 in non-cash losses for our investments in two
retirement community limited partnerships. Diluted earnings per share for fiscal
year 2008 were $.45 per share compared to $1.00 per share last year.
Nobility’s financial position during fiscal year 2008 remains strong with
cash and cash equivalents, short and long-term investments of $16,958,160 and
no outstanding debt. Working capital is $21,232,995 and our ratio of current
assets to current liabilities is 15.5:1. Stockholders’ equity is $43,395,261 and the
book value per share of common stock is $10.61. The return on average
stockholders’ equity was 4% and the return on average assets was 4%. The
Company repurchased in the open market 3,855 shares of its common stock
during fiscal year 2008. Your Board of Directors has authorized the purchase of
up to 200,000 shares of the Company’s stock in the open market. The Board of
Directors declared an annual cash dividend of $0.25 per common share for
fiscal year 2008, as compared to the $0.50 per share declared last fiscal year.
The cash dividend was paid January 12, 2009 to stockholders of record as of
January 2, 2009. Management understands that during these challenging
conditions within our industry and our country, Nobility’s strong financial
condition is extremely vital for future growth and success.
Your Company will continue to increase the level of consumer
awareness and confidence in Nobility and Prestige, our retail organization, with
the introduction and promotion of more special edition homes and by
periodically using television commercials in our various marketing areas within
Florida. The Company has invested as a limited partner in two new Florida
retirement manufactured home communities in fiscal year 2008. Although these
investments will report non-cash losses in the initial fill-up stage, management
believes that the new attractive and affordable manufactured home communities
for senior citizens will be a significant growth area for Florida in the future.
Fiscal year 2009 is Nobility’s 42nd year of operating in our market area
and may prove to be our most challenging. Lack of retail and wholesale
financing, increasing unemployment and home foreclosures, slow sales of
existing site-built homes, very low consumer confidence and a poor economic
outlook for the U.S. economy are just a few of the challenges facing our
industry, our country, and your Company. Although the current overall housing
picture, financial market and economy have declined significantly this year and
the immediate outlook for the manufactured housing industry in Florida and the
nation is uncertain, the long-term demographic trends still favor good future
2
favor Florida. Management remains convinced
growth in the Florida market area we serve. Job formation, immigration growth
and migration trends, plus consumers returning to more affordable housing
should
that our specific
geographic market is one of the best long-term growth areas in the country and,
because of the strong operating leverage inherent in the Company, we plan to
continue out-performing the industry. The country must experience a better
economy with less uncertainty, improved sales in the existing home market,
declining unemployment, low interest rates, and the continued absence of
aggressive and reckless mortgage financing of site-built homes, for the demand
of your Company’s affordable homes to improve.
Management will continue our vertical integration business strategy to
generate long-term growth for Nobility. Through disciplined growth and
consistent focus, we are committed to achieving our financial and strategic
objectives of improving operating margins, achieving higher returns on our asset
base, and capturing a greater market share of our existing Florida market.
We appreciate the confidence and support of our shareholders,
suppliers and friends of the Company. We would also like to express our thanks
to each of our employees, whose dedication, focus and energy during these
most difficult times are key to achieving Nobility’s goals. With this confidence
and support, along with the able leadership from the Board of Directors and
management team, we believe your Company has the human, financial and
physical resources to meet the many difficult challenges ahead and the
enthusiasm and determination to capitalize upon new opportunities as they
develop.
Terry E. Trexler
Chairman of the Board
and President
Thomas W. Trexler
Executive Vice President
and Chief Financial Officer
3
Summary of Financial Data
For each of the five years in the period ended November 1, 2008
Total Assets
(in 000's)
$4 7,135
$47 ,4 51
$4 5,05 7
$ 45,13 1
$ 39,97 5
Net Sales
(in 000's)
$56,711
$59,958
$50,019
$40,623
$30,065
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
200 4
2 005
20 06
200 7
200 8
2004
2005
2006
2007
2008
Gross Margin
Operating Margin
29.5%
29.0%
29.0%
27.3%
26.0%
1 4.7%
14 .3%
1 2.4 %
10 .6 %
5 .4 %
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2004
2005
2006
2007
2008
200 4
2 005
20 06
20 07
200 8
Diluted Earnings Per Shar e
$1 .4 9
$1 .59
$ 1.1 3
$ 1.00
Cash Dividends Declared
(per share)
$0.50
$0.50
$0.30
$0.20
$0.25
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
$0.4 5
2004
200 5
2 006
2007
2008
2004
2005
2006
2007
2008
$5 0,000
$4 8,000
$4 6,000
$4 4,000
$4 2,000
$4 0,000
$3 8,000
$3 6,000
30.0%
29.0%
28.0%
27.0%
26.0%
25.0%
24.0%
$1 .80
$1 .60
$1 .40
$1 .20
$1 .00
$0 .80
$0 .60
$0 .40
$0 .20
$0 .00
4
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended November 1, 2008
Commission file number 0-6506
NOBILITY HOMES, INC.
(Name of issuer in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
3741 S.W. 7th Street
Ocala, Florida
(Address of principal executive offices)
59-1166102
(I.R.S. Employer
Identification No.)
34474
(Zip Code)
(352) 732-5157
(Issuer’s telephone number, including area code)
Securities registered under Section 12(b) of the Act:
Title of each class
None
Name of each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 par value
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
No
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the past 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
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Accelerated filer
Smaller Reporting Company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
State the aggregate market value of the voting stock held by non-affiliates of the registrant (1,435,284 shares) based on the
closing price on the Nasdaq Global Market on May 3, 2008 (the last business day of the most recent second quarter) was
$24,543,356.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Title of Class
Common Stock
Shares Outstanding
January 16, 2009
4,069,546
DOCUMENTS INCORPORATED BY REFERENCE
Title
Definitive proxy statement for Annual Meeting of
Shareholders to be held February 27, 2009
Form 10-K
Part III, Item 10-14
TABLE OF CONTENTS
Item 1.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 8.
PART I
Description of Business
Unresolved Staff Comments
Properties
Legal Proceedings
Submission of Matters to a Vote of Security Holders
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Repurchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 9.
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 9A (T). Controls and Procedures
Item 9B.
Other Information
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
Certain Relationships, Related Transactions and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
(a) 1. Financial Statements
2. Exhibits
SIGNATURES
Exhibit Index
Form
10-K
2
5
5
5
5
6
7
7
13
14
15
16
17
18
19
34
34
34
35
35
35
36
36
37
37
38
39
1
Item 1.
Description of Business
PART I
Nobility Homes, Inc., a Florida corporation incorporated in 1967, designs, manufactures and sells a broad line of
manufactured homes through a network of its own retail sales centers throughout Florida. Nobility also sells its manufactured
homes on a wholesale basis to independent manufactured home retail dealers and manufactured home communities.
Manufactured Homes
Nobility’s homes are available in approximately 100 active models sold under the trade names “Kingswood,” “Springwood,”
“Springwood Special,” “Tropic Isle Special,” “Regency Manor Special,” and “Special Edition.” The homes, ranging in size
from 700 to 2,650 square feet and containing from one to five bedrooms, are available in:
double-wide widths of 24, 26, 28 and 32 feet ranging from 32 to 76 feet in length;
triple-wide widths of 36, 38 and 42 feet ranging from 46 to 72 feet in length; and
quad-unit 2 sections 28 feet long by 48 feet long and 2 sections 28 feet long by 52 feet long.
Nobility’s homes are sold primarily as unfurnished dwellings ready for permanent occupancy. Interiors are designed and
color coordinated in a range of decors. Depending on the size of the unit and quality of appliances and other appointments,
retail prices for Nobility’s homes typically range from approximately $30,000 to $100,000. Most of the prices of Nobility’s
homes are considered by it to be within the low to medium price range of the industry.
Both of Nobility’s manufacturing plants utilize assembly line techniques in manufactured home production. Both plants
manufacture and assemble the floors, sidewalls, end walls, roofs and interior cabinets for their homes. Nobility purchases,
from outside suppliers, various other components that are built into its homes including the axles, frames, tires, doors,
windows, pre-finished sidings, plywood, ceiling panels, lumber, rafters, insulation, gypsum board, appliances, lighting and
plumbing fixtures, carpeting and drapes. Nobility is not dependent upon any one particular supplier for its raw materials or
component parts, and is not required to carry significant amounts of inventory to assure itself of a continuous allotment of
goods from suppliers.
Nobility’s two manufacturing plants operated at an average of approximately 22% of their single shift capacity in fiscal year
2008 and 30% in fiscal year 2007.
Nobility generally does not manufacture its homes to be held by it as inventory (except for model home inventory of its
wholly-owned retail network subsidiary, Prestige Home Centers, Inc.), but, rather, manufactures its homes after receipt of
orders. Although Nobility attempts to maintain a consistent level of production of homes throughout the fiscal year, seasonal
fluctuations do occur, with sales of homes generally lower during the first fiscal quarter due to the holiday season.
The sales area for a manufactured home manufacturer is limited by substantial delivery costs of the finished product.
Nobility’s homes are delivered by outside trucking companies. Nobility estimates that it can compete effectively within a
range of approximately 350 miles from its manufacturing plants. During the last two fiscal years, substantially all of
Nobility’s sales were made in Florida.
Retail Sales
Prestige Home Centers, Inc. operates 17 retail sales centers in north and central Florida. Its principal executive offices are
located at Nobility’s headquarters in Ocala, Florida. Sales by Prestige accounted for 88% and 92% of Nobility’s sales during
fiscal year 2008 and 2007, respectively.
Each of Prestige’s retail sales centers is located within 350 miles of Nobility’s two manufacturing facilities. Prestige owns
the land at five of its retail sales centers and leases the remaining 12 retail sales centers from unaffiliated parties under leases
with terms between one and three years with renewal options.
The primary customers of Prestige are homebuyers who generally purchase manufactured homes to place on their own home
sites. Prestige operates its retail sales centers with a model home concept. Each of the homes displayed at its retail sales
centers is furnished and decorated as a model home. Although the model homes may be purchased from Prestige’s model
2
home inventory, generally, customers order homes which are shipped directly from the factory to their home site. Prestige
sales generally are to purchasers living within a radius of approximately 100 miles from the selling retail lot.
Since 1997, Nobility has partnered with 21st Mortgage Corporation to provide financing to retail customers purchasing
homes from Prestige. Additionally, financing for home purchases is available from several other independent sources that
specialize in manufactured housing lending and numerous banks that finance manufactured home purchases. Prestige and
Nobility are not required to sign any recourse agreements with any of these retail financing sources, except 21st Mortgage
Corporation. As a condition to the finance revenue sharing agreement, the Company has agreed to repurchase homes from
defaulted loans which were financed under the agreement. Upon disposition of the homes, the Company will receive a
payment from the finance revenue sharing agreement reserve account, of no less than 25% and no more than 60% of the
payoff of the loan, to cover the costs of the disposition of the homes. No losses have been incurred in connection with the
finance revenue sharing agreement. Prestige does not itself finance customers’ new home purchases. Since 2004, Nobility
has engaged in a finance revenue sharing arrangement between 21st Mortgage Corporation, Prestige and Nobility's wholly-
owned subsidiary, Majestic Homes, Inc. without forming a separate entity. For more information about the revenue sharing
arrangement, see Note 3 of “Notes to Consolidated Financial Statements”. In the future, Nobility may explore the possibility
of underwriting its own mortgage loans.
The Company formed in fiscal year 2008 two limited liability companies called Nobility Parks I, LLC and Nobility Parks II,
LLC to invest in new Florida retirement manufactured home communities. Walden Woods, III Ltd. (Walden Woods) located
in Homosassa, Florida, and CRF III, Ltd. (Cypress Creek) located in Winter Haven, Florida. These investments will provide
the Company with 31.9% of the earnings/losses of the 236 residential lots in Walden Woods and 49% of the earnings/losses
of the 403 residential lots in Cypress Creek. See Note 3 of “Notes to Consolidated Financial Statements.”
The retail sale of manufactured homes is a highly competitive business. Because of the large number of retail sales centers
located throughout Nobility’s market area, potential customers typically can find several sales centers within a 100 mile
radius of their present home. Prestige competes with over 100 other retailers in its primary market area, some of which may
have greater financial resources than Prestige. In addition, manufactured homes offered by Prestige compete with
conventional site-built housing.
