NCI BUILDING SYSTEMS INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended November 2, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission file number 1-14315

NCI BUILDING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Delaware 76-0127701
(State or other jurisdiction) (I.R.S. employer
of incorporation or organization identification no.)

10943 North Sam Houston Parkway West 77064
Houston, Texas (Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: (281) 897-7788

Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value

Securities registered pursuant to Section 12(g) of the Act: None

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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes X No
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The aggregate market value of the voting and non-voting common stock
held by non-affiliates of the registrant on January 15, 2003, was $418,197,589,
which aggregate market value was calculated using the closing sales price
reported by the New York Stock Exchange as of the last day of the registrant's
most recently completed second fiscal quarter.

The number of shares of common stock of the registrant outstanding on
January 15, 2003, was 18,717,582.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Parts I and II of this Annual Report is
incorporated by reference from the registrant's 2002 Annual Report to
Shareholders, and certain information required by Parts II and III of this
Annual Report is incorporated by reference from the registrant's definitive
proxy statement for its annual meeting of shareholders to be held on March 14,
2003.

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TABLE OF CONTENTS

PART I

Item 1. Business............................................................................................1
Item 2. Properties.........................................................................................13
Item 3. Legal Proceedings..................................................................................14
Item 4. Submission of Matters to a Vote of Security Holders................................................14

PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters..............................14
Item 6. Selected Financial Data............................................................................14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..............15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.........................................15
Item 8. Financial Statements and Supplementary Data........................................................15
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............15

PART III

Item 10. Directors and Executive Officers of the Registrant.................................................15
Item 11. Executive Compensation.............................................................................15
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Shareholder Matters................................................................................15
Item 13. Certain Relationships and Related Transactions.....................................................16
Item 14. Controls and Procedures............................................................................16
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................................16

This Annual Report contains forward-looking statements concerning our
business and operations. Although we believe that the expectations reflected in
the forward-looking statements are reasonable, these expectations and the
related statements are subject to risks, uncertainties, and other factors that
could cause the actual results to differ materially from those projected. These
risks, uncertainties, and other factors include, but are not limited to,
industry cyclicality and seasonality, adverse weather conditions, fluctuations
in customer demand and other patterns, raw material pricing, competitive
activity and pricing pressure, the ability to make strategic acquisitions
accretive to earnings, and general economic conditions affecting the
construction industry, as well as other risks detailed in our filings with the
SEC. We expressly disclaim any obligations to release publicly any updates or
revisions to these forward-looking statements to reflect any changes in our
expectations.

PART I

ITEM 1. BUSINESS.

GENERAL

NCI Building Systems, Inc. is one of North America's largest integrated
manufacturers of metal products for the building industry. We operate 35
manufacturing facilities located in 16 states and Mexico. We sell metal building
components and engineered building systems, offering one of the most extensive
metal product lines in the building industry with well-recognized brand names.
We believe that our leading market positions and strong track record of growth
and profitability have resulted from our focus on:

o Controlling operating and administrative costs

o Managing working capital and fixed assets

o Developing new markets and products

o Successfully identifying strategic growth
opportunities

We believe that metal products have gained and continue to gain a
greater share of the new non-residential construction and repair and retrofit
markets. This is due to increasing acceptance and recognition of the benefits of
metal products in building applications. Metal building components offer
builders, designers, architects and end-users several advantages, including
lower long-term costs, longer life, attractive aesthetics and design
flexibility. Similarly, engineered building systems offer a number of advantages
over traditional construction alternatives, including shorter construction time,
more efficient use of materials, lower construction costs, greater ease of
expansion and lower maintenance costs.

In March 2000, we acquired the remaining 50% interest in DOUBLECOTE,
L.L.C. from our previous joint venture partner. The acquisition gave us complete
control over our principal metal coating facility. In December 2000, we bought
substantially all of the assets of Midland Metals, Inc., an Iowa-based
manufacturer of metal building components, which gave us a stronger presence in
the Midwest.

In June 2001, we sold our 50% interest in Midwest Metal Coatings, LLC,
a joint venture that operated a hot rolled coil coating facility, to our joint
venture partner. In October 2001, we announced the closing of five of our
manufacturing facilities, which we completed during the first quarter of fiscal
2002. Two of the closings resulted from ongoing synergies realized from our 1998
acquisition of Metal Building Components, Inc. ("MBCI"). The operations of the
other three facilities were consolidated into our other manufacturing facilities
that could efficiently provide delivery and service to those geographic areas.

In the second quarter of fiscal 2001, we discovered errors in a new
accounting and financial system that impacted certain inventories and related
liabilities, which resulted in a restatement of our financial results for the
third and fourth quarters of 1999, fiscal year 2000 and the quarter ended
January 31, 2001. The restatement was reflected in our Annual Report on Form
10-K/A for the fiscal year ended October 31, 2000 and our Quarterly Report on
Form 10-Q/A for the quarter ended January 31, 2001 filed with the SEC. All
financial information in this Annual Report on Form 10-K for fiscal 2000 and
2001 reflect this restatement. See "Item 3. Legal Proceedings" for a description
of litigation matters related to our restatement.

We were founded in 1984 and we reincorporated in Delaware in 1991. Our
principal offices are located at 10943 North Sam Houston Parkway West, Houston,
Texas 77064 and our telephone number is (281) 897-7788. Unless indicated
otherwise, references in this report to NCI, us, or we include our predecessors
and our subsidiaries.

We file annual, quarterly and current reports and other information
with the SEC. Our annual reports on Form 10-K, quarterly reports on Form 10-Q
and current reports on Form 8-K, along with any amendments to those reports, are
available free of charge at our corporate website at "http://www.ncilp.com."

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BUSINESS SEGMENTS

We have divided our operations into two reportable segments: engineered
building systems and metal building components, based upon similarities in
product lines, manufacturing process, marketing and management of its business.
Products of both segments are similar in basic raw materials used. The
engineered building systems segment includes the manufacturing of structural
framing and includes value added engineering and drafting, which are typically
not part of metal building component products or services. Our approximate sales
to outside customers, operating income and total assets attributable to these
business segments were as follows for the periods indicated (in thousands):

For more business segment information, please see the supplementary
business segment information contained in footnote 14 to our consolidated
financial statements included in our 2002 Annual Report to Shareholders.

Metal Building Components. We are the largest domestic supplier of
metal building components to the nonresidential building industry and have a
market share at least twice that of our largest competitor. We are also one of
the largest suppliers in the U.S. of roll-up doors for self-storage facilities.
We design, manufacture, sell and distribute one of the widest selections of
components for a variety of new construction applications as well as repair and
retrofit uses.

The following are the types of components we sell:

o Metal roof and wall systems

o Fascia systems

o Roll-up doors

o Mansard systems

o Interior and exterior doors

o Trim and accessories

Our components are used in the following markets:

o Industrial

o Governmental

o Community

o Commercial

o Agricultural

o Residential

As part of our metal building components manufacturing, we also provide
hot roll and light gauge metal coil coating and painting services and products.
We coat and paint hot roll and light gauge metal coils for our own use in metal
building components manufacturing, supplying substantially all of our internal
metal coating and painting

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requirements. On average, our internal use accounts for about 52% of our
production. We also coat and paint hot roll metal coils and light gauge metal
for third parties for a variety of applications, including heating and air
conditioning systems, water heaters, lighting fixtures and office furniture.

