FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended February 1, 2003 Commission File number 0-6506 NOBILITY HOMES, INC. (Exact name of registrant as specified in its charter) Florida 59-1166102 (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) 3741 S.W. 7th Street Ocala, Florida 34474 (Address of principal executive offices) (Zip Code) (352) 732-5157 (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X ; No _____. Indicate by check mark whether the Registrant is an acceleerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes _____; No X . The number of shares outstanding of each of the issuer's classes of common equity as of March 17, 2003 was 3,997,513 NOBILITY HOMES, INC. INDEX Page Number PART I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of February 1, 2003 and November 2, 2002 3 Consolidated Statements of Income for the three months ended February 1, 2003 and February 2, 2002 4 Consolidated Statements of Cash Flows for the three months ended February 1, 2003 and February 2, 2002 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Conditions 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 13 PART II. Other Information and Signatures Item 5. Submission of Matters to a Vote of Security Holders 14 Item 6. Exhibits 14 Page 2 PART I. FINANCIAL INFORMATION NOBILITY HOMES, INC. CONSOLIDATED BALANCE SHEETS February 1, 2003 November 2, 2002 ------------------------- -------------------------- (Unaudited) ASSETS - ------ Current Assets: Cash and cash equivalents $ 12,094,726 $ 12,481,711 Accounts receivable - trade 929,111 1,074,481 Inventories 7,172,194 6,589,076 Deferred income taxes 608,700 608,700 Prepaid expenses and other current assets 566,941 368,129 ------------ ------------- Total current assets 21,371,672 21,122,097 Property, plant and equipment, net 2,953,347 2,948,096 Investment in joint venture - Majestic 21 1,041,622 1,020,056 Deferred income taxes - noncurrent 22,700 22,700 Other assets 2,398,425 2,383,425 ------------ ------------- Total assets $ 27,787,766 $ 27,496,374 ============ ============= LIABILITIES & STOCKHOLDERS' EQUITY - ---------------------------------- Current liabilities: Accounts payable $ 979,161 $ 1,178,395 Accrued expenses and other current liabilities 1,755,512 1,834,965 Accrued compensation 435,266 704,122 Income taxes payable 282,101 - ------------ - Total current liabilities 3,452,040 3,717,482 ------------ ------------- Commitments and contingencies liabilities Stockholders' equity: Preferred stock, $.10 par value, 500,000 shares authorized, none issued - - Common stock, $.10 par value, 10,000,000 shares authorized; 5,364,907 shares issued 536,491 536,491 Additional paid in capital 8,629,144 8,629,144 Retained earnings 23,022,467 22,421,883 Less treasury stock at cost, 1,352,694 and 1,347,694 shares, respectively, in 2003 and 2002 (7,852,376) (7,808,626) ------------ ------------- Total stockholders' equity 24,335,726 23,778,892 ------------ ------------- Total liabilities and stockholders' equity $ 27,787,766 $ 27,496,374 ============ ============= The accompanying notes are in integal part of these financial statements Page 3 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended ------------------ February 1, February 2, 2003 2002 -------------------------- ---------------------- Net sales $ 8,482,415 $ 8,244,123 Net sales - related parties - 44,325 ------------ ------------ Total net sales 8,482,415 8,288,448 Cost of goods sold (6,258,985) (6,180,373) ------------ ------------ Gross profit 2,223,430 2,108,075 Selling, general and administrative expenses (1,385,043) (1,381,285) ------------ ------------ Operating income 838,387 726,790 ------------ ------------ Other income: Interest income 40,297 58,650 Undistributed earnings in joint venture - Majestic 21 21,567 105,384 Miscellaneous income 9,333 4,110 ------------ ------------ 71,197 168,144 ------------ ------------ Income before provision for income taxes 909,584 894,934 Provision for income taxes (309,000) (302,000) ------------ ------------ Net income $ 600,584 $ 592,934 ============ ============ Average shares outstanding Basic 4,014,246 4,132,133 Diluted 4,036,337 4,149,232 Earnings per share Basic $ .15 $ .14 Diluted $ .15 $ .14 The accompanying notes are in integal part of these financial statements Page 4 NOBILITY HOMES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended ------------------ February 1, February 2, 2003 2002 ----------------------- ---------------------- Cash flows from operating activities: Net income $ 600,584 $ 592,934 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 49,569 46,113 Undistributed earnings in