Nobility Homes, Inc. Annual Report 2010

FY2010 Annual Report · Nobility Homes, Inc.

Loading PDF…

Nobility Homes, Inc.

2010 AnnuAl RepoRt

located at our corporate
headquarters in Ocala, Florida.
Each of Prestige’s retail sales
centers is located within 350 miles
of our manufacturing facility.
Prestige’s wholly-owned
subsidiary, Mountain Financial,
Inc., is an independent insurance
agent and licensed mortgage
lender. 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, give
Prestige more control over the
financing aspect of the retail home
sales process and allow 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 and
modular 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 a manufacturing plant and
corporate headquarters located in
Ocala, Florida. The Belleview,
Florida manufacturing plant is
temporarily closed.

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.
We estimate that out of 45
manufacturers selling in the state,
approximately 15 manufacture
homes of the same type as
Nobility and compete in the same
market area.

Prestige Home Centers are the

Company owned retail sales
centers which operate 12 retail
sales centers in north and central
Florida: Ocala (two), Chiefland,
Tampa, Auburndale, Inverness,
Hudson, Tavares, Yulee, Pace,
Panama City and Punta Gorda.
Prestige executive offices are

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 6, 2010 and October 31, 2009

RESULTS FOR THE YEAR

Net sales
Net loss
Loss per share
Average shares outstanding

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

2010

2009

14,861,682
(795,130)
(0.20)
4,056,144

$ 11,869,333
$
(1,051,843)
$
(0.26)
4,064,208

2010

8,225,232
2,025,812
512,786
26,761,904
25.3:1
40,660,338
10.02

2009
$
3,995,167
$
3,855,905
$
2,252,419
$ 25,306,819
32.4:1
$ 41,267,312
$
10.17

$
$
$

$
$
$
$

$
$

To Our Shareholders

Your Company’s results for fiscal year 2010 continued to reflect a very
difficult environment in the manufactured housing industry and the State of
Florida. The weak housing, financial and credit markets of our country and
market area, coupled with
low consumer
confidence have adversely affected the Company’s results.

the high unemployment and

Net sales for Nobility during fiscal year 2010 were up 25% to
$14,861,682 as compared to $11,869,333 recorded in fiscal year 2009. Loss
from operations for fiscal year 2010 was $816,631 versus loss $2,230,641 in the
same period a year ago. Net loss after taxes was $795,130 as compared to net
loss after taxes of $1,051,843 for the same period last year. Due to the number
of repurchased homes the Company has experienced in fiscal year 2010 and
2009 under the finance revenue sharing agreement, the Company has
increased the reserve to $402,994 in 2010 from $300,000 in 2009 for potential
losses associated with the refurbishing and reselling of the repurchased homes.
Although the Company has currently not experienced any losses in disposing of
the
the number of
repossessions in inventory and may choose more aggressive pricing which
could lead to some repossessions being sold for a loss. The net loss after taxes
of $795,130 for fiscal year 2010 came after deducting $942,352 in non-cash
losses for our investment in two retirement community limited partnerships and
included a tax benefit of $643,219. Loss for the fiscal year of 2010 was ($0.20)
per share compared to a loss of ($0.26) per share last fiscal year.

is concerned with

repossessions,

the Company

Nobility’s financial position during fiscal year 2010 remains strong with
cash and cash equivalents, short and long-term investments of $10,763,830 and
no outstanding debt. Working capital is $26,761,904 and our ratio of current
assets to current liabilities is 25.3:1. Stockholders’ equity is $40,660,338 and
the book value per share of common stock is $10.02. The Company did not
repurchase any shares of its common stock during fiscal year 2010. The
Company’s Board of Directors has authorized the purchase of up to 200,000
shares of the Company’s stock in the open market.

Although the overall housing picture, credit market and economy have
not improved measurably during the past year and the immediate outlook for the
manufactured housing industry in Florida and the nation is uncertain, the long-
term demographic trends still favor future growth in the Florida market area we
serve. Job formation, immigration growth and migration trends, plus consumers
returning to more affordable housing should favor Florida. The Baby Boomer
generation began to turn 65 in January 2011 and by 2030 the number of

Americans 65 and over is predicted to almost double. This trend coupled with
the end of the free spending credit-driven years, Nobility’s 44 years in the
Florida market, and consumers’ increased need for more affordable housing
should serve the company well in the coming years. Management remains
convinced that our specific geographic market is one of the best long-term
growth areas in the country. For fiscal 2011, the country must experience a
better economy with less uncertainty, improved sales in the existing home
market, declining unemployment, continued low interest rates, improving credit
markets, increased consumer confidence and more retail financing for the
demand of our affordable homes to improve significantly.

Management understands that during this very complex economic
environment, maintaining the Company’s strong financial position is vital for
future growth and success. Because of the poor business conditions in our
market area and the lack of any clarity when today’s economic challenges will
improve measurably, the Company will continue to evaluate Prestige’s twelve
retail model centers in Florida, along with all expenses within the Company and
react in a manner consistent with maintaining our financial position.

The Company 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
the new, attractive and affordable manufactured home
communities for senior citizens will be a growth area for Florida in the future.

that

We gratefully acknowledge the wise counsel of the Board of Directors,
officers and friends of the Company and express our appreciation to all
employees for their dedication in striving to return your Company to profitable
operating results. Our appreciation is also extended to our retail distribution
network, customers and suppliers for their support and loyalty. We sincerely
thank our stockholders for their continued investment confidence in Nobility and
pledge our efforts to maintain and guard that trust. With this confidence and
support, we enter fiscal year 2011 with full awareness of the challenging
opportunities that lie ahead and with renewed enthusiasm and determination to
achieve the goals for higher sales and operating results that have been set for
your Company.

Terry E. Trexler
Chairman of the Board
and President

Thomas W. Trexler
Executive Vice President
and Chief Financial Officer

Summary of Financial Data

For each of the five years in the period ended November 6, 2010

$47,135 $47,451 $45,131 $42,073 $41,760 $38,000 $39,000 $40,000 $41,000 $42,000 $43,000 $44,000 $45,000 $46,000 $47,000 $48,000 20062007200820092010Total Assets(in 000's)$59,958 $40,623 $30,065 $11,869 $14,862 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 20062007200820092010Net Sales(in 000's)14.3%10.6%5.4%-18.8%-5.4%-20.0%-15.0%-10.0%-5.0%0.0%5.0%10.0%15.0%20.0%20062007200820092010Operating Margin2010$1.59 $1.00 $0.45 ($0.26)($0.20)($0.50)$0.00 $0.50 $1.00 $1.50 $2.00 Diluted Earnings Per Share20102009200620072008$0.50$0.50$0.25$0.00$0.00$0.00$0.10$0.20$0.30$0.40$0.50$0.6020062007200820092010Cash Dividends Declared(per share)29.5%29.0%27.3%19.8%20.4%0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%20062007200820092010Gross Margin

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 6, 2010
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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes  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 1, 2010 (the last business day of the most recent second quarter) was approximately $14,367,193.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Shares Outstanding
May 11, 2011
4,056,144

Title of Class
Common Stock

DOCUMENTS INCORPORATED BY REFERENCE

Form 10-K

Title
N/A

TABLE OF CONTENTS

PART I

Form
10-K

2
5
5
5
5

6
6
7
15

15
16
17
18
19
20
21
22
39
39
39

40
41
43
44
44

45
45

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.

Item 5.

Item 6.
Item 7.
Item 7A.
Item 8.

Item 9.
Item 9A (T).
Item 9B.

Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

Item 15.

Description of Business .......................................................................................................................................
Risk Factors ...........................................................................................................................................................
Unresolved Staff Comments ..................................................................................................................................
Properties ...............................................................................................................................................................
Legal Proceedings ..................................................................................................................................................

PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities ..............................................................................................................................................................
Selected Financial Data ............................................................................................................................................
Management’s Discussion and Analysis of Financial Condition and Results of Operations ...................................
Quantitative and Qualitative Disclosures about Market Risk ...................................................................................
Financial Statements and Supplementary Data .........................................................................................................
Index to Consolidated Financial Statements ...................................................................................................
Report of Independent Registered Public Accounting Firm – Crowe Horwath LLP .....................................
Report of Independent Registered Public Accounting Firm – McGladrey & Pullen, LLP ............................
Consolidated Balance Sheets...........................................................................................................................
Consolidated Statements of Operations and Comprehensive loss ...................................................................
Consolidated Statements of Changes in Stockholders’ Equity ........................................................................
Consolidated Statements of Cash Flows .........................................................................................................
Notes to Consolidated Financial Statements ...................................................................................................
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...................................
Controls and Procedures ...........................................................................................................................................
Other Information .....................................................................................................................................................

PART III

Directors, Executive Officers and Corporate Governance ....................................................................................
Executive Compensation ......................................................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .............
Certain Relationships and Related Transactions, and Director Independence ......................................................
Principal Accounting Fees and Services ...............................................................................................................

Exhibits and Financial Statement Schedules ........................................................................................................
(a) 1. Financial Statements ...................................................................................................................................
2. Exhibits ......................................................................................................................................................

PART IV

SIGNATURES.................................................................................................................................................................................

Exhibit Index....................................................................................................................................................................................

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 and
modular 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.

Nobility’s manufacturing plant utilizes assembly line techniques in manufactured home production. The plant manufactures and
assembles 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 Ocala manufacturing plant operated at an average of approximately 14% of their single shift capacity in fiscal year 2010
and 8% in fiscal year 2009. The Belleview plant closed in 2009 and operations were consolidated with the Ocala plant.

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 plant. During the last two fiscal years, substantially all of Nobility’s sales were made in Florida.

Retail Sales
Prestige Home Centers, Inc. operates 12 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 89% and 88% of Nobility’s sales during fiscal year 2010
and 2009, respectively.

Each of Prestige’s retail sales centers is located within 350 miles of Nobility’s manufacturing facility. Prestige owns the land at five of
its retail sales centers and leases the remaining 7 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 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.

Prestige does not itself finance customers’ new home purchases, but since 1997, Nobility has partnered with 21st Mortgage
Corporation to provide financing to retail customers purchasing homes from Prestige. Additionally, financing for home purchases has
historically been available from several other independent sources that specialize in manufactured housing lending and numerous
banks that finance manufactured home purchases. However, such financing has not been readily available in recent years due to the
downturn in the Florida housing market. 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. The Company believes that the revenue sharing
agreement reserve account carried on the books of 21st Mortgage Corporation which provides for the payments above more than offsets
the fair value of any ASC 460 liability that might arise under the agreement. Due to the number of repurchased homes the Company
has experienced in fiscal year 2010 and 2009 under the finance revenue sharing agreement, the Company has increased its inventory
valuation reserve to $402,994 in 2010 from $300,000 in 2009 for potential losses associated with the refurbishing and reselling of the
repurchased homes. Since 2004, Nobility has engaged in a finance revenue sharing arrangement between 21 st 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 5 of ―Notes to Consolidated Financial Statements‖. In the future, Nobility may explore the
possibility of underwriting its own mortgage loans.

In fiscal year 2008, the Company formed two limited liability companies called Nobility Parks I, LLC and Nobility Parks II, LLC to
invest in new Florida retirement manufactured home communities. Nobility Parks I, LLC has invested in Walden Woods, III Ltd.
(Walden Woods) located in Homosassa, Florida, and Nobility Parks II, LLC has invested in 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 48.5% of the earnings/losses of the 403 residential lots in Cypress Creek. See Note 5 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 types of 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 lead 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 2010 and 2009. Mountain Financial,
Inc.’s insurance revenues were approximately $249,000 and $280,000 in fiscal year 2010 and 2009, respectively.

The construction lending operations 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. Such a 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
construction lending operations revenues in fiscal year 2010 was approximately $81,000 compared to $62,000 in fiscal year 2009.

Mountain Financial acted as the warehouse lender for a mortgage lender who was financing two of Prestige retail customers in the
amount of $193,445. The warehouse loan from Mountain would be repaid when the mortgage lender sold the loans to a wholesale
lender. The mortgage lender went out of business and never completed the sale of the loans. Mountain is in the process of selling the
notes to a wholesale lender. The retail customers are currently making monthly payments to Mountain Financial.

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 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 2010 or 2009. 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 2010 and 2009. For additional information, see Note 15 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. Nobility estimates that of those 45 manufacturers selling in the state, approximately 15
manufacture homes of the same type as Nobility and compete in the same market area. Nobility believes that it is generally
competitive with most of those manufacturers in terms of price, service, warranties 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 7, 2011, Nobility had 94 full-time employees, including 37 employed by Prestige. Approximately 32 employees are
factory personnel compared to approximately 20 in such positions a year ago and 62 are in management, administrative, supervisory,
sales and clerical positions (including 34 management and sales personnel employed by Prestige) compared to approximately 82 a
year ago. In addition, Nobility employs part-time employees when necessary.

Nobility makes contributions toward employees’ group health and life insurance. 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 1A.
As a Smaller Reporting Company, we are not required to provide information required by this item.

Risk Factors

Item 1B.
None.

Unresolved Staff Comments

Item 2.
As of November 6, 2010, Nobility owns two manufacturing plants:

Properties

Location

Approximate Size

3741 SW 7th Street ............................................................................................
Ocala, Florida(1)

72,000 sq ft.