Insurance and Financial Services
Mountain Financial, Inc., a wholly-owned subsidiary of Prestige Home Centers, Inc., is an independent insurance agent,
licensed mortgage lender and mortgage broker. Its principal activity is providing retail insurance services, which involves
placing various types of insurance, including property and casualty, automobile and extended home warranty coverage, with
insurance underwriters on behalf of its Prestige customers in connection with their purchase and financing of manufactured
homes. As agent, we solely assist our customers in obtaining various insurance and extended warranty coverage with
insurance underwriters. As such, we have no agreements with homeowners and/or third party insurance companies other than
agency agreements with various insurance carriers, which leads us to conclude that the Company has no material
commitments or contingencies related to Mountain Financial, Inc. The Company provides 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 is
deemed necessary for policy cancellations for fiscal years 2008 and 2007. Mountain Financial, Inc.'s insurance revenues
were approximately $404,000 and $402,000 in fiscal year 2008 and 2007, respectively.
The construction lending operation provides financing to buyers who have been approved for financing by an independent
third party who are purchasing a home through the Company's retail sales centers. The loan provides the homeowner with
enough money to pay for the land, land improvements, construction and installation of the home, impact fees and permits.
The loan is disbursed in draws as construction progresses and is secured by a first mortgage on the land, home, and all of the
improvements. The term is typically for one year, with interest only payable monthly. There is also a finance charge which is
added to the loan at closing. The construction loan is paid off when the homeowner closes on the permanent financing,
typically a 30 year fixed mortgage. The mortgage broker fee was $117,000 and $34,000 and construction interest was
$63,000 and $25,000 for fiscal year 2008 and 2007, respectively.
Wholesale Sales to Manufactured Home Communities
Nobility currently sells its homes on a wholesale basis exclusively through two full-time salespersons to approximately 30
manufactured home communities. Nobility continues to seek new opportunities in the areas in which it operates, as there is
ongoing turnover in the manufactured home communities as they achieve full occupancy levels. As is common in the
3
industry, most of Nobility’s independent dealers sell homes produced by several manufacturers. No customer accounted for
more than 10% of Nobility’s total sales in fiscal years 2008 and 2007. In fiscal year 2008, the Company invested as a limited
partner in two new Florida retirement manufactured home communities. Management’s belief is that new attractive and
affordable manufactured home communities for senior citizens will be a significant growth area for Florida in the future.
Dealers generally obtain inventory financing from financial institutions (usually banks and finance companies) on a “floor
plan” basis where the financial institution obtains a security interest in all or part of the dealer’s manufactured home
inventory. Nobility, from time-to-time, enters into repurchase agreements with the lending institutions which provide that, in
the event of a dealer’s default, Nobility will, at the lender’s request, repurchase the home provided that Nobility’s liability
will not exceed the manufacturer’s invoice price and that the repurchased home is new and unused. Generally, the repurchase
agreement expires within 18 – 24 months after a home is sold to the dealer and the repurchase price is limited to between
70% to 100% of the original invoice price to the dealer, depending on the length of time that has expired since the original
sale. The repurchase is usually conditioned upon the dealer’s insolvency and presentation of the unit back to the Company.
Any losses incurred as a result of such repurchases would be limited to the difference between the repurchase price and the
subsequent resale value of the home repurchased. Nobility was not required to repurchase any homes during fiscal years
2008 and 2007. For additional information, see Note 13 of “Notes to Consolidated Financial Statements”. Nobility does not
finance retail sales of new homes for customers of its independent dealers.
Nobility does not generally offer consigned inventory programs or other credit terms to its dealers and ordinarily receives
payment for its homes within 15 to 30 days of delivery. However, Nobility may offer extended terms to unrelated park
dealers who do a high volume of business with Nobility. In order to stimulate sales, Nobility sells homes for display to
selected manufactured home communities on special terms. The high visibility of Nobility’s homes in such communities
generates additional sales of its homes through such dealers.
Regulation
The manufacture, distribution and sale of homes is subject to governmental regulation at the federal, state and local levels.
The Department of Housing and Urban Development has adopted national construction and safety standards that have
priority over existing state standards. In addition, HUD regulations require that manufactured homes be constructed to more
stringent wind load and thermal standards. Compliance with these standards involves approval by a HUD approved
engineering firm of engineering plans and specifications on all models. HUD has also promulgated rules requiring producers
of manufactured homes to utilize wood products certified by their suppliers to meet HUD's established limits on
formaldehyde emissions and to place in each home written notice to prospective purchasers of possible adverse reaction from
airborne formaldehyde in homes. HUD’s standards also require periodic inspection by state or other third party inspectors of
plant facilities and construction procedures, as well as inspection of manufactured home units during construction. In
addition, some components of manufactured homes may also be subject to Consumer Product Safety Commission standards
and recall requirements. Homes manufactured by Nobility are also required to comply with the standard building code
established by the Florida Department of Community Affairs.
Nobility estimates that compliance with federal, state and local environmental protection laws will have no material effect
upon capital expenditures for plant or equipment modifications or earnings for the next fiscal year.
The transportation of manufactured homes is subject to state regulation. Generally, special permits must be obtained to
transport the home over public highways and restrictions are imposed to promote travel safety including those relating to
routes, travel periods, speed limits, safety equipment and size.
Nobility’s homes are subject to the requirements of the Magnuson-Moss Warranty Act and Federal Trade Commission
rulings which regulate warranties on consumer products. Nobility provides a limited warranty of one year on the structural
components of its homes.
Competition
The manufactured home industry is highly competitive. The initial investment required for entry into the business of
manufacturing homes is not unduly large. State bonding requirements for entry in the business vary from state to state. The
bond requirement for Florida is $50,000. Nobility competes directly with other manufacturers, some of whom are both
considerably larger and possess greater financial resources than Nobility. Based on number of units sold, Nobility ranks 6th in
the state of Florida out of the top 45 manufacturers selling manufactured homes in the state. Nobility estimates that of those
45 manufacturers approximately 15 manufacture homes of the same type as Nobility and compete in the same market area.
4
Nobility believes that it is generally competitive with most of those manufacturers in terms of price, service, warranty and
product performance.
According to statistics compiled by Statistical Surveys, Inc. from records on file with the State of Florida, Prestige has been
one of the largest retail dealers of multi-section manufactured homes in Florida since 1994, based on number of home sales.
Employees
As of January 5, 2009, Nobility had 160 full-time employees, including 73 employed by Prestige. Approximately 53
employees are factory personnel compared to approximately 93 in such positions a year ago and 107 are in management,
administrative, supervisory, sales and clerical positions (including 68 management and sales personnel employed by
Prestige) compared to approximately 75 a year ago. In addition, Nobility employs part-time employees when necessary.
Nobility makes contributions toward employees’ group health and life insurance and to the Nobility 401(k) plan. Nobility,
which is not subject to any collective bargaining agreements, has not experienced any work stoppage or labor disputes and
considers its relationship with employees to be generally satisfactory.
Item 1B
Unresolved Staff Comments
None.
Item 2.
Properties
As of November 1, 2008, Nobility owned and operated two manufacturing plants:
Location
3741 SW 7th Street
Ocala, Florida(1)
6432 SE 115th Lane
Belleview, Florida(2)
Approximate Size
72,000 sq ft.
33,500 sq. ft.
1Nobility’s Ocala facility is a 72,000 square foot plant and is located on approximately 35.5 acres of land on which
an additional two-story structure adjoining the plant serves as Nobility’s corporate offices. The plant, which is of
metal construction, is in good condition and requires little maintenance.
2Nobility’s Belleview is a 33,500 square foot plant which is of metal and concrete construction. The property is in
good condition and requires little maintenance.
Prestige has acquired the properties on which it’s Pace, Panama City, Yulee, Punta Gorda and Ocala North, Florida retail
sales centers are located. Prestige leases the property for its other 12 retail sales centers.
Item 3.
Legal Proceedings
Certain claims and suits arising in the ordinary course of business have been filed or are pending against the Company. In the
opinion of management, the ultimate outcome of these matters will not have a material adverse effect on the Company's
financial position, results of operations or cash flows.
The Company does not maintain casualty insurance on some of our property, including the inventory at our retail centers, our
plant machinery and plant equipment and is at risk for those types of losses.
Item 4.
Submission of Matters to a Vote of Security Holders
None
5
PART II
Item 5.
Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer
Repurchases of Equity Securities
Market Information
Nobility’s common stock is listed on the Nasdaq Global Market under the symbol NOBH. The following table shows the
range of high and low sales prices for the common stock for each fiscal quarter of 2008 and 2007.
Fiscal
Quarter
1st
2nd
3rd
4th
Fiscal Year End
November 1, 2008
High
Low
$
20.00
18.50
17.56
17.53
$
15.98
16.10
11.20
8.67
$
November 3, 2007
High
27.92
25.81
21.48
20.68
$
Low
22.84
20.85
18.94
17.00
Holders
At January 16, 2009, the approximate number of holders of record of common stock was 196 (not including individual
participants in security position listings).
Dividends
The Board of Directors declared an annual cash dividend of $0.25 per common share for fiscal year 2008, paid
January 12, 2009 to stockholders of record as of January 2, 2009. The Company paid an annual cash dividend of $0.50 per
common share for fiscal year 2007. The payment of future cash dividends is within the discretion of Nobility’s Board of
Directors and will depend, among other factors, on Nobility’s earnings, capital requirements and operating and financial
condition.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table displays equity compensation plan information as of the fiscal year ended November 1, 2008. For further
information, see Note 11 of “Notes to Consolidated Financial Statements”.
Equity Compensation Plan Information
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities remaining
available for issuance under equity
compensation plans (excluding
securities reflected in column (a))
(c)
Equity compensation
plans approved by
security holders
Equity compensation
plans not approved
by security holders
147,634
None
Total
147,634
Recent Sales of Unregistered Securities
$23.55
---
$23.55
347,366
---
347,366
Nobility has not sold any securities within the past three years which were not registered under the Securities Act.
6
Item 6.
Selected Financial Data
Not applicable
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Nobility’s primary focus is homebuyers who generally purchase their manufactured homes from retail sales centers to locate
on property they own. Nobility has aggressively pursued this market through its Prestige retail sales centers. While Nobility
actively seeks to make wholesale sales to independent retail dealers, its presence as a competitor limits potential sales to
dealers located in the same geographic areas serviced by its Prestige retail sales centers.
Nobility has also aggressively targeted the retirement community market, which is made up of retirees moving to Florida and
typically purchasing homes to be located on sites leased from park communities offering a variety of amenities. Sales are not
limited by the presence of the Company’s Prestige retail sales centers in this type of arrangement, as the retirement
community sells homes only within their community.
Nobility has a product line of approximately 100 active models. Although market demand can fluctuate on a fairly short-term
basis, the manufacturing process is such that Nobility can alter its product mix relatively quickly in response to changes in
the market. During fiscal years 2008 and 2007, Nobility’s product mix was affected by the number of “Special Edition”
homes marketed by Prestige and by larger, more expensive multi-wide homes resulting from the availability of varied types
of financing at competitive rates through our affiliates. Most family buyers today purchase three-, four- or five-bedroom
manufactured homes, compared with the two-bedroom home that typically appeals to the retirement buyers who reside in the
manufactured housing communities.
Nobility's joint venture and finance revenue sharing agreement with 21st Mortgage Corporation provides mortgage financing
to retail customers who purchase Nobility’s manufactured homes at Prestige retail sales centers. These agreements, which
originate and service loans, have given Prestige more control over the financing aspect of the retail home sales process and
allowed it to offer better services to its retail customers. Management believes that these agreements give Prestige an
additional potential for profit by providing finance products to retail customers. In addition, management believes that
Prestige has more input in the design of unique finance programs for prospective homebuyers, and that the joint venture has
resulted in more profitable sales at its Prestige retail sales centers. For more information about the finance revenue sharing
agreement, see Note 3 of “Notes to Consolidated Financial Statements”. In an effort to make manufactured homes more
competitive with site-built housing, financing packages are available to provide (1) 30-year financing, (2) an interest rate
reduction program, (3) combination land/manufactured home loans, and (4) a 5% down payment program for qualified
buyers.
In December 2008, 21st Mortgage Corporation advised the Company that 21st Mortgage Corporation’s parent company had
decided not to provide any additional funding for loan originations at this time. Consequently, 21st Mortgage Corporation
was seeking additional capital to fund their loan originations through other sources, primarily bank financing. It is not clear
at this time, if 21st Mortgage Corporation will be able to raise enough capital to fund the Company’s loan originations
through our finance revenue sharing agreement.
Prestige also maintains several other outside financing sources that provide financing to retail homebuyers for its
manufactured homes and the Company is in the process of developing relationships with new lenders. In the future, Nobility
may explore the possibility of underwriting its own mortgage loans for non-21st Mortgage loans.
Prestige’s wholly-owned subsidiary, Mountain Financial, Inc., is an independent insurance agent, licensed mortgage lender
and mortgage broker. Mountain Financial provides construction loans, mortgage brokerage services, automobile, extended
warranty coverage and property and casualty insurance to Prestige customers in connection with their purchase and financing
of manufactured homes.