We market our metal building components products and metal coating and
painting services nationwide primarily through a direct sales force under
several brand names. These brand names include "Metal Building Components,"
"American Building Components," "Doors and Building Components," "ABC," "DBCI,"
"MBCI," "Midland Metals," "IPS," "Metal Coaters," "Metal-Prep," "NCI Metal
Depot" and "DOUBLECOTE."

Engineered Building Systems. We are one of the largest domestic
suppliers of engineered building systems. We design, manufacture and market
engineered building systems, self-storage building systems and metal home
framing systems for commercial, industrial, agricultural, governmental,
community and residential uses. We market these systems nationwide through
authorized builder networks totaling over 1,400 builders and a direct sales
force under several brand names. These brand names include "Metallic Buildings,"
"Metallic de Mexico," "Mid-West Steel Buildings," "A & S Buildings," "All
American Systems," "Classic," "Steel Systems" and "Mesco."

INDUSTRY OVERVIEW

The building industry encompasses a broad range of metal products,
principally composed of steel, sold through a variety of distribution channels
for use in diverse applications. These metal products include metal building
components and engineered building systems.

Metal Building Components. Manufacturers of metal components supply
products to the building industry. These products include roof and wall panels,
doors, metal partitions, metal trim and other related accessories. These
products are used in new construction and in repair and retrofit applications
for commercial, industrial, agricultural, governmental, community and
residential uses. Metal building components are used in a wide variety of
construction applications, including purlins and girts, roofing, walls, doors,
trim and other parts of traditional buildings, as well as in architectural
applications and engineered building systems. We estimate the metal building
components market including roofing applications to be a multi-billion dollar
market, although market data is limited. We believe that the metal building
components business is less affected by economic cycles than the engineered
building systems business due to the use of metal building components in repair
and retrofit applications. We believe that metal products have gained and
continue to gain a greater share of new construction and repair and retrofit
markets due to increasing acceptance and recognition of the benefits of metal
products in building applications.

Metal roofing accounts for a significant portion of the overall metal
building components market, but less than 10% of total annual roofing material
expenditures. As a result, we believe that significant opportunities exist for
metal roofing, with its advantages over conventional roofing materials, to
increase its overall share of this market. Metal roofing systems have several
advantages over conventional roofing systems, including the following:

o Lower lifecycle cost. The total cost over the life of
metal roofing systems is lower than that of
conventional roofing systems for both new
construction and retrofit roofing. For new
construction, the cost of installing metal roofing is
greater than the cost of conventional roofing. Yet,
the longer life and lower maintenance costs of metal
roofing make the cost more attractive. For retrofit
roofing, although installation costs are 60-70%
higher for metal roofing due to the need for a
sloping support system, the lower ongoing costs more
than offset the initial cost.

o Increased longevity. Metal roofing systems generally
last for 20 years without requiring major maintenance
or replacement. This compares to five to ten years
for conventional roofs. The cost of leaks and roof
failures associated with conventional roofing can be
very high, including damage to building interiors and
disruption of the functional usefulness of the
building. Metal roofing prolongs the intervals
between costly and time-consuming repair work.

o Attractive aesthetics and design flexibility. Metal
roofing systems allow architects and builders to
integrate colors and geometric design into the
roofing of new and existing buildings, providing an
increasingly fashionable means of enhancing a
building's aesthetics. Conventional roofing material
is generally tar paper or a gravel surface, and
building designers tend to conceal roofs made with
these materials.

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Engineered Building Systems. Engineered building systems consist of
engineered structural members and panels that are welded and roll formed in a
factory and shipped to a construction site complete and ready for assembly.
Engineered building systems manufacturers design an integrated system that meets
applicable building code requirements. These systems consist of primary
structural framing, secondary structural members (purlins and girts) and
covering for roofs and walls.

Over the last 15 years, engineered building systems have significantly
increased penetration of the market for nonresidential low rise structures and
are being used in a broad variety of other applications. According to the Metal
Building Manufacturers Association ("MBMA"), reported sales of engineered
building systems have increased from approximately $1.5 billion in 1993 to $2.5
billion in 2000. We believe this increase resulted primarily from (1) the
significant cost advantages offered by these systems, (2) increased
architectural acceptance of engineered building systems for construction of
commercial and industrial building projects, (3) advances in design versatility
and production processes and (4) a favorable economic environment through the
year 2000. In 2001, the MBMA reported a decline of 20% in sales, which was
in-line with the general decline in non-residential construction. This downturn
continued into 2002 with a further decline of 10%. Industry sales are expected
to improve as non-residential construction markets show improvements.

We believe the cost of an engineered building system generally
represents approximately 15-20% of the total cost of constructing a building,
which includes land cost, labor, plumbing, electrical, heating and air
conditioning systems installation and interior finish. Technological advances in
products and materials, as well as significant improvements in engineering and
design techniques, have led to the development of structural systems that are
compatible with more traditional construction materials. Architects and
designers now often combine an engineered building system with masonry, glass
and wood exterior facades to meet the aesthetic requirements of customers while
preserving the inherent characteristics of engineered building systems. As a
result, the uses for engineered building systems now include office buildings,
showrooms, retail stores, banks, schools, warehouses, factories, distribution
centers, government buildings and community centers for which aesthetics and
architectural features are important considerations of the end-users.

In our marketing efforts, we and other major manufacturers generally
emphasize the following characteristics of engineered building systems to
distinguish them from other methods of construction:

o Shorter construction time. In many instances, it
takes less time to construct an engineered building
than other building types. In addition, because most
of the work is done in the factory, the likelihood of
weather interruptions is reduced.

o More efficient material utilization. The larger
engineered building systems manufacturers use
computer-aided analysis and design to fabricate
structural members with high strength-to-weight
ratios, minimizing raw materials costs.

o Lower construction costs. The in-plant manufacture of
engineered building systems, coupled with automation,
allows the substitution of less expensive factory
labor for much of the skilled on-site construction
labor otherwise required for traditional building
methods.

o Greater ease of expansion. Engineered building
systems can be modified quickly and economically
before, during or after the building is completed to
accommodate all types of expansion. Typically, an
engineered building system can be expanded by
removing the end or side walls, erecting new
framework and adding matching wall and roof panels.

o Lower maintenance costs. Unlike wood, metal will not
deteriorate because of cracking, rot or insect
damage. Furthermore, factory-applied roof and siding
panel coatings resist cracking, peeling, chipping,
chalking and fading.

Consolidation. Over the last several years, there has been
consolidation in the metal building components and engineered building systems
industry, which includes a large number of small local and regional firms. We
believe that this industry will continue to consolidate, driven by the needs of
manufacturers to increase manufacturing capacity,

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achieve greater process integration and add geographic diversity to meet
customers' product and delivery needs, improve production efficiency and manage
costs.

PRODUCTS AND MARKETS

Our product lines consist of metal building components and engineered
building systems.