6432 SE 115th Lane ..........................................................................................
Belleview, Florida(2)

33,500 sq. ft.

Nobility’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.
Nobility’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. The Belleview manufacturing plant has been temporarily closed and its operations have been
consolidated into the Ocala manufacturing plant in the second quarter of 2009 due to the reduction in our current manufacturing
operations. Subsequent to fiscal 2010 year end, the Company has leased the Belleview plant for a two year period beginning in
February 2011.

Prestige owns 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 7 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.

PART II

Item 5.

Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases 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 2010 and 2009.

Fiscal
Quarter

Fiscal Year End

November 6, 2010
Low
High

October 31, 2009
High

Low

1st .............................................................................................................. $
2nd ..............................................................................................................
3rd ..............................................................................................................
4th ..............................................................................................................

10.12 $
10.28
9.37
9.38

9.77 $
10.08
9.18
9.25

13.00 $
10.05
11.44
12.40

7.30
7.03
8.25
8.20

Holders
At February 28, 2011, the approximate number of holders of record of common stock was 182 (not including individual participants in
security position listings).

Dividends
The Board of Directors declared no annual cash dividend for fiscal years 2010 and 2009.

Securities Authorized for Issuance Under Equity Compensation Plans
The following table displays equity compensation plan information as of the fiscal year ended November 6, 2010. For further
information, see Note 13 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 ..........................................

120,110

22.34

Equity compensation plans not approved

by security holders .....................................

None

Total ......................................................

120,110

—

0.00

178,650

—

178,650

Recent Sales of Unregistered Securities
Nobility has not sold any securities within the past three years which were not registered under the Securities Act.

Item 6.
Not applicable

Selected Financial Data

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

Item 7.
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 2010 and 2009, Nobility’s product mix was affected by the number of ―Special Edition‖ homes marketed by
Prestige and by consumer demand for smaller, less expensive homes. Most family buyer’s 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, under which loans are
originated and serviced, 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 5 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 that time. The Company owns a 50% interest in Majestic 21, a joint venture
with 21st Mortgage Corporation. The decision by the parent company of 21st Mortgage Corporation to not provide additional capital to
support the lending operation required us to consider seeking capital from alternative sources. The Company has been able to sign
dealer agreements with additional lenders who provide financing for our homes. In the third quarter of fiscal year 2009, Majestic 21
secured $5,000,000 in financing from a commercial bank. The Company guarantees 50% of this financing. Both of these additional
sources of funding have been sufficient to fund our loan originations to date allowing us to fund loans without interruption.
Subsequent to our 2009 fiscal year end, 21st Mortgage Corporation announced that their parent company had agreed to provide
additional capital to fund loan originations, which will be available when Majestic 21 has fully lent the proceeds from the $5,000,000
commercial loan.

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 year ended November 6, 2010 consisted of fifty-
three week periods and year ended October 31, 2009 consisted of fifty-two week periods.

Results of Operations
The following table summarizes certain key sales statistics and percent of gross profit as of and for fiscal years ended November 6,
2010 and October 31, 2009.

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 ...................................................................................

2010

147
39
137
98
68,880
35,389

$
$

2009

117
27
100
73
77,748
40,506

16%

12%

19%

For fiscal years ended November 6, 2010 and October 31, 2009 results are as follows. Total net sales in fiscal year 2010 were
$14,861,682 compared to $11,869,333 in fiscal year 2009.

Sales and operations for fiscal year 2010, although improved, continued to be adversely impacted by our country’s economic
uncertainty and the low manufactured housing shipments in Florida, plus the overall weakness in Florida and the nation’s housing
market. Industry shipments in Florida for the period November 2009 through October 2010 were up approximately 11% from the
same period last year. Even though Nobility’s sales, gross profit as a percentage of net sales, selling, general and administrative
expenses improved, the Company’s low sales volume made it difficult to report meaningful results for fiscal 2010. Continued lack of
retail and wholesale financing, very high unemployment and home foreclosures, slow sales of existing site-built homes, low consumer
confidence and a poor economic outlook for the U.S. and Florida’s economy are just a few of the on-going challenges the Company
faced. While management has not seen decisive improvement in these challenges brought about by the tumultuous events of 2008 and
2009, some slight progress has emerged for the nation’s economy. Although the overall housing picture, credit market and economy
have not improved measurably during the past year and the immediate outlook for the manufactured housing industry in Florida and
the nation is uncertain, the long-term demographic trends still favor future growth in the Florida market area we serve. Job formation,
immigration growth and migration trends, plus consumers returning to more affordable housing should favor Florida. The Baby
Boomer generation began to turn 65 in January 2011 and by 2030 the number of Americans 65 and over is predicted to almost double.
This trend coupled with the end of the free spending credit-driven years, Nobility’s 44 years in the Florida market, and consumers’
increased need for more affordable housing should serve the Company well in the coming years. Management remains convinced that
our specific geographic market is one of the best long-term growth areas in the country. For fiscal 2011, the country must experience a
better economy with less uncertainty, improved sales in the existing home market, declining unemployment, continued low interest
rates, improving credit markets, increased consumer confidence and more retail financing for the demand of our affordable homes to
improve significantly. Management understands that during this very complex economic environment, maintaining the Company’s
strong financial position is vital for future growth and success. Because of the poor business conditions in our market area and the lack
of any clarity as to when today’s economic challenges will improve measurably, the Company will continue to evaluate Prestige’s
twelve retail model centers in Florida, along with all expenses within the Company and react in a manner consistent with maintaining
our financial position.

The Company 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 growth area for Florida in the future.

Nobility Homes, Inc. has specialized for 44 years in the design and production of quality, affordable manufactured homes at its plant
located in central Florida. With twelve Company retail sales centers, a finance company joint venture, an insurance subsidiary, and an
investment in two new affordable retirement manufactured home communities, Nobility is the only vertically integrated manufactured
home company headquartered in Florida.

Insurance agent commissions in fiscal year 2010 were $248,624 compared to $279,972 in fiscal year 2009. The decline in insurance
agent commissions resulted from a decline in new policies written and renewals. 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 assists our customers in obtaining various
insurance and extended warranties 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. Mountain Financial, Inc. has no
material commitments or contingencies. The Company establishes appropriate reserves for policy cancellations based on numerous
factors, including past transaction history with customers, historical experience and other information, which is periodically evaluated
and adjusted as deemed necessary. In the opinion of management, no reserve is deemed necessary for policy cancellations at
November 6, 2010 and October 31, 2009.

The construction lending operations provide financing to buyers who have been approved for financing by an independent third party
and who are purchasing a home through the Company’s retail sales centers. Such a 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
revenues from the construction lending operations in fiscal year 2010 were $80,790 compared to $61,842 in fiscal year 2009.

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 20.3% in fiscal year 2010 compared to 19.8% in fiscal year 2009. The increase in gross
profit as a percentage of net sales was primarily due to increased sales at the Company’s manufacturing facilities and retail sales
centers, although the reserve established for potential losses associated with the refurbishing and re-selling of the repossessions
increased $102,994 to $402,994 for fiscal year 2010. The expenses to temporarily close the Belleview manufacturing facility (see
Liquidity and Capital Resources) and transfer the raw materials to the Ocala manufacturing facility, the number of repossessions that
the Company has experienced over the past fiscal year related to its finance revenue sharing agreement, the $300,000 inventory
valuation reserve established for potential losses associated with the refurbishing and re-selling of the repossessions and the fixed
overhead costs associated with the lower sales volume at the manufacturing facility and retail sales centers were the primary reason
gross profit margins were lower in fiscal year 2009.

Selling, general and administrative expenses at our manufacturing facility include 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 include: 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 26.0% in fiscal year 2010 compared to 38.6% in fiscal year
2009. In spite of closing three retail sales centers in fiscal year 2010 and the write-off of certain capitalized assets, selling, general and
administrative expenses as a percent of net sales declined due to the fixed expenses directly related to the increased sales at the
Company’s manufacturing facilities and retail sales centers in fiscal year 2010. The higher selling, general and administrative
expenses as a percent of net sales in fiscal year 2009 resulted from the fixed expenses directly related to the decreased sales at the
Company’s manufacturing facilities and retail sales centers, the closing of three retail sales centers and the write-off of certain
capitalized assets (see Liquidity and Capital Resources).

The Company earned $18,549 from its joint venture, Majestic 21, in fiscal year 2010 compared to $183,901 in fiscal year 2009. The
earnings from Majestic 21 represent the allocation of profit and losses which are owned 50% by 21st Mortgage Corporation and 50%
by the Company. The primary assets are loans that were originated from 1997 until 2003. In 2003, the Company entered into a finance
revenue sharing agreement with 21st Mortgage Corporation and all loans originated from that point forward, are owned by 21st
Mortgage Corporation pursuant to the finance revenue sharing agreement as further discussed below. Consequently, no additional
loans are going into the Majestic 21 joint venture and the balance of the loans/assets of the partnership is declining each month due to
amortization and payoffs.

In accordance with the Company’s finance revenue sharing agreement with 21st Mortgage Corporation, the Company refers its
customers to 21st Mortgage Corporation for financing on manufactured homes sold through the Company’s retail sales centers. Under
the finance revenue sharing agreement, the Company has agreed to repurchase from 21 st Mortgage Corporation any repossessed homes
and related collateral that was financed under the agreement. The repurchase price is the remaining loan balance (plus 21st Mortgage
Corporation’s legal fees). If the loan included a mortgage on the land, the Company receives the land in addition to the home. If the
loan only had the home as collateral, the Company only gets the home and is required to move it off the location where it was
previously sited. After the Company re-sells the homes, the Company receives the full proceeds from the sale of the home, plus a
reimbursement from 21st Mortgage Corporation for liquidation expenses. The reimbursement covers the Company’s cost of
transporting homes, repairing homes to resale condition, remarketing homes and other liquidation expenses. The Company and 21 st
Mortgage Corporation have agreed that the reimbursement for: (a) a home only repurchase will not exceed 60% of the Company’s
purchase price nor will it be less than 40% of the Company’s repurchase price; and (b) a home and land repurchase will not exceed
45% of the Company’s purchase price nor will it be less than 25% of the Company’s purchase price. ―The Company believes that the
revenue sharing agreement reserve account carried on the books of 21st Mortgage Corporation which provides for the payments above
more than offsets the fair value of any ASC 460 liability that might arise under the agreement.‖ Due to the number of repurchased
homes the Company has experienced in fiscal year 2010 and 2009 under the finance revenue sharing agreement, the Company has
increased its inventory valuation reserve to $402,994 in 2010 from $300,000 in 2009 for potential losses associated with the
refurbishing and reselling of the repurchased homes. The Company is repurchasing the collateral consisting of either the home or
home and land for the amount of the loan receivable (not including accrued interest) carried by 21st Mortgage Corporation. The
positive impact upon results of operations from the re-sale of the collateral for defaulted loans has been approximately $250,832
which includes commission income of $206,434 in fiscal year 2010 and $93,900 which includes commission income of $51,021 in
fiscal year 2009. There were 28 re-sales during fiscal year 2010 and 7 re-sales in fiscal year 2009.

The Company earned $157,700 for fiscal year 2009 from the finance revenue sharing agreement with 21st Mortgage Corporation,
Prestige Home Centers, Inc. and Majestic Homes, Inc. To the extent that the finance revenue sharing agreement has reserves in excess
of the minimum reserve (as required to be maintained), those funds are available for distribution. The minimum reserve is determined
by a formula based on the delinquency rate and the higher the delinquency rate of the loan portfolio the more that is needed in the
minimum reserve. During the fiscal year 2010 and second, third and fourth quarters of 2009, the loan delinquencies had increased to
the point that there was not enough excess reserve to warrant a distribution. The reserve for loan losses of approximately $6,541,000 is
held by 21st Mortgage Corporation and does not appear on the Company’s books. Included in the reserve is the cost of refurbishing
and reselling the repurchased and foreclosed homes. All of the earnings of the loans originated under the finance revenue sharing
agreement go to the reserve account. If this reserve account balance is greater than the minimum required reserve, a distribution can be
made. If the delinquency rate in the loan portfolio increases requiring an increase in the required minimum reserve to an amount that is
equal to or exceeds the reserve amount, then no amount would be available for distribution.

Pursuant to the finance revenue sharing agreement with 21st Mortgage Corporation, the Company’s subsidiaries, Prestige Home
Centers, Inc. and Majestic Homes, Inc., are not required to repay any previously received distributions. However, should the Escrow
Account maintained by 21st Mortgage Corporation for the loans originated pursuant to this agreement ever be less than $500,000, then
Prestige and Majestic Homes must contribute an amount equal to 50% of such deficit and 21st Mortgage Corporation will credit an
equal amount to the Escrow Account. If Prestige and Majestic Homes fail to contribute, they forfeit all rights to distributions under the
finance revenue sharing agreement but will be required to continue purchasing repossessed homes under the agreement.

The Company earned interest on cash, cash equivalents and short- and long-term investments in the amount of $254,010 in fiscal year
2010 compared to $391,289 in fiscal year 2009. The decreased interest income was primarily due to a decrease in the amount of cash,
cash equivalents and long-term investments and in the lower variable rate portion of our cash and cash equivalents balances.