The Company’s fiscal year ends on the first Saturday on or after October 31. The years ended November 1, 2008 and
November 3, 2007 consisted of fifty-two week periods.
7
Results of Operation
The following table summarizes certain key sales statistics and percent of gross profit as of and for fiscal years ended
November 1, 2008 and November 3, 2007.
Homes sold through Company owned
sales centers
Homes sold to independent dealers
Total new factory built homes produced
Less: intercompany
Average new manufactured home price - retail
Average new manufactured home price - wholesale
As a percent of net sales:
Gross profit from the Company owned retail
sales centers
Gross profit from the manufacturing facilities -
including intercompany sales
2008
2007
332
66
357
291
74,856
36,741
$
$
462
52
485
433
75,971
37,054
$
$
21%
15%
22%
17%
For fiscal years ended November 1, 2008 and November 3, 2007 results are as follows. Total net sales in fiscal 2008 were
$30,065,022 compared to $40,622,897 in fiscal 2007.
Sales for fiscal year 2008 were adversely impacted by the reduced manufactured housing shipments in Florida plus the
overall decline in Florida and the nation’s housing market. Florida combined industry shipments of multi-section homes and
single-section homes for fiscal year 2008 decreased approximately 30% as compared to fiscal year 2007 and decreased
approximately 39% in fiscal year 2007 as compared to fiscal year 2006. Approximately 99% of Nobility’s home sales are
multi-section homes. Although the current overall housing market has continued to decline this year, the long-term
demographic trends still favor strong growth in the Florida market area we serve. Management remains convinced that our
specific geographic market is one of the best long-term growth areas in the country and because of the strong operating
leverage inherent in the Company, we expect to continue out-performing the industry. With a better economy, improved
sales in the existing home market, lower unemployment, continued low interest rates, the continued tight credit markets and
the absence of aggressive mortgage financing of site-built homes, management expects the demand for our homes to
improve. Management understands that during these challenging conditions within our industry and our country, the
Company’s strong financial condition is vital for future growth and success. Fiscal year 2009 is Nobility’s 42nd year of
operating in our market area. We have been increasing the level of consumer awareness and confidence in Nobility and
Prestige, our retail organization, with the introduction and promotion of more special edition homes and by using television
commercials in our various marketing areas within Florida. During fiscal year 2008, the Company has also invested as a
limited partner in two new Florida retirement manufactured home communities.
Insurance revenues in fiscal year 2008 were $403,662 compared to $402,101 in fiscal year 2007. The slight increase resulted
from new policies generated and renewal of existing policies. Prestige’s wholly-owned subsidiary, Mountain Financial, Inc.,
is an independent insurance agent, licensed mortgage lender and mortgage broker. Its principal activity is the performance of
retail insurance services, which involves placing various types of insurance, including property and casualty, automobile and
extended home warranty coverage, with insurance underwriters on behalf of its Prestige customers in connection with their
purchase and financing of manufactured homes. As agent, Mountain Financial solely assists our customers in obtaining
various insurance and extended warranty coverage with insurance underwriters. As such, we have no agreements with
homeowners and/or third party insurance companies other than agency agreements with various insurance carriers and
therefore, we have no material commitments or contingencies related to Mountain Financial, Inc. The Company provides
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 is deemed necessary for policy cancellations at November 1, 2008 and November 3, 2007.
The construction lending operation provides financing to buyers who are purchasing a home through the Company's retail
sales centers. The loan provides the homeowner with enough money to pay for the land, land improvements, construction
and installation of the home, impact fees and permits. The loan is disbursed in draws as construction progresses and is
secured by a first mortgage on the land, home and all of the improvements. The term is typically for one year, with interest
8
only payable monthly. There is also a finance charge which is added to the loan at closing. The construction loan is paid off
when the homeowner closes on the permanent financing, typically a 30 year fixed mortgage. The prepaid finance charge in
fiscal year 2008 was $116,580 compared to $34,089 in fiscal year 2007. The construction interest in fiscal year 2008 was
$63,481 compared to $24,759 in fiscal year 2007. The construction lending operation began in the second quarter of 2007.
Cost of goods sold at our manufacturing facilities include: materials, direct and indirect labor and manufacturing expenses
(which consists of factory occupancy, salary and salary related, delivery costs, mobile home service costs and other
manufacturing expenses). Cost of goods sold at our retail sales centers include: appliances, air conditioners, electrical and
plumbing hook-ups, furniture, insurance, impact and permit fees, land and home fees, manufactured home, service warranty,
setup contractor, interior drywall finish, setup display, skirting, steps, well and septic tank and other expenses.
Gross profit as a percentage of net sales was 27% in fiscal year 2008 compared to 29% in fiscal year 2007. The decrease in
gross profit was primarily due to the rapidly increasing material costs at the manufacturing facilities that were not passed on
until the beginning of the Company’s fourth quarter. The increased cost of goods sold also impacted the retail sales centers
gross profit margin as they were locked into retail customer’s contracts and could not pass along the increases. Fixed
overhead costs associated with the lower sales volume at the manufacturing facilities and retail sales centers also reduced
gross profit margins.
Selling, general and administrative expenses at our manufacturing facility includes salaries, professional services, advertising
and promotions, corporate expense, employee benefits, office equipment and supplies and utilities. Selling, general and
administrative expenses at our retail sales center includes: advertising, retail sales centers expenses, salary and salary related,
professional fees, corporate expense, employee benefit, office equipment and supplies, utilities and travel. Selling, general
and administrative expenses at the insurance company include: advertising, professional fees and office supplies.
Selling, general and administrative expenses as a percent of net sales was approximately 22% in fiscal year 2008 compared
to 18.4% in fiscal year 2007. The increase in selling, general and administrative expenses as a percent of net sales resulted
from the fixed expenses directly related to the decreased sales at the Company’s manufacturing facilities and retail sales
centers in fiscal year 2008 as compared to fiscal year 2007.
The Company earned $283,693 from Majestic 21 in fiscal year 2008 compared to $282,680 as fiscal year 2007. The earnings
from Majestic 21 represent the allocation of the Company’s share of net income and distribution on a 50/50 basis. The
Majestic 21 portfolio of loans is not being increased and the portfolio continues to runoff.
The Company reported earnings from the finance revenue sharing agreement with 21st Mortgage Corporation, Prestige Home
Centers, Inc. and Majestic Homes Inc. in the amount of $697,900 in fiscal year 2008 as compared to $579,700 in fiscal year
2007. The increase is primarily due to increase in the number of loans added to the finance revenue sharing agreement.
The Company earned interest on cash equivalents and investments in the amount of $546,764 in fiscal year 2008 compared
to $814,683 in fiscal year 2007. The decreased interest income was primarily due to a decrease in the amount of cash and
cash equivalents and in the variable rate portion of our cash and cash equivalents balances.
During fiscal year 2008, the Company invested $6,390,000 to become a limited partner in two new Florida retirement
manufactured home communities. The Company reported losses from investments in these retirement community limited
partnerships in the amount $468,828. Although these investments will report non-cash losses in the initial fill-up stage,
management believes that the new attractive and affordable manufactured home communities for senior citizens will be a
significant growth area for Florida in the future.
As a result of the factors discussed above, earnings for fiscal year 2008 were $1,822,156 or $0.45 per diluted share compared
to $4,081,660 or $1.00 per diluted share for fiscal year 2007.
Liquidity and Capital Resources
Cash and cash equivalents were $8,649,724 at November 1, 2008 compared to $13,696,990 at November 3, 2007. The
decrease in cash and cash equivalents was primarily due to (i) investments in two new manufactured home retirement
communities, (ii) purchase of land for a retail sales lot and (iii) the payment of cash dividends. Short and long-term
investments were $8,308,436 at November 1, 2008 compared to $11,210,592 at November 3, 2007. The decrease in short
and long-term investments was primarily due to the maturity of some of the bonds in the investment portfolio. Working
capital was $21,232,995 at November 1, 2008 as compared to $25,144,323 at November 3, 2007. Nobility owns the entire
9
inventory for its Prestige retail sales centers and does not incur any third party floor plan financing expenses. Customer
deposits continued to decrease to a below normal historic level due to the deteriorating housing and financial markets
resulting in a decrease in the number of sold retail homes.
Nobility paid an annual cash dividend of $0.50 per common share for fiscal year 2007 on January 11, 2008 in the amount of
$2,043,572. On January 12, 2007 the Company paid an annual cash dividend of $0.50 per common share for fiscal year 2006
in the amount of $2,041,071. Subsequent to November 1, 2008, the Company's Board of Directors declared an annual cash
dividend of $0.25 per common share, paid on January 12, 2008 to stockholders of record as of January 2, 2008.
Nobility repurchased in the open market 3,855 shares of its common stock for $85,952 during fiscal year 2008. Nobility did
not repurchase any significant amount of shares in fiscal year 2007.
Nobility maintains a revolving credit agreement with a major bank providing for borrowing up to $4,000,000. At
November 1, 2008 and November 3, 2007, there were no amounts outstanding under this agreement.
Nobility’s operations may require significant capital expenditures during fiscal year 2009 compared to fiscal year 2008, as
the Company considers purchasing some of our current retail sales centers locations that are currently leased and opening
new retail sales centers in Florida. Nobility may also require additional funds for capital expenditures relating to its finance
revenue sharing agreement and to underwrite its own construction and mortgage loans. Working capital requirements 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 from its retail sales upon the occurrence of the following:
its receipt of a down payment,
construction of the home is complete,
home has been delivered and set up at the retail home buyer’s site and title has been transferred to the retail home
buyer,
remaining funds have been released by the finance company (financed sales transaction), remaining funds have been
committed by the finance company by an agreement with respect to financing obtained by the customer, usually in
the form of a written approval for permanent home financing received from a lending institution, (financed
construction sales transaction) or cash has been received from the home buyer (cash sales transaction), and
completion of any other significant obligations.
The Company recognizes revenues from its independent dealers upon receiving wholesale floor plan financing or
establishing retail credit approval for terms, shipping of the home and transferring title and risk of loss to the independent
dealer. For wholesale shipments to independent dealers, the Company has no obligation to setup the home or to complete any
other significant obligations.
The Company recognizes revenues from its wholly-owned subsidiary, Mountain Financial, Inc., as follows: commission
income (and fees in lieu of commissions) is recorded as of the effective date of insurance coverage or the billing date,
whichever is later. Commissions on premiums billed and collected directly by insurance companies are recorded as revenue
when received which, in many cases, is the Company’s first notification of amounts earned due to the lack of policy and
renewal information. Contingent commissions are recorded as revenue when received. Contingent commissions are
commissions paid by insurance underwriters and are based on the estimated profit and/or overall volume of business placed
with the underwriter. The data necessary for the calculation of contingent commissions cannot be reasonably obtained prior
to the receipt of the commission which, in many cases, is the Company’s first notification of amounts earned. The Company
provides 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 is deemed necessary for policy cancellations at November 1, 2008 or
November 3, 2007.
10
Investments in Retirement Community Limited Partnerships
The Company formed a limited liability company called Nobility Parks I, LLC to invest in a new Florida retirement
manufactured home community, Walden Woods, III Ltd. (Walden Woods) located in Homosassa, Florida. The investment
was $2,360,000 and will provide the Company with 49% of the earnings/losses of the 236 residential lots. The investment
amount is equivalent to $10,000 per residential lot. The investment is included in Other Investments in the accompanying
consolidated balance sheets. Nobility Parks I, LLC has the right to assign some of its ownership to partners other than
Nobility Homes. Nobility Parks I, LLC has sold $825,250 of its ownership at cost, which reduced the Company’s investment
by the same amount to 31.9%.
The Company formed a limited liability company called Nobility Parks II, LLC to invest in a new Florida retirement
manufactured home community, CRF III, Ltd. (Cypress Creek) located in Winter Haven, Florida. The investment was
$4,030,000 and will provide the Company with 49% of the earnings/losses of the 403 residential lots. The investment
amount is equivalent to $10,000 per residential lot. The investment is included in Other Investments in the accompanying
consolidated balance sheets. Nobility Parks II, LLC has the right to assign some of its ownership to partners other than
Nobility Homes.