joint venture - Majestic 21 (21,566) (105,384) Increase in cash surrender value of life insurance (15,000) (15,000) Decrease (increase) in: Accounts receivable - trade 145,370 (169,754) Inventories (583,118) 375,705 Prepaid expenses and other current assets (198,812) (290,654) (Decrease) increase in: Accounts payable (199,234) (177,171) Accrued expenses and other current liabilities (79,453) (320,425) Accrued compensation (268,856) (93,575) Income taxes payable 282,101 287,672 ------------ ----------- Net cash provided by (used in) operating activities (288,415) 130,461 ------------ ----------- Cash flows from investing activities: Purchase of property, plant and equipment (54,820) (352,099) ------------ ----------- Net cash provided by (used in) investing activities (54,820) (352,099) ------------ ----------- Cash flows from financing activities: Purchase of treasury stock (43,750) (163,473) ------------ ----------- Net cash used in financing activities (43,750) (163,473) ------------ ----------- Decrease in cash and cash equivalents (386,985) (385,111) Cash and cash equivalents at beginning of quarter 12,481,711 11,005,012 ------------ ----------- Cash and cash equivalents at end of quarter $ 12,094,726 $ 10,619,901 ============ =========== Supplemental disclosure of cash flow information Interest Paid $ - $ - ============ =========== Income taxes paid $ 333 $ 100,000 ============ =========== The accompanying notes are in integal part of these financial statements Page 5 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The unaudited financial information included in this report includes all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods. The operations for the three months ended February 1, 2003 are not necessarily indicative of the results of the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the Securities and Exchange Commission rules and regulations governing Form 10-Q. The condensed financial statements included in this report should be read in conjunction with the financial statements and notes thereto included in the Registrant's November 2, 2002 Form 10-K Annual Report. 2. Inventories ----------- Inventories are carried at the lower of cost or market. Cost of finished home inventories is determined on the specific identification method. Other inventory costs are determined on a first-in, first-out basis. Inventories at February 1, 2003 and November 2, 2002 are summarized as follows: February 1, November 2, 2003 2002 -------------- ----------- Raw materials $ 619,414 $ 555,231 Work-in-process 115,331 113,375 Finished homes 6,017,614 5,525,607 Pre-owned manufactured homes 337,829 320,564 Model home furniture and other 82,006 74,299 -------------- ------------ $ 7,172,194 $ 6,589,076 ============== ============ Page 6 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 3. Earnings Per Share ------------------ Three Months Ended February 1, February 2, 2003 2002 -------------- ---------------- Net income $ 600,584 $ 592,934 =========== =========== Weighted average shares outstanding: Basic 4,014,246 4,132,133 Add: common stock equivalents 22,091 17,099 ----------- ----------- Diluted 4,036,337 4,149,232 =========== =========== Earnings per share: Basic and Diluted $ 0.15 $ 0.14 =========== =========== 4. Affiliated Entities ------------------- The amounts previously paid by TLT, Inc. to the Company have been recorded as a gain on recovery of the fully reserved TLT, Inc. note receivable in the consolidated financial statements. The balance of the reserved advances at February 1, 2003 was approximately $232,000. 5. Critical Accounting Policies and Estimates ------------------------------------------ The Company currently only applies judgment and estimates, which may have a material effect on the eventual outcome of assets, liabilities, revenues and expenses, for accounts receivable, inventory and goodwill. The following explains the basis and the procedure for each asset account where judgment and estimates are applied. Revenue Recognition ------------------- The Company recognizes revenue for the majority of retail sales upon its receipt of a down payment, completion of the home, title has passed to the retail home buyer, funds have been deposited into the company's account, delivery and setup of the home at the retail home buyer's site, and completion of any other significant obligations. The Company recognizes sales to independent dealers upon receiving wholesale floor plan financing or establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent dealer. Page 7 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) Goodwill -------- The Company