The Company reported losses from investments in the retirement community limited partnerships in the amount of $942,352 in fiscal
year 2010 compared to $682,831 in fiscal year 2009. Although these investments will report losses in the initial fill-up stage,
management believes that new attractive and affordable manufactured home communities for senior citizens will be a significant
growth area for Florida in the future. Because of a dispute on the refinancing terms on one of the Florida retirement manufactured
home communities, Walden Woods, with the current mortgage lender, the General Partner sought bankruptcy protection in August
2010. Final resolution of the dispute is pending bankruptcy court approval.

The projected tax effect of tax positions arising in the current year have been reflected as a component of the estimated annual
effective tax rate for the interim period. In that regard, the Company has recognized $200,000 in benefits due to the statute of
limitations expiring on uncertain tax positions previously recognized as a liability on the Company’s consolidated financial
statements.

As a result of the factors discussed above, losses in fiscal year 2010 were $795,132 or $0.20 per share and in fiscal year 2009 were
$1,051,843 or $0.26 per share.

Liquidity and Capital Resources
Cash and cash equivalents were $8,225,232 at November 6, 2010 compared to $3,995,167 at October 31, 2009. The increase in cash
and cash equivalents was primarily due to the proceeds from maturity of long-term investments. Short and long-term investments were
$2,538,598 at November 6, 2010 compared to $6,108,324 at October 31, 2009. 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 $26,916,120 at November 6, 2010
as compared to $25,306,819 at October 31, 2009. Nobility owns the entire inventory for its Prestige retail sales centers which includes
new, pre-owned and repossessed or foreclosed homes and does not incur any third party floor plan financing expenses.

Accounts payable at November 6, 2010 was $220,635 compared to $91,636 at October 31, 2009. The increase in accounts payable
was primarily due to a increase in materials purchased since the number of homes produced in fourth quarter of 2010 at the
Company’s manufacturing facility increased by 90% percent from fourth quarter of 2009. Accrued compensation at November 6,
2010 was $114,478 compared to $62,610 at October 31, 2009. Since accrued compensation consists largely of sales commissions and
bonuses, the increase in accrued compensation was primarily due to the 32% increase in the number of homes sold at the Company’s
retail sales centers in fourth quarter of 2010 compared to fourth quarter of 2009. Accrued expenses and other current liabilities at
November 6, 2010 was $209,787 compared to $240,539 at October 31, 2009. The decrease in accrued expenses and other liabilities is
primarily due to the decrease in the average retail selling price. Customer deposits increased to $554,991 at November 6, 2010 from
$410,578 at October 31, 2009 due to the slight increase in the number of sold retail homes on customers’ sites awaiting completion.

The Belleview manufacturing plant was consolidated into the Ocala manufacturing plant in the second quarter of 2009, because of the
poor economic conditions in Florida and the rest of the United States and no immediate improvement of either in sight. The Company
was not selling enough manufactured homes to justify keeping both plants open. The Company was able to transfer the raw material
inventory to the Ocala plant and use it in producing the Belleview plant’s models in our Ocala plant. Most members of the Belleview
plant’s management team and several of the employees were integrated into the Ocala plant. The cost to close the Belleview plant was
approximately $10,000 and the ongoing cost for insurance, taxes, and minimum utilities is approximately $16,000 per quarter.
Subsequent to fiscal 2010 year end, the Company has leased the Belleview plant for a two year period beginning in February 2011. If
business conditions improve to the point that the Ocala plant production is at or near capacity, the Company would reopen the
Belleview plant.

There were three retail model centers closed in fiscal year 2010 located in Tallahassee, Lake City and Jacksonville, Florida and two
closed in fiscal year 2009 located in Ft Walton and Ocala, Florida. The inventory was transported to other retail model centers with the
close down costing approximately $34,000 per model center and no on-going cost associated with the locations closed. There was
approximately $23,000 in fiscal year 2010 and $60,000 in fiscal year 2009 in other assets written off relating to the Jacksonville model
center in 2010 and the Ft. Walton model center in 2009. The Ocala model center had $16,000 in land improvements written off in
fiscal year 2009.

Dividends are determined annually by the Board of Directors and are based on the profitability of the Company. Management did not
recommend to the Board that a dividend be paid based on the results in fiscal years 2010 and 2009. On January 12, 2009 Nobility paid
an annual cash dividend of $0.25 per common share or an aggregate of $1,018,669 for fiscal year 2008.

Nobility did not repurchase any of its common stock in the open market during fiscal year 2010. The Company repurchased in the
open market 32,390 shares of its common stock for $263,467 during fiscal year 2009. The Company’s Board of Directors has
authorized the purchase of up to 200,000 shares of the Company’s stock in the open market.

Nobility maintained a revolving credit agreement with a major bank providing for borrowing up to $4,000,000. At October 31, 2009
there were no amounts outstanding under this agreement. The Company has experienced no credit rating downgrades which would
have an impact on our ability to draw on our revolving credit agreement. The $4 million unsecured revolving credit agreement expired
on May 30, 2010.

We do not plan to incur any expenditure in fiscal year 2011 for the purchase of any of our current retail sales centers since we have no
plan to purchase any of our leased centers in fiscal year 2011. The expenditures associated with defaulted loans are highly related to
the unemployment rate in our market area and the length and severity of the recession, in addition to how quickly the Company can
resell the foreclosed homes. Our joint venture still has a significant loan loss reserve of over $6 million on the portfolio of $72 million
in loans. Based on the current level of sales, construction loans should not exceed $1,000,000. The Company could be required to
repurchase several million dollars more of defaulted loans during the remainder of fiscal year 2011 depending upon delinquency and
foreclosure rates. The Company has repurchased approximately $1,496,232 in additional defaulted loans under the finance revenue
sharing agreement since November 6, 2010.

Under the finance revenue sharing agreement, loans that are 30 days past due are considered to be delinquent. At November 6, 2010,
14.3%, or $10,224,692, of the loans in the portfolio subject to the finance revenue sharing agreement were delinquent. At
November 6, 2010, there were loan loss reserves of 8.98% of the finance revenue sharing agreement’s loan portfolio, which, based on
our historical recovery ratios, should be sufficient to cover our losses on the disposition of delinquent loans. The joint venture,
Majestic 21, is monitoring loan loss reserves on a monthly basis and is adjusting the loan loss reserves as necessary. If the fair market
value of the collateral is less than the purchase price, after combining the liquidation expense reserves carried by 21st Mortgage
Corporation, the Company would book a loss at that time. The risk of loss is carried primarily by 21st Mortgage Corporation as
evidenced by the loss reimbursement payment of up to 60% that Prestige can use to cover any shortfall in the sales proceeds from the
cost of repurchasing the home.

The maximum future undiscounted payments the Company could be required to make under the finance revenue sharing agreement,
as of November 6, 2010, is $72,875,881 in repurchase obligations, offset by payments from 21st Mortgage Corporation for the loss
reserve reconciliation of up to $33,383,382 and the proceeds from the sale of the homes (the collateral).

The Company owns a 50% interest in Majestic 21, a joint venture with 21st Mortgage Corporation. The Company has dealer
agreements with a number of lenders who provide financing for our homes. In the third quarter of fiscal year 2009, Majestic 21
secured $5,000,000 in financing from a commercial bank. The Company guarantees 50% of this financing. In addition, subsequent to
fiscal 2009 year end, 21st Mortgage Corporation announced that their parent company had agreed to provide additional capital to fund
loan originations, which will be available when Majestic 21 fully lent the proceeds from the $5,000,000 commercial loan. Both of
these sources of funding have been sufficient to fund our loan originations to date. To date, we have been able to fund loans without
interruption.

Despite lower sales, negative cash flows, net operating losses and the repurchase of homes under the finance revenue sharing
agreement, we are able to continue operations through fiscal year 2012. We will continue to monitor and eliminate all unnecessary
expenses.

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, 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 revenue from the sale of the repurchased homes upon transfer of title to the new purchaser.

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 6, 2010 or October 31, 2009.

Investments in Retirement Community Limited Partnerships

During 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) located in Homosassa, Florida. The investment of
$2,360,000 provides 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. During fiscal year 2008,
Nobility Parks I, LLC sold $825,250 of its ownership at cost, which reduced the Company’s investment, and percentage of
earning/losses by the same amount to 31.9%.

During 2008, 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 of $4,030,000
provides 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. During fiscal year 2009, Nobility Parks II,
LLC sold $40,000 of its ownership at cost, which reduced the Company’s investment, and percentage of earning/losses by the same
amount to 48.5%.

These investments are accounted for under the equity method of accounting. The Company holds a 31.9% interest in Walden Woods
and a 48.5% 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 FASB ASC No. 810-10.

Nobility’s investments in the retirement communities are evaluated for possible impairment as facts and circumstances present
themselves. The major factor that is considered to be an indicator of possible impairment would be the significant and/or permanent
decline in actual or forecasted sales or no sales activity in the retirement communities. When it is determine that the retirement
communities do not have the ability to weather such an event, then an impairment charge may be taken. The Company receives
financial statements on each community quarterly and compares those financial statements with our investment expectations. In
addition, by being the sole supplier of homes to the two communities we know on a daily basis how many homes are sold. The
Company also gets a monthly inventory report showing all homes set up as models, all homes sold waiting for closing, all homes with
15% deposits waiting for a closing date, plus homes sold for the month. The Company follows the number of customers booked into
the communities on the ―guest house‖ program and monitor the communities’ advertising and marketing plans and programs. With a
manufactured home community, each home sold increases the monthly rental income and increases the value of the community since
the new homeowner agrees to pay a monthly payment to the community for the community’s amenities and the land upon which the
home is located. The Company continually analyzes this information provided for any indicators of possible impairment. To date, the
Company does not believe our investments in the retirement community limited partnerships are impaired.

Investment in Majestic 21

Majestic 21 was formed in 1997 as a joint venture with our joint venture partner, an unrelated entity (21 st 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 FASB ASC 810. 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 $1,966,304 as of November 6, 2010 and $1,976,755 as of November 31, 2009. However, based on
management’s evaluation, there was no impairment of this investment at November 6, 2010 or October 31, 2009.

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.

The Majestic 21 joint venture is a loan portfolio that is owned 50% by 21st Mortgage Corporation and 50% by the Company. The
primary assets are loans that were originated from 1997 until 2003. In 2003, the Company entered into a finance revenue sharing
agreement with 21st Mortgage Corporation and all loans originated from that point forward, are owned by 21 st Mortgage Corporation
pursuant to the finance revenue sharing agreement. Consequently, no additional loans are going into the Majestic 21 joint venture and
the balance of the loans/assets of the partnership is declining each month due to amortization and payoffs. At November 6, 2010, there
was $676,000 in loan loss reserves or 2.68% of Majestic 21’s loan portfolio. The Majestic 21 joint venture is monitoring loan loss
reserves on a monthly basis and is adjusting the loan loss reserves as necessary. The Majestic 21 joint venture is consolidated into 21st
Mortgage Corporation’s financial statements which are included in the financial statements of its ultimate parent, which is a public
company. Management believes the loan loss reserves are reasonable based upon its review of the Majestic 21 joint venture’s financial
statements and loan loss experiences to-date.

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. Under the
finance revenue sharing agreement, the Company has agreed to repurchase any repossessed homes and related collateral from 21 st
Mortgage Corporation that were financed under the agreement. The repurchase price is the remaining loan balance (plus 21st Mortgage
Corporation’s legal fees). If the loan included a mortgage on the land, the Company receives the land in addition to the home. If the
loan only had the home as collateral, the Company only gets the home and is required to move it off the location where it was
previously sited. After the Company re-sells the homes, the Company receives the full proceeds from the sale of the home, plus a
reimbursement from 21st Mortgage Corporation for liquidation expenses. The reimbursement covers the Company’s cost of
transporting homes, repairing homes to resale condition, remarketing homes and all other liquidation expenses. The Company and 21st
Mortgage Corporation have agreed that the reimbursement for: (a) a home only repurchase will not exceed 60% of the Company’s
purchase price nor will it be less than 40% of the Company’s repurchase price; and (b) a home and land repurchase will not exceed
45% of the Company’s purchase price nor will it be less than 25% of the Company’s purchase price. Due to the number of
repurchased homes the Company has experienced in fiscal year 2010 and 2009 under the finance revenue sharing agreement, the
Company has increased the reserve to $402,994 in 2010 from $300,000 in 2009 for potential losses associated with the refurbishing
and reselling of the repurchased homes.

Accounting for Income taxes

The Company accounts for income taxes bases on ASC 740 utilizing the asset and liabilities method. Management is required to
assess the reliability of its deferred tax assets on a more likely than not basis at each reporting period.

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 9 of ―Notes to Consolidated Financial
Statements‖.

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 6, 2010, we are not involved in any material unconsolidated entities (other than the Company’s investments in Majestic 21,
the finance revenue sharing agreement and Retirement Community Limited Partnerships).

Forward Looking Statements
Certain statements in this report are forward-looking statements within the meaning of the federal securities laws, including our
statement that working capital requirements will be met with internal sources. Although Nobility believes that the expectations
reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause
actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, competitive pricing
pressures at both the wholesale and retail levels, increasing material costs, 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.

Item 7A.
As a Smaller Reporting Company, we are not required to provide information required by this item.