Investment in Majestic 21
Majestic 21 was formed in 1997 as a joint venture with our joint venture partner, an unrelated entity (21st Mortgage
Corporation (“21st Mortgage”)). We have been allocated our share of net income and distributions on a 50/50 basis since
Majestic 21’s formation. While Majestic 21 has been deemed to be a variable interest entity, the Company only holds a 50%
interest in this entity and all allocations of profit and loss are on a 50/50 basis. Since all allocations are to be made on a 50/50
basis and the Company’s maximum exposure is limited to it’s investment in Majestic 21, management has concluded that the
Company would not absorb a majority of Majestic 21’s expected losses nor receive a majority of Majestic 21’s expected
residual returns; therefore, the Company is not required to consolidate Majestic 21 with the accounts of Nobility Homes in
accordance with FIN 46R. Management believes that the Company’s maximum exposure to loss as a result of its
involvement with Majestic 21 is its investment in the joint venture recorded in the accounts of Nobility Homes of $1,876,354
as of November 1, 2008 and $1,667,661 as of November 3, 2007. However, based on management’s evaluation, there was
no impairment of this investment at November 1, 2008 or November 3, 2007.
The Company is not obligated to repurchase any foreclosed/repossessed units of Majestic 21 as it does not have a repurchase
agreement or any other guarantees with Majestic 21. The Company resells foreclosed/repossessed units of Majestic 21
through the Company’s network of retail centers as we believe it benefits the historical loss experience of the joint venture.
We earn commissions from reselling such foreclosed/repossessed units and have historically not recorded any material losses
in connection with this activity.
Finance Revenue Sharing Agreement
During fiscal year 2004, the Company transferred $250,000 from its existing joint venture in Majestic 21 in order to
participate in a finance revenue sharing agreement between 21st Mortgage Corporation, Prestige Homes, Inc., and Majestic
Homes, Inc. without forming a separate entity. In connection with this finance revenue sharing agreement, mortgage
financing will be provided on manufactured homes sold through the Company’s retail centers to customers who qualify for
such mortgage financing. As a condition to the finance revenue sharing agreement, the Company has agreed to repurchase
homes from defaulted loans which were financed under the agreement. Upon disposition of the homes, the Company will
receive a payment from the finance revenue sharing agreement reserve account, of no less than 25% and no more than 60%
of the payoff of the loan, to cover the costs of the disposition of the homes. No losses have been incurred in connection with
the finance revenue sharing agreement.
Rebate Program
The Company has a rebate program for all dealers which pays rebates based upon sales volume to the dealers. Volume
rebates are recorded as a reduction of sales in the accompanying consolidated financial statements. The rebate liability is
calculated and recognized as eligible homes are sold based upon factors surrounding the activity and prior experience of
specific dealers and is included in accrued expenses in the accompanying consolidated balance sheets. See Note 7 of “Notes
to Consolidated Financial Statements”.
11
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities
or financial partnerships, such as entities often referred to as structured finance or variable interest entities (“VIE's”), which
would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes. As of November 1, 2008, we are not involved in any material unconsolidated VIE transactions (other than
the Company’s investments in Majestic 21, the Finance Revenue Sharing Agreement and Retirement Community Limited
Partnerships).
Contractual Obligations
The impact of our contractual obligations as of November 1, 2008 is expected to have on our liquidity and cash flow in
future periods is as follows:
Operating lease obligations
Forward Looking Statements
Payments Due By Period
Less Than
1 Year
$197,500
Total
$252,100
1-3 Years
$54,600
Certain statements in this report are forward-looking statements within the meaning of the federal securities laws, including
our statement that working capital requirements will be met with internal sources. Although Nobility believes that the
expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and
uncertainties that may cause actual results to differ materially from expectations. These risks and uncertainties include, but
are not limited to, competitive pricing pressures at both the wholesale and retail levels, increasing material costs, continued
excess retail inventory, increase in repossessions, changes in market demand, changes in interest rates, availability of
financing for retail and wholesale purchasers, consumer confidence, adverse weather conditions that reduce sales at retail
centers, the risk of manufacturing plant shutdowns due to storms or other factors, 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 rising 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.
12
Item 8.
Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm ............................................................................. 14
Consolidated Balance Sheets ............................................................................................................................ 15
Consolidated Statements of Income and Comprehensive Income .................................................................... 16
Consolidated Statements of Changes in Stockholders' Equity ......................................................................... 17
Consolidated Statements of Cash Flows ........................................................................................................... 18
Notes to Consolidated Financial Statements ..................................................................................................... 19
All other schedules are omitted because they are not applicable or the required information is shown in the financial
statements or notes thereto.
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Nobility Homes, Inc.
We have audited the accompanying consolidated balance sheets of Nobility Homes, Inc. and Subsidiaries as of November 1,
2008 and November 3, 2007, and the related consolidated statements of income and comprehensive income, changes in
stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Nobility Homes, Inc. and Subsidiaries as of November 1, 2008 and November 3, 2007, and the results of their
operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.
As discussed in Notes 1 and 8 to the consolidated financial statements, Nobility Homes, Inc. has changed its method of
accounting for uncertainty in income taxes in 2008 due to the adoption of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes”.
We were not engaged to examine management’s assessment of the effectiveness of Nobility Homes, Inc.’s internal control
over financial reporting as of November 1, 2008, included in the accompanying Management’s Annual Report on Internal
Control over Financial Reporting and, accordingly, we do not express an opinion thereon.
/s/ MCGLADREY & PULLEN, LLP
Orlando, Florida
January 30, 2009
14
Nobility Homes, Inc.
Consolidated Balance Sheets
November 1, 2008 and November 3, 2007
Assets
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable
Inventories
Prepaid income taxes
Prepaid expenses and other current assets
Deferred income taxes
Total current assets
Property, plant and equipment, net
Long-term investments
Other investments
Deferred income taxes
Other assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Accrued compensation
Accrued expenses and other current liabilities
Income taxes payable
Customer deposits
Total current liabilities
Unrecognized tax benefits
Total liabilities
Commitments and contingent liabilities (Note 13)
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
Additional paid in capital
Retained earnings
Accumulated other comprehensive income
Less treasury stock at cost, 1,276,373 and
1,277,763 shares, respectively, in 2008 and 2007
Total stockholders' equity
Total liabilities and stockholders' equity
2008
2007
$
8,649,724
168,210
654,529
12,051,361
438,398
433,166
298,408
22,693,796
4,342,401
8,140,226
7,222,276
334,424
2,397,939
45,131,062
$
$
13,696,990
544,271
846,868
12,696,388
13,232
468,739
404,776
28,671,264
3,867,279
10,666,321
1,917,661
49,364
2,280,010
47,451,899
$
$
186,477
201,155
355,218
-
717,951
1,460,801
$
642,484
544,970
738,950
134,500
1,466,037
3,526,941
275,000
1,735,801
-
3,526,941
-
-
536,491
10,178,398
41,968,423
175
536,491
9,999,799
42,389,839
234,724
(9,288,226)
43,395,261
45,131,062
$
(9,235,895)
43,924,958
47,451,899
$
The accompanying notes are an integral part of these financial statements.
15
Nobility Homes, Inc.
Consolidated Statements of Income and Comprehensive Income
For the years ended November 1, 2008 and November 3, 2007
Net sales
Cost of goods sold
Gross profit
2008
2007
$
30,065,022
$
40,622,897
(21,845,686)
(28,838,274)
8,219,336
11,784,623
Selling, general and administrative expenses
(6,604,195)
(7,460,667)
Operating income
1,615,141
4,323,956
Other income:
Interest income
Undistributed earnings in joint venture - Majestic 21
Earnings from finance revenue sharing agreement
Undistributed losses from investments in
retirement community limited partnerships
Miscellaneous
Total other income
546,764
283,693
697,900
(468,828)
59,777
1,119,306
814,683
282,680
579,700
-
145,498
1,822,561
Income before provision for income taxes
2,734,447
6,146,517
Provision for income taxes
(912,291)
(2,064,857)
Net income
1,822,156
4,081,660
Other comprehensive income (loss), net of tax:
Unrealized investment gains (losses)
(234,549)
64,905
Comprehensive income
$
1,587,607
$
4,146,565
Weighed average number of shares outstanding
Basic
Diluted
Earnings per share
Basic
Diluted
4,088,121
4,091,645
4,084,691
4,094,001
$
$
0.45
0.45
$
$
1.00
1.00
Cash dividends paid per common share
$
0.50
$
0.50
The accompanying notes are an integral part of these financial statements.
16
Nobility Homes, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
For the years ended November 1, 2008 and November 3, 2007
Common
Stock Shares
Common
Stock
Additional
Paid-in Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Treasury
Stock
Total
Balance at November 4, 2006
4,082,143
$
536,491
$
9,885,647
$
40,349,250
$
169,819
$
(9,258,071)
$
41,683,136
Purchase of
treasury stock
Exercise of employee
stock options
Cash dividends paid
Stock-based
compensation
Unrealized investment
gains
Net income
Balance at November 3, 2007
Cumulative effect of
adoption of FIN 48
Purchase of
treasury stock
Exercise of employee
stock options
Cash dividends paid
Stock-based
compensation
Unrealized investment
losses
Net income
(720)
5,721
-
-
-
-
-
-
-
-
11,658
-
-
(2,041,071)
102,494
-
-
-
-
-
(14,848)
(14,848)
37,024
-
48,682
(2,041,071)
-
102,494
-
-
4,087,144
-
-
536,491
-
-
9,999,799
-
4,081,660
42,389,839
64,905
-
234,724
-
-
(9,235,895)
64,905
4,081,660
43,924,958
-
(3,855)
5,245
-
-
-
-
-
-
-
-
-
-
-
-
-
(200,000)
-
13,275
-
-
(2,043,572)
165,324
-
-
-
-
-
-
-
-
-
1,822,156
(234,549)
-
-
(200,000)
(85,952)
(85,952)
33,621
-
46,896
(2,043,572)
-
-
-
165,324
(234,549)
1,822,156
Balance at November 1, 2008
4,088,534
$
536,491
$
10,178,398
$
41,968,423
$
175
$
(9,288,226)
$
43,395,261
The accompanying notes are an integral part of these financial statements.
17
Nobility Homes, Inc.
Consolidated Statements of Cash Flows
For the years ended November 1, 2008 and November 3, 2007
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation
Amortization of bond premium/discount
Deferred income taxes
Undistributed earnings in joint venture - Majestic 21
Distributions from joint venture - Majestic 21
Undistributed earnings from finance revenue sharing agreement
Distributions from finance revenue sharing agreement
Undistributed losses from investments in retirement
community limited partnerships
Loss on disposal of property, plant and equipment
Increase in cash surrender value of life insurance
Stock-based compensation
Decrease (increase) in:
Accounts receivable
Inventories
Prepaid income taxes
Prepaid expenses and other current assets
(Decrease) increase in:
Accounts payable
Accrued compensation
Accrued expenses and other current liabilities
Income taxes payable
Customer deposits
Net cash provided by operating activities
Cash flows from investing activities:
Equity investment in limited partnerships
Purchase of property, plant and equipment
Proceeds from sale of equity investment in limited partnerships
Proceeds from maturity of long term investment
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Payment of cash dividends
Proceeds from exercise of employee stock options
Purchase of treasury stock
Net cash used in financing activities
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information
Income taxes paid
2008
2007
$
1,822,156
$
4,081,660
305,332
101,095
37,820
(283,693)
75,000
(697,900)
697,900
468,828
9,738
(117,929)
165,324
192,339
645,027
(425,166)
35,573
(456,007)
(343,815)
(383,732)
(134,500)
(748,086)
965,304
(6,390,000)
(790,192)
825,250
2,425,000
(3,929,942)
(2,043,572)
46,896
(85,952)
(2,082,628)
329,483
128,291
(265,079)
(282,680)
214,447
(579,700)
579,700
-
-
(106,678)
102,494
(467,498)
(282,684)
1,035,435
135,888
(237,214)
(458,094)
(66,666)
134,500
(1,297,473)
2,698,132
-
(284,779)
-
910,000
625,221
(2,041,071)
48,682
(14,848)
(2,007,237)
(5,047,266)
1,316,116
13,696,990
12,380,874
$
8,649,724
$
13,696,990
$
1,420,675
$
1,160,000
The accompanying notes are an integral part of these financial statements.
18
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
NOTE 1
Reporting Entity and Significant Accounting Policies
Description of Business and Principles of Consolidation – The consolidated financial statements include the accounts of
Nobility Homes, Inc. ("Nobility"), its wholly-owned subsidiaries, Prestige Home Centers, Inc. ("Prestige") Nobility Parks I,
LLC, Nobility Parks II, LLC and Prestige's wholly-owned subsidiaries, Mountain Financial, Inc., an independent insurance
agency and mortgage broker, and Majestic Homes, Inc., (collectively the "Company"). The Company is engaged in the
manufacture and sale of manufactured homes to various dealerships, including its own retail sales centers, and manufactured
housing communities throughout Florida. The Company has two manufacturing plants located in and near Ocala, Florida.