acquired in 1995, 1997 and 1998 retail sales center using the purchase method. As a result, goodwill is reflected on the consolidated balance sheets. A valuation based on the cash flow method was performed and it was determined that the value of the goodwill and the net assets in the accounts exceeded the estimated cash flow valuation. There is no assurance that the value of the acquired company will not decrease in the future due to changing business conditions. Vendor Rebates -------------- The Company receives a volume rebate based upon reaching a certain level of purchased materials during a certain period of time. Volume rebates are determined based upon annual purchases, and are adjusted quarterly to determine if the accrued volume rebate is applicable. Dealer Volume Rebates --------------------- The Company pays a volume rebate to independent dealers based upon the dollar volume of homes purchased and paid for by the dealer in excess of a certain specfic dollar amount during a specific time period. Dealer volume rebates are accrued when sales are recognized. Page 8 NOBILITY HOMES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) 6. Accounting for Stock Based Compensation --------------------------------------- At February 1, 2003, the Company had a stock incentive plan (the "Plan"), which authorizes the issuance of options to purchase common stock. The company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statment No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation. Three Months Ended February 1, February 2, 2003 2002 ---- ---- Net Income, as reported $ 600,584.00 $ 592,934.00 Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of related tax effects (2,533.00) (6,885.00) ------------- ------------- Pro forma net income $ 598,051.00 $ 586,049.00 ============= ============= Earnings per share Basic - as reported $ 0.15 $ 0.14 Basic - pro forma $ 0.15 $ 0.14 Earnings per share Diluted - as reported $ 0.15 $ 0.14 Diluted - pro forma $ 0.15 $ 0.14 Page 9 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations - --------------------- For the first quarter ended February 1, 2003 compared to first quarter ended February 2, 2002 results of operations are as follows. Total net sales in first quarter 2003 increased 2% to $8,482,415 compared to $8,288,448 in first quarter 2002. Sales in first quarter 2002 were affected by a one-time adjustment of approximately $1.4 million primarily due to an increased sales to independent dealers of 51 units and retail sales of 24 units as a result of the timing of recognition of the sale as required under SAB 101. Gross profit as a percentage of net sales was 26.2% in first quarter 2003 compared to 25.4% in first quarter 2002. Selling, general and administrative expenses as a percent of net sales were 16.3% in first quarter 2003 compared to 16.7% in first quarter 2002. The Company earned from interest on cash equivalents $40,297 in first quarter 2003 compared to $58,650 for same quarter last year. The decrease in interest income was a result of lower interest rates. Majestic 21 is a financing joint venture accounted for under the equity method of accounting. The Company earned from Majestic 21 $21,567 in first quarter 2003 compared to $105,384 in first quarter 2002. The decrease in income in first quarter 2003 was primarily due to a larger provision for loan losses and fewer originations. Income reported for Majestic 21 results from the Company's 50% share of the equity in the earnings of this joint venture. Income for the joint venture fluctuates due to loan origination volume, foreclosure/repossession frequency and the severity of loss on the re-sale of the foreclosed units. The Company believes that its historical loss experience has been favorably affected by its ability to resell foreclosed/repossessed units through its network of retail sales centers. As a result of the factors discussed above, earnings for first quarter 2003 were $600,584 or $.15 per basic and diluted share compared to $592,934 or $.14 per basic and diluted share for first quarter 2002. Page 10 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents were $12,094,726 at February 1, 2003 compared to $12,481,711 at November 2, 2002. Working capital was $17,919,632 at February 1, 2003, compared to $17,404,615 at November 2, 2002. Nobility owns the entire inventory for the Prestige retail sales centers and does not incur any third party floor plan financing expenses. Inventories increased to $7,172,194 at February 1. 