Metal Building Components. Our metal building components consist of
individual components, including secondary structural framing, covering systems
and associated metal trims, that are sold directly to contractors or end-users
for use in the building industry, including the construction of metal buildings.
We also stock and market metal component parts for use in the maintenance and
repair of existing buildings. Specific component products consist of end and
side wall panels, roof panels, purlins, girts, partitions, header panels and
related trim and screws. We believe we offer the widest selection of metal
building components in the building industry.

Purlins and girts are medium gauge, roll formed steel components. They
are supplied to builders for secondary structural framing. We custom produce
purlins and girts for our customers and offer the widest selection of sizes and
profiles in the United States. Covering systems, consisting of wall and roof
panels, protect the rest of the structure and the contents of the building from
the weather. They also contribute to the structural integrity of the building.

Our metal roofing products are attractive and durable. We use standing
seam roof technology to replace traditional built-up and single-ply roofs as
well as to provide a distinctive look to new construction. We manufacture and
design metal roofing systems for sales to regional metal building manufacturers,
general contractors and subcontractors. We believe we have the broadest line of
standing seam roofing products in the building industry. We also have developed
and patented a retrofit metal panel, Retro-R(R), that is used to replace wall
and roof panels of metal buildings. Retro-R(R) can be installed over the top of
existing metal panels to remodel or preserve a standing structure. Although
metal roofing is somewhat more expensive than traditional roofing in upfront
costs, its durability and low maintenance costs make metal roofing a lower cost
roofing product after the first 10 years.

We manufacture overhead doors and interior and exterior doors for use
in metal and other buildings. We are one of the largest suppliers in the U.S. of
roll-up doors to builders of self-storage facilities.

During fiscal 2000, we introduced our new "pier and header" system that
is used in the construction of self-storage warehouse facilities. Conventional
metal building systems require approximately ten steps and processes to
construct the areas between and above the doors of self-storage units. Our pier
and header system requires only two and produces a facility that is more
aesthetically pleasing with a clean, uncluttered profile.

We provide our own metal coating and painting products and services for
use in component manufacturing. We also provide pre-painted hot roll coils to
manufacturers of engineered building systems and metal building components. We
also pre-paint light gauge steel coils for steel mills, which supply the painted
coils to various industrial users, including manufacturers of engineered
building systems, metal building components and lighting fixtures.

Our metal coating and painting operations apply a variety of paint
systems to metal coils. The process generally includes cleaning and painting the
coil and slitting it to customer specifications. We believe that pre-painted
metal coils are a better quality product, environmentally cleaner and more
cost-effective than painted metal products prepared in other manufacturers'
in-house painting operations. Painted metal coils also offer manufacturers the
opportunity to produce a broader and more aesthetically pleasing range of
products.

Engineered Building Systems. Engineered building systems consist of
pre-engineered structural members and panels that are welded and roll formed in
a factory and shipped to a construction site complete and ready for assembly. We
design an integrated engineered building system that meets customer
specifications and allows easy on-site assembly by the builder or independent
contractor. Engineered building systems typically consist of three systems:

o Primary structural framing. Primary structural
framing, fabricated from heavy-gauge steel, supports
the secondary structural framing, roof, walls and all
externally applied loads. Through the primary
framing, the force of all applied loads is
structurally transferred to the foundation.

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o Secondary structural framing. Secondary structural
framing consists of medium-gauge, roll-formed steel
components called purlins and girts. Purlins are
attached to the primary frame to support the roof.
Girts are attached to the primary frame to support
the walls. The secondary structural framing is
designed to strengthen the primary structural framing
and efficiently transfer applied loads from the roof
and walls to the primary structural framing.

o Covering systems. Covering systems consist of roof
and wall panels. These panels not only lock out the
weather but also contribute to the structural
integrity of the overall building system. Roof and
siding panels are fabricated from light-gauge,
roll-formed steel.

Accessory components complete the engineered building system. These
components include doors, windows, gutters and interior partitions.

Our "Long Bay System" allows for the construction of metal buildings
with base spacings of up to 60 feet without internal supports. This compares to
base spacings of up to 30 feet under other engineered building systems. The Long
Bay System virtually eliminates all welding at the site, which significantly
reduces erection time compared with conventional steel construction. Our Long
Bay System is designed for larger buildings that typically require less custom
engineering and design than our other engineered building systems, which allows
us to meet our customers' needs more quickly.

SALES, MARKETING AND CUSTOMERS

Metal Building Components. We sell metal building components directly
to regional manufacturers, contractors, subcontractors, distributors,
lumberyards, cooperative buying groups and other customers under the brand names
"Metal Building Components," "American Building Components," "ABC," "MBCI,"
"Midland Metals," "NCI Metal Depot," "DOUBLECOTE," "IPS," "Metal Coaters" and
"Metal Prep." Roll-up doors, interior and exterior doors, interior partitions
and walls, header panels and trim are sold directly to contractors and other
customers under the brand names "Doors & Building Components" or "DBCI." These
components also are produced for integration into self storage and engineered
building systems sold by us. We also operate three retail stores that sell
components directly to the public.

We market our components products within four product lines:
commercial/industrial, architectural, agricultural and residential.

Customers include regional engineered building systems manufacturers,
general contractors, subcontractors, roofing installers, architects and
end-users. Commercial and industrial businesses are heavy users of metal
building components and metal buildings systems. Standing seam roof and
architectural customers are growing in importance. As metal buildings become a
more acceptable building alternative and aesthetics become an increasingly
important consideration for end-users of metal buildings, we believe that
architects are participating in metal building design and purchase decisions to
a greater extent. Wood frame builders also purchase our metal building
components through distributors, lumberyards, cooperative buying groups and
chain stores for various uses, including agricultural buildings. Residential
customers are generally contractors building upscale homes that require an
architect-specified product.

Our metal building components sales operations are organized into four
geographic regions. Each region is headed by a general sales manager supported
by individual plant sales managers. In addition, each of our metal coating
facilities has its own sales manager. Each local sales office is located
adjacent to a manufacturing plant and is staffed by a direct sales force
responsible for contacting customers and architects and a sales coordinator who
supervises the sales process from the time the order is received until it is
shipped and invoiced. The regional and local focus of our customers requires
extensive knowledge of local business conditions. During fiscal 2002, our
largest customer for metal building components accounted for less than 3% of our
total sales.

We provide our customers with product catalogs tailored to our product
lines, which include product specifications and suggested list prices. Some of
our catalogs are available on-line through the Internet, which enables
architects and other customers to download drawings for use in developing
project specifications. Customers place orders via telephone or facsimile to a
sales coordinator at the regional office who enters it onto a standard order
form. The form is then sent via computer to the plant and downloaded
automatically to the production machines.

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We have a small number of national accounts for our coating and
painting products and services and rely on a single sales manager.

Engineered Building Systems. We sell engineered building systems to
builders nationwide under the brand names "Metallic Buildings," "Mid-West Steel
Buildings," "A&S Buildings" and "Mesco." We market engineered building systems
through an in-house sales force to authorized builder networks of over 1,400
builders. We market engineered building systems under the brand name "Mid-West
Steel Buildings" directly to contractors in Texas and surrounding states using
an in-house sales force. We also sell engineered building systems under the
names "All American Systems" and "Steel Systems" to various private labels.

