About the Company
Nobility Homes, Inc., a Florida corporation incorporated in 1967,
designs, manufactures and sells a broad line of manufactured and modular
homes through 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.
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’s manufacturing
plant and corporate headquarters are located in Ocala, Florida.
Our homes are available in approximately 100 active models sold under
the trade names “Kingswood”, “Richwood”, “Tropic Isle”, “Regency Manor”
and “Tropic Manor”. Our home sales are single and multi-section, range in
size from 464 to 2,800 square feet and contain from one to five bedrooms
and retail prices for our homes typically range from approximately $54,000
to $189,000.
Prestige Home Centers, Inc., our wholly-owned subsidiary, operates ten
retail sales centers in north and central Florida: Ocala (two), Chiefland,
Auburndale, Inverness, Hudson, Tavares, Yulee, Panama City, Punta
Gorda and executive offices are located at our corporate headquarters in
Ocala, Florida. Prestige did not open an eleventh retail sales center in
north Florida due
the
manufacturing facility and the hiring of a sales staff. This lease expired in
December 2021. Each of Prestige’s retail sales centers is located within
350 miles of Nobility’s Ocala manufacturing facility.
in obtaining homes
the difficulty
from
to
The primary customers of Prestige are homebuyers who generally
purchase manufactured or modular homes to place on their own home
sites. Prestige operates its retail sales centers using a model home
concept. Each of the homes displayed at its retail sales centers is furnished
and decorated as a model home.
In an effort to make manufactured homes more competitive with site-
built housing, financing packages are available through 21st Mortgage
Corporation and other outside financing sources that provide financing to
retail customers who purchase the Company’s manufactured homes at
Prestige retail sales centers.
Mountain Financial, Inc., a wholly-owned subsidiary of Prestige Home
Centers, Inc., is an independent insurance agent and licensed loan
originator. Mountain Financial provides automobile insurance, extended
warranty coverage and property and casualty insurance to Prestige
customers in connection with their purchase and financing of manufactured
homes.
Contents
1 Shareholders’ Letter
3 Directors
3 Officers
3 General Shareholders’
Information
3 General Information
To Our Shareholders
Sales for fiscal year 2021 increased 8% to $45.0 million as compared to $41.6
million recorded in fiscal year 2020. Income from operations for fiscal year 2021, was
$6.1 million versus $7.1 million in the same period a year ago. Net income after taxes
was $5.4 million as compared to $6.0 million for the same period last year. Diluted
earnings per share for fiscal year 2021 were $1.50 per share compared to $1.64 per
share last year.
Fiscal 2021 proved to be a very difficult year to improve or even maintain
consistency in factory production, materials procurement, building products cost
control and the manufacturing work force. Certainly the continued pressure of the
coronavirus (“COVID-19”) and variants have had a significant impact on each of these
areas. However, the major disruption in maintaining or improving our production of
homes this fiscal year has been the inconsistent delivery of building supplies from our
vendors. The negative impact of allocations being placed on certain key materials,
the delay or lack of the vendors’ key components to manufacture and deliver timely
our ordered products for our production line, back orders or just delayed shipments
and, of course, unparalleled price increases, have been unprecedented in the
Company’s history. Until some order has been restored to the industry’s supply chain,
management feels that, at least the first half of fiscal year 2022 will face these same
challenges. According to the Florida Manufactured Housing Association, shipments
for the industry in Florida for the period from November 2020 through October 2021
were up approximately 11% from the same period last year.
Nobility’s financial position during fiscal year 2021 remained very strong with
cash and cash equivalents, short term investments and certificates of deposit of $38.8
million and no outstanding debt. Working capital is $35.6 million and our ratio of
current assets to current liabilities is 3.1:1. Stockholders’ equity is $49.3 million and
the book value per share of common stock increased to $13.96.
Maintaining our strong financial position is vital for future growth and
success. Because of very challenging business conditions during economic
recessions in our market area, management will continue to evaluate all expenses
and react in a manner consistent with maintaining our strong financial position,
while exploring opportunities to expand our distribution and manufacturing
operations.
Our many years of experience in the Florida market, combined with home
buyers’ 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.
1
On June 5, 2021 we celebrated our 54th anniversary in business
specializing in the design and production of quality, affordable manufactured and
modular homes. With multiple retail sales centers in Florida for over 30 years and
an
integrated
manufactured home company headquartered in Florida.
insurance agency subsidiary, we are
the only vertically
We appreciate the confidence and support of our shareholders, suppliers
and friends of the Company. We would also like to express our thanks to each of
our employees, whose dedication, focus and energy are key to achieving
Nobility’s goals. With this confidence and support, along with the able leadership
from the Board of Directors and our management team, we believe your Company
has the human, financial and physical resources to meet the challenges ahead
and the enthusiasm and determination to capitalize upon new opportunities as
they develop.
Terry E. Trexler
Chairman of the Board
and President
Thomas W. Trexler
Executive Vice President
and Chief Financial Officer
2
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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, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 000-06506
NOBILITY HOMES, INC.
(Exact name of registrant as specified 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
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class
Common Stock, $0.10 Par Value
Trading Symbol(s)
NOBH
Name of ea/Exchange on
Which Registered
OTCQX
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 registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
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 such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
☐
Emerging growth company ☐
Accelerated filer
Smaller reporting company
☐
☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the common stock held by non-affiliates of the registrant (645,004) shares), based on the closing price
on the over-the-counter market on April 30, 2021 (the last business day of the second quarter of fiscal 2021), was approximately
$21.2 million.
The number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
Title of Class
Common Stock
Shares Outstanding on February 4, 2022
3,532,796
DOCUMENTS INCORPORATED BY REFERENCE
Title
Definitive proxy statement for Annual Meeting of
Shareholders to be held March 4, 2022
Form 10-K
Part III, Items 10-14
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Business ....................................................................................................................................................................
Risk Factors ...............................................................................................................................................................
Unresolved Staff Comments .....................................................................................................................................
Properties ..................................................................................................................................................................
Legal Proceedings .....................................................................................................................................................
Mine Safety Disclosures............................................................................................................................................
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
PART II
Securities ..............................................................................................................................................................
Reserved ....................................................................................................................................................................
Item 6.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ....................................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk....................................................................................
Financial Statements and Supplementary Data .........................................................................................................
Item 8.
Index to Consolidated Financial Statements ............................................................................................
Report of Independent Registered Public Accounting Firm-Daszkal Bolton LLP ..................................
Consolidated Balance Sheets ...................................................................................................................
Consolidated Statements of Income ........................................................................................................
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............................................................................................................................................
Item 9.
Item 9A.
Item 9B. Other Information…………………………………………………………………………………………………...
Item 9C.
Disclosure Regarding Foreign Jurisdictions that prevent Inspections ......................................................................
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
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 ...................................................................................................................
PART III
Item 15.
Exhibits and Financial Statement Schedules .............................................................................................................
(a) Consolidated Financial Statements and Schedules .............................................................................................
(b) Exhibits ................................................................................................................................................................
Form 10-K Summary ................................................................................................................................................
Item 16.
Signatures ....................................................................................................................................................................................
PART IV
1
Form
10-K
2
4
4
4
5
5
6
6
7
11
12
12
13
14
15
16
17
18
30
30
30
30
31
31
31
31
31
32
32
32
33
34
PART I
Item 1.
Business
Nobility Homes, Inc., a Florida corporation incorporated in 1967, designs, manufactures and sells a broad line of manufactured and
modular homes through 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. All references in this annual report on
Form 10-K to “Nobility,” “Company,” “we,” “us,” or “our” refer to Nobility Homes, Inc. and its consolidated subsidiaries unless the
context otherwise suggests.
Manufactured Homes
Nobility’s homes are available in approximately 100 active models sold under the trade names “Kingswood,” “Richwood,” “Tropic
Isle,” “Regency Manor,” and “Tropic Manor.” The homes, ranging in size from 464 to 2,800 square feet and containing from one to
five bedrooms, are available in:
•
Single-wide widths of 14 and 16 feet ranging from 35 to 72 feet in length;
• Double-wide widths of 20, 24, 26, 28 and 32 feet ranging from 32 to 72 feet in length;
•
Triple-wide widths of 42 feet ranging from 60 to 72 feet in length; and
• Quad-unit with 2 sections 28 feet wide from 40 to 48 feet long and 2 sections 28 feet wide by 52 feet long.
Our floor plans can be built as an on-frame modular home. We have been approved to build A.N.S.I. (American National Standards
Institute) Park models less than 400 square feet and exposure D homes.