2003, from $6,589,076 at November 2, 2002 primarily due to an increase in the numbers of homes in inventory at the Prestige retail sales centers. Nobility repurchased in the open market 5,000 shares of its common stock for $43,750 during first quarter 2003. Nobility maintains a revolving credit agreement with a major bank providing for borrowings up to $2,500,000 with an option to increase the line to $4,000,000. At February 1, 2003 and November 2, 2002, there were no amounts outstanding under this agreement. Consistent with normal practice, Nobility's operations are not expected to require significant capital expenditures during fiscal 2003. Working capital requirements for the home inventory for existing and any new retail sales centers will be met with internal sources. Critical Accounting Policies and Estimates - ------------------------------------------ The Company applies judgment and estimates, which may have a material effect in the eventual outcome of assets, liabilities, revenues and expenses, for accounts receivable, inventory and goodwill. The following explains the basis and the procedure for each asset account where judgment and estimates are applied. Revenue Recognition The Company recognizes revenue for the majority of retail sales upon the occurrence of the following: - its receipt of a down payment, - completion of the home, - title having passed to the retail homebuyer, - funds having been deposited into the Company's account, - the home having been delivered and set up at the retail home buyer's site, and - completion of any other significant obligations. The Company recognizes sales to independent dealers upon receiving wholesale floor plan financing or establishing retail credit approval for terms, shipping of the home, and transferring title and risk of loss to the independent dealer. Page 11 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) Critical Accounting Policies and Estimates (Continued) - ------------------------------------------------------ Goodwill Between 1995 and 1998 the Company acquired retail sales centers using the purchase method of accounting. As a result, goodwill is reflected on the consolidated balance sheets. A valuation based on the cash flow method was performed and it was determined that the value of the goodwill and the net assets in the accounts exceeded the estimated cash flow valuation. There is no assurance that the value of the acquired sales centers will not decrease in the future due to changing business conditions. Vendor Rebates The Company receives volume rebates from its vendors based upon reaching a certain level of purchased materials during a specified period of time. Volume rebates are estimated based upon annual purchases, and are adjusted quarterly if the accrued volume rebate is applicable. Dealer Volume Rebates The Company pays a volume rebate to independent dealers based upon the dollar volume of homes purchased and paid for by the dealer in excess of a certain specific dollar amount during a specific time period. Dealer volume rebates are accrued when sales are recognized. Recent Accounting Pronouncements - -------------------------------- FASB Statement No. 142 (FAS 142) In June 2001, the FASB issued Statement No. 142 (FAS 142), "Goodwill and Other Intangible Assets". FAS 142 Primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition (i.e., the post-acquisition accounting) and supercedes APB 17, Intangible Assets. Under FAS 142, goodwill and indefinite lived intangible asets will no longer be amortized and will be tested for impairment at least annually at a reporting unit level. Additionally, the amortization period of intangible assets with finite lives is no longer limited to forty years. The Company implemented FAS 142, effective November 3, 2002, the beginning of its fiscal year. The Company performed the initial impairment testing of goodwill and determined there was no impairment as of February 1, 2003. FASB Staement No. 144 (FAS 144) In August 2001, the FASB issued Statement No. 144 (FAS 144), "Accounting for the Impairment of Disposal of Long-Lived Assets". FAS 144 supersedes FAS 121 and applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board opinion No. 30 (APB 30), Reporting Results of Operations Reporting the Effects of Disposal of a Segment of a Business. FAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. The Company implemented FAS 144, effective November 3, 2002, the beginning of its fiscal year. The adoption of FAS 144 had no material impact on the Company's reported results of operations, financial position or cash flows. Page 12 NOBILITY HOMES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (Continued) FASB Statement No 148 (FAS 148) In December 2002, the FASB issued Statement No. 