Quantitative and Qualitative Disclosures about Market Risk

Item 8.
Index to Consolidated Financial Statements

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm Crowe Horwath LLP ...................................................................................
Report of Independent Registered Public Accounting Firm McGladrey & Pullen, LLP ..........................................................................
Consolidated Balance Sheets ....................................................................................................................................................................
Consolidated Statements of Operations and Comprehensive Loss ...........................................................................................................
Consolidated Statements of Changes in Stockholders’ Equity .................................................................................................................
Consolidated Statements of Cash Flows ...................................................................................................................................................
Notes to Consolidated Financial Statements .............................................................................................................................................

16
17
18
19
20
21
22

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or
notes thereto.

Nobility Homes, Inc.

Consolidated Balance Sheets
November 6, 2010 and October 31, 2009

Current assets: ..............................................................................................................................................
Cash and cash equivalents .................................................................................................................. $
Short-term investments .......................................................................................................................
Accounts and notes receivable ...........................................................................................................
Mortgage notes receivable, current ....................................................................................................
Inventories, net ...................................................................................................................................
Income tax receivable .........................................................................................................................
Prepaid expenses and other current assets ..........................................................................................
Deferred income taxes ........................................................................................................................
Total current assets ...................................................................................................................

8,225,232 $
2,025,812
296,536
2,284
16,569,403
244,365
230,597
267,566
27,861,795

3,995,167
3,855,905
963,032
—
15,679,969
976,130
362,161
279,818
26,112,182

2010

2009

Property, plant and equipment, net ..............................................................................................................
Long-term investments ................................................................................................................................
Mortgage notes receivable, long term ..........................................................................................................
Other investments ........................................................................................................................................
Deferred income taxes .................................................................................................................................
Other assets ..................................................................................................................................................

4,138,336
2,252,419
—
6,599,846
572,099
2,397,793
Total assets ................................................................................................................................ $ 41,760,229 $ 42,072,675

3,989,441
512,786
190,921
5,647,043
1,033,291
2,524,952

Liabilities and Stockholders’ Equity
Current liabilities:

Accounts payable ............................................................................................................................... $
Accrued compensation .......................................................................................................................
Accrued expenses and other current liabilities ...................................................................................
Customer deposits ..............................................................................................................................
Total current liabilities ..............................................................................................................

220,635 $
114,478
209,787
554,991
1,099,891

91,636
62,610
240,539
410,578
805,363

Commitments and contingent liabilities

Stockholders’ equity:

Preferred stock, $.10 par value, 500,000 shares authorized; none issued and outstanding.................
—
Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued ...................
536,491
Additional paid in capital ...................................................................................................................
10,331,168
Retained earnings ...............................................................................................................................
39,897,911
Accumulated other comprehensive income (loss) ..............................................................................
53,435
Less treasury stock at cost, 1,308,763 in 2010 and 2009....................................................................
(9,551,693)
Total stockholders’ equity.........................................................................................................
41,267,312
Total liabilities and stockholders’ equity .................................................................................. $ 41,760,229 $ 42,072,675

—
536,491
10,482,920
39,102,781
89,839
(9,551,693)
40,660,338

The accompanying notes are an integral part of these financial statements.

Nobility Homes, Inc.

Consolidated Statements of Operations and Comprehensive Loss
For the years ended November 6, 2010 and October 31, 2009

2010

2009

Net sales ...................................................................................................................................................... $

14,861,682 $ 11,869,333

Cost of goods sold .......................................................................................................................................

(11,821,007)

(9,514,452)

Gross profit ..............................................................................................................................

3,040,675

2,354,881

Selling, general and administrative expenses ..............................................................................................

(3,857,306)

(4,585,522)

Operating loss ..........................................................................................................................

(816,631)

(2,230,641)

Other income (expense):

Interest income ..................................................................................................................................
Undistributed earnings in joint venture - Majestic 21 .......................................................................
Earnings from finance revenue sharing agreement ...........................................................................
Losses from investments in retirement community limited partnership ............................................
Miscellaneous ....................................................................................................................................
Total other income (loss) .........................................................................................................

254,010
18,549
—
(942,352)
48,075
(621,718)

391,289
183,901
157,700
(682,831)
22,150
72,209

Loss before income tax benefit ...................................................................................................................

(1,438,349)

(2,158,432)

Income tax benefit ......................................................................................................................................

643,219

1,106,589

Net loss ....................................................................................................................................

(795,130)

(1,051,843)

Other comprehensive income, net of tax:

Unrealized investment gain ...............................................................................................................

36,404

53,260

Comprehensive loss ........................................................................................................................... $

(758,726) $

(998,583)

Weighed average number of shares outstanding:

Basic ..................................................................................................................................................
Diluted ...............................................................................................................................................

Loss per share:

Basic .................................................................................................................................................. $
Diluted ............................................................................................................................................... $

Cash dividends paid per common share ...................................................................................................... $

4,056,144
4,056,144

4,064,208
4,064,208

(0.20) $
(0.20) $

— $

(0.26)
(0.26)

0.25

The accompanying notes are an integral part of these financial statements.

Nobility Homes, Inc.

Consolidated Statements of Changes in Stockholders’ Equity
For the years ended November 6, 2010 and October 31, 2009

Common
Stock Shares

Common
Stock

Additional Paid-
in Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income

Treasury
Stock

Total

Balance at November 1,

2008..........................................

4,088,534 $536,491 $10,178,398 $41,968,423 $

Purchase of treasury

stock ................................
Cash dividends paid.............
Stock-based

compensation ..................

Unrealized investment

gain .................................
Net loss ................................
Balance at October 31, 2009 .........
Purchase of treasury

—
—
4,056,144

(32,390)
—

—
—

—
(1,018,669)

—

152,770

—

175 $(9,288,226) $ 43,395,261

—
—

—

(263,467)
—

(263,467)
(1,018,669)

—

152,770

—
—
536,491

—
—
10,331,168

—
(1,051,843)
39,897,911

53,260
—
53,435

—
—
(9,551,693)

53,260
(1,051,843)
41,267,312

stock ................................
Cash dividends paid.............
Stock-based

compensation ..................

Unrealized investment

gain .................................
Net loss ................................

—
—

—

151,752

—
—

—

—
—

—

—
—

—
(795,130)

36,404
—

—
—

—

—
—

151,752

36,404
(795,130)

Balance at November 6,

2010..........................................

4,056,144 $536,491 $10,482,920 $39,102,781 $

89,839 $(9,551,693) $ 40,660,338

The accompanying notes are an integral part of these financial statements.

2010

2009

(795,130) $

(1,051,843)

Nobility Homes, Inc.

Consolidated Statements of Cash Flows
For the years ended November 6, 2010 and October 31, 2009

Cash flows from operating activities:

Net loss .................................................................................................................................................. $
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: .....................
Depreciation .................................................................................................................................
Amortization of bond premium/discount .....................................................................................
Impairment of goodwill ................................................................................................................
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 ................................................................
Equity in 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 base compensation .............................................................................................................
Other ............................................................................................................................................
Decrease (increase) in: .................................................................................................................
Accounts and notes receivable ............................................................................................
Inventories ..........................................................................................................................
Prepaid income taxes ..........................................................................................................
Income taxes receivable ......................................................................................................
Prepaid expenses and other current assets ..........................................................................
(Decrease) increase in: .................................................................................................................
Accounts payable ................................................................................................................
Accrued compensation........................................................................................................
Accrued expenses and other current liabilities ...................................................................
Customer deposits ...............................................................................................................
Net cash provided by (used in) operating activities ...............................................................................

Cash flows from investing activities:

Purchase of property, plant and equipment ............................................................................................
Mortgage notes receivable .....................................................................................................................
Proceeds from the sale 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 investing activities ..............................................................................................

168,169
73,096
23,090
(481,357)
(18,549)
29,000
—
—
952,803
—
(150,249)
151,752
—

666,496
(889,434)
—
731,765
131,564

128,999
51,868
(30,752)
144,413
887,544

(19,274)
(193,205)
—
—
3,555,000
3,342,521

Cash flows from financing activities:

Payment of cash dividends ....................................................................................................................
—
Purchase of treasury stock .....................................................................................................................
—
Net cash used in financing activities ......................................................................................................
—
Increase (decrease) in cash and cash equivalents ............................................................................................
4,230,065
Cash and cash equivalents at beginning of year ..............................................................................................
3,995,167
Cash and cash equivalents at end of year ........................................................................................................ $ 8,225,232 $
Supplemental disclosure of cash flow information

Income taxes paid .................................................................................................................................. $

— $

The accompanying notes are an integral part of these financial statements.

217,075
80,507
—
(526,220)
(183,901)
83,500
(157,700)
157,700
682,831
5,452
(59,520)
152,770
59,666

(308,503)
(3,628,608)
438,398
(976,130)
71,005

(94,841)
(138,545)
(114,679)
(307,373)
(5,598,959)

(78,825)
—
60,363
40,000
2,205,000
2,226,538

(1,018,669)
(263,467)
(1,282,136)
(4,654,557)
8,649,724
3,995,167

40,000

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 modular homes to various dealerships, including its own retail sales centers, and manufactured housing communities
throughout Florida. The Company has one manufacturing plant in operation that is located in Ocala, Florida. Prestige currently
operates twelve Florida retail sales centers: Ocala (2), Chiefland, Tampa, Auburndale, Inverness, Hudson, Tavares, Yulee, Pace,
Panama City and Punta Gorda.

All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements are prepared
in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).

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 year ended November 6, 2010
consisted of fifty-three week periods and year ended October 31, 2009 consisted of fifty-two week periods.

Revenue Recognition – The Company recognizes revenue from its retail sales of new manufactured homes 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 revenue from the sale of the repurchased homes upon transfer of title to the new purchaser.

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 6, 2010 or October 31, 2009.

Revenues by Products and Services – Revenues by net sales from manufactured housing, insurance agent commissions, and
construction lending operations for the years ended November 6, 2010 and October 31, 2009 are as follows:

Manufactured housing ...............................................................................
Insurance agent commissions ....................................................................
Construction lending operations ................................................................
Total net sales ..................................................................................

2010
14,532,268 $
248,624
80,790
14,861,682 $

2009
11,527,519
279,972
61,842
11,869,333

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.

Accounts Receivable – Accounts receivable are stated at net realizable value. An allowance for doubtful account is provided based on
prior collection experiences and management’s analysis of specific accounts. At November 6, 2010 and October 31, 2009, in the
opinion of management, all accounts were considered fully collectible and, accordingly, no allowance was deemed necessary.

Accounts receivable fluctuates due to the number of homes sold to independent dealers. 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.

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 – New home inventory is carried at the lower of cost or market value. The cost of finished home inventories determined
on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is
recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific
identification method, if finished home inventory can be sold for a profit there is no basis to write down the inventory below the lower
of cost or market value. Pre-owned home inventory is carried at the lower of cost or market value. Each specific model’s market value
is determined using the standards established by the NADA (National Automobile Dealers Association) manufactured housing cost
guide book. This guidebook is HUD Title 1, Fannie Mae and Freddie Mac approved, and the Department of Veteran Affairs
recognizes it for appraisal (cost approach) and review purposes. The Company compares the models’ market value to the NADA
manufactured housing cost guide book on a quarterly basis or more often as facts and circumstances causes the Company to believe
any changes in valuation have occurred. Other inventory costs are determined on a first-in, first-out basis. Due to the number of
repurchased homes the Company has experienced in fiscal year 2010 and 2009 under the finance revenue sharing agreement, the
Company has increased the inventory valuation reserve to $402,994 in 2010 from $300,000 in 2009 for potential losses associated
with the refurbishing and reselling of the repurchased homes. (See Note 6)

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 (21 st
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 ASC 810. 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 $1,966,304 as of November 6, 2010 and $1,976,755 as of October 31, 2009.
However, based on management’s evaluation, there was no impairment of this investment at November 6, 2010 or October 31, 2009.

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. On
May 20, 2009, the Company became a 50% guarantor on a $5 million note payable entered into by Majestic 21, a joint venture in
which the Company owns a 50% interest (see Note 15).

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 21 st 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.

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 under which the Company’s share of the
net income (loss) of the affiliate is recognized as income (loss) in the Company’s statement of operations and added to the investment
account, and dividends received from the affiliate are treated as a reduction of the investment account (see Note 5). 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 5). 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.

Because of a dispute on the refinancing terms on one of the Florida retirement manufactured home communities, Walden Woods, with
the current mortgage lender, the General Partner sought Chapter 11 bankruptcy protection in August 2010. Final resolution of the
dispute is pending bankruptcy court approval.
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.

Customer Deposits – A retail customer is required to make a down payment ranging from $500 to 35% of the retail contract price
based upon the credit worthiness of the customer. The retail customer receives the full down payment back when the Company is not
able to obtain retail financing. If the retail customer receives retail financing and decides not to go through with the retail sale, the
Company can withhold 20% of the retail contract price. The Company does not receive any deposits from their independent dealers.

Warranty Costs – The Company provides for a warranty as the manufactured homes are sold. Amounts related to these warranties for
fiscal years 2010 and 2009 are as follows:

Beginning accrued warranty expense ...............................................................
Less: reduction for payments ...........................................................................
Plus: additions to accrual..................................................................................
Ending accrued warranty expense ....................................................................

2010
75,000 $
(198,834)
198,834
75,000 $

2009
184,000
(328,410)
219,410
75,000

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

The Company tracks the warranty claims per home. Based on the history of the warranty claims, the Company has determined that a
majority of warranty claims usually occur within the first three months after the home is sold. The Company determines its warranty
accrual using the last three months of home sales; therefore, the warranty accrual for the prior four quarters should equal the warranty
expense for the full fiscal year.