Our authorized builder networks consist of independent general
contractors that market our Mid-West Steel Buildings, Metallic Buildings, A&S
Buildings and Mesco products to end-users. Most of our sales of engineered
building systems outside of Texas and surrounding states are through our
authorized builder networks. We rely upon maintaining a satisfactory business
relationship for continuing job orders from our authorized builders and do not
consider the builder agreements to be material to our business. During fiscal
2002, our largest customer for engineered building systems accounted for less
than 1% of our total sales.

We enter into an agreement with an authorized builder, which generally
grants the builder the non-exclusive right to market our products in a specified
territory. The agreement is cancelable by either party on 60 days notice. The
agreement does not prohibit the builder from marketing engineered building
systems of other manufacturers. We establish an annual sales goal for each
builder and provide the builder with sales and pricing information, design and
engineering manuals, drawings and assistance, application programs for
estimating and quoting jobs and advertising and promotional literature. We also
defray a portion of the builder's advertising costs and provide volume
purchasing and other pricing incentives to encourage it to deal exclusively or
principally with us. The builder is required to maintain a place of business in
its designated territory, provide a sales organization, conduct periodic
advertising programs and perform construction, warranty and other services for
customers and potential customers. An authorized builder usually is hired by an
end-user to erect an engineered building system on the customer's site and
provide general contracting and other services related to the completion of the
project. We sell our products to the builder, which generally includes the price
of the building as a part of its overall construction contract with its
customer.

Our Long Bay System provides us with an entree to larger builders. This
also provides us with new opportunities to cross-sell our other products to
these new builders.

During fiscal 2001, we introduced a National Accounts program. This
program is designed to provide our builders with access to the largest
contractors and developers in the United States. We currently have a team of
nine people who comprise our National Accounts group. We market our engineered
building systems and our Long Bay System under this program using the brand name
"Metallic Buildings."

MANUFACTURE AND DESIGN

Metal Building Components. We operate 27 facilities used for
manufacturing of metal building components for the building industry, including
our doors and our metal coating and painting operations. We believe this broad
geographic penetration gives us an advantage over our components competitors
because major elements of a customer's decision are the speed and cost of
delivery from the manufacturing facility to the product's ultimate destination.
With the exception of our architectural and standing seam products, we are not
involved in the design process for the components we manufacture. We also own a
fleet of trucks to deliver our products to our customers in a more timely manner
than most of our competitors.

Our doors, interior partitions and other related panels and trim
products are manufactured at dedicated plants in Georgia, Texas and Arizona.
Orders are processed at the Georgia plant and sent to the appropriate plant,
which is generally determined based upon the lowest shipping cost.

Metal component products are roll-formed or fabricated at each plant
using roll-formers and other metal working equipment. In roll forming,
pre-finished coils of steel are unwound and passed through a series of
progressive forming rolls which form the steel into various profiles of
medium-gauge structural shapes and light-gauge sheets and panels.

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We operate two metal coating and painting facilities for hot rolled,
medium gauge steel coils and three metal coating and painting facilities for
painting light gauge steel coils. These facilities primarily service our needs,
but we also process steel coils at these facilities for other manufacturers.
Metal coating and painting processes involve applying various types of chemical
treatments and paint systems to flat rolled continuous coils of metal, including
steel and aluminum. These processes give the coils a baked-on finish that both
protects the metal and makes it more attractive. Initially, various metals in
coil form are flattened, cleaned and pretreated. The metal is then coated, oven
cured, cooled, recoiled and packaged for shipment. Slitting and embossing
services can also be performed on the coated metal before shipping according to
customer specifications. Hot roll steel coils typically are used in the
production of secondary structural framing of metal buildings and other
structural applications. Painted light gauge steel coils are used in the
manufacture of products for building exteriors, metal doors, lighting fixtures
and appliances.

Engineered Building Systems. We operate eight facilities used for
manufacturing engineered building systems. After we receive an order, our
engineers design the engineered building system to meet the customer's
requirements and to satisfy applicable building codes and zoning requirements.
To expedite this process, we use computer-aided design and engineering systems
to generate engineering and erection drawings and a bill of materials for the
manufacture of the engineered building system. We employ approximately 294
engineers and draftsmen in this area.

Once the specifications and designs of the customer's project have been
finalized, the manufacturing of frames and other building systems begins at one
of our five frame manufacturing facilities in Texas, Georgia or Tennessee or our
joint venture facility in Mexico. The fabrication of the primary structural
framing consists of a process in which rigid steel plates are punched and
sheared and then routed through an automatic welding machine and sent through
further fitting and welding processes. The secondary structural framing and the
covering subsystem are roll-formed steel products that are manufactured at our
full manufacturing facilities as well as our components plants.

Once manufactured, structural framing members and covering systems are
shipped to the job site for assembly. We generally are not responsible for any
on-site construction. The time elapsed between our receipt of an order and
shipment of a completed building system has typically ranged from four to eight
weeks, although delivery can extend somewhat longer if engineering and drafting
requirements are extensive.

We own 51% of a joint venture, which operates a framing facility in
Monterrey, Mexico. We purchase substantially all of the framing systems produced
by the Mexico joint venture.

RAW MATERIALS

The principal raw material used in manufacturing of our metal building
components and engineered building systems is steel. Our various products are
fabricated from steel produced by mills including bars, plates, structural
shapes, sheets, hot rolled coils and galvanized or galvalume-coated coils.
During fiscal 2002, we purchased approximately 76% of our steel requirements
from National Steel Corporation, Bethlehem Steel Corporation and U.S. Steel. No
other steel supplier accounted for more than 8% of steel purchases for the same
period. We believe concentration of our steel purchases among a small group of
suppliers that have mills and warehouse facilities close to our facilities
enables us, as a large customer of those suppliers, to obtain better pricing,
service and delivery. These suppliers generally maintain an inventory of the
types of materials we require.

We do not have any long-term contracts for the purchase of raw
materials. A prolonged labor strike against one of our principal domestic
suppliers, or financial or other difficulties of a principal supplier that
affects its ability to produce steel, could have a material adverse effect on
our operations. Alternative sources, however, including foreign steel, are
currently believed to be sufficient to maintain required deliveries.

BACKLOG

At November 2, 2002, the total backlog of orders for our products
believed by us to be firm was $162 million. This compares with a total backlog
for our products of $152 million at October 31, 2001. Backlog primarily consists
of engineered building systems. Job orders generally are cancelable by customers
at any time for any reason. Occasionally, orders in the backlog are not
completed and shipped for reasons that include changes in the requirements of
the customers and the inability of customers to obtain necessary financing or
zoning variances. None of the backlog at November 2, 2002 currently is scheduled
to extend beyond fiscal 2003.

8

COMPETITION

We and other manufacturers of metal building components and engineered
building systems compete in the building industry with all other alternative
methods of building construction such as tilt-wall, concrete and wood, all of
which may be perceived as more traditional, more aesthetically pleasing or
having other advantages over our products. We compete with all manufacturers of
building products, from small local firms to large national firms.