Prestige currently operates seventeen Florida retail sales centers: Ocala (3), Chiefland, Tallahassee, Tampa, Lake City,
Auburndale, Inverness, Hudson, Tavares, Jacksonville, Yulee, Fort Walton, Pace, Panama City and Punta Gorda.
All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Fiscal Year – The Company's fiscal year ends on the first Saturday on or after October 31. The years ended
November 1, 2008 and November 3, 2007 consisted of fifty-two week periods.
Revenue Recognition – The Company recognizes revenue from its retail sales upon the occurrence of the following:
its receipt of a down payment,
construction of the home is complete,
home has been delivered and set up at the retail home buyer’s site, and title has been transferred to the retail
home buyer,
remaining funds have been released by the finance company (financed sales transaction), remaining funds have
been committed by the finance company by an agreement with respect to financing obtained by the customer,
usually in the form of a written approval for permanent home financing received from a lending institution,
(financed construction sales transaction) or cash has been received from the home buyer (cash sales transaction),
and
completion of any other significant obligations.
The Company recognizes revenues from its independent dealers upon receiving wholesale floor plan financing or
establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent
dealer. For wholesale shipments to independent dealers, the Company has no obligation to setup the home or to complete any
other significant obligations.
The Company recognizes revenues from its wholly-owned subsidiary, Mountain Financial, Inc., as follows: commission
income (and fees in lieu of commissions) is recorded as of the effective date of insurance coverage or the billing date,
whichever is later. Commissions on premiums billed and collected directly by insurance companies are recorded as revenue
when received which, in many cases, is the Company’s first notification of amounts earned due to the lack of policy and
renewal information. Contingent commissions are recorded as revenue when received. Contingent commissions are
commissions paid by insurance underwriters and are based on the estimated profit and/or overall volume of business placed
with the underwriter. The data necessary for the calculation of contingent commissions cannot be reasonably obtained prior
to the receipt of the commission which, in many cases, is the Company’s first notification of amounts earned. The Company
provides 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 is deemed necessary for policy cancellations at November 1, 2008 or
November 3, 2007.
Cash and Cash Equivalents – The Company considers all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents. As of November 1, 2008 and November 3, 2007, approximately $7,306,000
and $9,329,000, respectively, of the cash and cash equivalents were held in the form of municipal and other debt securities.
19
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
All of the municipal and other debt securities are held by one trustee bank, are backed by letters of credit provided by the
issuers and are due on demand at the original purchase price paid by the Company.
Accounts Receivable – Accounts receivable are stated at net realizable value. An allowance for doubtful accounts is
provided based on prior collection experiences and management's analysis of specific accounts. At November 1, 2008 and
November 3, 2007, in the opinion of management, all accounts were considered fully collectible and, accordingly, no
allowance was deemed necessary.
Investments – The Company’s investments consist of municipal and other debt securities as well as equity securities of a
public company. Investments with maturities of less than one year are classified as short-term investments. Debt securities
that the Company has the positive intent and ability to hold until maturity are accounted for as “held-to-maturity” securities
and are carried at amortized cost. Premiums and discounts on investments in debt securities are amortized over the
contractual lives of those securities. The method of amortization results in a constant effective yield on those securities (the
interest method). The Company’s equity investment in a public company is classified as “available-for-sale” and carried at
fair value. Unrealized gains on the available-for-sale securities, net of taxes, are recorded in accumulated other
comprehensive income.
The Company continually reviews its investments to determine whether a decline in fair value below the cost basis is other
than temporary. If the decline in fair value is judged to be other than temporary, the cost basis of the security is written down
to fair value and the amount of the write-down is included in the accompanying consolidated statements of income and other
comprehensive income.
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.
Property, Plant And Equipment – Property, plant and equipment are stated at cost and depreciated over their estimated
useful lives using the straight-line method. Routine maintenance and repairs are charged to expense when incurred. Major
replacements and improvements are capitalized. Gains or losses are credited or charged to earnings upon disposition.
Investment in Majestic 21 – Majestic 21 was formed in 1997 as a joint venture with our joint venture partner, an unrelated
entity (21st Mortgage Corporation (“21st Mortgage”)). We have been allocated our share of net income and distributions on a
50/50 basis since Majestic 21’s formation. While Majestic 21 has been deemed to be a variable interest entity, the Company
only holds a 50% interest in this entity and all allocations of profit and loss are on a 50/50 basis. Since all allocations are to
be made on a 50/50 basis and the Company’s maximum exposure is limited to its investment in Majestic 21, management has
concluded that the Company would not absorb a majority of Majestic 21’s expected losses nor receive a majority of Majestic
21’s expected residual returns; therefore, the Company is not required to consolidate Majestic 21 with the accounts of
Nobility Homes in accordance with FIN 46R. Management believes that the Company’s maximum exposure to loss as a
result of its involvement with Majestic 21 is its investment in the joint venture recorded in the accounts of Nobility Homes of
$1,876,354 as of November 1, 2008 and $1,667,661 as of November 3, 2007. However, based on management’s evaluation,
there was no impairment of this investment at November 1, 2008 or November 3, 2007.
The Company is not obligated to repurchase any foreclosed/repossessed units of Majestic 21 as it does not have a repurchase
agreement or any other guarantees with Majestic 21. The Company does resell foreclosed/repossessed units of Majestic 21
through the Company’s network of retail centers as we believe it benefits the historical loss experience of the joint venture.
We earn commissions from reselling such foreclosed/repossessed units and have historically not recorded any losses in
connection with this activity.
Finance Revenue Sharing Agreement – During fiscal year 2004, the Company transferred $250,000 from its existing joint
venture in Majestic 21 in order to participate in a finance revenue sharing agreement between 21st Mortgage Corporation,
Prestige Homes, Inc., and Majestic Homes, Inc. without forming a separate entity. In connection with this finance revenue
sharing agreement, mortgage financing will be provided on manufactured homes sold through the Company’s retail centers
to customers who qualify for such mortgage financing. As a condition to the finance revenue sharing agreement, the
Company has agreed to repurchase homes from defaulted loans which were financed under the agreement. Upon disposition
of the homes, the Company will receive a payment from the finance revenue sharing agreement reserve account, of no less
20
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
than 25% and no more than 60% of the payoff of the loan, to cover the costs of the disposition of the homes. No losses have
been incurred in connection with the finance revenue sharing agreement.
Other Investments – The Company owns a 50% interest in a joint venture, Majestic 21, engaged in providing mortgage
financing on manufactured homes. This investment is accounted for using the equity method of accounting see Note 3 of
“Notes to Consolidated Financial Statements”. The Company also participates in a finance revenue sharing agreement with
21st Mortgage Corporation in providing mortgage financing on manufactured homes sold through the Company’s retail sales
centers (see Note 3). In connection with the finance revenue sharing agreement, the Company has made a deposit of
$250,000, which is included in other investments in the accompanying consolidated balance sheets.
The Company formed a limited liability company called Nobility Parks I, LLC to invest in a new Florida retirement
manufactured home community, Walden Woods, III Ltd. (Walden Woods) located in Homosassa, Florida. This investment is
accounted for using the equity method of accounting see Note 3 of “Notes to Consolidated Financial Statements”. The
investment was $2,360,000 and will provide the Company with 49% of the earnings/losses of the 236 residential lots. The
investment amount is equivalent to $10,000 per residential lot. The investment is included in Other Investments in the
accompanying consolidated balance sheets. Nobility Parks I, LLC has the right to assign some of its ownership to partners
other than Nobility Homes. Nobility Parks I, LLC has sold $825,250 of its ownership at cost, which reduced the Company’s
investment by the same amount to 31.9%.
The Company formed a limited liability company called Nobility Parks II, LLC to invest in a new Florida retirement
manufactured home community, CRF III, Ltd. (Cypress Creek) located in Winter Haven, Florida. This investment is
accounted for using the equity method of accounting see Note 3 of “Notes to Consolidated Financial Statements”. The
investment was $4,030,000 and will provide the Company with 49% of the earnings/losses of the 403 residential lots. The
investment amount is equivalent to $10,000 per residential lot. The investment is included in Other Investments in the
accompanying consolidated balance sheets. Nobility Parks II, LLC has the right to assign some of its ownership to partners
other than Nobility Homes.
Impairment of Long-Lived Assets – In the event that facts and circumstances indicate that the carrying value of a long-lived
asset may be impaired, an evaluation of recoverability is performed by comparing the estimated future undiscounted cash
flows associated with the asset to the asset’s carrying amount to determine if a write-down is required. If such evaluations
indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of
such assets, the assets are adjusted to their fair values.
Warranty Costs – The Company provides for a warranty as the manufactured homes are sold. Amounts related to these
warranties for fiscal years 2008 and 2007 are as follows:
2008
2007
Beginning accrued warranty expense
Less: reduction for payments
Plus: additions to accrual
Ending accrued warranty expense
$
215,000
(593,692)
562,692
184,000
$
$
215,000
(897,307)
897,307
215,000
$
Accrued home setup costs – Accrued home setup costs represent amounts due to vendors and/or independent contractors for
various items related to the actual setup of the homes on the retail home buyers’ site. These costs include appliances, air
conditioners, electrical/plumbing hook-ups, furniture, insurance, impact/permit fees, land/home fees, extended service plan,
freight, skirting, steps, well and septic tanks and other setup costs and are included in accrued expenses in the accompanying
consolidated balance sheets see Note 7 of “Notes to Consolidated Financial Statements”.
21
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
Fair Value of Financial Instruments – The carrying amount of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximates fair value because of the short maturity of those instruments. The carrying
amount and fair market value of the Company’s short and long-term investments are as follows:
Carrying amount
Fair value
.
November 1,
2008
November 3,
2007
$
8,308,436
8,341,353
$
11,210,592
11,150,224
Stock-Based Compensation – At November 1, 2008, the Company had a stock incentive plan (the "Plan") which authorizes
the issuance of options to purchase common stock. Prior to November 6, 2005, the Company accounted for the Plan under
the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related
Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation. Compensation cost
recognized for the years ended November 1, 2008 and November 3, 2007 includes compensation cost for all share-based
payments granted prior to, but not yet vested as of November 5, 2005, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123 and compensation cost for all share-based payments granted
subsequent to November 6, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS
No. 123(R). Results for prior periods have not been restated to reflect the impact of adopting SFAS No. 123(R).
Rebate Program – The Company has a rebate program for all dealers which pays rebates based upon sales volume to the
dealers. Volume rebates are recorded as a reduction of sales in the accompanying consolidated financial statements. The
rebate liability is calculated and recognized as eligible homes are sold based upon factors surrounding the activity and prior
experience of specific dealers and is included in accrued expenses in the accompanying consolidated balance sheets. See
Note 7 of “Notes to Consolidated Financial Statements”.
Advertising – Advertising for Prestige retail sales centers consists primarily of newspaper, radio and television advertising.
All costs are expensed as incurred. Advertising expense amounted to approximately $844,000 and $683,000 for fiscal year
2008 and 2007, respectively.
Income Taxes – The Company accounts for income taxes utilizing the asset and liability method. This approach requires the
recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date
of enactment.
Earnings per Share – These financial statements include "basic" and "diluted" earnings per share information for all periods
presented. 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 common shares. Diluted earnings per share calculations include dilutive common shares of
3,524 and 9,310 for fiscal year 2008 and 2007, respectively.
Shipping and Handling Costs – Net sales include the revenue related to shipping and handling charges billed to customers.
The related costs associated with shipping and handling are included as a component of cost of goods sold.
Comprehensive Income – Comprehensive income includes net income as well as other comprehensive income. The
Company’s other comprehensive income consists of unrealized gains (losses) on available-for-sale securities, net of related
taxes.
Segments – The Company's chief operating decision maker is its Chief Executive Officer, who reviews financial information
on a company-wide or consolidated basis. Accordingly, the Company accounts for its operations in accordance with SFAS
22
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
No. 131, "Disclosures about Segments of an Enterprise and Related Information." No segment disclosures have been made
as the Company considers its business activities as a single segment.
Adoption of New Accounting Pronouncements – Effective November 4, 2007 the Company adopted the provisions of
FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. The evaluation of a tax position in accordance with FIN 48 is a two-
step process. Under FIN 48, an entity may only recognize or continue to recognize tax positions that meet a “more likely than
not” threshold. Upon adoption of FIN 48, the Company accrued a liability of $275,000 to offset the uncertainty of $75,000 in
certain deferred tax assets and $200,000 in other permanent items, for which the Company recorded a charge against
beginning retained earnings of $200,000 (including $58,000 of interest and penalties) representing the cumulative effect of
the change in accounting principle. With few exceptions, the Company is no longer subject to U.S. federal and state tax
examinations by taxing authorities before the October 31, 2004 tax year-end.