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 $54,000 to $189,000. 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
draperies. 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 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 in Ocala, Florida. Substantially all of Nobility’s sales are made in Florida.
Retail Sales
Prestige Home Centers, Inc., our wholly-owned subsidiary, operates ten 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 87% and 79% of Nobility’s
sales during fiscal years 2021 and 2020, respectively.
Each of Prestige’s retail sales centers are located within 350 miles of Nobility’s Ocala manufacturing facility. Prestige owns the land
at eight of its retail sales centers and leases the remaining two retail sales centers from unaffiliated parties.
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
2
within a radius of approximately 100 miles from the selling retail lot. The Company’s internet-based marketing program generates
numerous leads which are directed to the Prestige retail sales centers to assist a potential buyer in purchasing a home.
The retail sale of manufactured homes is a highly competitive business. Because of the 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 80 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 site-built housing.
Prestige does not itself finance customers’ new home purchases. Financing for home purchases has historically been available from
other independent sources that specialize in manufactured housing lending and banks that finance manufactured home purchases.
Prestige and Nobility are not required to sign any recourse agreements with any of these retail financing sources.
Insurance and Financial Services
Mountain Financial, Inc., a wholly-owned subsidiary of Prestige Home Centers, Inc., is an independent insurance agent and licensed
mortgage loan originator. 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.
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 was deemed necessary for policy cancellations for fiscal years 2021 and 2020.
Wholesale Sales to Manufactured Home Communities
Nobility also sells its homes on a wholesale basis through two full-time salespersons to approximately 36 manufactured home
communities and independent dealers. 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.
Nobility does not generally offer consigned inventory programs or other credit terms to its independent dealers and ordinarily receives
payment for its homes within 15 to 30 days of delivery. However, Nobility may offer extended terms to park dealers who do a high
volume of business with Nobility. In order to stimulate sales, Nobility sells homes for display to related party manufactured home
communities on extended terms and recognizes revenue when the homes are sold to the end users. 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 are subject to governmental regulation at the federal, state and local levels. The
Department of Housing and Urban Development (HUD) has adopted national construction and safety standards that preempt 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. 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. Modular homes manufactured by Nobility are required to comply with the
Florida Building Code established by the Florida Department of Business and Professional Regulations.
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 restrictions 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.
3
The coronavirus (“COVID-19”) pandemic has resulted in government authorities implementing numerous measures to try to contain
the virus. We were labeled an essential business and never closed our manufacturing plant or retail sales centers. The government
measures as well as the public reaction to COVID-19 and the various variants had a negative impact on customer traffic (and
corresponding sales) within our centers and the operations of our business partners. While our manufacturing operations have
continued, an outbreak in our manufacturing facility would impact our ability to produce new homes. There is considerable
uncertainty regarding the impact, and expected duration, of such measures and potential future measures, which could cause
disruptions to our business in the future. In addition, whether caused by COVID-19 or other factors, we have experienced
unprecedented inflation and shortages in many material products, and difficulty in hiring additional and retaining production workers,
with no immediate relief in sight that have resulted in increases to our material and labor costs. The Company is monitoring these
issues and has adjusted our selling prices accordingly to help offset the higher costs.
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 the 20 manufacturers selling in the state, approximately 10
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.
Employees
As of January 7, 2022, the Company had 131 full-time employees, including 33 employed by Prestige. Approximately 74 employees
are factory personnel compared to approximately 78 in such positions a year ago and 57 are in management, administrative,
supervisory, sales and clerical positions compared to approximately 69 a year ago. In addition, Nobility employs part-time employees
when necessary.
The Company has managerial, administrative, supervisory, sales and manufacturing employees. We have a focus on safety and being
drug free in our manufacturing operations.
Historically, we have had low turnover rates with our employees, other than with respect to our manufacturing employees. It is
currently difficult for us to attract long-term quality employees for our manufacturing operations. We have experienced disruption in
production as a result of our inability to find labor. We are working on developing programs designed to cause less turnover, although
have not been successful to date.
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.
Risk Factors
As a smaller reporting company, we are not required to provide the information required by this item.
Item 1B.
Unresolved Staff Comments
None.
Item 2.
Properties
As of February 4, 2022, Nobility owned one manufacturing plant as follows:
Location
Approximate Size
3741 SW 7th Street ...................................................................................
Ocala, Florida ..........................................................................................
72,000 sq. ft.
Nobility’s Ocala facility 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.
4
Prestige owns the properties on which it’s Ocala South, Ocala North, Auburndale, Inverness, Tavares, Panama City, Yulee and Punta
Gorda, Florida retail sales centers are located. Prestige leases the property for its other two retail sales centers. The Company
purchased the land for the Tavares retail sales center in January 2021 for $245,000, land in Ocala for a future retail sales center in
February 2021 for $1,040,000 and the land for the Ocala South retail sales center in March 2021 for $500,000. In December 2017
Prestige executed a lease to open an eleventh retail sales center in north Florida and did not open the retail sales center due to the
difficulty in obtaining homes from the manufacturing facility and the hiring of a sales staff. This lease expired in December 2021.
Item 3.
Legal Proceedings
We are a party to various legal proceedings that arise in the ordinary course of our business. We are not currently involved in any
litigation nor to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on
information currently available to us, have a material adverse effect on our financial position or results of operations.
The Company does not maintain casualty insurance on some of its property, including the inventory at its retail centers, its plant
machinery and plant equipment and is at risk for those types of losses.
Item 4.
None.
Mine Safety Disclosures
5
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
The Company’s common stock currently trades under the symbol NOBH on the OTCQX market. Any over-the-counter market
quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.
Holders
At January 31, 2022 the approximate number of holders on record of common stock was 89 (not including individual participants in
security position listings).
Dividends
The Board of Directors declared a one-time cash dividend of $1.00 per common share for fiscal year 2020 paid to stockholders of
record as of March 12, 2021. Any future determination to pay dividends will be at the discretion of our Board of Directors.
Securities Authorized for Issuance under Equity Compensation Plans
The following table displays equity compensation plan information as of the end of the fiscal year ended November 6. 2021 (see Note
13 to the Company’s financial statement included herein).
Equity Compensation Plan Information
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
Number of securities remaining
available for issuance under equity
compensation plans (excluding
securities reflected in column (a))
(c)
47,300
$
24.41
N/A*
N/A
N/A
252,700*
47,300
$
24.41
252,700
Equity compensation plans
approved by security
holders ..........................
Equity compensation plans
not approved by
security holders ............
Total ........................
*The Nobility Homes, Inc. 2011 Stock Incentive Plan was amended by the Board of Directors to extend the termination date from
June 2021 until June, 1, 2026.
Recent Sales of Unregistered Securities
None.
Issuer Repurchases of Equity Securities
The Company did not repurchase any shares of its common stock during the fourth quarter ended November 6. 2021.
In September 2021, the Company’s Board of Directors authorized management to repurchase up to 200,000 shares of the Company’s
common stock for fiscal year 2022 in the open market.
In September 2020 the Company’s Board of Directors authorized 200,000 share to be repurchased during fiscal year 2021 in the open
market. During the twelve months ended November 6, 2021 management repurchased an aggregate of 100,346 share of common
stock.
6
Item 6.
Reserved
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Nobility focuses on home buyers 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 aggressively targeted the retirement community market, which is made up of retirees moving to Florida and typically
purchasing or renting 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 2021 and 2020, Nobility continued to experience consumer demand for affordable manufactured homes in Florida.
Our three, four and five bedroom manufactured homes are favored by families, compared with the one, two and three-bedroom homes
that typically appeal to the retirement buyers who reside in the manufactured housing communities.
In an effort to make manufactured homes more competitive with site-built housing, financing packages are available through third-
party lenders to provide (1) 30-year financing, (2) an interest rate reduction program (buy-down), (3) combination land/manufactured
home loans, and (4) a 5% down payment program for qualified buyers.
Prestige maintains several outside financing sources that provide financing to retail homebuyers for its manufactured homes. The
Company continually tries to develop relationships with new lenders, since established lenders will occasionally leave manufactured
home lending. The lack of lenders in our industry, partly as a result of an increase in government regulations, still affects our results
by limiting many affordable manufactured housing buyers from purchasing homes.
Prestige’s wholly-owned subsidiary, Mountain Financial, Inc., is an independent insurance agent and licensed loan originator.
Mountain Financial provides automobile insurance, extended warranty coverage and property and casualty insurance to Prestige
customers in connection with their purchase and financing of manufactured homes.