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 9 of ―Notes to Consolidated Financial Statements‖.

Stock-Based Compensation – At November 6, 2010, the Company had a stock incentive plan (the ―Plan‖) which authorizes the
issuance of options to purchase common stock. Stock based compensation is measured at the grant date based on the fair value of the
award and is recognized as expense over the period during which an employee is required to provide service in exchange for the award
(usually the vesting period).

Rebate Program – The Company has a rebate program for all dealers which pay 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 9 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 $489,583 and $637,000 for fiscal year 2010 and 2009,
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.

Loss Per Share – These financial statements include ―basic‖ loss per share information for all periods presented. Basic loss per share
is calculated by dividing net loss by the weighted-average number of shares outstanding.

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 is included as a component of cost of goods sold.

Comprehensive Income – Comprehensive income includes net loss as well as other comprehensive income. The Company’s other
comprehensive income consists of unrealized gains 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 FAS ASC 280,
―Segment Reporting.‖ No segment disclosures have been made as the Company considers its business activities as a single segment.

Concentration of Credit Risk – The Company’s financial instruments that are exposed to concentrations of credit risk consist
primarily of cash and cash equivalents, short-term and long-term investments and accounts receivable. At times, the Company’s
deposits may exceed federally insured limits. However, the Company has not experienced any losses in such accounts and
management believes the Company is not exposed to any significant credit risk on these accounts. The majority of the Company’s
sales are credit sales which are made primarily to customers whose ability to pay is dependent upon the industry economics prevailing
in the areas where they operate; however, concentrations of credit risk with respect to accounts receivables is limited due to generally
short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk. The
Company maintains reserves for potential credit losses when deemed necessary and such losses have historically been within
management’s expectations.

Recent Accounting Pronouncements – In accordance with U.S. GAAP, the Company has adopted new fair value measurements
guidance as it applies to non-financial assets and liabilities. U.S. GAAP defines fair value, establishes a framework for measuring fair
value and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. The guidance was applied in the fourth quarter of 2009, in
conjunction with a reclassification of two facilities as held for sale, at which time the net carrying value of the facilities were measured
at their fair value less costs to sell. It was determined through third-party appraisals that the fair value of one facility was less than the
carrying value, and the Company adjusted the value of the facility to its fair value less cost to sell.

In June 2009, the FASB issued guidance to change financial reporting by enterprises involved with variable interest entities (VIEs).
The standard replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial
interest in a VIE with an approach focused on identifying which enterprise has the power to direct the activities of a VIE and the
obligation to absorb losses of the entity or the right to receive the entity’s residual returns. This accounting standard is effective for
fiscal years beginning after November 15, 2009. The Company has evaluated the impact of the adoption of this pronouncement on its
consolidated financial statements and has determined the impact of adoption to be immaterial based on its current structures with
VIEs.

In June 2009, the FASB issued guidance to improve the relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. The
standard modifies existing guidance by removing the concept of a qualifying special purpose entity (QSPE) and removing the special
provisions for guaranteed mortgage securitizations, requiring those securitizations to be treated the same as any other transfer of
financial assets. Therefore, formerly qualifying special-purpose entities (as defined under previous accounting standards) and
guaranteed mortgage securitizations should be evaluated for consolidation by reporting entities on and after the effective date in
accordance with the applicable consolidation guidance. The standard also limits the unit of account eligible for sale accounting, and
clarifies the control and legal isolation criteria to qualify for sale accounting. This accounting standard is effective for fiscal years
beginning after November 15, 2009. The Company has evaluated the impact of the adoption of this pronouncement on its consolidated
financial statements and has determined the impact of adoption to be immaterial as its securitizations and other financial assets
transfers as described in Note 6 are currently consolidated.

NOTE 2 Investments
Investments in ―held-to-maturity‖ and ―available-for-sale‖ debt and equity securities were as follows:

November 6, 2010

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Amortized
Cost

Estimated
Fair Value

Held-to-maturity securities (carried at amortized cost):

Municipal securities ...................................................................

2,226,623 $

Available-for-sale securities (carried at fair value):

Equity securities in a public company .......................................
Total investments ................................................................................

253,605
2,480,228 $

40,214 $

— $

2,266,837

58,370
98,584 $

—
— $

311,975
2,578,812

October 31, 2009

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Amortized
Cost

Estimated
Fair Value

Held-to-maturity securities (carried at amortized cost):

Municipal securities ...................................................................

5,854,719 $

Available-for-sale securities (carried at fair value):

Equity securities in a public company .......................................
Total investments ................................................................................

168,210
6,022,929 $

112,875 $

(69) $

5,967,525

85,395
198,270 $

—
(69) $

253,605
6,221,130

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 6, 2010

October 31, 2009

Due in less than one year .........................................................
Due in 1 - 5 years ....................................................................

Cost
1,713,837 $
512,786
2,226,623 $

Estimated Fair
Value
1,743,637 $
523,200
2,266,837 $

Cost
3,602,300 $
2,252,419
5,854,719 $

Estimated Fair
Value
3,639,201
2,328,324
5,967,525

There were no sales of ―available-for-sale‖ securities during the fiscal years 2010 or 2009.
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 6, 2010.

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:

Available-for-sale equity securities ............................................................... $
Held-to-maturity debt securities included in short-term investments ............
Total short-term investments ...............................................................
Held-to-maturity debt securities included in long-term investments.............

October 31,
2009
253,605
3,602,300
3,855,905
2,252,419
Total investments ................................................................................. $ 2,538,598 $ 6,108,324

November 6,
2010
311,975 $
1,713,837
2,025,812
512,786

NOTE 3 Fair Value of Financial Investments
The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and accrued expenses approximates fair
value because of the short maturity of those instruments. The carrying amount and fair market value of the Company’s short and long-
term investments are as follows:

Carrying amount............................................................................................
Fair value.......................................................................................................

$
$

November 6,
2010
2,538,598 $
2,578,810 $

October 31,
2009
6,108,324
6,221,130

The Company adopted the provisions of FASB ASC Topic 820, ―Fair Value Measurements‖ (ASC No. 820) on November 2, 2008.
ASC No. 820 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. The adoption of ASC No. 820 did not have a material effect on the Company’s consolidated financial
position, cash flows, or results of operations.

In 2007, the Financial Accounting Standards Board (FASB) issued another pronouncement which provided a one year deferral for the
implementation of ASC No. 820 for non-financial assets and liabilities measured at fair value that are recorded or disclosed on a non-
recurring basis. The Company has elected to apply the deferral to the applicable non-financial assets and liabilities until
November 1, 2009.

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

•

Level 1 - Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in
markets that are not active for which significant inputs are observable, either directly or indirectly.
Level 3 - Valuations are based on prices or valuation techniques that require inputs that are both unobservable and
significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants
would use in valuing the asset or liability at the measurement date.

The following table represents the Company’s financial assets and liabilities which are carried at fair value at November 6, 2010:

Available for sale equity securities included in short-term investments ...................

311,975 $ — $ —

Level 1

Level 2

Level 3

As discussed in the Annual Report on Form 10-K, the Company is not required to account for their debt security investments at fair
value as they are classified as held-to-maturity and therefore are not included in the above table.

NOTE 4 Related Party Transactions
Affiliated Entities
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 2010 and 2009, respectively.

NOTE 5 Other Investments
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 ASC 810.

The following is summarized financial information of the Company’s joint venture:

Total Assets ...............................................................................................
Total Liabilities .........................................................................................
Total Equity ...............................................................................................
Net Income ................................................................................................

$
$
$
$

November 6,
2010
12,165,197 $
8,232,590 $
3,932,606 $
37,098 $

October 31,
2009
13,592,028
9,638,518
3,953,510
367,804

Distributions received from the joint venture amounted to $29,000 and $83,500 in fiscal years 2010 and 2009, respectively.

With regard to our investment in Majestic 21, there are no differences between our investment balance and the amount of underlying
equity in net assets owned by Majestic 21 by the Company.

Investment in Retirement Community Limited Partnerships — During 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)
located in Homosassa, Florida. The investment of $2,360,000 provides 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. During fiscal year 2008, Nobility Parks I, LLC sold $825,250 of its ownership at cost, which reduced the
Company’s investment, and percentage of earning/losses by the same amount to 31.9%.

The following is summarized financial information of Walden Woods and Cypress Creek as of September 30, 2010 and 2009*:

September 30,
2010

September 30,
2009

Total Assets ...............................................................................................
Total Liabilities .........................................................................................
Total Equity ...............................................................................................
Net Loss ....................................................................................................

$
$
$
$

18,879,272 $
18,516,577 $
362,694 $
(1,846,967) $

20,594,321
18,434,936
2,159,385
(1,458,169)

* Due to each partnership having a calendar year-end, the summarized financial information provided is from their most recent

quarter.

The only difference between the Company’s investment balances in Walden Woods and Cypress Creek and the amount of underlying
equity in net assets owned by the Company that is recorded on each partnership’s balance sheet is caused by each partnership’s
founding partner not stepping up the original cost basis to fair market value its contribution of land to the partnerships, which is in
accordance with generally accepted accounting principles, since the founding partner formed both partnerships.

Because of continuing losses related to the limited partnership operations and the bankruptcy filing by Walden Woods and because the
Company’s investments in these partnerships exceeds the underlying equity of those entities, the Company in 2010 assessed its
carrying value of these investments by comparing them to its proportionate share of its estimates of the fair value of the partnerships.

In the case of Walden Woods, the Company’s assessment of the fair value of its investment is based on the expected refinancing of a
Walden Woods’ long-term debt as a result of the bankruptcy filing in August 2010. The agreement related to this refinancing was
finalized at a mediation hearing between the general partners and the existing lenders on January 27, 2011 and will result in a
significant reduction of Walden Woods’ debt. The refinancing is subject to approval by the bankruptcy court, which the Company
expects to occur since there are no significant other creditors involved in the filing; the ability of the general partner to obtain
acceptable alternative financing; and the general partner sharing the benefit of this with the limited partners. In correspondence with
the Company, the general partner has indicated his intent to share the benefit of the refinancing with the limited partners as long as he
is able to attain acceptable financing. The Company believes that the underlying property is financeable at the debt level indicated in
the refinancing agreement and accordingly expects that the general partner should be able to obtain satisfactory financing. If this
refinancing would not occur or if the benefit of this would not be shared with the limited partners, the Company’s investment of
$863,053 could be fully impaired. The Company has not reflected any impairment of this investment in the November 6, 2010
financial statements based on the expectation of the occurrence of the refinancing and that the benefit of this that will inure to the
limited partners. Additionally, the Company has received assurances from its principal shareholder that if the general partner is not
able to obtain acceptable financing to effect the refinancing, the shareholder or his affiliate will pursue a refinancing, subject to all the
conditions thereof, with the lender and seek approval of this through the bankruptcy proceedings which will protect the value of the
Company’s investment. Based on its assessment of the circumstances surrounding this investment as of the date of these financial
statements, management does not believe this investment is impaired.

The general partner of Cypress Creek has notified the Company that it is in the process of refinancing the mortgage loan on the
property of approximately $9.1 million which expired on March 2, 2011. Further, the Company has been informed that Cypress Creek
has continued to service the mortgage during the period of negotiations and the general partner has informed the Company that this
mortgage is expected to be refinanced in the near future. Management believes that the mortgage will be refinanced and that the
operations of Cypress Creek will continue uninterrupted. Management has assessed that its proportionate share of its estimate of the
fair value of Cypress Creek supports the carrying value of its investment in the 2010 financial statements.

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.

The positive impact upon results of operations from the re-sale of the collateral for defaulted loans has been approximately $250,832
which includes commission income of $206,434 in fiscal year 2010 and $93,900 which includes commission income of $51,021 in
fiscal year 2009. There were 28 re-sales during fiscal year 2010 and 7 re-sales in fiscal year 2009.

Due to the number of repurchased homes the Company has experienced in fiscal year 2010 and 2009 under the finance revenue
sharing agreement, the Company has set up an inventory valuation reserve of $402,994 in 2010 and $300,000 in 2009 for potential
losses associated with the refurbishing and reselling of the repurchased homes (see Note 15).

NOTE 6 Inventories
Inventories are summarized as follows:

November 6,
2010

October 31,
2009

Raw materials ............................................................................................
Work-in-process ........................................................................................
Finished homes .........................................................................................
Pre-owned manufactured homes, net (see Note 15) ..................................
Model home furniture ...............................................................................

Less reserve for pre-owned manufactured homes .....................................
Total inventories, net .......................................................................

398,332 $
73,668
6,886,540
9,478,621
135,236
16,972,397
(402,994)
16,569,403 $

502,779
16,030
8,347,620
6,896,680
216,860
15,979,969
(300,000)
15,679,969

The finished homes, pre-owned manufactured homes and model home furniture are maintained at the Prestige retail sales centers.

Due to the number of repurchased homes the Company has experienced in fiscal year 2010 and 2009 under the finance revenue
sharing agreement, the Company has increased its inventory valuation reserve to $402,994 in 2010 from $300,000 in 2009 for
potential losses associated with the refurbishing and reselling of the repurchased homes. The Company’s reserve for potential losses
on pre-owned manufactured homes is as follows:

November 6,
2010

October 31
2009

Beginning balance ............................................................................................
Amount charged to operations .........................................................................
Ending balance .................................................................................................