In addition, competition in the metal building components and
engineered building systems market of the building industry is intense. It is
based primarily on:

o quality

o service

o delivery

o ability to provide added value in the design and
engineering of buildings

o price

o speed of construction

We compete with a number of other manufacturers of metal building
components and engineered building systems for the building industry, ranging
from small local firms to large national firms. Most of these competitors
operate on a regional basis, although we believe that at least four other
manufacturers of engineered building systems and three manufacturers of metal
building components have nationwide coverage.

REGULATORY MATTERS

We must comply with a wide variety of federal, state and local laws and
regulations governing the protection of the environment. These laws and
regulations cover air emissions, discharges to water, the generation, handling,
storage, transportation, treatment and disposal of hazardous substances, the
cleanup of contamination, the control of noise and odors and other materials and
health and safety matters. Laws protecting the environment generally have become
more stringent than in the past and are expected to continue to do so.
Environmental laws and regulations generally impose strict liability. This means
that in some situations we could be exposed to liability for cleanup costs, and
toxic tort or other damages as a result of conduct that was lawful at the time
it occurred or because of the conduct of or conditions caused by prior operators
or other third parties. This strict liability is regardless of fault on our
part. We believe we are in substantial compliance with all environmental
standards applicable to our operations. We cannot assure you, however, that
cleanup costs, natural resource damages, criminal sanctions, toxic tort or other
damages arising as a result of environmental laws and costs associated with
complying with changes in environmental laws and regulations will not be
substantial and will not have a material adverse effect on our financial
condition. From time to time, claims have been made against us under
environmental laws. We have insurance coverage applicable to some environmental
claims and to specified locations after payment of the applicable deductible. We
do not anticipate material capital expenditures to meet current environmental
quality control standards. We cannot assure you that more stringent regulatory
standards will not be established that might require material capital
expenditures.

We also must comply with federal, state and local laws and regulations
governing occupational safety and health, including review by the federal
Occupational Health and Safety Administration and similar state agencies. We
believe we are in substantial compliance with applicable laws and regulations.
Compliance does not have a material adverse affect on our business.

The engineered building systems and components we manufacture must meet
zoning, building code and uplift requirements adopted by local governmental
agencies.

PATENTS, LICENSES AND PROPRIETARY RIGHTS

We have a number of United States patents and pending patent
applications, including patents and applications relating to metal roofing
systems, metal overhead doors, our new pier and header system, our Long Bay
System and Retro-R(R) panel. We do not, however, consider patent protection to
be a material competitive factor in our industry. We also have several
registered trademarks and pending registrations in the United States.

9

EMPLOYEES

As of November 2, 2002, we had approximately 4,050 employees, of whom
3,099 were manufacturing and engineering personnel. We regard our employee
relations as satisfactory.

Our employees are not represented by a labor union or covered by a
collective bargaining agreement. The United Steel Workers of America has
periodically petitioned the National Labor Relations Board to be recognized as
the collective bargaining representative of the production and maintenance
employees at various facilities, but has lost the resulting union election each
time. The last elections were at our Rancho Cucamonga, California facility in
August 1998 and November 1999.

RISK FACTORS

OUR BUSINESSES ARE CYCLICAL. The nonresidential construction industry
is highly sensitive to national and regional economic conditions. From time to
time, it has been adversely affected in various parts of the country by
unfavorable economic conditions, low use of manufacturing capacity, high vacancy
rates, changes in tax laws affecting the real estate industry, high interest
rates and the unavailability of financing. Sales of our products may be
adversely affected by weakness in demand for our products within particular
customer groups, or a recession in the general construction industry or
particular geographic regions. We cannot predict the timing or severity of
future economic or industry downturns. Any economic downturn, particularly in
states where many of our sales are made, could have a material adverse effect on
our results of operations and financial condition.

OUR BUSINESSES ARE SEASONAL. The metal components and engineered
building systems businesses, as well as the construction industry in general,
are seasonal in nature. Sales normally are lower in the first calendar quarter
of each year compared to the other three quarters because of unfavorable weather
conditions for construction and typical business planning cycles affecting
construction. This seasonality adversely affects our results of operations for
the first two fiscal quarters. Prolonged severe winter weather conditions can
delay construction projects and otherwise adversely affect our business.

SUPPLY AND DEMAND FOR STEEL MAY AFFECT OUR BUSINESS. Our principal raw
material is steel. We do not have any long-term contracts for the purchase of
steel. During fiscal 2002, we purchased approximately 63% of our steel
requirements from Bethlehem Steel Corporation and National Steel Corporation,
each of which has filed for protection under federal bankruptcy laws. In
addition, we purchased approximately 13% of our steel requirements from U.S.
Steel during fiscal 2002. We believe that our other primary steel supplier can
meet our demand for steel if our supply from Bethlehem Steel or National Steel
is interrupted. We do not maintain an inventory of steel in excess of our
current production requirements. We can give you no assurance that steel will
remain available or that prices will remain stable. The steel industry is highly
cyclical in nature, and steel prices are influenced by numerous factors beyond
our control. These factors include general economic conditions, competition,
labor costs, import duties and other trade restrictions. Furthermore, a
prolonged labor strike against one or more of our principal domestic suppliers
could have a material adverse effect on our operations. If the available supply
of steel declines or if one or more of our current suppliers is unable for
financial or any other any reason to continue in business or produce steel
sufficient to meet our requirements, we could experience price increases, a
deterioration of service from our suppliers or interruptions or delays that may
cause us not to meet delivery schedules to our customers. Any of these problems
could adversely affect our results of operations and financial condition.

WE HAVE POTENTIAL EXPOSURE TO SHAREHOLDER LAWSUITS. As a result of our
restatement of our financial results for the last half of fiscal 1999, all of
fiscal 2000 and the first quarter of fiscal 2001, several class action lawsuits
were filed against us and certain of our current officers in the United States
District Court for the Southern District of Texas, commencing in April 2001. The
plaintiffs in the actions purport to represent purchasers of our common stock
during various periods ranging from August 25, 1999 through April 12, 2001. The
lawsuits were consolidated into one class action lawsuit on August 16, 2001. On
January 10, 2002, the court appointed lead plaintiffs for the consolidated
lawsuit. The lead plaintiffs filed a consolidated amended complaint on February
1, 2002. In the consolidated complaint the plaintiffs allege, among other
things, that during the financial periods that were restated we made materially
false and misleading statements about the status and effectiveness of a
management information and accounting system used by our components division and
costs associated with that system, failed to assure that the system maintained
books and records accurately reflecting inventory levels and costs of goods
sold, failed to maintain internal controls on manual accounting entries made to
certain inventory-related accounts in an effort to correct the data in the
system, otherwise

10

engaged in improper accounting practices that overstated earnings, and issued
materially false and misleading financial statements. The plaintiffs further
allege that the individual defendants traded in our common stock while in
possession of material, non-public information regarding the foregoing. The
plaintiffs in the consolidated complaint assert various claims under Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and seek unspecified
amounts of compensatory damages, interest and costs, including legal fees. On
March 15, 2002, we filed our Motion to Dismiss Plaintiffs' Amended Consolidated
Class Action Complaint and Memorandum in Support. The Motion to Dismiss is
currently pending before the court. We and the individual defendants deny the
allegations in the complaint and intend to defend against them vigorously.
Procedurally, the consolidated lawsuit is at a very early stage. Consequently,
at this time we are not able to predict whether we will incur any liability in
excess of insurance coverages or to estimate the damages, or the range of
damages, if any, that we might incur in connection with the lawsuit, or whether
an adverse outcome could have a material adverse impact on our business,
consolidated financial condition or results of operations.