The COVID-19 pandemic’s future impact on the housing market, production work force, supply of certain building products and the
operations of the Company is difficult to forecast. We were deemed an essential business and never closed our manufacturing plant or
retail sales centers. We implemented the recommended protocols to limit the exposure and transmission of COVID-19, but it has had
a negative impact on customer traffic (and corresponding sales) within our sales centers, operations of the manufacturing facility and
our business partners during the third and fourth quarters of fiscal 2021. We expect COVID-19 to continue to negatively impact the
Company and its retail customers during fiscal 2022.
The Company’s fiscal year ends on the first Saturday on or after October 31. The year ended November 6, 2021 (fiscal year 2021)
consisted of a fifty-three week period and the year ended October 31, 2020 (fiscal year 2020) consisted of a fifty-two week period.
7
Results of Operations
Total net sales in fiscal year 2021 increased 8% to $45,062,558 compared to $41,612,307 in fiscal year 2020. The Company reported
net income of $5,398,808 in fiscal year 2021, compared to a net income of $5,983,698 during fiscal year 2020. According to the Florida
Manufactured Housing Association, shipments for the industry in Florida for the period from November 2020 through October 2021
were up approximately 11% from the same period last year. During third and fourth quarters of 2021 our production of homes was
impacted due to the challenges in hiring additional and retaining production workers and the unpredictable absenteeism of the COVID-
19 quarantine. Production has incurred shortages in many building products which has limited production and delayed the completion
of the homes both at the manufacturing plant and the set up process in the field. The Company has continued to experience inflation in
most building products resulting in increases to our material and labor costs and a corresponding decrease in gross profits.
The following table summarizes certain key sales statistics and percent of gross profit as of and for fiscal years ended November 6,
2021 and October 31, 2020.
New homes sold through Company owned sales centers ..........
Pre-owned homes sold through Company owned sales centers
Homes sold to independent dealers ...........................................
Total new factory built homes produced ...................................
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 ...............................................................
2021
394
15
139
557
93,824
50,183
17%
15%
2020
343
12
225
547
91,161
43,758
$
$
19%
22%
Maintaining our strong financial position is vital for future growth and success. Our many years of experience in the Florida market,
combined with home buyers’ 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.
On June 5, 2021 we celebrated our 54th anniversary in business specializing in the design and production of quality, affordable
manufactured and modular homes. With multiple retail sales centers in Florida for over 31 years and an insurance agency subsidiary,
we are the only vertically integrated manufactured home company headquartered in Florida.
Insurance agent commissions in fiscal year 2021 were $283,154 compared to $283,999 in fiscal year 2020. We have established
appropriate reserves for policy cancellations based on numerous factors, including past transaction history with customers, historical
experience and other information, which is periodically evaluated and adjusted as deemed necessary. In the opinion of management,
no reserve was deemed necessary for policy cancellations at November 6, 2021 and October 31, 2020.
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, manufactured 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, septic tank and other expenses.
Gross profit as a percentage of net sales was 25% in fiscal year 2021 compared to 29% in fiscal year 2020. Our gross profit was
$11,432,196 for fiscal year 2021 compared to $12,130,487 for fiscal year 2020. The gross profit is dependent on the sales mix of
wholesale and retail homes and number of pre-owned homes sold. The decrease in gross profit as a percentage of net sales is
primarily due to the continued inflation, shortages in certain building products and factory workers to work on the production line to
build homes.
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 12% in fiscal year 2021 and in fiscal year 2020. Selling,
general and administrative expenses were $5,286,172 for fiscal year 2021 compared to $4,984,318 for fiscal year 2020. The dollar
8
increase in expenses in 2021 were due to the increase in variable expenses which were a direct result of employee benefits
compensation due to the increase in sales.
The Company earned interest in the amount of $180,635 in fiscal year 2021 compared to $286,897 in fiscal year 2020. Interest income
is dependent on our cash balance and available rates of return. The decrease during 2021 is primarily due to the decline in the investment
rates and the decrease in the monies invested.
The Company earned $59,072 from its joint venture, Majestic 21, in fiscal year 2021 compared to $80,091 in fiscal year 2020. 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 earnings from the Majestic 21 loan portfolio will continue to decrease due to the amortization, maturity and payoff
of the loans.
We received $246,216 in fiscal year 2021 and $421,099 in fiscal year 2020 under an escrow arrangement related to a Finance Revenue
Sharing Agreement (FRSA) between 21st Mortgage Corporation and the Company. The distributions from the escrow account, related
to certain loans financed by 21st Mortgage Corporation, are recorded in income by the Company as received, which has been the
Company’s past practice. The earnings from the FRSA loan portfolio will continue to decrease due to the amortization and payoff of
the loans.
The Company realized pre-tax income of $7,118,733 in fiscal year 2021 compared to a pre-tax income of $7,869,085 in fiscal year
2020.
The Company recorded an income tax expense of $1,719,925 in fiscal year 2021 compared to $1,885,387 in fiscal year 2020.
Net income in fiscal year 2021 was $5,398,808 or $1.50 per basic and diluted share and net income in fiscal year 2020 was $5,983,698
or $1.64 per basic and diluted share.
Liquidity and Capital Resources
Cash and cash equivalents were $36,126,059 at November 6, 2021 compared to $30,305,902 at October 31, 2020. Certificates of deposit
were $2,093,015 at November 6, 2021 compared to $4,602,307 at October 31, 2020. Short-term investments were $621,928 at
November 6, 2021 compared to $358,960 at October 31, 2020. Working capital was $35,563,355 at November 6, 2021 compared to
$38,865,240 at October 31, 2020. A cash dividend was paid from our cash reserves in March 2021 in the amount of $1.00 per share
($3,632,100). During fiscal 2021, the Company repurchased an aggregate of 100,346 shares of its common stock for an aggregate of
$3,478,553. The Company purchased the land for the Tavares retail sales center in January 2021 for $245,000, land in Ocala for a future
retail sales center in February 2021 for $1,040,000 and land for the Ocala South retail sales center in March 2021 for $500,000. During
fiscal 2020, the Company repurchased an aggregate of 33,100 shares of its common stock for an aggregate of $822,450. A cash dividend
was paid from the Company’s cash reserves in March 2020 in the amount of $1.00 per share ($3,630,970). We own the entire inventory
for our Prestige retail sales centers which includes new, pre-owned and repossessed or foreclosed homes and do not incur any third party
floor plan financing expenses. In December 2021, the Company broke ground to build an 11,900 square foot frame shop at a cost of
approximately $1.1 million to manufacture the steel frames for our homes, on our current manufacturing plant property in Ocala Florida.
The Company currently has no line of credit facility and no debt and does not believe that such a facility is currently necessary to its
operations. The Company also has approximately $3.9 million of cash surrender value of life insurance which it may be able to access
as an additional source of liquidity though the Company has not currently viewed this to be necessary. As of November 6, 2021, the
Company continued to report a strong balance sheet which included total assets of approximately $66 million which was funded
primarily by stockholders’ equity of approximately $49 million.
Looking ahead, the Company’s strong balance sheet and significant cash reserves accumulated in profitable years has allowed the
Company to remain sufficiently liquid to allow the continuation of operations and should enable the Company to take advantage of
any market opportunities. Management believes it has sufficient levels of liquidity as of the date of the filing of this Form 10-K to
allow the Company to operate into the foreseeable future.
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 where
judgment and estimates are applied.
9
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 revenue 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.
Sales of homes to affiliated entities that are subject to contingent payment terms are considered inventory consignment arrangements.
Revenue from such arrangements is recognized when the homes are sold to the end users and payment is collected by the affiliated
entity.
See Note 4 “Related Party Transactions” to the Company’s financial statement included herein
The Company recognizes revenue 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 was deemed necessary for policy cancellations
at November 6, 2021 or October 31, 2020.
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.
Rebate Program
The Company has a rebate program for some dealers, based upon the number and type of homes purchased, 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.
Off-Balance Sheet Arrangements
As part of our ongoing business, we generally 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.
10
As of November 6, 2021, we are not involved in any material unconsolidated entities (other than the Company’s investments in
Majestic 21).
Forward Looking Statements
Certain statements in this report are unaudited or forward-looking statements within the meaning of the federal securities laws.
Although Nobility believes that the amounts and 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, the potential adverse impact on our business caused by the COVID-19 pandemic or other
health pandemics, competitive pricing pressures at both the wholesale and retail levels, inflation, increasing material costs (including
forest based products) or availability of materials due to potential supply chain interruptions (such as current inflation with forest
products and supply issues with vinyl siding and PVC piping), 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, any armed conflict involving the
United States and the impact of inflation.