Recent Accounting Pronouncements – In September 2006, FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS
No. 157 defines fair value to be the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date and emphasizes that fair value is a market-based
measurement, not an entity-specific measurement. It establishes a fair value hierarchy and expands disclosures about fair
value measurements in both interim and annual periods. SFAS No. 157 will be effective for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. In December 2007, FASB issued proposed FASB Staff
Position (“FSP”) FAS 157-b, which delays the effective date of SFAS No. 157 for nonfinancial assets and nonfinancial
liabilities that are recognized or disclosed in the financial statements on a nonrecurring basis. The proposed FSP partially
defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 and interim periods within
those fiscal years for items within the scope of this FSP. The Company does not expect SFAS No. 157 to have a material
effect on the Company’s consolidated financial position or results of operations, but anticipates additional disclosures when
SFAS No. 157 becomes effective.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities.”
SFAS No. 159 provides all entities with an option to report selected financial assets and liabilities at fair value. The
Statement's effective as of the beginning of an entity's first fiscal year beginning after November 15, 2007, with early
adoption available in certain circumstances. The Company is evaluating the impact this statement will have on its
consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" and SFAS No. 160, "Non-
controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51". SFAS
141R will change how business acquisitions are accounted for and will impact financial statements both on the acquisition
date and in subsequent periods. SFAS 160 will change the accounting and reporting for minority interests, which will be re-
characterized as non-controlling interests and classified as a component of equity. SFAS 141R and SFAS 160 are effective
for us beginning in the first quarter of fiscal 2010. Early adoption is not permitted. The Company is evaluating the impact
these statements will have on its consolidated financial statements.
23
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
NOTE 2
Investments
Investments in “held-to-maturity” and “available-for-sale” debt and equity securities were as follows:
Held-to-maturity securities (carried at
amortized cost):
Municipal securities
Available-for-sale securities (carried at
fair value):
Equity securities in a public company
Amortized
Cost
November 1, 2008
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated Fair
Value
$
8,140,226
$
50,274
$
(17,357)
$
8,173,143
165,519
2,691
-
168,210
Total investments
$
8,305,745
$
52,965
$
(17,357)
$
8,341,353
Held-to-maturity securities (carried at
amortized cost):
Municipal securities
Available-for-sale securities (carried at
fair value):
Equity securities in a public company
Amortized
Cost
November 3, 2007
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated Fair
Value
$
10,666,321
$
9,727
$
(70,095)
$
10,605,953
165,519
378,752
-
544,271
Total investments
$
10,831,840
$
388,479
$
(70,095)
$
11,150,224
The fair values were estimated based on quoted market prices using current market rates at each respective period end.
Contractual maturities of “held-to-maturity” debt securities were as follows:
November 1, 2008
November 3, 2007
Due in less than one year
Due in 1 - 5 years
Cost
2,204,059
5,936,167
8,140,226
$
$
Estimated Fair
Value
2,227,473
5,945,670
8,173,143
$
$
Cost
2,448,418
8,217,903
10,666,321
$
$
Estimated Fair
Value
2,434,841
8,171,112
10,605,953
$
$
There were no sales of “available-for-sale” securities during the fiscal years 2008 or 2007.
The unrealized losses on municipal securities were primarily due to changes in interest rates. Because the decline in market
values of these securities is attributable to changes in interest rates and not credit quality and because the Company has the
ability and intent to hold these investments until a recovery of fair value, which may be until maturity, the Company does not
believe any of the unrealized losses represent other than temporary impairment based on evaluations of available evidence as
of November 1, 2008.
24
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
A summary of the carrying values and balance sheet classification of all investments in debt and equity securities including
“held-to-maturity” and “available-for-sale” securities disclosed above was as follows:
November 1,
2008
November 3,
2007
Available-for-sale equity securities
Short-term investments
Held-to-maturity debt securities included in long-term investments
Total investments
NOTE 3
Related Party Transactions
Affiliated Entities
$
168,210
168,210
8,140,226
8,308,436
$
$
544,271
544,271
10,666,321
11,210,592
$
TLT, Inc. -- The President and Chairman of the Board of Directors ("President") and the Executive Vice President each own
50% of the stock of TLT, Inc. TLT, Inc. is the general partner of limited partnerships which are developing manufactured
housing communities in Central Florida (the "TLT Communities"). The President owns between a 24.75% and a 49.5%
direct and indirect interests in each of these limited partnerships. The Executive Vice President owns between a 49.5% and a
57.75% direct and indirect interests in each of these limited partnerships. The TLT Communities have purchased
manufactured homes exclusively from the Company since 1990. There were no sales to TLT Communities during fiscal year
2008 and 2007, respectively.
Investment in Joint Venture – Majestic 21 -- During fiscal 1997, the Company contributed $250,000 for a 50% interest in a
joint venture engaged in providing mortgage financing on manufactured homes. This investment is accounted for under the
equity method of accounting.
While Majestic 21 has been deemed to be a variable interest entity, the Company only holds a 50% interest in this entity and
all allocations of profit and loss are on a 50/50 basis. Since all allocations are to be made on a 50/50 basis and the Company's
maximum exposure is limited to its investment in Majestic 21, management has concluded that the Company would not
absorb a majority of Majestic 21's expected losses nor receive a majority of Majestic 21's expected residual returns;
therefore, the Company is not required to consolidate Majestic 21 with the accounts of Nobility Homes in accordance with
FIN 46R.
The following is summarized financial information of the Company’s joint venture:
Total Assets
Total Liabilities
Total Equity
Net Income
November 1,
2008
9,112,378
5,359,672
3,752,706
567,386
$
$
$
$
November 3,
2007
9,709,794
6,374,473
3,335,321
690,152
$
$
$
$
Distributions received from the joint venture amounted to $75,000 and $214,447 in fiscal year 2008 and 2007, respectively.
Investment in Retirement Community Limited Partnerships -- During fiscal year 2008, the Company formed a limited
liability company called Nobility Parks I, LLC to invest in a new Florida retirement manufactured home community, Walden
Woods, III Ltd. (Walden Woods). The investment was $2,360,000 and will provide the Company with a 49% interest in this
entity. Nobility Parks I, LLC has sold $825,250 of its ownership, which reduced the Company’s investment by the same
amount to 31.9%. Walden Woods has a December 31st year-end and the Company has included the activity of Walden
Woods through September 30, 2008 in the accompanying consolidated financial statements.
25
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
The Company also during fiscal year 2008, formed a limited liability company called Nobility Parks II, LLC to invest in a
new Florida retirement manufactured home community, CRF III, Ltd. (Cypress Creek). The investment was $4,030,000 and
will provide the Company with a 49% interest in this entity. Cypress Creek has a December 31st year-end and the Company
has included the activity of Cypress Creek through September 30, 2008 in the accompanying consolidated financial
statements.
These investments are accounted for under the equity method of accounting. While Walden Woods and Cypress Creek have
been deemed to be variable interest entities, the Company only holds a 31.9% interest in Walden Woods and a 49% interest
in Cypress Creek and all allocations of profit and loss are on a pro-rata basis. Since all allocations are to be made on a pro-
rata basis and the Company's maximum exposure is limited to its investment in Walden Woods and Cypress Creek,
management has concluded that the Company would not absorb a majority of Walden Woods’ and Cypress Creek’s expected
losses nor receive a majority of Walden Woods’ and Cypress Creek’s expected residual returns; therefore, the Company is
not required to consolidate Walden Woods and Cypress Creek with the accounts of Nobility Homes in accordance with FIN
46R.
The following is summarized financial information of Walden Woods and Cypress Creek as of September 30, 2008:
Total Assets
Total Liabilities
Total Equity
Net Loss
September 30,
2008
22,250,102
18,423,163
3,826,939
(968,889)
$
$
$
$
Finance Revenue Sharing Agreement – During fiscal year 2004, the Company transferred $250,000 from its existing joint
venture in Majestic 21 in order to participate in a finance revenue sharing agreement between 21st Mortgage Corporation,
Prestige Home Centers, Inc. and Majestic Homes, Inc. without forming a separate entity. In connection with this finance
revenue sharing agreement, mortgage financing will be provided on manufactured homes sold through the Company’s retail
sales centers to customers who qualify for such mortgage financing.
As a condition to the finance revenue sharing agreement, the Company has agreed to repurchase homes from defaulted loans
which were financed under the agreement. Upon disposition of the homes, the Company will receive a payment from the
finance revenue sharing agreement reserve account, of no less than 25% and no more than 60% of the payoff of the loan, to
cover the costs of the disposition of the homes. No losses have been incurred in connection with the finance revenue sharing
agreement.
NOTE 4
Inventories
Inventories are summarized as follows:
Raw materials
Work-in-process
Finished homes
Pre-owned manu factured homes
Model home furniture
November 1,
2008
November 3,
200 7
$
1,003,452
117,159
9,741,053
909,844
279,853
$
863,179
151,859
10,952,741
461,371
267,238
$
12,051,361
$
12,696,388
The finished homes, pre-owned manufactured homes and model home furniture are maintained at the Prestige retail sales
centers.
26
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
NOTE 5
Property, Plant and Equipment
Property, plant and equipment, along with their estimated useful lives and related accumulated depreciation are summarized
as follows:
Range of Lives in
Years
November 1,
2008
November 3,
2007
Land
Land improvements
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Less accumulated depreciation
-
10-20
15-40
3-10
3-10
$
$
2,338,453
932,921
2,590,103
1,223,490
497,271
7,582,238
(3,239,837)
4,342,401
1,599,135
957,920
2,544,540
1,296,080
485,015
6,882,690
(3,015,411)
3,867,279
$
$
Depreciation expense totaled approximately $305,000 and $329,000 for fiscal year 2008 and 2007, respectively.
NOTE 6
Other Assets
Other assets are comprised of the following:
November 1,
2008
November 3,
2007
Cash surrender value of life insurance
Other
$
2,099,231
298,708
$
1,981,302
298,708
$
2,397,939
$
2,280,010
NOTE 7
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are comprised of the following:
Accrued warranty expense
Other accrued expenses
Accrued volume rebate
Accrued home setup costs
Accrued sales taxes
November 1,
2008
November 3,
2007
$
184,000
118,536
52,682
-
-
$
215,000
199,248
-
208,702
116,000
$
355,218
$
738,950
27
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
NOTE 8
Income Taxes
The provision for income taxes for the years ended consists of the following:
Current tax expense:
Federal
State
November 1,
2008
November 3,
2007
$
725,160
149,311
874,471
$
2,011,955
317,981
2,329,936
Deferred tax (benefit) expense
37,820
(265,079)
Provision for income taxes
$
912,291
$
2,064,857
The following table shows the reconciliation between the statutory federal income tax rate and the actual provision for
income taxes for the years ended:
Provision - federal statu tory tax rate
Increase (decrease) resulting from:
State taxes, net of federal tax benefit
Permanent differences:
Tax exempt interest
Tax settlement (Note 13)
Other
November 1,
2008
November 3,
2007
$
929,711
$
2,089,816
99,260
201,821
(159,563)
-
42,883
(226,690)
134,500
(134,590)
Provision for income taxes
$
912,291
$
2,064,857
28
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
The types of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts and
the related deferred tax assets and deferred tax liabilities are as follows:
Gross deferred tax assets:
Allowance for doubtful accounts
Inventories
Investments
Other assets
Accrued expenses
Stock-based compensation
Total deferred tax assets
Gross deferred tax liabilities:
Depreciation
Amortization
Prepaid expense
Net deferred tax assets
November 1,
2008
November 3,
2007
$
87,261
178,685
339,078
-
69,239
92,378
766,641
$
87,300
86,700
107,500
149,852
80,900
52,640
564,892
(34,871)
(62,162)
(36,776)
632,832
(60,742)
(50,010)
-
454,140
$
$
These amounts are included in the accompanying consolidated balance sheets under the following captions:
Current assets:
Deferred tax assets
Non-current assets:
Deferred tax assets
To tal deferred tax assets
November 1,
200 8
November 3,
2007
$
298,40 8
$
404,776
334,42 4
632,83 2
$
49,364
454,140
$
The Company believes that it is more likely than not that the net deferred tax assets of $632,832 at November 1, 2008 will be
realized on future tax returns, primarily from the generation of future taxable income.