300,000 $
102,994
402,994 $

—
300,000
300,000

NOTE 7 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 6,
2010

October 31,
2009

Land ..............................................................................................
Land improvements ......................................................................
Buildings and improvements ........................................................
Machinery and equipment ............................................................
Furniture and fixtures ...................................................................

Less accumulated depreciation .....................................................

— $
10-20
15-40
3-10
3-10

2,349,383 $
867,626
2,526,837
1,158,460
486,270
7,388,576
(3,399,135)
3,989,441 $

2,339,383
863,826
2,524,413
1,158,460
485,520
7,371,602
(3,233,266)
4,138,336

During fiscal year 2009, the Company temporarily removed from operations certain property, plant, and equipment not expected to be
used during fiscal year 2010 related to temporary shutdown of the Belleview manufacturing plant. Property, plant, and equipment,
which has already been included in the above table, that has been temporarily removed from operations and its related accumulated
depreciation as of October 31, 2009, is summarized as follows:

November 6,
2010

October 31,
2009

Land .............................................................................................. $
Land improvements .......................................................................
Building and improvements ..........................................................
Machinery and equipment .............................................................
Furniture and fixtures ....................................................................

Less accumulated depreciation ......................................................

25,558 $
150,247
829,573
376,834
23,503
1,405,715
(840,312)
565,403 $

25,558
150,247
829,573
376,834
23,503
1,405,715
(798,226)
607,489

Depreciation expense totaled approximately $168,000 and $217,000 for fiscal years 2010 and 2009, respectively.

NOTE 8 Other Assets
Other assets are comprised of the following:

Cash surrender value of life insurance ..........................................................
Other..............................................................................................................

2,309,000 $
215,952

2,158,751
239,042

Total other assets .................................................................................

2,524,952 $

2,397,793

November 6,
2010

October 31,
2009

NOTE 9 Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are comprised of the following:

Accrued warranty expense ..............................................................................
Other accrued expenses ...................................................................................

75,000 $
134,789

75,000
165,539

Total accrued expenses and other current liabilities ..............................

209,789 $

240,539

November 6,
2010

October 31,
2009

NOTE 10 Income Taxes
The provision for income taxes for the years ended consists of the following:

November 6,
2010

October 31,
2009

Current tax benefit:

Federal ................................................................................................
State ....................................................................................................

(158,700) $
(13,614)
(172,314)

(520,795)
(59,574)
(580,369)

Deferred tax benefit: ....................................................................................

(470,905)

(526,220)

Income tax benefit ..............................................................................

(643,219) $

(1,106,589)

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 statutory tax rate ............................................................
Increase (decrease) resulting from:

State taxes, net of federal tax benefit ..................................................
Permanent differences: .......................................................................
Tax exempt interest ...................................................................
Unrecognized tax benefits .........................................................
Other .........................................................................................

(58,673)
—
(43,294)

Income tax benefit ..............................................................................

(643,219) $

(111,486)
(200,000)
16,996

(1,106,589)

November 6,
2010
(489,040) $

October 31,
2009
(733,867)

(52,212)

(78,232)

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:

November 6,
2010

October 31,
2009

Gross deferred tax assets:

Allowance for doubtful accounts ........................................................... $
Inventories .............................................................................................
Carrying value of other investments ......................................................
Accrued expenses ..................................................................................
Stock-based compensation ....................................................................
Total deferred tax assets ...............................................................

Gross deferred tax liabilities:

Depreciation ..........................................................................................
State income tax refunds .......................................................................
Amortization ..........................................................................................
Prepaid expenses ...................................................................................
Net deferred tax assets ................................................................. $

87,260 $
264,303
843,111
28,223
221,007
1,443,904

(30,614)
(22,704)
(55,324)
(34,405)
1,300,857 $

87,261
223,845
494,435
28,223
166,177
999,941

(36,651)
—
(51,862)
(59,511)
851,917

These amounts are included in the accompanying consolidated balance sheets under the following captions:

November 6,
2010

October 31,
2009

Current assets:

Deferred tax assets .................................................................................

267,566 $

279,818

Non-current assets:

Deferred tax assets .................................................................................
Total deferred tax assets ..................................................................................

1,033,291
1,300,857 $

572,099
851,917

Through the year ended November 6, 2010, the Company has incurred cumulative pre-tax losses for financial reporting purposes in
the last three years. The Company recognizes that this is viewed as significant negative evidence with respect to the ability to realize
the benefit of its deferred tax assets.

The Company has assessed its ability to realize these assets through an analysis of negative and positive evidence as discussed in ASC
740 and has concluded that positive evidence outweighs negative evidence and accordingly, the Company believes that the full value
of deferred tax assets reflected in the financial statements at November 6, 2010 are realizable.

The Company believes that significant positive evidence exists in the form of tax planning strategies particularly with respect to the
Company’s ability to generate additional future taxable income, if necessary, to effect the realization of deferred tax assets.

The Company has identified these strategies as being the potential sale of real estate, primarily land, not currently used in the
operations of the Company, at potential significant tax gains. The Company also believes that real estate, currently in use, that is not
integral to the ongoing operations of the Company could, if necessary, be sold at potential significant tax gains to avoid loss of tax
benefits. The Company also believes, to a lesser extent, that it could reallocate its investment of currently available cash and municipal
securities into higher rate taxable securities as a viable tax planning opportunity. The Company has assessed that these opportunities
are sufficient to ensure the realization of its existing deferred tax assets as of November 6, 2010 and accordingly has reflected the full
value of these assets in its financial statements.

On November 4, 2007, the Company adopted the recognition measurement and disclosure guidance for the accounting of
unrecognized tax benefits. As a result of this adoption, the Company recorded a liability for $275,000 as of November 1, 2008 of
unrecognized tax benefits, which was 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. During the third quarter of fiscal year 2009, the $275,000 unrecognized
tax benefits was reduced to $0 as a result of the statute of limitations expiring on the uncertain tax positions previously recognized.

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, 2006 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 11 Revolving Line of Credit
The Company maintained a revolving line of credit agreement (the ―Agreement‖) with a bank which provided for borrowings of up to
$4,000,000. The Agreement provided for interest at the bank prime rate less 0.5% (3% at October 31, 2009) on the outstanding
balance. The Agreement which was uncollateralized, due on demand, included certain restrictive covenants relating to tangible net
worth and acquiring new debt expired on May 30, 2010.

NOTE 12 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
32,390 shares of its common stock during fiscal year 2009. These shares were acquired for general corporate purposes.

NOTE 13 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 178,650 and 149,121
at November 6, 2010 and October 31, 2009. Options were held by 12 persons at November 6, 2010.

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 2010 and 2009, the Company recognized approximately $151,800 and
$152,800 in compensation cost related to stock options.

Information with respect to options granted at November 6, 2010 is as follows:

Number of
Shares

Stock Option
Price Range

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

Outstanding at 11/1/2008.......................................................................

147,634 $

8.20 - 26.56 $

Granted .........................................................................................
Exercised ......................................................................................
Canceled .......................................................................................
Outstanding at 10/31/2009.....................................................................

Granted .........................................................................................
Exercised ......................................................................................
Canceled .......................................................................................
Outstanding at 11/6/2010.......................................................................

13,150
—
(11,145)
149,639

6,500
—
(36,029)
120,110

7.91
—
7.91 - 26.56
7.91 - 26.56

10.45
—
7.91 - 26.56
7.91 - 26.56 $

23.88
7.91
—
20.49
22.40

10.45
—
20.43
22.34 $

—

The weighted-average grant-date fair value of options granted during fiscal years 2010 and 2009 was $3.40 and $1.60, respectively.
The total intrinsic value of options exercised during the years ended November 6, 2010 and October 31, 2009 was none.

The aggregate intrinsic value in the table above represents total intrinsic value (of options in the money), which is the difference
between the Company’s closing stock price on the last trading day of fiscal year 2010 and the exercise price times the number of
shares, that would have been received by the option holders had the option holders exercised their options on November 6, 2010.
The following table summarizes information about the Plan’s stock options at November 6, 2010:

Options Outstanding

Options Exercisable

Exercise
Prices

$ 23.73
26.56
26.38
18.50
7.91
10.45

Shares
Outstanding
17,760
32,950
33,450
19,300
10,650
6,000
120,110

Weighted
Average
Remaining
Contractual
Life
(years)

1
2
3
4
5
6
4

Weighted
Average
Exercise
Price

23.76
26.56
26.38
18.50
7.91
10.45
22.34

Number
Exercisable

17,600
23,065
15,053
4,825
1,065
—
61,608

Weighted
Average
Exercise
Price

23.76
26.56
26.38
18.50
7.91
10.45
24.76

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.

The weighted-average assumptions used in the Black-Scholes model were as follows:

Stock Option Granted in
Fiscal Year

2010
Risk-free interest rate ................................................................................................
Expected volatility of stock .......................................................................................
Dividend yield ...........................................................................................................
Expected option life ..................................................................................................

5 years

3.4%
29%
0.0%

2009

1.9%
30%
3.2%

5 years

As of November 6, 2010, there is approximately $150,445 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 2.61
years.

NOTE 14 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 none in fiscal years 2010 and 2009.

NOTE 15 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 $265,596 and $237,900 in fiscal year 2010 and 2009, 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 6, 2010 are as follows:

Fiscal Year Ending
2011 ........................................................................................................................
2012 ........................................................................................................................
2013 ........................................................................................................................

84,400
47,500
10,000

Majestic 21 – On May 20, 2009, the Company became a 50% guarantor on a $5 million note payable entered into by Majestic 21, a
joint venture in which the Company owns a 50% interest. This guarantee was a requirement of the bank that provided the $5 million
loan to Majestic 21. The $5 million guarantee of Majestic 21’s debt is for the life of the note which matures on the earlier of May 31,
2019 or when the principal balance is less than $750,000. The amount of the guarantee declines with the amortization and repayment
of the loan. As collateral for the loan, 21st Mortgage Corporation (our joint venture partner) has granted the lender a security interest in
a pool of loans encumbering homes sold by Prestige Homes Centers, Inc. If the pool of loans securing this note should decrease in
value so that the notes outstanding principal balance is in excess of 80% of the principal balance of the pool of loans, then Majestic 21
would have to pay down the note’s principal balance to an amount that is no more than 80% of the principal balance of the pool of
loans. The Company and 21st Mortgage are obligated jointly to contribute the amount necessary to bring the loan balance back down to
80% of the collateral provided. We do not anticipate any required contributions as the pool of loans securing the note have historically
been in excess of 100% of the collateral value. As of November 6, 2010, the outstanding principal balance of the note was $3,790,333
and the amount of collateral held by our joint venture partner for the Majestic 21 note payable was $4,738,080. Based upon
management’s analysis, the fair value of the guarantee is not material and as a result, no liability for the guarantee has been recorded
in the accompanying balance sheets of the Company.

On November 6, 2010 there was approximately $676,000 in loan loss reserves or 2.68% of the portfolio in Majestic 21. The Majestic
21 joint venture partnership is monitoring loan loss reserves on a monthly basis and is adjusting the loan loss reserves as necessary.
The Majestic 21 joint venture is reflected on 21st Mortgage Corporation’s financial statements which are included in the financial
statements of its ultimate parent which is a public company. Management believes the loan loss reserves are adequate based upon its
review of the Majestic 21 joint venture partnership’s financial statements.

Finance Revenue Sharing Agreement – The Company has a finance revenue sharing agreement with 21st Mortgage Corporation.
Pursuant to this agreement, the Company refers its customers to 21st Mortgage Corporation for financing on manufactured homes sold
through the Company’s retail sales centers. Under the finance revenue sharing agreement, the Company has agreed to repurchase any
repossessed homes and related collateral from 21st Mortgage Corporation that were financed under the agreement, at any time while
the loan is outstanding. Upon the repurchase of the loan, the Company receives all of the related collateral. The repurchase price is the
remaining loan balance (plus 21st Mortgage Corporation’s legal fees). If the loan included a mortgage on the land, the Company
receives the land in addition to the home. If the loan only had the home as collateral, the Company only gets the home and is required
to move it off the location where it was previously sited. After the Company re-sells the homes, the Company receives the full
proceeds from the sale of the home, plus a reimbursement from 21st Mortgage Corporation for liquidation expenses. The
reimbursement covers the Company’s cost of transporting homes, repairing homes to resale condition, remarketing homes and all
other liquidation expenses. The Company and 21st Mortgage Corporation have agreed that the reimbursement for: (a) a home only
repurchase will not exceed 60% of the Company’s purchase price nor will it be less than 40% of the Company’s repurchase price; and
(b) a home and land repurchase will not exceed 45% of the Company’s purchase price nor will it be less than 25% of the Company’s
purchase price.