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this item.
11
Item 8.
Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm—Daszkal Bolton LLP ......................................................................... 13
Consolidated Balance Sheets ............................................................................................................................................................ 14
Consolidated Statements of Income .................................................................................................................................................. 15
Consolidated Statements of Changes in Stockholders’ Equity ......................................................................................................... 16
Consolidated Statements of Cash Flows ........................................................................................................................................... 17
Notes to Consolidated Financial Statements ..................................................................................................................................... 18
12
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Nobility Homes, Inc.
Ocala, Florida
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Nobility Homes, Inc. (the “Company”) at November 6, 2021 and
October 31, 2020, and the related consolidated statements of comprehensive income, changes in stockholders’ equity, and cash flows
for each of the years in the two-year period ended November 6, 2021, and the related notes (collectively referred to as the consolidated
financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position
of the Company and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required
to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Daszkal Bolton LLP
We have served as the Company’s auditor since 2018.
Jupiter, Florida
February 4, 2022
13
Nobility Homes, Inc.
Consolidated Balance Sheets
November 6, 2021 and October 31, 2020
November 6, 2021
October 31,2020
Assets
Current assets:
Cash and cash equivalents ........................................................................................................ $ 36,126,059 $
Certificates of deposit ...............................................................................................................
Short-term investments .............................................................................................................
Accounts receivable—trade......................................................................................................
Note receivable .........................................................................................................................
Mortgage notes receivable ........................................................................................................
Income taxes receivable ...........................................................................................................
Inventories ................................................................................................................................
Pre-owned homes, net ..............................................................................................................
Prepaid expenses and other current assets ................................................................................
2,093,015
621,928
680,228
32,825
22,589
—
10,394,288
542,081
1,821,267
Total current assets .........................................................................................................
Property, plant and equipment, net ....................................................................................................
Pre-owned homes, net ........................................................................................................................
Note receivable, less current portion ..................................................................................................
Mortgage notes receivable, less current portion.................................................................................
Mobile home park note receivable
Other investments ..............................................................................................................................
Deferred income taxes .......................................................................................................................
Operating lease right of use asset .......................................................................................................
Cash surrender value of life insurance ...............................................................................................
Other assets ........................................................................................................................................
52,334,280
6,847,780
755,394
38,895
222,459
72,731
1,788,436
—
1,597
3,966,939
156,287
30,305,902
4,602,307
358,960
790,046
35,997
20,162
105,676
9,294,677
441,937
1,014,849
46,970,513
5,142,714
1,077,240
6,573
227,509
—
1,729,364
3,598
715,368
3,795,902
156,287
Total assets ...................................................................................................................... $
66,184,798 $
59,825,068
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable ..................................................................................................................... $
Accrued compensation .............................................................................................................
Accrued expenses and other current liabilities .........................................................................
Income taxes payable ...............................................................................................................
Operating lease obligation ........................................................................................................
Customer deposits ....................................................................................................................
939,964 $
555,222
1,513,967
89,083
1,597
13,671,092
Total current liabilities ....................................................................................................
16,770,925
Deferred income taxes ..............................................................................................................
Operating lease obligation, less current portion .......................................................................
Total liabilities ................................................................................................................
99,568
—
16,870,493
928,095
670,520
1,383,833
—
24,192
5,098,633
8,105,273
—
778,519
8,883,792
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,
3,532,100 and 3,631,196 outstanding, respectively .............................................................
Additional paid in capital .........................................................................................................
Retained earnings .....................................................................................................................
Less treasury stock at cost, 1,832,807 shares in 2021 and 1,733,711 shares in 2020 ...............
—
—
536,491
10,766,253
59,742,759
(21,731,198)
536,491
10,694,554
57,976,051
(18,265,820)
Total stockholders’ equity...............................................................................................
49,314,305
50,941,276
Total liabilities and stockholders’ equity ........................................................................ $
66,184,798 $
59,825,068
The accompanying notes are an integral part of these financial statements.
14
Nobility Homes, Inc.
Consolidated Statements of Income
For the years ended November 6, 2021 and October 31, 2020
Year Ended
November 6,
2021
October 31,
2020
Net sales ............................................................................................................................................. $
Cost of sales .......................................................................................................................................
45,062,558 $
(33,630,362)
41,612,307
(29,481,820)
Gross profit ...............................................................................................................................
Selling, general and administrative expenses .....................................................................................
11,432,196
(5,286,172)
12,130,487
(4,984,318)
Operating income .....................................................................................................................
6,146,024
7,146,169
Other income (loss):
Interest income .........................................................................................................................
Undistributed earnings in joint venture—Majestic 21 ..............................................................
Proceeds received under escrow arrangement ..........................................................................
Increase (decrease) in fair value of equity investment .............................................................
Gain on sale of assets ...............................................................................................................
Miscellaneous ...........................................................................................................................
Total other income ..........................................................................................................
180,635
59,072
246,216
262,968
—
223,818
972,709
286,897
80,091
421,099
(155,406)
32,041
58,194
722,916
Income before provision for income taxes .........................................................................................
Income tax expense ............................................................................................................................
7,118,733
(1,719,925)
7,869,085
(1,885,387)
Net income ......................................................................................................................
5,398,808
5,983,698
Weighted average number of shares outstanding:
Basic .........................................................................................................................................
Diluted ......................................................................................................................................
3,597,756
3,607,448
3,638,592
3,639,950
Net income per share:
Basic ......................................................................................................................................... $
Diluted ...................................................................................................................................... $
1.50 $
1.50 $
1.64
1.64
The accompanying notes are an integral part of these financial statements.
15
Nobility Homes, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
For the years ended November 6, 2021 and October 31, 2020
Balance at October 31, 2020
Cash dividend
Purchase of treasury stock .
Stock-based compensation
Exercise of employee stock
options
Net income ........................
Additional
Paid-in
Capital
Common
Stock
Common
Stock Shares
3,631,196 $ 536,491 $10,694,554 $57,976,051 $
—
(100,346)
—
— (3,632,100 )
—
—
—
69,749
—
—
—
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Treasury
Stock
Total
— $ (18,265,820) $ 50,941,276
(3,632,100)
—
—
(3,478,553)
—
69,749
—
—
(3,478,553)
1,250
—
—
—
1,950
—
— 5,398,808
—
—
13,175
—
15,125
5,398,808
Balance at November 6, 2021
3,532,100 $ 536,491 $10,766,253 $59,742,759 $
— $ (21,731,198) $ 49,314,305
Balance at November 2, 2019
Adoption of ASU 2016-01
Adoption of ASU 2016-02
Balance at November 2, 2019
as adjusted .........................
Cash dividend ....................
Purchase of treasury stock .
Stock-based compensation.
Net income .........................
3,664,070 $ 536,491 $10,687,662 $55,298,750 $
—
—
389,164
(64,591 )
—
—
—
—
3,664,070
—
(33,100)
226
—
536,491 10,687,662
—
—
—
—
55,623,323
— (3,630,970 )
—
—
—
6,892
— 5,983,698
389,164 $ (17,445,752) $ 49,466,315
—
(389,164)
(64,591)
—
—
—
—
—
—
—
—
—
(17,445,752) 49,401,724
(3,630,970)
(822,450)
9,274
5,983,698
(822,450)
2,382
—
Balance at October 31, 2020 ..
3,631,196 $ 536,491 $10,694,554 $57,976,051 $
— $ (18,265,820) $ 50,941,276
The accompanying notes are an integral part of these financial statements.
16
Nobility Homes, Inc.
Consolidated Statements of Cash Flows
For the years ended November 6, 2021 and October 31, 2020
Year Ended
November 6,
2021
October 31,
2020
Cash flows from operating activities:
Net income ................................................................................................................................................. $
Adjustments to reconcile net income to net cash provided by operating activities:
5,398,808 $
5,983,698
Depreciation ....................................................................................................................................
Deferred income taxes .....................................................................................................................
Undistributed earnings in joint venture—Majestic 21 .....................................................................
Gain on disposal of property, plant and equipment .........................................................................
(Increase) decrease in fair value of equity investments ...................................................................
Stock-based compensation ..............................................................................................................
Amortization of operating lease right of use assets .........................................................................
Decrease (increase) in:
Accounts receivable—trade ..................................................................................................
Inventories ............................................................................................................................
Pre-owned homes ..................................................................................................................
Prepaid expenses and other current assets .............................................................................