On November 4, 2007, the Company adopted the provisions of FIN 48. As a result of the implementation of FIN 48, the
Company has recorded a liability for $275,000 as of November 1, 2008 of unrecognized tax benefits, which were accounted
for as a reduction of $200,000 to retained earnings and an increase of $75,000 to deferred taxes as of the adoption date. As of
November 1, 2008, the Company had approximately $275,000 of unrecognized tax benefits including accrued interest and
penalties was $58,000. If the unrecognized tax benefits were to be recognized in a future period, $200,000 would reduce the
statement of operations tax provision, thereby impacting the effective tax rate. The impact of recognition of the income tax
provision reflects the amounts for unrecognized tax benefits net of the deferred tax benefit on accrued interest and state
income tax items, and reversal of accrued interest and penalties. Interest and penalties related to underpayment of income
taxes are classified as a component of income taxes in the accompanying consolidated statements of income.
29
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
A reconciliation of the total amount of unrecognized tax benefits including interest and penalties is as follows:
Unrecognized tax benefits: November 3, 2007
Gross increases: tax po sitions taken in prior periods
Gross decreases: tax positions taken in prior periods
Gross increases: current period tax positions
Unrecognized tax benefits: November 1, 2008
$
$
275,000
-
-
-
275,000
The Company is subject to U.S. federal and state income taxes. With few exceptions, the Company is no longer subject to
U.S. federal and state tax examinations by taxing authorities before the October 31, 2004 tax year-end. The Company is not
currently under examination by any taxing authority. The Company does not anticipate that the amount of the unrecognized
benefit will significantly increase or decrease within the next 12 months.
NOTE 9
Financing Agreements
Revolving Credit Agreement – The Company maintains a revolving credit agreement (the "Agreement") with a bank which
provides for borrowings of up to $4,000,000. The Agreement provides for interest at the bank prime rate less 0.5% (3.5% at
November 1, 2008) on the outstanding balance. The Agreement is uncollateralized, due on demand and includes certain
restrictive covenants relating to tangible net worth and acquiring new debt. There are no commitment fees or compensating
balance arrangements associated with the Agreement. At November 1, 2008 and November 3, 2007, there were no
borrowings outstanding under the Agreement.
NOTE 10
Stockholders’ Equity
Authorized preferred stock may be issued in series with rights and preferences designated by the Board of Directors at the
time it authorizes the issuance of such stock. The Company has never issued any preferred stock. Treasury stock is recorded
at cost and is presented as a reduction of stockholders' equity in the accompanying consolidated financial statements. The
Company repurchased 3,855 and 720 shares of its common stock during fiscal year 2008 and 2007, respectively. These
shares were acquired for general corporate purposes. The Company reissued 5,245 and 5,721 shares of treasury stock during
fiscal year 2008 and 2007, respectively, for employee stock option exercises.
NOTE 11
Stock Option Plan
During fiscal year 1996, the Company’s Board of Directors adopted a stock incentive plan (the "Plan"), which authorizes the
issuance of options to purchase common stock. The Plan provides for the issuance of options to purchase up to 495,000
shares of common stock to employees and directors. Options granted are exercisable after one or more years and expire no
later than six to ten years from the date of grant or upon termination of employment, retirement or death. Options available
for future grant were 347,366 and 361,971 at November 1, 2008 and November 3, 2007. Options were held by 14 persons at
November 1, 2008.
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the
grant-date fair value of the award. The cost is to be recognized over the period during which an employee is required to
provide service in exchange for the award (usually the vesting period). The grant date fair value of employee share options
and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those
instruments (unless observable market prices for the same or similar instruments are available). If an equity award is
modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair
value of the modified award over the fair value of the original award immediately before the modification. During fiscal
years 2008 and 2007, the Company recognized approximately $165,300 and $102,500 in compensation cost related to stock
options.
30
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
Information with respect to options granted at November 1, 2008 is as follows:
Number of
Shares
Stock Option
P rice Range
Weighted
A verage
Exercise
Price
Aggregate
Intrinsic
V alue
Outstanding at 11/4/2006
103,9 72
$ 8 .30 - 26.56
$
21.53
Granted
Exercised
Canceled
Outstanding at 11/3/2007
Granted
Exercised
Canceled
Outstanding at 11/1/2008
44,5 00
(5,7 21)
(9,7 22)
133,0 29
26,9 00
(5,2 45)
(7,0 50)
147,6 34
26.38
8 .30 - 11.42
8 .83 - 26.56
8 .20 - 26.56
18.50
8 .83 - 11.42
8 .30 - 26.56
$ 8 .83 - 26.56
$
26.38
8.54
19.23
23.88
18.50
9.05
21.39
23.55
$
937
The weighted-average grant-date fair value of options granted during fiscal years 2008 and 2007 was $4.01 and $6.59,
respectively. The total intrinsic value of options exercised during the years ended November 1, 2008 and November 3, 2007
was approximately $42,911 and $82,400, respectively.
The following table summarizes information about the Plan’s stock options at November 1, 2008:
Options Outstanding
Options Exercisable
Exercise
Prices
$
8.83
11.42
23.76
26.56
26.38
18.50
Shares
Outstanding
545
10,229
23,260
44,350
43,500
25,750
147,634
Weighted
Average
Remaining
Contractual
Life (years)
1
2
3
4
5
6
4
Weighted
Average
Exercise Price
$
8.83
11.42
23.76
26.56
26.38
18.50
23.55
$
Number
Exercisable
545
7,160
10,467
11,088
4,350
-
33,610
Weighted
Average
Exercise Price
$
8.83
11.42
23.76
26.56
26.38
18.50
22.15
$
Aggregate
Intrinsic
Value
$
937
The fair value of each option is determined using the Black-Scholes option-pricing model which values options based on the
stock price at the grant date, the expected life of the option, the estimated volatility of the stock, expected dividend payments,
and the risk-free interest rate over the expected life of the option. The dividend yield was calculated by dividing the current
annualized dividend by the option exercise price for each grant. The expected volatility was determined considering the
Company's historical stock prices for the fiscal year the grant occurred and prior fiscal years for a period equal to the
expected life of the option. The risk-free interest rate was the rate available on zero coupon U.S. government obligations with
a term equal to the expected life of the option. The expected life of the option was estimated based on the exercise history
from previous grants.
31
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
The weighted-average assumptions used in the Black-Scholes model were as follows:
Risk-free interest rate
Expected volatility of stock
Dividend yield
Expected option life
Stock Option Granted in
2008
4.0%
25%
2.7%
5 years
2007
4.7%
24%
1.9%
5 years
As of November 1, 2008, there is approximately $547,800 of total unrecognized compensation cost related to non-vested
share based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted
average period of 3.58 years.
NOTE 12
Employee Benefit Plan
The Company has a defined contribution retirement plan (the "Plan") qualifying under Section 401(k) of the Internal
Revenue Code. The Plan covers employees who have met certain service requirements. The Company makes a matching
contribution of 20% of an employee’s contribution up to a maximum of 6% of an employee’s compensation. The Company’s
contribution charged to operations was approximately $40,000 and $45,000 in fiscal year 2008 and 2007, respectively.
NOTE 13
Commitments and Contingent Liabilities
Operating Leases – The Company leases the property for several Prestige retail sales centers from various unrelated entities
under operating lease agreements expiring through November 2009. The Company also leases certain equipment under
unrelated operating leases. These leases have varying renewal options. Total rent expense for operating leases, including
those with terms of less than one year, amounted to approximately $448,400 and $585,000 in fiscal year 2008 and 2007,
respectively.
Future minimum payments by year and in the aggregate, under the aforementioned leases and other non-cancelable operating
leases with initial or remaining terms in excess of one year, as of November 1, 2008 are as follows:
Fisca l Year Ending
2009
2010
2011
197,500
32,300
22,300
Repurchase Agreements – The Company is contingently liable under terms of repurchase agreements with financial
institutions providing covering dealer floor plan financing arrangements for independent dealers of its manufactured homes.
These arrangements, which are customary in the industry, provide for the repurchase of homes sold to independent dealers in
the event of default by the independent dealer. The price the Company is obligated to pay declines over the period of the
repurchase agreement (generally 18-24 months) and the risk of loss is further reduced by the sales value of any homes which
may be required to be repurchased. The contingent liability under these repurchase agreements is on an individual unit basis
and amounted to approximately $1,085,400 and $539,000 at November 1, 2008 and November 3, 2007, respectively. The
Company applies FASB Interpretation ("FIN") No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a
rescission of FASB Interpretation No. 3 and SFAS No. 5, Accounting for Contingencies to account for its liability for
repurchase commitments. Under the provisions of FIN 45, during the period in which a home is sold (inception of a
repurchase commitment), the Company records the greater of the estimated fair value of the non-contingent obligation or a
contingent liability under the provisions of SFAS No. 5, based on historical information available at the time, as a reduction
to revenue. Additionally, subsequent to the inception of the repurchase commitment, the Company evaluates the likelihood
that it will be called on to perform under the inventory repurchase commitments. If it becomes probable that a dealer will
default and a SFAS No. 5 loss reserve should be recorded, then such contingent liability is recorded equal to the estimated
loss on repurchase. Based on identified changes in dealers' financial conditions, the Company evaluates the probability of
32
Nobility Homes, Inc.
Notes to Consolidated Financial Statements
default for the group of dealers who are identified at an elevated risk of default and applies a probability of default to the
group, based on historical default rates. Changes in the reserve, if any, are recorded as an adjustment to revenue. Following
the inception of the commitment, the recorded reserve, if any, is reduced over the repurchase period and is eliminated once
the dealer sells the home. Based upon management's analysis, the fair value of the guarantee related to the Company's
repurchase agreements is not material and no amounts have been recorded related to the fair value of the guarantee in the
accompanying consolidated financial statements. In addition, there were no homes repurchased under any of the Company's
repurchase agreements in fiscal year 2008 and 2007, respectively.
Income Tax Matters – The Company had been subject to an Internal Revenue Service ("IRS") examination for the years
ended November 6, 2004 and November 1, 2003. During fiscal 2007, the Company settled with the IRS for approximately
$134,500 which is included in income taxes payable at November 3, 2007. The amount was paid by the Company to the IRS
during fiscal year 2008.
Other Contingent Liabilities – Certain claims and suits arising in the ordinary course of business have been filed or are
pending against the Company. In the opinion of management, the ultimate outcome of these matters will not have a material
adverse effect on the Company's financial position, results of operations or cash flows.
The Company does not maintain casualty insurance on some of its property, including the inventory at our retail centers, our
plant machinery and plant equipment and is at risk for those types of losses.
NOTE 14
Subsequent Event
Subsequent to November 1, 2008, the Company’s Board of Directors declared an annual cash dividend of $0.25 per common
share, paid on January 12, 2009 to stockholders of record as of January 2, 2009.
.
33
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On June 5, 2007, Nobility Homes, Inc. was notified that certain partners of Tedder, James, Worden & Associates, P.A., the
Company's independent registered certified public accounting firm, had joined McGladrey & Pullen, LLP and that, as a
result, effective June 5, 2007 Tedder, James, Worden & Associates, P.A. resigned as independent registered auditor for the
Company. The decision to engage McGladrey & Pullen, LLP was approved by the audit committee of the board of directors
on June 8, 2007.
There were no disagreements with accountants on accounting and financial disclosure matters.
Item 9A (T).
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 fiscal year covered by this report, our
Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were
effective to ensure that the information required to be disclosed by us in this report was recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that the
information required to be disclosed in this report was accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management's annual report on internal control over financial reporting. The Company’s management is responsible for
establishing and maintaining effective internal control over financial reporting in order to provide reasonable assurance of
the reliability of the Company's financial reporting and preparation of financial statements for external reporting purposes in
accordance with accounting principles generally accepted in the United States of America. Internal control over financial
reporting involves policies and procedure that (i) require maintenance of records that in reasonable detail accurately reflect
the Company's financial transactions and disposition of assets; (ii) provide reasonable assurance that these transactions are
recorded as required to support preparation of financial statements in accordance with generally accepted accounting
principles; and (iii) provide reasonable assurance for the prevention or timely detection of unauthorized use of the
Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company's management assessed the effectiveness of its internal control over financial reporting as of
November 1, 2008 based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company's management concluded
that internal control over financial reporting was effective as of November 1, 2008.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding
internal control over financial reporting. Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits the Company to
provide only management's report in this annual report.
Changes in internal control over financial reporting. There were no significant changes in our internal controls over
financial reporting that occurred during the fourth quarter of fiscal 2008 that have materially affected, or are reasonably
likely to materially affect, the Company’s internal controls over financial reporting.
Item 9B.
Other Information
None.
34
Item 10.
Directors, Executive Officers and Corporate Governance
PART III
Information concerning Nobility’s directors is incorporated by reference pursuant to Instruction G of Form 10-K from its
definitive proxy statement for the 2009 annual meeting of shareholders to be filed with the Commission pursuant to
Regulation 14A on or before March 2, 2009.