148 (FAS 148), "Accounting for Stock-Based Compensation-Transition and Disclosure". FAS 148 amends FAS 123, Accouting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of FAS 123 to require prominent disclosures in both annual and interim financial statments about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The Company implemented FAS 148, effective November 3, 2002, the beginning of its fiscal year. Forward Looking Statements - -------------------------- Certain statements in this report are forward-looking statements within the meaning of the federal securities laws. Although Nobility believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, there are risks and uncertainties that may cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, competitive pricing pressures at both the wholesale and retail levels, continued excess retail inventory, increase in repossessions, changes in market demand, changes in interest rates, availability of financing for retail and wholesale purchasers, realization of deferred tax assets, consumer confidence, adverse weather conditions that reduce sales at retail centers, the risk of manufacturing plant shutdowns due to storms or other factors, and the impact of marketing and cost-management programs. Item 3. Quantitative and Qualitative Disclosures About Market Risk We do not engage in investing in or trading market risk sensitive instruments. We also do not purchase, for investing, hedging, or for purposes "other than trading", instruments that are likely to expose us to market risk, whether interest rate, foreign currency exchange, commodity price or equity price risk. We have not entered into any forward or futures contracts, purchased any options or entered into any interest rate swaps. We do not currently have any indebtedness as of November 2, 2002. If we were to borrow from our revolving line of credit facility, we would be exposed to changes in interest rates. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. Item 4. Controls and Procedures a. Evaluation of Disclosure Controls and Procedures. The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a - 14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) requ8ired to be included in the Company's reports filed or submitted under the Exchange Act. b. Changes in Internal Controls. Since the Evaluation Date, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect such controls. Page 13 Part II. OTHER INFORMATION AND SIGNATURES There were no reportable events for Item 1 through Item 3 and Item 5 Item 5. Submission of Matters to a Vote of Securtiy Holders. a) The annual Meeting of the Shareholders was held on February 28, 2003. The only matter to come before the meeting was the election of directors. b) The vote to elect a board of five directors was as follows: For Against Abstain Not Voted --- ------- ------- --------- Terry E. Trexler 3,766,310 0 49,557 197,322 Richard C. Barberie 3,809,950 0 5,917 197,322 Robert P. Holliday 3,809,950 0 5,917 197,322 Robert P. Saltsman 3,809,950 0 5,917 197,322 Thomas W. Trexler 3,766,310 0 49,557 197,322 Item 6. Exhibits 99.1 Written Statement of Chief Executive Officer Pursuant to 18 U.S.C. ss. 1350 99.2 Written Statement of Chief Executive Officer Pursuant to 18 U.S.C. ss. 1350 Page 14 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NOBILITY HOMES, INC. DATE: March 17, 2002 By: /s/ Terry E. Trexler ---------------------------------- Terry E. Trexler, Chairman, President and Chief Executive Officer DATE: March 17, 2002 By: /s/ Thomas W. Trexler ---------------------------------- Thomas W. Trexler, Executive Vice President, Chief Financial Officer DATE: March 17, 2002 By: /s/ Lynn J. Cramer, Jr. ---------------------------------- Lynn J. Cramer, Jr., Treasurer and Principal Accounting Officer Page 15 CERTIFICATIONS I, Terry E. Trexler, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Nobility Homes, Inc.; 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures 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 annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 17, 2003 /s/ Terry E. Trexler - -------------------- Terry E. Trexler Chief Executive Officer CERTIFICATIONS I, Thomas W. Trexler, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Nobility Homes, Inc.; 2. Based on my knowledge, this annual 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 annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures 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 annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 17, 2003 /s/ Thomas W. Trexler - --------------------- Thomas W. Trexler Chief Financial Officer