Interest receivable .................................................................................................................
Income taxes receivable ........................................................................................................
(Decrease) increase in:
Accounts payable ..................................................................................................................
Accrued compensation ..........................................................................................................
Accrued expenses and other current liabilities ......................................................................
Income taxes payable ............................................................................................................
Customer deposits .................................................................................................................
Net cash provided by operating activities ..................................................................................................
Cash flows from investing activities:
Purchase of property, plant and equipment ................................................................................................
Purchase of certificates of deposit ..............................................................................................................
Proceeds from certificates of deposit .........................................................................................................
Proceeds from disposal of property, plant and equipment ..........................................................................
Collections on interest receivable ..............................................................................................................
Collections on mortgage notes receivable ..................................................................................................
Collections on equipment and other notes receivable ................................................................................
Issuance of equipment note receivable .......................................................................................................
Issuance of mobile home park not receivable ............................................................................................
Increase in cash surrender value of life insurance ......................................................................................
Net cash provided by investing activities ...................................................................................................
186,320
103,166
(59,072)
—
(262,968)
69,750
713,771
109,818
(1,099,611)
221,702
(806,420)
(18,328)
—
11,869
(115,298)
130,135
194,759
8,572,459
13,350,860
(1,891,386)
—
2,496,000
—
31,620
2,623
39,350
(68,500)
(72,731)
(171,037)
365,939
Cash flows from financing activities:
Payment of cash dividend ..........................................................................................................................
Proceeds from exercise of employee stock options ....................................................................................
Purchase of treasury stock ..........................................................................................................................
Proceeds from paycheck protection program
Return of proceeds from paycheck protection program
Reduction of operating lease obligation .....................................................................................................
Net cash used in financing activities ..........................................................................................................
Increase in cash and cash equivalents ...................................................................................................................
Cash and cash equivalents at beginning of year....................................................................................................
Cash and cash equivalents at end of year .............................................................................................................. $
(3,632,100)
15,125
(3,478,553)
—
—
(801,114)
(7,896,642)
5,820,157
30,305,902
36,126,059 $
180,047
83,724
(80,091)
(32,041)
155,406
9,274
36,340
561,792
1,322,101
(379,946)
202,913
(150,459)
(105,676)
(183,121)
(78,106)
(672,119)
(2,016,132)
2,075,815
6,913,419
(318,215)
(20,000)
5,574,124
33,139
147,603
2,373
84,430
—
(177,928)
5,325,526
(3,630,970)
—
(822,450)
1,449,700
(1,449,700)
(13,588)
(4,467,008)
7,771,937
22,533,965
30,305,902
Supplemental disclosure of cash flow information:
Income taxes paid ................................................................................................................................................. $
1,422,000 $
4,002,000
The accompanying notes are an integral part of these financial statements.
17
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”), and Prestige’s wholly-owned
subsidiaries, Mountain Financial, Inc., an independent insurance agency and licensed mortgage loan originator and Majestic Homes,
Inc., (collectively the “Company”). The Company is engaged in the manufacture and sale of manufactured and 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. At November 6, 2021, Prestige operated ten Florida retail
sales centers: Ocala (2), Chiefland, Auburndale, Inverness, Hudson, Tavares, Yulee, 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 U.S. GAAP requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These
estimates and assumptions are based upon management’s best knowledge of current events and actions that the Company may take in
the future. The Company is subject to uncertainties such as the impact of future events, economic, environmental and political factors
and changes in the Company’s business environment; therefore, actual results could differ from these estimates. Accordingly, the
accounting estimates used in the preparation of the Company’s consolidated financial statements will change as new events occur, as
more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Changes in
estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected
in the reported financial condition and results of operations; if material, the effects of changes in estimates are disclosed in the notes to
the consolidated financial statements. Significant estimates and assumptions by management affect: valuation of pre-owned homes,
the allowance for doubtful accounts, the carrying value of long-lived assets, the provision for income taxes and related deferred tax
accounts, certain accrued expenses and contingencies, warranty reserve and stock-based compensation.
Fiscal Year – The Company’s fiscal year ends on the first Saturday on or after October 31. The year ended November 6, 2021 (fiscal
year 2021) consisted of a fifty-three week period and the year ended October 31, 2020 (fiscal year 2020) consisted of a fifty-two week
period.
Revenue Recognition – The Company’s revenue comes substantially from the sale of manufactured housing, modular housing and
park models, along with freight billed to customers, parts sold and aftermarket services.
The Company recognizes revenue following the comprehensive framework of Financial Accounting Standards Board ASU No. 2014-
09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09), which established a methodology for determining how
much revenue to recognize and when it should be recognized through application of the following five-step approach:
1. Identify the contract(s) with a customer;
2. Identify each performance obligation in the contract;
3. Determine the transaction price;
4. Allocate the transaction price to each performance obligation; and
5. Recognize revenue when or as each performance obligation is satisfied.
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 accompanying notes are an integral part of these financial statements.
18
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 was deemed necessary for policy cancellations
at November 6, 2021 and October 31, 2020.
Sales of homes to affiliated entities that are subject to contingent payment terms are considered inventory consignment arrangements.
Revenue from such arrangements is recognized when the homes are sold to the end users and payment is collected by the affiliated
entity.
See Note 4 “Related Party Transactions”.
Revenues by Products and Services – Revenues by net sales from manufactured housing, pre-owned homes, and insurance agent
commissions for the years ended November 6, 2021 and October 31, 2020 are as follows:
Manufactured housing ............................................. $
Pre-owned homes ....................................................
Insurance agent commissions ..................................
2021
43,963,239
816,165
283,154
$
2020
40,775,887
552,421
283,999
Total net sales ................................................ $
45,062,558
$
41,612,307
Cash and Cash Equivalents – The Company considers all money market accounts and highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.
Certificates of Deposit – Certificates of deposits are recorded at cost plus accrued interest and have maturities of twelve months or
less.
Accounts Receivable – Accounts receivable are stated at net realizable value. An allowance for doubtful accounts is provided based
on prior collection experiences and management’s analysis of specific accounts. At November 6, 2021 or October 31, 2020, in the
opinion of management, all accounts were considered fully collectible and, accordingly, no allowance was deemed necessary.
Accounts receivable fluctuate 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.
Investments – The Company’s investments consist of equity securities of a public company. Investments with maturities of less than
one year are classified as short-term investments. 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, were recorded in accumulated
other comprehensive income. Upon the Company’s adoption of ASU 2016-01, unrealized gains and losses on these available-for-sale
securities, are reflected in the statement of income and comprehensive income.
Inventories – New home inventory is carried at the lower of cost or net realizable 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
The accompanying notes are an integral part of these financial statements.
19
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 net realizable value.
Other pre-owned homes are acquired (Repossessions Inventory) as a convenience to the Company’s joint venture partner, 21st
Mortgage Corporation. This inventory has been repossessed by 21st Mortgage Corporation or through mortgage foreclosure. The
Company acquired this inventory at the amount of the uncollected balance of the financing at the time of the foreclosure/repossessions
by 21st Mortgage Corporation. The Company records this inventory at cost determined on the specific identification method. All of
the refurbishment costs are paid by 21st Mortgage Corporation. This arrangement assists 21st Mortgage Corporation with liquidation of
their repossessed inventory. The timing of these repurchases by the Company is unpredictable as it is based on the repossessions 21st
Mortgage Corporation incurs in the portfolio. When the home is sold, the Company retains the cost of the home, an interest factor on
the cost of the home and a sales commission, from the sales proceeds. Any additional proceeds are paid to 21st Mortgage. Any
shortfall from the proceeds to cover these amounts is paid by 21st Mortgage to the Company. As the Company has no risk of loss on
the sale, there is no valuation allowance necessary for this inventory.
Inventory held at consignment locations by affiliated entities is included in the Company’s inventory on the Company’s consolidated
balance sheets. Consigned inventory was $794,766 and $1,277,681 as of November 6, 2021 and October 31, 2020, respectively.
Pre-owned homes are also taken as trade-ins on new home sales (Trade-in Inventory). This inventory is recorded at estimated actual
wholesale value, which is generally lower than market value, determined on the specific identification method, plus refurbishment
costs incurred to date to bring the inventory to a more saleable state. The Trade-in Inventory amount is reduced where necessary on a
unit specific basis by a valuation reserve, which management believes results in inventory being valued at market.
Other inventory costs are determined on a first-in, first-out basis.
See Note 6 “Inventories”.