WE HAVE POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES. We must comply
with federal, state and local laws and regulations governing the protection of
the environment. These laws and regulations cover air emissions, discharges to
water, the management of wastes and hazardous substances, the cleanup of
contamination and the control of noise and odors. We may incur significant fines
or penalties if we fail to comply with these environmental requirements. In some
circumstances, a current or previous owner or operator of real property, and
parties that generate or transport hazardous substances that are disposed of at
real property, may be held liable for the cost to investigate or clean up
hazardous substances on or under the property. We may incur liability, including
liability for cleanup costs, if contamination is discovered at one of our
facilities or at a landfill or other location where we have disposed of wastes.
Because environmental requirements are becoming increasingly stringent, our
expenditures for environmental compliance may increase and we may incur material
costs associated with environmental compliance in the future. From time to time,
claims have been made against us under environmental laws or regulations.

OUR BUSINESSES ARE HIGHLY COMPETITIVE. Competition in the metal
components and metal buildings markets of the building industry is intense. It
is based primarily on:

o quality

o service

o delivery

o ability to provide added value in the design and
engineering of buildings

o price

o speed of construction

We compete with a number of other manufacturers of metal components and
engineered building systems ranging from small local firms to large national
firms. In addition, we and other manufacturers of metal components and
engineered building systems compete with alternative methods of building
construction. These alternative building methods may be perceived as more
traditional, more aesthetically pleasing or having other advantages.

ACQUISITIONS MAY HAVE SHORT-TERM ADVERSE EFFECTS ON OUR OPERATIONS. One
element of our growth strategy is to pursue strategic acquisitions that either
expand or complement our business. We may not be able to integrate successfully
an acquired business into our business or operate profitably any business we may
acquire. Acquisitions involve a number of special risks. They divert
management's attention to the integration of the operations and personnel of the
acquired companies. They may also have adverse short-term effects on our
operating results. We may have difficulty integrating our financial reporting
and other management systems in connection with acquisitions.

OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE. The trading
price of our common stock has fluctuated in the past and is subject to
significant fluctuations in response to the following factors, some of which are
beyond our control:

o variations in quarterly operating results;

o changes in earnings estimates by analysts;

o our announcements of significant contracts,
acquisitions, strategic partnerships or joint
ventures;

11

o general conditions in the metal components and
engineered building systems industries;

o fluctuations in stock market price and volume; and

o other general economic conditions.

In recent years, the stock market in general has experienced extreme
price and volume fluctuations that have affected the market price for many
companies in industries similar to ours. Some of these fluctuations have been
unrelated to the operating performance of the affected companies. These market
fluctuations may decrease the market price of our common stock in the future.

WE MAY NOT BE ABLE TO SERVICE OUR DEBT. In connection with our
acquisition activity, especially the MBCI acquisition, we have incurred debt. We
may also incur additional debt from time to time to finance additional
acquisitions, capital expenditures or for other purposes if we comply with the
restrictions in our senior credit facility and the indenture governing our
publicly-held notes.

The debt that we carry may have important consequences to us, including
the following:

o Our ability to obtain additional financing, if
necessary, for working capital, capital expenditures,
acquisitions or other purposes may be impaired or
additional financing may not be available on
favorable terms.

o We must use a portion of our cash flow to pay the
principal and interest on our debt. These payments
reduce the funds that would otherwise be available
for our operations and future business opportunities.

o A substantial decrease in our net operating cash
flows could make it difficult for us to meet our debt
service requirements and force us to modify our
operations.

o We may be more vulnerable to a downturn in our
business or the economy generally.

If we cannot service our debt, we will be forced to take actions such
as reducing or delaying acquisitions and/or capital expenditures, selling
assets, restructuring or refinancing our debt or seeking additional equity
capital. We can give you no assurance that we can do any of these things on
satisfactory terms or at all.

WE MUST COMPLY WITH DEBT COVENANTS. We must comply with operating and
financing restrictions in our senior credit facility and the indenture governing
our publicly-held notes. We may also have similar restrictions with any future
debt. These restrictions affect, and in many respects limit or prohibit our
ability to:

o incur additional indebtedness;

o make restricted payments, including dividends or
other distributions;

o incur liens;

o make investments, including joint venture
investments;

o sell assets; and

o merge or consolidate with or into other companies or
sell substantially all our assets.

Our senior credit facility also requires us to achieve specified
financial and operating results and satisfy set financial tests governing our
consolidated net worth and our leverage, fixed charge coverage and senior debt
ratios. These restrictions could limit our ability to plan for or react to
market conditions or meet extraordinary capital needs or otherwise could
restrict corporate activities. These restrictions could also adversely affect
our ability to finance our future operations or capital needs or to engage in
other business activities that would be in our interest.

12

ITEM 2. PROPERTIES.

We conduct manufacturing operations at the following facilities:

- ----------
(1) Secondary structures and covering systems.

(2) Endwalls, secondary structures and covering systems for components and
engineered building systems.

(3) Full components product range.

(4) Primary structures, secondary structures and covering systems for
engineered building systems.

(5) Covering systems.

(6) We own a 51% interest in a joint venture that owns this facility.

(7) Structural steel.

(8) Insulated Panel Systems.

We also maintain several drafting office facilities and small retail
locations in various states. We have short-term leases for these additional
facilities.

We believe that our present facilities are adequate for our current and
projected operations.

Additionally, we own approximately six acres of land in Houston, Texas
and have a 60,000 square foot facility that is used as our principal executive
and administrative offices. Approximately 14,000 square feet of this facility is
leased to third parties for a term of five years with approximately two and
one-half years remaining on the lease term.

13

During the fourth quarter of fiscal 2001 and the first quarter of
fiscal 2002, we closed five of our manufacturing facilities, and sold three of
the five facilities during fiscal 2002.

During fiscal 2002, we bought four acres of real property outside of
Houston, Texas. We intend to construct a metal depot on this real property.

ITEM 3. LEGAL PROCEEDINGS.