Under the finance revenue sharing agreement, loans that are 30 days past due are considered to be delinquent. At November 6, 2010,
14.03%, or $10,224,692, of the loans in the portfolio subject to the finance revenue sharing agreement were delinquent. At
November 6, 2010, there were loan loss reserves of 8.9% of the finance revenue sharing agreement’s loan portfolio, which, based on
our historical recovery ratios, should be sufficient to cover our losses on the disposition of delinquent loans. The joint venture
partnership is monitoring loan loss reserves on a monthly basis and is adjusting the loan loss reserves as necessary. If the fair market
value of the collateral is less than the purchase price, after combining the liquidation expense reserves carried by 21st Mortgage
Corporation, the Company would book a loss at that time. The risk of loss is carried primarily by 21st Mortgage Corporation as
evidenced by the loss reimbursement payment of up to 60% that the Company can use to cover any shortfall in the sales proceeds
from the cost of buying the loan. The Company believes that the revenue sharing agreement reserve account carried on the books of
21st Mortgage Corporation which provides for the payments above more than offsets the fair value of any ASC 460 liability that might
arise under the agreement.

The Company was required to repurchase 51 homes in fiscal year 2010 and 74 homes in fiscal 2009 totaling approximately
$4,829,725 in 2010 and $6,795,960 in 2009 under its finance revenue sharing agreement. Of the 51 homes that were repurchased in
2010, 6 homes were related to loans originated from 2003-2005 and were repurchased for $430,425, and 45 homes were related to
loans originated from 2006-2009 and were repurchased for $4,399,300. Of the 74 homes that were repurchased in 2009, 17 homes
were related to loans originated from 2003-2005 and were repurchased for $1,089,017, and 57 homes were related to loans originated
from 2006-2008 and were repurchased for $5,706,944. These homes and land have been included in pre-owned manufactured homes
in inventory (see Note 6). The Company has sold 28 of the repurchased homes for $2,007,783 and received $621,312 from 21st
Mortgage Corporation for liquidation expenses. In 2009 the Company sold 7 of the repurchased homes for $454,162 and received
$100,287 from 21st Mortgage Corporation for liquidation expenses. Due to the number of repurchased homes the Company has
experienced in fiscal year 2010 and 2009 under the finance revenue sharing agreement, the Company has increased the inventory
valuation reserve to $402,994 in 2010 from $300,000 in 2009 for potential losses associated with the refurbishing and reselling of the
repurchased homes.

The maximum future undiscounted payments the Company could be required to make under the finance revenue sharing agreement,
as of November 6, 2010, is $72,875,881, in repurchase obligations, offset by payments from 21st Mortgage Corporation for the loss
reserve reconciliation of up to $33,383,382 and the proceeds from the sale of the homes (the collateral). The fair value of the
collateral, when combined with the amount of the reserve payment from the finance revenue sharing agreement reserve for loan losses
account, has historically exceeded the amount of the defaulted loan resulting in no loss to the Company. However, if the real estate
market further deteriorates, the Company could experience losses on the disposition of these delinquent loans.

Repurchase Agreements – The Company has only one repurchase agreement with a financial institution (floor plan lender) and that
agreement is for only one manufactured housing dealer. As of November 6, 2010, the dealer had 7 of the Company’s homes on floor
plan in 8 different manufacturing home communities. The contingent liability for each is home is based on the wholesale invoice price
of the home-less the required curtailment from the floor plan lender that the dealer has paid per home. 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 $116,136 and $60,200 at
November 6, 2010 and October 31, 2009, respectively. The Company applies FASB ASC 460-10, Guarantees, to account for its
liability for repurchase commitments. Under the provisions of FASB ASC 460-10, 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 FASB ASC 450, Contingencies, 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 FASB ASC 450 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 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 2010 and 2009,
respectively.

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. Accordingly, the Company has not made any accrual provisions
for litigation in the accompanying consolidated financial statements.

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 16 Subsequent Events
The Company has repurchased approximately $1,978,206 in additional defaulted loans under the finance revenue sharing agreement
since November 6, 2010.

Subsequent to fiscal 2010 year end, the Company has leased the Belleview plant for a two year period beginning in February 2011.

Item 9.
There were no disagreements with accountants on accounting and financial disclosure matters.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.

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 the Company’s disclosure controls and procedures require remedial action as of November 6,
2010 as outlined in management’s Report on Internal Controls over Financial Reporting as outlined below.

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 6, 2010 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 identified the following material weaknesses in the
Company’s internal controls:

• Valuation of Investments in Retirement Community Limited Partnerships: The Company has investments in retirement

community limited partnerships, including one that the General Partner put into bankruptcy during 2010. Management needs to
review its accounting procedures surrounding its investments and with regard to its investments and document the underlying
valuation of its investments and reassess this valuation on a quarterly basis. Subsequent to year end, the Company has taken
steps to implement internal controls associated with this weakness.

• Accounting for Income Taxes: The Company engages a specialist to assist it with accounting for income taxes. In connection

with computing its periodic tax provision, the Company needs to document its assessment of the future realization of its deferred
tax assets, especially since it has cumulative tax losses for the past three years. Consideration should be given to all relevant
positive and negative evidence, including any possible tax planning strategies and its forecasted operating performance.
Subsequent to year end, the Company, working with its specialist, has worked to implement internal controls associated with
their documentation weakness.

• Revenue Recognition: In connection with its finance revenue sharing agreement with 21st Mortgage Corporation, the Company
is required to repurchase homes previously sold through its dealerships, and the underlying land, related to transactions financed
with 21st Mortgage Corporation that have defaulted. Management has failed to assess revenue recognition related to the
subsequent sale of repurchased homes that are sold with land and financed under a new mortgage with 21st Mortgage
Corporation. The Company is considering engaging an outside financial accounting specialist to assist with its revenue
recognition accounting and the financial reporting related to this matter.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control
over financial reporting pursuant to Dodd-Frank Wall Street Reform and Consumer Protection Act.

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 2010 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal controls over financial reporting.

Item 9B.
None.

Other Information

Item 10.

Directors, Executive Officers and Corporate Governance

The following table provides the names, ages, and business experience of each of Nobility’s directors including the year each director
was first elected to the board. Directors serve for one year terms.

PART III

Name
(Age)
Terry E. Trexler
(71)

Thomas W. Trexler
(47)

Richard C. Barberie
(72)

Robert P. Holliday
(73)

Robert P. Saltsman
(58)

Executive Officers

Principal Occupation or Employment; Certain Other Directorships
Our chairman of the board, chief executive officer and president for more than five years;
Mr. Trexler is also president of TLT, Inc.

Our executive vice president and chief financial officer 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

Our vice president of purchasing from December 1994 until his retirement in June 1995;
our executive vice president for more than five years prior to December 1994

President of Chariot Eagle, Inc. (which is engaged in the park model and manufactured
home business) since 1984 and president of Chariot Eagle-West, Inc. since 1995

Attorney and CPA in private practice since 1983; prior to 1983 Mr. Saltsman was
employed as a CPA by Arthur Andersen & Co. in Orlando, Florida

Year First
Became
Director
1967

1993

1975

1996

1988

Jean Etheredge (65)

Secretary of the Company for more than five years

Lynn J. Cramer, Jr. (65) Treasurer and principal accounting officer of the Company for more than five years

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
Under Section 16(a) of the Securities Exchange Act, a Form 4 reporting the acquisition or disposition of Nobility securities by an
officer, director or 10% shareholder must be filed with the Securities and Exchange Commission no later than the second business day
after the date on which the transaction occurred unless certain exceptions apply. Most transactions not reported on Form 4 must be
reported on Form 5 within 45 days after the end of our fiscal year. Based on information provided by our directors and executive
officers, during the fiscal year ended November 6, 2010, all required reports were filed on a timely basis.

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.

Corporate Governance

Board Composition

Our board of directors is comprised of five members, a majority of whom are independent directors. The board of directors has
determined that our non-management directors, Messrs. Richard Barberie, Robert Holliday and Robert Saltsman, are all independent
according to current NASDAQ rules. During the fiscal year ended November 6, 2010, the board of directors held four regular
meetings. Our non-management directors meet in executive sessions without management on a regular basis. All directors attended
100% of the meetings of the board of directors and committees of the board on which they served.

Board Role in Risk Oversight

Our board is actively involved in the oversight of risks that could affect the Company. Although this oversight is conducted in part
through the committees of the board as disclosed in the descriptions of the committees below and in the charters of each of the
committees, the full board has retained responsibility for the general oversight of risks. The board satisfies this responsibility through
full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly
from officers responsible for oversight of particular risks within the Company.

Risk Considerations in our Compensation Policies

Our board believes that our compensation policies and practices are reasonable and properly align our employees’ interests with those
of our shareholders. The board believes that the fact that incentive compensation for our executive officers and other employees is tied
to earnings encourages actions that improve the Company’s profitability over the short and long term. In addition, the compensation
committee reviews changes to our compensation policies and practices to ensure that such policies and practices do not encourage our
executive officers and other employees to take actions that are likely to result in a material adverse effect on the Company.

Board Committees

Our board of directors has established three standing committees; a compensation committee, an audit committee and a nominating
committee.

Compensation Committee. The compensation committee is presently comprised of Messrs. Richard Barberie, Robert Holliday and
Robert Saltsman. The compensation committee evaluates the performance of the CEO and other executive officers and recommends to
the board of directors the salaries and bonuses, if any, to be paid to the executive officers. The compensation committee has a written
charter which is available on our website at www.nobilityhomes.com. The compensation committee did not meet during fiscal year
2010 because no bonuses or compensation changes were being proposed during 2010.

Audit Committee. The audit committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act.
During fiscal 2010, the audit committee was comprised of Messrs. Robert Saltsman, Robert Holliday and Richard Barberie, all of
whom are considered independent under current NASDAQ rules. The audit committee has a written charter which establishes the
scope of the committee’s responsibilities and how it is to carry out those responsibilities. The audit committee charter charges the
committee with overseeing management’s conduct of our financial reporting process, including: (1) the integrity of our financial
statements, (2) our compliance with legal and regulatory requirements, and (3) the independence and performance of our internal and
external auditors. The audit committee charter is available on our website at www.nobilityhomes.com. The audit committee met five
times during fiscal 2010.

The board of directors has determined that Mr. Robert Saltsman is the audit committee financial expert, and is independent under
current NASDAQ rules.

Nominating Committee. The board of directors has established a nominating committee comprised of Messrs. Robert Saltsman,
Robert Holliday and Richard Barberie, all of whom are considered independent under current NASDAQ rules. The nominating
committee’s charter is available on our website at www.nobilityhomes.com. The nominating committee met one time during fiscal
year 2010. The nominating committee will consider suggestions for potential director nominees nominated by our board from many
sources, including management and our shareholders. Any such nominations, together with appropriate biographical information,
should be submitted to the nominating committee no later than October 6, 2011 by sending a letter to our corporate secretary at P.O.
Box 1659, Ocala, Florida 34478. The mailing envelope should contain a clear notation indicating that the enclosed letter is a
―Shareholder Nomination For Director.‖

In evaluating director nominees, including candidates submitted by shareholders, the nominating committee will consider the
candidate’s experience, integrity, ability to make independent analytical inquiries, understanding of our business environment and
willingness to devote adequate time to board duties. The nominating committee will also consider whether a candidate meets the
definition of ―independent director‖ under NASDAQ rules. There are no stated minimum criteria for director nominees, and the
nominating committee may also consider such other factors as it deems to be in the best interest of Nobility and its shareholders.

Item 11.

Executive Compensation

The compensation committee of our board of directors established, subject to the approval of the full board of directors, the
compensation for our chief executive officer and our chief financial officer, who are our only officers whose total compensation for
the fiscal year ended November 6, 2010 exceeded $100,000. We refer to these individuals as the ―named executive officers.‖

Because we are a small company, our compensation committee has sought to avoid the expense of retaining an outside compensation
consultant to assist the committee with compensation plan design. The compensation committee takes into consideration
recommendations of our CEO for compensation for officers other than our CEO.

Base Salary. The compensation committee sets salary levels for named executive officers so as to reflect the duties and level of
responsibilities inherent in the position and current economic conditions relating to our business. In establishing salary levels, the
compensation committee considers the particular qualifications and level of experience of the individual holding the position in
establishing a salary level when the individual is first appointed to a given position.

At his request, our CEO’s base salary has remained fixed for the last five fiscal years because a major incentive for his performance is
the value of his substantial stock ownership in Nobility. Our CFO receives the same base salary as our CEO, with the majority of his
compensation paid as quarterly incentive compensation. Due to the challenging economic environment in which we currently operate,
we did not increase our CFO’s base salary for fiscal 2007, 2008, 2009 or 2010.

Quarterly Incentive Bonuses. We provide certain employees, including the named executive officers, the opportunity to earn a
quarterly incentive bonus based on an evaluation of the employee’s individual performance and our performance. The bonus pool is
based on a specified percentage earnings before interest and taxes for the quarter. The bonus pool is divided among eligible employees
on a discretionary rather than formulaic basis. In considering bonuses for named executive officers other than the CEO, the
compensation committee consults with our chairman and CEO regarding instances of exceptional effort demonstrated by an employee.
No named executive officer is automatically entitled to a bonus or a bonus in any particular amount. Due to the downturn in our sales
and earnings during fiscal 2009 and 2008, neither our CEO nor our CFO received a bonus in fiscal 2010 or fiscal 2009.

Summary Compensation Table
for fiscal years ended November 6, 2010 and October 31, 2009

The following table provides information about all compensation awarded to, earned by or paid to our named executive officers during
the fiscal years ended November 6, 2010 and October 31, 2009.