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 joint
decisions with the joint venture partner are made which most significantly impact Majestic 21 economic performance therefore, the
Company is not required to consolidate Majestic 21 with the accounts of Nobility Homes in accordance with the Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) No. 810, “Consolidations” (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. Based
on management’s evaluation, there was no impairment of this investment at November 6, 2021 or October 31, 2020.
The Company entered into an arrangement in 2002 with 21st Mortgage to repurchase certain pre-owned homes. Under this
arrangement or any other arrangement, 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. However, the Company buys from 21st Mortgage
foreclosed/repossessed units from the Majestic 21 portfolio and acts as a remarketing agent. It resells those units through the
Company’s network of retail centers which management believes benefits the historical loss experience of the joint venture. The only
impact on the Company’s operations from this arrangement are commissions earned on the resale of these units and interest earned for
the Company’s carrying costs of the units while in inventory.
See Note 14 “Commitments and Contingent Liabilities”.
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.
The accompanying notes are an integral part of these financial statements.
20
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 typically receive any deposits from independent
dealers.
Company Owned Life Insurance – The Company has purchased life insurance policies on certain key executives. Company owned
life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash
surrender value adjusted for other charges or other amounts due that are probable at settlement.
Warranty Costs – The Company provides for a warranty as the manufactured homes are sold. Amounts related to these warranties for
fiscal years 2021 and 2020 are as follows:
Beginning accrued warranty expense ............................ $
Less: reduction for payments ........................................
Plus: additions to accrual...............................................
2021
125,000
(465,549)
465,549
$
2020
125,000
(419,731)
419,731
Ending accrued warranty expense ................................. $
125,000
$
125,000
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. Accrued warranty costs are included in accrued expenses in the accompanying
consolidated balance sheets.
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 home 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, septic tanks and other setup costs and are included in accrued expenses in the accompanying consolidated balance sheets.
Stock-Based Compensation – The Company has 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 some dealers based upon the number and type of home purchased, 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. There were no rebates earned by dealers during fiscal years 2021 and 2020.
Advertising – Advertising for Prestige retail sales centers consists primarily of internet, newspaper, radio and television advertising.
All costs are expensed as incurred. Advertising expense amounted to approximately $141,581 and $144,600 for fiscal years 2021 and
2020, 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
The accompanying notes are an integral part of these financial statements.
21
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.
Net Income per Share – These financial statements include “basic” and “diluted” net income per share information for all periods
presented. The basic net income per share is calculated by dividing net income by the weighted-average number of shares outstanding.
The diluted net income per share is calculated by dividing net income by the weighted-average number of shares outstanding, adjusted
for dilutive common shares.
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 income as well as other comprehensive income or loss. The
Company’s other comprehensive income or loss consists of unrealized gains or losses on available-for-sale securities, net of related
taxes.
Segments – The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information on a
company-wide or consolidated basis. Accordingly, the Company accounts for its operations in accordance with FASB ASC No. 280,
“Segment Reporting.” No segment disclosures have been made as the Company considers its business activities as a single segment.
Major Customers –There were no customers that accounted for more than 10% of our total net sales in fiscal year 2021.
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.
Concentration of Retail Financing Sources –There are two national lenders that service the manufactured housing industry with
several others who specialize in government insured loans (Fannie, Freddie, FHA, VA, etc.). With only a few lenders dedicated to our
industry, the loss of any of them could adversely affect our retail sales.
Recently Issued or Adopted Accounting Pronouncements – In January 2016, the FASB issued ASU No. 2016-01, “Financial
Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The amendments require all equity
investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for
under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to
present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change
in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value
option for financial instruments. In addition, the amendments eliminate the requirement to disclose the method(s) and significant
assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the
balance sheet. The Company adopted ASU 2016-01 resulting in recognition changes in the fair value of equity investment in earnings.
NOTE 2 Investments
The following is a summary of short-term investments (available for sale):
Equity securities in a public company ................ $
167,930
$
Amortized Cost
November 6, 2021
Gross
Unrealized
Gains
453,998
Gross
Unrealized
Losses
Estimated Fair
Value
$
—
$
621,928
The accompanying notes are an integral part of these financial statements.
22
Equity securities in a public company ................ $
167,930
$
Amortized Cost
October 31, 2020
Gross
Unrealized
Gains
191,030
Gross
Unrealized
Losses
Estimated Fair
Value
$
—
$
358,960
The fair values were estimated based on unadjusted quoted prices at each respective period end.
NOTE 3 Fair Values of Financial Investments
The carrying amount of cash and cash equivalents, accounts and notes receivable, accounts payable and accrued expenses
approximates fair value because of the short maturity of those instruments.
The Company accounts for the fair value of financial investments in accordance with FASB ASC No. 820, “Fair Value
Measurements” (ASC 820).
ASC 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 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 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, 2021 and October 31, 2020.
Equity securities in a public company ........................................... $
Equity securities in a public company ........................................... $
November 6, 2021
Level 1
621,928
Level 2
$ —
Level 3
$ —
October 31, 2020
Level 1
358,960
Level 2
$ —
Level 3
$ —
NOTE 4 Related Party Transactions
Affiliated Entities
TLT, Inc. – Our 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”). Our President owns between a 24.75% and a 56.0% direct and indirect
interest in each of these limited partnerships. Our Executive Vice President owns between a 23.0% and a 57.75% direct and indirect
interest in each of these limited partnerships. The TLT Communities have purchased manufactured homes exclusively from the
Company since 1990. Sales to TLT Communities were not significant during fiscal years 2021 and 2020.
Repurchase of Common Stock – In July 2021, the Company repurchased 100,000 shares of common stock from our President at
$34.68 per share.
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.
The accompanying notes are an integral part of these financial statements.
23
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.
See Note 14 “Commitments and Contingent Liabilities”.
We received no distributions from the joint venture in fiscal year 2021 or 2020.
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.
NOTE 6 Inventories
A breakdown of the elements of inventory at November 6, 2021 and October 31, 2020 is as follows:
Raw materials ...................................................... $
Work-in-process ..................................................
Inventory consigned to affiliated entities ............
Finished homes ...................................................
Model home furniture .........................................
November 6, 2021
2,225,532
97,021
794,766
7,140,880
136,089
Inventories ................................................. $
10,394,288
Pre-owned homes ............................................... $
Less homes expected to sell in 12 months...........
1,297,475
(542,081)
Pre-owned homes, long-term ..................... $
755,394
October 31, 2020
1,203,282
107,651
1,277,681
6,543,861
162,202
9,294,677
1,686,373
(441,937)
1,077,240
$
$
$
$
The accompanying notes are an integral part of these financial statements.
24
NOTE 7 Property, Plant and Equipment
Property, plant and equipment, along with their estimated useful lives and related accumulated depreciation are summarized as
follows:
Land ........................................................
Land improvements ................................
Buildings and improvements ..................
Machinery and equipment ......................
Furniture and fixtures .............................
Construction in progress
Less accumulated depreciation ...............
Range of Lives in Years
—
10-20
15-40
3-10
3-10
—
$
November 6, 2021
4,880,416
1,245,975
2,579,772
1,038,455
301,889
—
10,046,507
(3,198,727)
$
October 31, 2020
3,092,463
1,245,975
2,529,048
985,746
301,889
—
8,155,121
(3,012,407)
$
6,847,780
$
5,142,714
Depreciation expense during the years ended November 6, 2021 and October 31, 2020 totaled $186,320 and $180,047, respectively.
NOTE 8 Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities are comprised of the following:
Accrued warranty expense ............................... $
Accrued property and sales taxes .....................
Other accrued expenses ....................................
Total accrued expenses and other current
liabilities ............................................ $
November 6, 2021
125,000
351,784
1,037,183
$
October 31, 2020
125,000
370,694
888,139
1,513,967
$
1,383,833
NOTE 9 Proceeds Received Under Escrow Arrangement
The Company received $246,216 in fiscal year 2021 and $421,099 in fiscal year 2020 under an escrow arrangement related to a
Finance Revenue Sharing Agreement between 21st Mortgage Corporation and the Company. The distributions from the escrow
account, related to certain loans financed by 21st Mortgage Corporation, are recorded in income by the Company when received,
which has been the Company’s past practice.
NOTE 10 Income Taxes
The Company computes income tax expense using the liability method. Under this method, deferred income taxes are provided, to the
extent considered realizable by management, for basis differences of assets and liabilities for financial reporting and income tax
purposes.
The Company follows guidance issued by the FASB with respect to accounting for uncertainty in income taxes. A tax position is
recognized as a benefit only if it is “more-likely-than-not” that the tax position would be sustained in a tax examination, with a tax
examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of
being realized on examination. For tax positions not meeting the “more-likely-than-not” test, no tax benefit is recorded.