As a result of our restatement of our financial results for the last
half of fiscal 1999, all of fiscal 2000 and the first quarter of fiscal 2001,
several class action lawsuits were filed against us and certain of our current
officers in the United States District Court for the Southern District of Texas,
commencing in April 2001. The plaintiffs in the actions purport to represent
purchasers of our common stock during various periods ranging from August 25,
1999 through April 12, 2001. The lawsuits were consolidated into one class
action lawsuit on August 16, 2001. On January 10, 2002, the court appointed lead
plaintiffs for the consolidated lawsuit. The lead plaintiffs filed a
consolidated amended complaint on February 1, 2002. In the consolidated
complaint the plaintiffs allege, among other things, that during the financial
periods that were restated we made materially false and misleading statements
about the status and effectiveness of a management information and accounting
system used by our components division and costs associated with that system,
failed to assure that the system maintained books and records accurately
reflecting inventory levels and costs of goods sold, failed to maintain internal
controls on manual accounting entries made to certain inventory-related accounts
in an effort to correct the data in the system, otherwise engaged in improper
accounting practices that overstated earnings, and issued materially false and
misleading financial statements. The plaintiffs further allege that the
individual defendants traded in our common stock while in possession of
material, non-public information regarding the foregoing. The plaintiffs in the
consolidated complaint assert various claims under Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and seek unspecified amounts of
compensatory damages, interest and costs, including legal fees. On March 15,
2002, we filed our Motion to Dismiss Plaintiffs' Amended Consolidated Class
Action Complaint and Memorandum in Support. The Motion to Dismiss is currently
pending before the court. We and the individual defendants deny the allegations
in the complaint and intend to defend against them vigorously. Procedurally, the
consolidated lawsuit is at a very early stage. Consequently, at this time we are
not able to predict whether we will incur any liability in excess of insurance
coverages or to estimate the damages, or the range of damages, if any, that we
might incur in connection with the lawsuit, or whether an adverse outcome could
have a material adverse impact on our business, consolidated financial condition
or results of operations.

We are involved in various other legal proceedings that we consider to
be in the normal course of business. We believe that these proceedings will not
have a material adverse effect on our business, consolidated financial condition
or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

The information required by this Item is incorporated by reference from
our 2002 Annual Report to Shareholders, bottom of page 36, regarding the market
for our common stock.

The information required by this Item is incorporated by reference from
our definitive proxy statement for our annual meeting of shareholders to be held
on March 14, 2003, page 22, regarding securities authorized for issuance under
equity compensation plans.

ITEM 6. SELECTED FINANCIAL DATA.

The information required by this Item is incorporated by reference from
our 2002 Annual Report to Shareholders, bottom of the inside gatefold front
cover.

14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The information required by this Item is incorporated by reference from
the following portions of our 2002 Annual Report to Shareholders: Management's
Discussion and Analysis of Results of Operations and Financial Condition, pages
29 through 35.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information required by this Item is incorporated by reference from
our 2002 Annual Report to Shareholders, page 35.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following consolidated financial statements and supplementary
financial information are incorporated by reference from the indicated pages in
our 2002 Annual Report to Shareholders.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information required by this Item is incorporated by reference from
our definitive proxy statement for our annual meeting of shareholders to be held
on March 14, 2003, pages 3 through 6.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated by reference from
our definitive proxy statement for our annual meeting of shareholders to be held
on March 14, 2003, pages 7 through 11.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

The information required by this Item is incorporated by reference from
our definitive proxy statement for our annual meeting of shareholders to be held
on March 14, 2003, pages 1 through 3.

15

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this Item is incorporated by reference from
our definitive proxy statement for our annual meeting of shareholders to be held
on March 14, 2003, top of page 25.

ITEM 14. CONTROLS AND PROCEDURES.

Within 90 days before the date of this report, we carried out an
evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in our periodic
SEC reports. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how remote.

Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Securities and Exchange Act of 1934 is
recorded, processed, summarized and reported, within the time periods specified
in the SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our principal executive
officer and principal financial officer as appropriate, to allow timely
decisions regarding required disclosure.

In addition, we reviewed our internal controls, and there have been no
significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of their last
evaluation.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following documents are filed as a part of this report:

1. Consolidated financial statements (see Item 8).

2. Consolidated financial statement schedules.

Schedule II--Valuation and Qualifying Accounts

All other schedules are omitted because they are inapplicable or the
requested information is shown in the financial statements or noted therein.

3. Exhibits

*3.1 Restated Certificate of Incorporation, as amended
through September 30, 1998

*3.2 Amended and Restated By-Laws, as amended through May 30,
2002

4.1 Form of certificate representing shares of NCI's common
stock (filed as Exhibit 1 to NCI's registration
statement on Form 8-A filed with the SEC on July 20,
1998 and incorporated by reference herein)

4.2 Credit Agreement, dated September 13, 2002 (the "Credit
Agreement"), by and among NCI, Bank of America, N.A., as
administrative agent ("BOA"), Wachovia Bank, N.A., as
syndication agent, and the several lenders named therein
(filed as Exhibit 4.1 to NCI's Quarterly Report on Form
10-Q for the quarter ended August 3, 2002 and
incorporated by reference herein)

16

4.3 Guaranty, dated September 13, 2002, by and among BOA
and all of NCI's domestic subsidiaries and operating
limited partnerships (filed as Exhibit 4.2 to NCI's
Quarterly Report on Form 10-Q for the quarter ended
August 3, 2002 and incorporated by reference herein)

4.4 Promissory Note, dated May 5, 1998, of NCI Holding
Corp. in favor of NCI (filed as Exhibit 4.26 to NCI's
Annual Report on Form 10-K for the fiscal year ended
October 31, 1998 and incorporated by reference
herein)

4.5 Note Pledge Agreement, dated May 5, 1998, between NCI
and BOA (filed as Exhibit 4.27 to NCI's Annual Report
on Form 10-K for the fiscal year ended October 31,
1998 and incorporated by reference herein)

4.6 Rights Agreement, dated June 24, 1998, between NCI
and Harris Trust and Savings Bank (filed as Exhibit 2
to NCI's registration statement on Form 8-A (filed
with the SEC on July 9, 1998 and incorporated by
reference herein)

4.7 First Amendment to Rights Agreement, dated June 24,
1999, between NCI and Harris Trust and Savings Bank
(filed as Exhibit 3 to NCI's registration statement
on Form 8-A, Amendment No. 1 filed with the SEC on
June 25, 1999 and incorporated by reference herein)

*10.1 Amended and Restated Employment Agreement, dated
January 29, 2003, between NCI and Johnie Schulte, Jr.

10.2 Amended and Restated Bonus Program, as amended and
restated on December 11, 1998, September 9, 1999,
December 7, 2000, May 24, 2001 and December 6, 2001

10.3 Stock Option Plan, as amended and restated on
December 14, 2000 (filed as Exhibit 10.4 to NCI's
Annual Report on Form 10-K for the fiscal year ended
October 31, 2000 and incorporated by reference
herein)

10.4 Form of Nonqualified Stock Option Agreement (filed as
Exhibit 10.5 to NCI's Annual Report on Form 10-K for
the fiscal year ended October 31, 2000 and
incorporated by reference herein)

10.5 Form of Incentive Stock Option Agreement (filed as
Exhibit 10.6 to NCI's Annual Report on Form 10-K for
the fiscal year ended October 31, 2000 and
incorporated by reference herein)

*10.6 2003 Long-Term Stock Incentive Plan

10.7 401(k) Profit Sharing Plan (filed as Exhibit 4.1 to
NCI's registration statement no. 33-52078 and
incorporated by reference herein)

*10.8 Amended and Restated Supplemental Benefit Plan (as
amended and restated on December 12, 2002

*10.9 Supplemental Benefit Agreement, dated December 13,
2002, between NCI and A.R. Ginn, Jr.