Name and Principal Positions
Terry E. Trexler

Year
2010
2009
President, chief executive officer ............................................................

Salary
$ 93,500
$ 93,500

Thomas W. Trexler

2010
2009
Executive vice president and chief financial officer ...............................

$ 93,500
$ 93,500

Non-Equity
Incentive Plan
Compensation
—
—

All Other
Compensation
39,395(1)
39,395(1)

$
$

Total
$ 132,895
$ 132,895

—
—

$
$

17,904(2)
17,904(2)

$ 111,404
$ 111,404

$
$

(1) All other compensation for Mr. Terry E. Trexler for fiscal years 2010 and 2009 includes $39,395 in insurance premiums paid or
accrued by us on two term life insurance policies on the life of Mr. Terry E. Trexler. In the event of Mr. Trexler’s death, the
proceeds will be paid to Mr. Trexler’s designated beneficiaries.

(2) All other compensation for Mr. Thomas W. Trexler for fiscal years 2010 and 2009 includes $16,220 in insurance premiums paid
or accrued by us on a term insurance policy on the life of Mr. Thomas W. Trexler. In the event of Mr. Trexler’s death, the
proceeds will be paid to Mr. Trexler’s designated beneficiaries. The balance consists of the portion of a car allowance
attributable to Mr. Trexler’s personal use of a company-provided car.

We did not grant any stock options, restricted stock awards or other equity-based awards to the named executive officers during fiscal
2010. No equity awards vested for our named executive officers during fiscal 2010 and our named executive officers did not exercise
any stock options or hold any stock options or other equity awards at the end of fiscal 2010.

Item 12.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 3, 2011, information as to our $.10 par value common stock owned beneficially, directly or
indirectly, (1) by each person who is known by us to own beneficially more than 5% of our outstanding voting securities, (2) by each
director, (3) by each executive officer named in the summary compensation table set forth elsewhere herein and (4) by all directors
and executive officers as a group:

Name and Address
of Beneficial Owner(1)

Terry E. Trexler Irrevocable Trust(3)
Kay Charlton, Trustee(5)
P. O. Box 2146
Winter Park, Florida 32790

Terry E. Trexler(6)
3741 S.W. 7th Street
Ocala, Florida 34474

Thomas W. Trexler(8)
3741 S.W. 7th Street
Ocala, Florida 34474

Richard C. Barberie(8)
15300 SE 140 Avenue Road
Weirsdale, Florida 32195

Robert P. Holliday (8)
931 NW 37th Avenue
Ocala, Florida 34475

Robert P. Saltsman (8)
222 South Pennsylvania Avenue, Suite
200
Winter Park, Florida 32789

GAMCO Investors, Inc.(10)
One Corporate Center
Rye, New York 10580

Directors and
executive officers
(7 persons)

Number of Common
Shares Beneficially Owned(1)(2)

Percent of Class

2,180,535(4)

53.8%

3,073(7)

409,936(9)

10.1%

825

4,935

2,537

289,948

7.2%

468,818

11.6%

Less than 1%

*
(1) Unless otherwise noted, information contained in this table is based upon information furnished by the beneficial owners.
(2) Unless otherwise noted, all shares are owned directly with sole voting and dispositive power.
(3) Mr. Terry Trexler established this trust for personal estate and tax planning reasons. Mr. Trexler is the sole beneficiary of the

trust and has no voting or dispositive power with respect to the shares held by the trust.

(4) All shares are owned directly by the Terry E. Trexler Irrevocable Trust. Ms. Charlton has no pecuniary interest in the shares.
(5) Ms. Charlton is the trustee of the Terry E. Trexler Irrevocable Trust and, as such, is vested with sole voting and dispositive

power with respect to all shares owned by the trust.

(6) Mr. Terry Trexler is our president and chairman of the board. Additional information is contained under ―Nomination and

Election of Directors‖.
Includes 2,040 shares held in trust for the benefit of Mr. Trexler’s grandchild and 1,033 shares owned through our 401(k) plan.

(7)
(8) Mr. Thomas Trexler is our executive vice president and director. Messrs. Barberie, Holliday and Saltsman are our directors.

(9)
(10)

Additional information is contained under ―Nomination and Election of Directors‖.
Includes 1,067 shares owned through our 401(k) plan.
Information is based solely from Amendment No. 4 to Schedule 13D filed with the SEC on March 17, 2009 by one or more of
the following persons: GGCP, Inc. (―GGCP‖), GAMCO Investors, Inc. (―GBL‖), Gabelli Funds, LLC (―Gabelli Funds‖),
GAMCO Asset Management Inc. (―GAMCO‖), Teton Advisors, Inc. (―Teton Advisors‖), Gabelli Securities, Inc. (―GSI‖),
Gabelli & Company, Inc. (―Gabelli & Company‖), MJG Associates, Inc. (―MJG Associates‖), Gabelli Foundation, Inc.

(―Foundation‖), and Mario Gabelli. GBL, GAMCO, and Gabelli & Company are New York corporations and GSI and Teton
Advisors are Delaware corporations, each having its principal business office at One Corporate Center, Rye, New York 10580.
GGCP is a New York corporation having its principal business office at 140 Greenwich Avenue, Greenwich, CT 06830. Gabelli
Funds is a New York limited liability company having its principal business office at One Corporate Center, Rye, New York
10580. MJG Associates is a Connecticut corporation having its principal business office at 140 Greenwich Avenue, Greenwich,
CT 06830. The Foundation is a Nevada corporation having its principal offices at 165 West Liberty Street, Reno, Nevada
89501.

Item 13.
During the fiscal years ended 2010 and 2009, there have been no related party transactions required to be disclosed under SEC rules.

Certain Relationships and Related Transactions, and Director Independence

Item 14.

Principal Accounting Fees and Services

The following table provides information relating to the fees Crowe Howath LLP and McGladrey & Pullen, LLP billed or will bill to
us for the fiscal years ended November 6, 2010 and October 31, 2009.

Audit
Fees

Tax
Fees

All Other
Fees

Total
Fees

Fiscal Year 2010

Crowe Horwath LLP ......................................................................................

$ 58,000

McGladrey & Pullen, LLP .............................................................................

5,839

0 $

58,000

0 $

5,839

Fiscal Year 2009:

McGladrey & Pullen, LLP .............................................................................

$ 68,000(1) $

0 $

8,355(2) $

76,355

(1) Audit fees include all fees for services in connection with the annual audit of our financial statements and review of our

quarterly financial statements.

(2) All other fees for fiscal year 2009 include fees related to assistance with comment letters from the Securities and Exchange

Commission.

All decisions regarding selection of independent accounting firms and approval of accounting services and fees are made by our audit
committee in accordance with the provisions of the Sarbanes-Oxley Act of 2002. There are no exceptions to the policy of securing
pre-approval of our audit committee for any service provided by our independent accounting firm.

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) Consolidated Financial Statements and Schedules

PART IV

Report of Crowe Horwath LLP
Report of McGladrey & Pullen, LLP
Consolidated Balance Sheets at November 6, 2010 and October 31, 2009
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended November 6, 2010 and
October 31, 2009
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended November 6, 2010 and
October 31, 2009
Consolidated Statements of Cash Flows for the Years Ended November 6, 2010 and October 31, 2009
Notes to Consolidated Financial Statements

(b) Reports on Form 8-K

None
(c) Exhibits:

In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with
information regarding their terms and are not intended to provide any other factual or disclosure information about the
Company, its subsidiaries or other parties to the agreements. The Agreements contain representations and warranties by
each of the parties to the applicable agreement. These representations and warranties have been made solely for the
benefit of the other parties to the applicable agreement and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the
risk to one of the parties if those statements prove to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of
the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to you or

other investors; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in

the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were
made or at any other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we
are responsible for considering whether additional specific disclosures of material information regarding material
contractual provisions are required to make the statements in this report not misleading. Additional information about the
Company may be found elsewhere in this report and the Company’s other public files, which are available without charge
through the SEC’s website at http://www.sec.gov.

(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)

(e)

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 (filed as an exhibit to Nobility’s 10-K for the year ended
November 1, 2008 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).

Finance Revenue Sharing Agreement dated April 10, 2004 between 21st Mortgage Corporation,
Prestige Home Centers, Inc. and Majestic Homes, Inc. (filed as an exhibit to Nobility’s Form 10-K for
the fiscal year ended October 31, 2009 and incorporated herein by reference).

Loan and Security Agreement dated May 20, 2009, by and among Clayton Bank & Trust, Majestic 21
Partnership, 21st Mortgage Corporation, Majestic Homes, Inc. and the Company, as guarantor (filed
as an exhibit to Nobility’s Form 10-K for the fiscal year ended October 31, 2009 and incorporated
herein by reference).

(i) Term Note dated May 20, 2009 in favor of Clayton Bank & Trust (filed as an exhibit to Nobility’s
Form 10-K for the fiscal year ended October 31, 2009 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 Crowe Horwath LLP

23.2 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.

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.

Signatures

DATE: May 19, 2011

NOBILITY HOMES, INC.

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: May 19, 2011

By: /s/ Terry E. Trexler
Terry E. Trexler, Director

By: /s/ Richard C. Barberie
Richard C. Barberie, Director

By: /s/ Robert Holliday
Robert Holliday, Director

By: /s/ Robert P. Saltsman
Robert P. Saltsman, Director

By: /s/ Thomas W. Trexler
Thomas W. Trexler, Director

Exhibit Index

In reviewing the agreements included as exhibits to this report, please remember they are included to provide you with information
regarding their terms and are not intended to provide any other factual or disclosure information about the Company, its subsidiaries
or other parties to the agreements. The Agreements contain representations and warranties by each of the parties to the applicable
agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement
and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of
the parties if those statements prove to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable
agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to you or other

investors; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement

and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any
other time. We acknowledge that, notwithstanding the inclusion of the foregoing cautionary statements, we are responsible for
considering whether additional specific disclosures of material information regarding material contractual provisions are required to
make the statements in this report not misleading. Additional information about the Company may be found elsewhere in this report
and the Company’s other public files, which are available without charge through the SEC’s website at http://www.sec.gov.

(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)

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 (filed as an exhibit to Nobility’s 10-K for the year ended November
1, 2008 and incorporated herein by reference).

(c) 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).

(d)

(e)

Finance Revenue Sharing Agreement dated April 10, 2004 between 21st Mortgage Corporation, Prestige
Home Centers, Inc. and Majestic Homes, Inc. (filed as an exhibit to Nobility’s Form 10-K for the fiscal year
ended October 31, 2009 and incorporated herein by reference).

Loan and Security Agreement dated May 20, 2009, by and among Clayton Bank & Trust, Majestic 21
Partnership, 21st Mortgage Corporation, Majestic Homes, Inc. and the Company, as guarantor (filed as an
exhibit to Nobility’s Form 10-K for the fiscal year ended October 31, 2009 and incorporated herein by
reference).

(i) Term Note dated May 20, 2009 in favor of Clayton Bank & Trust (filed as an exhibit to Nobility’s Form
10-K for the fiscal year ended October 31, 2009 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 Crowe Horwath LLP

23.2 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.

Subsidiaries of Registrant

Exhibit 21

Prestige Home Centers, Inc. .......................................................................................................................................................... Florida
Mountain Financial, Inc. (a subsidiary of Prestige Home Centers, Inc.) ...................................................................................... Florida
Majestic Homes, Inc. (a subsidiary of Prestige Home Centers, Inc.) ............................................................................................ Florida
Nobility Parks I, LLC ................................................................................................................................................................... Florida
Nobility Parks II, LLC .................................................................................................................................................................. Florida

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

Exhibit 31(a)

I, Terry E. Trexler, certify that:
1.

I have reviewed this Annual Report on Form 10-K of Nobility Homes, Inc.;
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;
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;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under their supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant’s internal control over financial reporting.

DATE: May 19, 2011

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

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

Exhibit 31(b)

I, Thomas W. Trexler, certify that:
1.

I have reviewed this Annual Report on Form 10-K of Nobility Homes, Inc;
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;
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;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant’s internal control over financial reporting.

DATE: May 19, 2011

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

Written Statement of the Chief Executive Officer
Pursuant to 18 U.S.C. §1350

Exhibit 32(a)

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:

The Annual Report on Form 10-K of the Company for the year ended November 6, 2010 (the ―Report‖) fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.

DATE: May 19, 2011

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

Written Statement of the Chief Financial Officer
Pursuant to 18 U.S.C. §1350

Exhibit 32(b)

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:

DATE: May 19, 2011

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

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
StockTrans, Inc.
Ardmore, Pennsylvania

General Counsel
Wayne Argo, P.A.
Ocala, Florida

Stock Exchange Listing
NASDAQ Global Market
Symbol: NOBH

Independent Auditors
Crowe Horwath LLP
Tampa, Florida

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 Tuesday, the 19th
day of July, 2011, 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 1659
Ocala, Florida 34478
Phone (352)732-6110
Fax (352)732-4203

Belleview Plant (temporarily closed)
6432 S.E. 115th Lane
P.O. Box 779
Belleview, Florida 34421

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.

Pace

Panama City

Yulee

Chiefland

Ocala

Belleview

Inverness

Tavares

Hudson

Tampa

Auburndale

Punta Gorda

Nobility plaNts

• prestige sales ceNters

Nobility HoMes, iNc
ocala, Florida