The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of the state of Florida. The Company’s
income tax returns for the past three years are subject to examination by tax authorities, and may change upon examination.
The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company did not reflect
any amounts for interest and penalties in its 2021 or 2020 statements of operations, nor are any amounts accrued for interest and
penalties at November 6, 2021 and October 31, 2020.
The accompanying notes are an integral part of these financial statements.
25
The provision for income taxes for the years ended consists of the following:
November 6, 2021
October 31, 2020
Current tax expense:
Federal .................................................... $
State ........................................................
Deferred tax (benefit) .......................................
1,327,166
289,593
103,166
Provision for income taxes ..................... $
1,719,925
$
$
1,524,703
283,877
76,807
1,885,387
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:
Stock option expirations ................
Decrease in FL corporate tax rate
Other comprehensive income ........
Other .............................................
November 6, 2021
1,494,934
October 31, 2020
1,652,508
$
250,708
—
(135)
—
(25,582)
277,135
—
(3,306)
—
(40,950)
Provision for income taxes ..................... $
1,719,925
$
1,885,387
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, 2021
October 31, 2020
Deferred tax assets:
Allowance for doubtful accounts ............... $
Inventories .................................................
Prepaid Expenses .......................................
Accrued expenses ......................................
Other assets ................................................
Lease right of use liability .........................
Stock-based compensation .........................
Total deferred tax assets ...................
Deferred tax liabilities:
Depreciation...............................................
Carrying value of investments ...................
Amortization ..............................................
Prepaid expenses ........................................
Lease right of use asset ..............................
$
55,455
—
14,295
107,893
17,789
382
19,502
215,316
(135,466)
(109,146)
(37,374)
(32,516)
(382)
Net deferred tax assets (liabilities) ... $
(99,568)
$
56,864
46,790
—
112,999
23,224
196,839
2,894
439,610
(141,270)
(47,435)
(38,324)
(33,562)
(175,421)
3,598
The accompanying notes are an integral part of these financial statements.
26
These amounts are included in the accompanying consolidated balance sheets under the following captions:
November 6, 2021
October 31, 2020
Current assets (liabilities):
Deferred tax assets .................................. $
Deferred tax liabilities ............................
Net current deferred tax assets ......
$
—
—
—
Non-current assets (liabilities): ........................
Deferred tax assets ..................................
Deferred tax liabilities ............................
Net non-current deferred tax assets
(liabilities) ................................
Net deferred tax assets
215,316
(314,884)
(99,566)
(liabilities) ....................... $
(99,568)
$
—
—
—
439,610
(436,012)
3,598
3,598
In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized. For fiscal years 2021 and 2020, the Company determined that a
valuation reserve for the Company’s deferred tax assets was not considered necessary as the deferred tax assets were fully realizable.
NOTE 11 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
100,346 and 33,100 shares of its common stock during fiscal years 2021 and 2020, respectively.
NOTE 12 Stock Option Plan
In June 2011, the Company’s Board of Directors adopted and the Company’s shareholders later approved, the Nobility Homes, Inc.
2011 Stock Incentive Plan (the “Plan”), providing for the issuance of options to purchase shares of common stock, stock appreciation
rights and other stock-based awards to employees and non-employee directors. A total of 300,000 shares were reserved for issuance
under the Plan, all of which may be issued pursuant to the exercise of incentive stock options. The Plan was amended by the Board of
Directors to extend the termination date from June 2021 until June 1, 2026. At November 6, 2021, 252,700 options were available for
future grant under the Plan and 47,300 options were outstanding.
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 2021 and 2020, the Company recognized compensation cost related to the
vesting of stock options of approximately $69,750 and $3,624 respectively.
The accompanying notes are an integral part of these financial statements.
27
A summary of information with respect to options granted is as follows:
Outstanding at November 2, 2019 ........................................
2,750 $
12.10 $
Number of
Shares
Stock Option Price
Range
Weighted
Average
Exercise
Price
12.10
Aggregate
Intrinsic
Value
Granted .......................................................................
Exercised ....................................................................
Canceled .....................................................................
24,550
—
—
24.00
—
—
Outstanding at October 31, 2020 ..........................................
27,300 $ 12.10 - 24.00
Granted .......................................................................
Exercised ....................................................................
Canceled .....................................................................
21,250
1,250
—
25.75
12.10
—
24.00
—
—
23.36
25.75
12.10
—
Outstanding at November 6, 2021 ........................................
47,300 $ 12.10 - 25.75 $
24.41 $ 453,662
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 2021 and the exercise price times the number of
shares, that would have been received by the option holder had the option holder exercised their options on November 6, 2021.
The following table summarizes information about the outstanding stock options at November 6, 2021:
Options Outstanding
Options Exercisable
Exercise Price
$ 12.10
$ 24.00
$ 25.75
$
Shares
Outstanding
1,500
24,550
21,250
47,300
Weighted
Average
Remaining
Contractual
Life (years)
Weighted
Average
Exercise
Price
Number
Exercisable
Weighted
Average
Exercise Price
$
1
4
5
4.35
$
12.10
24.00
25.75
24.41
1,500 $
24,550
21,250
47,300 $
12.10
24.00
25.75
24.41
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.
NOTE 13 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 discretionary matching contribution,
up to a maximum of 6% of an employee’s compensation. The contribution expense charged to operations amounted to approximately
$219,900 and $175,000 in fiscal years 2021 and 2020, respectively.
NOTE 14 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 December 2021. The Company also leases certain equipment under unrelated operating
leases.
The accompanying notes are an integral part of these financial statements.
28
On November 3, 2019, the Company adopted ASC Topic 842 using the modified retrospective method applied to leases that were in
place as of November 3, 2019. Results for reporting periods beginning after November 3, 2019 are presented under Topic 842, while
prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840.
The Company elected the package of practical expedients permitted under the transition guidance, which allows for the historical lease
classification to be carried forward, the Company’s assessments on whether a contract is or contains a lease, and the Company’s initial
direct costs for any leases that exist prior to adoption of the new standard. The Company also elected the short-term lease recognition
exemption for all leases that qualify.
To determine the present value of minimum future lease payments for operating leases at November 3, 2019, the Company was required
to estimate a rate of interest that it would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease
payments in a similar economic environment (the “incremental borrowing rate” or “IBR”). The Company determined the appropriate
IBR by identifying a reference rate and making adjustments that take into consideration financing options and certain lease-specific
circumstances. For the reference rate, the Company used mortgage interest rates for similar terms.
Right of use assets are included as a non-current asset in the amount of $1,597, net of amortization in the consolidated Balance Sheet
as of November 6, 2021.
Based on the terms of the lease agreements, all of the Company’s leases are classified as operating leases. The weighted average
remaining lease term and weighted average discount rate of the operating leases is .08 years and 3.0%, respectively.
Minimum rental payments under operating leases are recognized on a straight-line basis over the term of the lease. Individual
components of the total lease cost incurred by the Company in the amount of $179,802 for the twelve months ended November 6,
2021.
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.
The accompanying notes are an integral part of these financial statements.
29
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements with accountants on accounting and financial disclosure matters.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures. The Company’s Chief Executive Officer (principal executive officer) and Chief
Financial Officer (principal financial officer) have evaluated the effectiveness of the Company’s disclosure controls and procedures
(as such term is defined in Rules 13a–15(e) and 15d–15(e) 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, our Chief Executive
Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the
Evaluation Date.
Management’s Annual Report on Internal Control over Financial Reporting. The Company’s management is responsible for
establishing and maintaining adequate and 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) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and disposition of assets of the issuer; (ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the issuer are being made in accordance with authorizations of management and directors of the issuer; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer
Company 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, 2021 based
on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and determined that its internal controls were effective.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control
over financial reporting.
Changes in internal control over financial reporting. There were no changes in our internal controls over financial reporting that
occurred during the fourth quarter of fiscal 2021 that have materially affected, or are reasonably likely to materially affect, the
Company’s internal controls over financial reporting.
Item 9B.
Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
The accompanying notes are an integral part of these financial statements.
30
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
Information is incorporated by reference pursuant to Instruction G of Form 10-K from its definitive proxy statement for the 2022
annual meeting of shareholders.
The following table provides the names, ages and business experience for the past five years for each of Nobility’s executive officers.
Executive officers are each elected for one year terms.