The following table provides the names, ages and business experience for the past five years for each of Nobility’s executive
officers. Executive officers are each elected for one year terms.
Executive Officers
Terry E. Trexler (69)
Thomas W. Trexler (45)
Chairman of the Board and President of Nobility for more than five years; Mr. Trexler is
also President of TLT, Inc.
Executive Vice President and Chief Financial Officer of Nobility since December 1994;
President of Prestige Home Centers, Inc. since June 1995; Director of Prestige since
1993 and Vice President from 1991 to June 1995; President of Mountain Financial, Inc.
since August 1992; Vice President of TLT, Inc. since September 1991.
Jean Etheredge (63)
Secretary.
Lynn J. Cramer, Jr. (63)
Treasurer.
Thomas W. Trexler, Executive Vice President, Chief Financial Officer and a director, is the son of Terry E. Trexler,
Nobility’s President and Chairman of the Board. There are no other family relationships between any directors or executive
officers.
Section 16(a) Beneficial Ownership Reporting Compliance
Information concerning the Section 16(a) Beneficial Ownership Reporting Compliance of Nobility’s officers, directors and
10% shareholders is incorporated by reference pursuant to Instruction G of Form 10-K from its definitive proxy statement for
the 2009 annual meeting of shareholders to be filed with the Commission pursuant to Regulation 14A on or before March 2,
2009.
Code of Ethics
We have adopted a code of ethics that applies to the principal executive officer, principal financial officer, executive vice
presidents and controller. The code has been designed in accordance with provisions of the Sarbanes-Oxley Act of 2002, to
promote honest and ethical conduct.
Our code of ethics is available on our website at www.nobilityhomes.com. You may also obtain a copy of the Nobility
Homes, Inc. Code of Ethics, at no cost, by forwarding a written request to the Secretary of Nobility at Post Office Box 1659,
Ocala, Florida 34478.
Item 11.
Executive Compensation
Information concerning executive compensation is incorporated by reference pursuant to Instruction G of Form 10-K from
Nobility’s definitive proxy statement for the 2009 annual meeting of shareholders to be filed with the Commission pursuant
to Regulation 14A on or before March 2, 2009.
Item 12.
Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners and management is incorporated by reference
pursuant to Instruction G of Form 10-K from Nobility’s definitive proxy statement for the 2009 annual meeting of
shareholders to be filed with the Commission pursuant to Regulation 14A on or before March 2, 2009.
35
Item 13.
Certain Relationships, Related Transactions and Director Independence
Information concerning certain relationships and related transactions is incorporated by reference pursuant to Instruction G
of Form 10-K from Nobility’s definitive proxy statement for the 2009 annual meeting of shareholders to be filed with the
Commission pursuant to Regulation 14A on or before March 2, 2009.
Item 14.
Principal Accountant Fees and Services
Information concerning principal accountant fees and services is incorporated by reference pursuant to Instruction G of Form
10-K from Nobility's definitive proxy statement for the 2009 annual meeting of shareholders to be filed with the Commission
pursuant to Regulation 14A on or before March 2, 2009.
36
PART IV
Item 15.
Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)
Consolidated Financial Statements and Schedules:
Report of McGladrey & Pullen, LLP
Consolidated Balance Sheets at November 1, 2008 and November 3, 2007
Consolidated Statements of Income and Comprehensive Income for the Years Ended November 1, 2008 and
November 3, 2007
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended November 1, 2008 and
November 3, 2007
Consolidated Statements of Cash Flows for the Years Ended November 1, 2008 and November 3, 2007
Notes to Consolidated Financial Statements
(b)
Reports on Form 8-K:
None
(c)
Exhibits:
3.
(a)
(b)
10.
(a)
*(b)
(c)
(d)
Nobility’s Articles of Incorporation, as amended (filed as an exhibit to Nobility’s Form 10-K for
the fiscal year ended November 1, 1997 and incorporated herein by reference).
Bylaws, as amended March 28, 1994, (filed as an exhibit to Nobility’s Form 10-KSB for the fiscal
year ended October 29, 1994 and incorporated herein by reference.)
Joint Venture Agreement with 21st Century Mortgage Corporation (filed as an exhibit to
Nobility’s Form 10-K for the fiscal year ended November 1, 1997 and incorporated herein by
reference).
Stock Incentive Plan (filed as an exhibit to Nobility’s registration statement on Form S-8,
registration no. 333-44769 and incorporated herein by reference).
(i) Amendment to Stock Incentive Plan
Revolving Credit Agreement dated April 18, 2001 with SunTrust Bank, a Georgia state-chartered
bank (filed as an exhibit to Nobility’s Form 10-K for the fiscal year ended November 3, 2001 and
incorporated herein by reference).
Agreement dated September 7, 2001 between Nobility and Terry E. Trexler relating to use of life
insurance proceeds (filed as an exhibit to Nobility’s Form 10-K for the fiscal year ended
November 3, 2001 and incorporated herein by reference).
14. Nobility's Code of Ethics (filed as an exhibit to Nobility's form 10-K for the fiscal year ended November
4, 2006 and incorporated herein by reference).
21. Subsidiaries of Nobility.
23.1 Consent of McGladrey & Pullen, LLP
31.
(a) Written Statement 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) Written Statement 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. §1350.
(b) Written Statement of Chief Financial Officer pursuant to 18 U.S.C. §1350.
* Management Remuneration Plan.
37
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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: January 30, 2009
DATE: January 30, 2009
DATE: January 30, 2009
By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief Executive Officer
By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive Vice President,
and Chief Executive Officer
By: /s/ Lynn J. Cramer, Jr.
Lynn J. Cramer, Jr., Treasurer
and Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated:
DATE: January 30, 2009
DATE: January 30, 2009
DATE: January 30, 2009
DATE: January 30, 2009
DATE: January 30, 2009
By: /s/ Terry E. Trexler
Terry E. Trexler, Director
By: /s/ Richard C. Barberie
Richard C. Barberie, Director
By: /s/ Robert Holliday
Robert Holiday, Director
By: /s/ Robert P. Saltsman
Robert P. Saltsman, Director
By: /s/ Thomas W. Trexler
Thomas W. Trexler, Director
38
Exhibit Index
3.
(a)
Nobility’s Articles of Incorporation, as amended (filed as an exhibit to Nobility’s Form
10-K for the fiscal year ended November 1, 1997 and incorporated herein by reference).
(b)
Bylaws, as amended March 28, 1994, (filed as an exhibit to Nobility’s Form 10-KSB for
the fiscal year ended October 29, 1994 and incorporated herein by reference.)
10.
(a)
Joint Venture Agreement with 21st Century Mortgage Corporation (filed as an exhibit to
Nobility’s Form 10-K for the fiscal year ended November 1, 1997 and incorporated
herein by reference).
*(b)
(c)
(d)
Stock Incentive Plan (filed as an exhibit to Nobility’s registration statement on Form S-8,
registration no. 333-44769 and incorporated herein by reference).
i.
Amendment to Stock Incentive Plan
Revolving Credit Agreement dated April 18, 2001 with SunTrust Bank, a Georgia state-
chartered bank (filed as an exhibit to Nobility’s Form 10-K for the fiscal year ended
November 3, 2001 and incorporated herein by reference).
Agreement dated September 7, 2001 between Nobility and Terry E. Trexler relating to
use of life insurance proceeds (filed as an exhibit to Nobility’s Form 10-K for the fiscal
year ended November 3, 2001 and incorporated herein by reference).
14.
Nobility's Code of Ethics (filed as exhibit to Nobility's Form 10-K for the fiscal year ended
November 4, 2006 and incorporated herein by reference).
21.
Subsidiaries of Nobility.
23.1
Consent of McGladrey & Pullen, LLP
31.
(a)
Written Statement 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.
(b)
(a)
(b)
Written Statement 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.
Written Statement of Chief Executive Officer pursuant to 18 U.S.C. §1350.
Written Statement of Chief Financial Officer pursuant to 18 U.S.C. §1350.
* Management Remuneration Plan.
39
Exhibit 21
Subsidiaries of Registrant
Prestige Home Centers, Inc.
Mountain Financial, Inc. (a subsidiary of Prestige Home Centers, Inc.)
Majestic Homes, Inc. (a subsidiary of Prestige Home Centers, Inc.)
Nobility Parks I, LLC
Nobility Parks II, LLC
Florida
Florida
Florida
Florida
Florida
40
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in Registration Statements (No.’s 333-44769 and 333-102919) on Forms S-8 of
Nobility Homes, Inc., of our report dated January 30, 2009, relating to our audit of the consolidated financial statements,
which appear in this Annual Report on Form 10-K of Nobility Homes, Inc. for the year ended November 1, 2008.
Exhibit 23.1
/s/ MCGLADREY & PULLEN, LLP
Orlando, Florida
January 30, 2009
41
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 Annual Report on Form 10-K of Nobility Homes, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:
(a)
(b)
(c)
(d)
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;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
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
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)
(b)
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
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: January 30, 2009
By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief Executive Officer
42
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 Annual Report on Form 10-K of Nobility Homes, Inc;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have:
(a)
(b)
(c)
(d)
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;
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under their supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
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
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)
(b)
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
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: January 30, 2009
By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive Vice President,
and Chief Financial Officer
43
Exhibit 32(a)
Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Chairman and Chief Executive Officer
of Nobility Homes, Inc. (the “Company"), hereby certify that:
1. The Annual Report on Form 10-K of the Company for the year ended November 1, 2008 (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: January 30, 2009
By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief Executive Officer
44
Exhibit 32(b)
Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. Section 1350, I, the undersigned Executive Vice President and Chief
Financial Officer of Nobility Homes, Inc. (the "Company"), hereby certify that:
1. The Annual Report on Form 10-K of the Company for the year ended November 1, 2008 (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: January 30, 2009
By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive Vice President,
and Chief Financial Officer
45
Directors
TERRY E. TREXLER
Chairman of the Board and
President of Nobility.
THOMAS W. TREXLER
Executive Vice President and
Chief Financial Officer of Nobility;
President of Prestige Home
Centers, Inc; President of
Mountain Financial, Inc.
Officers
RICHARD C. BARBERIE
Vice President of
Purchasing of Nobility
(Retired).
ROBERT P. HOLLIDAY
President of Chariot Eagle,
Inc. and President of
Chariot Eagle-West, Inc.
ROBERT P. SALTSMAN
Attorney and CPA in private
practice.
Audit Committee
Salary Review Committee
Nominating Committee
TERRY E. TREXLER
President
JEAN ETHEREDGE
Secretary
THOMAS W. TREXLER
Executive Vice-President and
Chief Financial Officer
LYNN J. CRAMER, JR.
Treasurer
General Shareholders’ Information
Transfer Agent and Registrar
Registrar and Transfer Company
Cranford, New Jersey
General Counsel
Weiner & Argo
Ocala, Florida
Independent Auditors
McGladrey & Pullen, LLP
Orlando, Florida
Stock Exchange Listing
NASDAQ Global Market
Symbol: NOBH
Special Counsel
Foley & Lardner LLP
Jacksonville, Florida
General Information
PLEASE TAKE NOTICE
The annual meeting of the
shareholders of NOBILITY
HOMES, INC. (the "Company")
will be held on Friday, the 27th
day of February, 2009, at 10:00
A.M. local time, at the Executive
Offices, 3741 S. W. 7th Street (I-75
and SR40), Ocala, Florida. All
shareholders are cordially invited
to attend the meeting.
Executive Offices
3741 S.W. 7th Street
P.O. Box 1659
Ocala, Florida 34478
Phone (352)732-5157
Fax (352)732-3711
www.nobilityhomes.com
Manufacturing Locations
Ocala Plant
3741 S.W. 7th Street
P.O. Box 1838
Ocala, Florida 34478
Phone (352)732-6110
Fax (352)732-4203
Belleview Plant
6432 S.E. 115th Lane
P.O. Box 779
Belleview, Florida 34421
Phone (352)245-5126
Fax (352)245-8733
A copy of the Company's current Annual Report on Form 10-K may be obtained from the Company free of charge
by writing to the Secretary, Nobility Homes, Inc., P.O. Box 1659, Ocala, Florida 34478 or online at
www.NobilityHomes.com.
5
Pace
Ft. Walton
Tallahassee
Lake City
Panama City
Yulee
Jacksonville
Chiefland
Ocala
Belleview
Inverness
Tavares
Hudson
Tampa
Auburndale
Punta Gorda
NObility plaNts
• prestige sales ceNters
NOBILITY HOMES, INC
Ocala, Florida
www.NobilityHomes.com