Executive Officers
Terry E. Trexler (82) ........... Chairman of the Board and President of Nobility since 1967; Mr. Trexler is also President of TLT, Inc.
Thomas W. Trexler (58) ..... Executive Vice President and Chief Financial Officer of Nobility since December 1994; President of
Prestige Home Centers, Inc. since June 1995; Director of Prestige since 1993 and Vice President from
1991 to June 1995; President of Mountain Financial, Inc. since August 1992; Vice President of TLT,
Inc. since September 1991.
Jean Etheredge (76)............. Secretary since 1967.
Lynn J. Cramer, Jr. (76) ..... Treasurer since 1980.
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.
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, Nobility Homes, Inc., 3741 SW 7th Street, Ocala, Florida
34474.
Item 11.
Executive Compensation
Information concerning executive compensation is incorporated by reference pursuant to Instruction G of Form 10-K from Nobility’s
definitive proxy statement for the 2022 annual meeting of shareholders.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information concerning security ownership of certain beneficial owners and management is incorporated by reference pursuant to
Instruction G of Form 10-K from Nobility’s definitive proxy statement for the 2022 annual meeting of shareholders.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
Information concerning certain relationships and related transactions is incorporated by reference pursuant to Instruction G of Form
10-K from Nobility’s definitive proxy statement for the 2022 annual meeting of shareholders.
Item 14.
Principal Accounting Fees and Services
Information concerning principal accountant fees and services is incorporated by reference pursuant to Instruction G of Form 10-K
from Nobility’s definitive proxy statement for the 2022 annual meeting of shareholders.
The accompanying notes are an integral part of these financial statements.
31
PART IV
Item 15.
Exhibits and Financial Statement Schedules
(a) Consolidated Financial Statements and Schedules
Report of Daszkal Bolton LLP
Consolidated Balance Sheets at November 6, 2021 and October 31, 2020
Consolidated Statements of Comprehensive Income for the Years Ended November 6, 2021 and October 31, 2020
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended November 6, 2021 and October 31,
2020
Consolidated Statements of Cash Flows for the Years Ended November 6, 2021 and October 31, 2020
Notes to Consolidated Financial Statements
(b) 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. 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.
3.(a) Nobility’s Articles of Incorporation, as amended (filed as an exhibit to Nobility’s Form 10-K for the fiscal year
ended November 1, 1997 and incorporated herein by reference).(P)
(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.) (P)
4.1
Description of Securities (filed herewith)
10.(a) Joint Venture Agreement with 21st Century Mortgage Corporation (filed as an exhibit to Nobility’s For 10-K for
the fiscal year ended November 1, 1997 and incorporated herein by reference).(P)
(b)
(c)
(d)
(e)
2011 Stock Incentive Plan (filed as part of Nobility’s definitive proxy statement filed on June 7, 2011 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).
Seventh Amendment to the Finance Revenue Sharing Agreement dated April 10, 2004 with 21st Mortgage
Corporation (filed as an exhibit to Nobility’s Form 8-K filed November 14, 2011 and incorporated herein by
reference).
The accompanying notes are an integral part of these financial statements.
32
(f)
Amendment No.1 to 2011 Stock Plan (filed herewith).
21.1 Subsidiaries of Nobility.
23.1 Consent of Daszkal Bolton 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 Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-
14(a) or 15d-14(a) under the Securities Exchange Act of 1934.
32.(a) Written Statement of Chief Executive Officer pursuant to 18 U.S.C. §1350.
(b) Written Statement of Chief Financial Officer pursuant to 18 U.S.C. §1350.
101.
Interactive data filing formatted in XBRL.
Item 16.
Form 10-K Summary
None.
The accompanying notes are an integral part of these financial statements.
33
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: February 4, 2022
By: /s/ Terry E. Trexler
NOBILITY HOMES, INC.
Terry E. Trexler, Chairman,
President and Chief Executive Officer (Principal Executive
Officer)
DATE: February 4, 2022
By: /s/ Thomas W. Trexler
DATE: February 4, 2022
Thomas W. Trexler, Executive Vice President
and Chief Financial Officer (Principal Financial 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: February 4, 2022
DATE: February 4, 2022
DATE: February 4, 2022
DATE: February 4, 2022
By: /s/ Terry E. Trexler
Terry E. Trexler, Director
By: /s/ Thomas W. Trexler
Thomas W. Trexler, Director
By: /s/ Robert P. Saltsman
Robert P. Saltsman, Director
By: /s/ Arthur L. Havener
Arthur L. Havener, Director
The accompanying notes are an integral part of these financial statements.
34
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.1
As of November 6 , 2021, Nobility Homes, Inc. (“we” or “our”) had one class of securities, common stock, par value $0.10 per
share (“Common Stock”), registered under Section 12 of the Securities Exchange Act of 1934, as amended. The following description
of our Common Stock is a summary and is subject to, and is qualified in its entirety by reference to, the provisions of our Articles of
Incorporation and our Bylaws, copies of which are incorporated by reference as Exhibits 3.(a) and 3.(b), respectively, to our Annual
Report on Form 10-K for the year ended November 6, 2021 of which this Exhibit 4.1 is a part.
Our authorized capital stock consists of 10,000,000 shares of Common Stock, $.10 par value per share, and 500,000 shares of
preferred stock, $0.10 par value per share. As of November 6, 2021, 3,532,100 shares of Common Stock were issued and outstanding
and no shares of preferred stock were issued and outstanding.
Our Common Stock is traded on the OTCQX market under the symbol “NOBH.” Holders of our Common Stock are entitled
to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Holders of
Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the board of directors out of funds legally
available therefore, subject to a preferential dividend right of outstanding preferred stock. Upon the liquidation, dissolution or our
winding up, the holders of Common Stock are entitled to receive ratably our net assets available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding preferred stock. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by the rights of the holders any series of preferred stock that we may designate and
issue in the future.
The accompanying notes are an integral part of these financial statements.
35
Subsidiaries of Registrant
Exhibit 21.1
Prestige Home Centers
Mountain Financial, Inc. (a subsidiary of Prestige Home Centers, Inc.)
Majestic Homes, Inc. (a subsidiary of Prestige Home Centers, Inc.)
Florida
Florida
Florida
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
Nobility Homes, Inc.
Ocala, Florida
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-102919 and No. 333-
193608) of Nobility Homes, Inc., of our report dated February 4, 2022, relating to the consolidated financial statements of Nobility
Homes, Inc. at and for the years ended November 6, 2021 and October 31, 2020, which appear in this Form 10-K.
/s/ Daszkal Bolton
Jupiter, Florida
February 4, 2022
Certifications 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.
2.
3.
4.
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 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 our 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
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
DATE: February 4, 2022
By: /s/ Terry E. Trexler
Terry E. Trexler, Chairman,
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31(b)
Certifications of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a)
or 15d-14(a) under the Securities Exchange Act of 1934
I, Thomas W. Trexler, certify that:
1.
2.
3.
4.
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 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 our 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
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
DATE: February 4, 2022
By: /s/ Thomas W. Trexler
Thomas W. Trexler, Executive Vice President
and Chief Financial Officer
(Principal 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:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended November 6, 2021 (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: February 4, 2022
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:
1.
2.
The Annual Report on Form 10-K of the Company for the year ended November 6, 2021 (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: February 4, 2022
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
Audit Committee
Salary Review Committee
Nominating Committee
ARTHUR L. HAVENER, JR
Principal of Stampede
Capital LLC, a real estate
advisory and investment
firm.
ROBERT P. SALTSMAN
Attorney and CPA in
Private practice.
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
Broadridge
Philadelphia, Pennsylvania
Special Counsel
Foley & Lardner LLP
Jacksonville, Florida
Independent Auditors
Daszkal Bolton LLP
Jupiter, Florida
Stock Exchange Listing
OTCQX
Symbol: NOBH
General Information
Executive Offices
Manufacturing Location
3741 S.W. 7th Street
Ocala, Florida 34474
Phone (352)732-5157
Fax (352)732-3711
www.nobilityhomes.com
Ocala Plant
3741 S.W. 7th Street
Ocala, Florida 34474
Phone (352)732-6110
Fax (352)732-4203
PLEASE TAKE NOTICE
The annual meeting of the
shareholders of the Company
will be held at 10:00 A.M.
local time, on Friday, March 4,
2022 at the Executive Offices,
3741 S. W. 7th Street (I-75
and SR40) Ocala, Florida. All
shareholders are cordially
invited to attend the meeting.
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., 3741 SW 7th Street, Ocala, Florida 34474 or online at
www.NobilityHomes.com.
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