*10.10 Supplemental Benefit Agreement, dated December 13,
2002, between NCI and Johnie Schulte

*10.11 Split-Dollar Life Insurance Agreement, dated February
1, 1996, between NCI and Fredrick D. Koetting

*10.12 Split-Dollar Life Insurance Agreement, dated October
13, 1998, between NCI and Karen Rene Rosales, trustee
of the Schulte Investment Trust

17

*10.13 Form of Metal Building Components, L.P. (formerly,
MBCI Operating, L.P.) ("MBC") and NCI Group, L.P.
(formerly, Metal Coaters Operating, L.P.) ("NCI
Group") Management Incentive Trust Agreement (as
amended through December 12, 2002) in effect for A.R.
Ginn, Jr. and Kenneth W. Maddox

*10.14 Form of MBC and NCI Group Long-Term Management
Incentive Plan (as amended through December 12, 2002)
in effect for A.R. Ginn, Jr. and Kenneth W. Maddox

10.15 Form of Metallic Builder Agreement (filed as Exhibit
10.10 to NCI's registration statement no. 33-45612
and incorporated by reference herein)

10.16 Form of A&S Builder Agreement (filed as Exhibit 10.17
to NCI's Annual Report on Form 10-K for the fiscal
year ended October 31, 1992 and incorporated by
reference herein)

10.17 Stock Purchase Agreement, dated March 25, 1998, by
and among BTR Australia Limited and NCI, and joined
therein for certain purposes by BTR plc (filed as
Exhibit 2.1 to NCI's Current Report on Form 8-K dated
May 19, 1998 and incorporated by reference herein)

10.18 Letter Agreement, dated May 4, 1998, by and among
NCI, BTR Australia Limited and BTR plc, amending the
Stock Purchase Agreement (filed as Exhibit 2.2 to
NCI's Current Report on Form 8-K dated May 19, 1998
and incorporated by reference herein)

10.19 Note Purchase Agreement, dated April 30, 1999, by and
among NCI, the guarantors named therein, Warburg
Dillon Read LLC, Montgomery NationsBanc Securities
LLC, First Union Capital Markets Corp. and Bear,
Stearns & Co. Inc. (filed as Exhibit 10.18 to NCI's
registration statement no. 333-80029 and incorporated
by reference herein)

10.20 Registration Rights Agreement, dated May 5, 1999, by
and among NCI, the guarantors named therein, Warburg
Dillon Read LLC, Montgomery NationsBanc Securities
LLC, First Union Capital Markets Corp. and Bear,
Stearns & Co. Inc. (filed as Exhibit 10.19 to NCI's
registration statement no. 333-80029 and incorporated
by reference herein)

10.21 Indenture, dated May 5, 1999, by and among NCI, the
guarantors named therein and Harris Trust Company of
New York (filed as Exhibit 10.20 to NCI's
registration statement no. 333-80029 and incorporated
by reference herein)

10.22 Agreement Regarding Retirement, dated July 31, 2000,
between NCI and C.A. Rundell, Jr. (filed as Exhibit
10.15 to NCI's Annual Report on Form 10-K/A for the
fiscal year ended October 31, 2000 and incorporated
by reference herein)

*13 2002 Annual Report to Shareholders. With the
exception of the information incorporated by
reference into Items 5, 6, 7, 7A and 8 of this Form
10-K, the 2002 Annual Report to Shareholders is not
to be deemed filed as part of this Form 10-K.

*21 List of Subsidiaries

*23.1 Consent of Independent Auditors

*23.2 Report of Independent Auditors

- ----------
* Filed herewith

(b) Reports on Form 8-K.

None

18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 31st day of January,
2003.

NCI BUILDING SYSTEMS, INC.

By: /s/ Johnie Schulte, Jr.
--------------------------------
Johnie Schulte, Jr., President
and Chief Executive 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 indicated as of the 31st day of January, 2003.

CERTIFICATION PURSUANT TO RULE 13a-14(b)

I, A. R. Ginn, certify that:

1. I have reviewed this annual report on Form 10-K of NCI Building
Systems, 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;

19

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 we 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: January 31, 2003
/s/ A.R. Ginn
-------------------------------------
A. R. Ginn
Chairman of the Board

CERTIFICATION PURSUANT TO RULE 13a-14(b)

I, Johnie Schulte, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of NCI Building
Systems, 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;

20

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 we 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: January 31, 2003

/s/ Johnie Schulte, Jr.
-----------------------------------------
Johnie Schulte, Jr.
President and Chief Executive Officer

CERTIFICATION PURSUANT TO RULE 13a-14(b)

I, Robert J. Medlock, certify that:

1. I have reviewed this annual report on Form 10-K of NCI Building
Systems, 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 we have:

21

(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: January 31, 2003
/s/ Robert J. Medlock
--------------------------------------
Robert J. Medlock
Executive Vice President
and Chief Financial Officer

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT

I, A. R. Ginn, certify that:

1. I have reviewed this periodic report on Form 10-K of NCI
Building Systems, Inc.;

2. This annual report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and

3. The information contained in this annual report fairly
presents, in all material respects, the financial condition
and results of operations of NCI Building Systems, Inc.

Date: January 31, 2003
/s/ A.R. Ginn
---------------------------------------
A. R. Ginn
Chairman of the Board

22

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT

I, Johnie Schulte, Jr., certify that:

1. I have reviewed this periodic report on Form 10-K of NCI
Building Systems, Inc.;

2. This annual report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and

3. The information contained in this annual report fairly
presents, in all material respects, the financial condition
and results of operations of NCI Building Systems, Inc.

Date: January 31, 2003
/s/ Johnie Schulte, Jr.
----------------------------------------
Johnie Schulte, Jr.
President and Chief Executive Officer

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT

I, Robert J. Medlock, certify that:

1. I have reviewed this periodic report on Form 10-K of NCI
Building Systems, Inc.;

2. This annual report fully complies with the requirements of
section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and

3 The information contained in this annual report fairly
presents, in all material respects, the financial condition
and results of operations of NCI Building Systems, Inc.

Date: January 31, 2003
/s/ Robert J. Medlock
----------------------------------------
Robert J. Medlock
Executive Vice President
and Chief Financial Officer

23

NCI BUILDING SYSTEMS, INC.

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

- ----------
(1) Uncollectible accounts, net of recoveries.

24

INDEX TO EXHIBITS

*10.8 Amended and Restated Supplemental Benefit Plan (as amended and
restated on December 12, 2002

*10.9 Supplemental Benefit Agreement, dated December 13, 2002,
between NCI and A.R. Ginn, Jr.

*10.10 Supplemental Benefit Agreement, dated December 13, 2002,
between NCI and Johnie Schulte

*10.11 Split-Dollar Life Insurance Agreement, dated February 1, 1996,
between NCI and Fredrick D. Koetting

*10.12 Split-Dollar Life Insurance Agreement, dated October 13, 1998,
between NCI and Karen Rene Rosales, trustee of the Schulte
Investment Trust

*10.13 Form of Metal Building Components, L.P. (formerly, MBCI
Operating, L.P.) ("MBC") and NCI Group, L.P. (formerly, Metal
Coaters Operating, L.P.) ("NCI Group") Management Incentive
Trust Agreement (as amended through December 12, 2002) in
effect for A.R. Ginn, Jr. and Kenneth W. Maddox

*10.14 Form of MBC and NCI Group Long-Term Management Incentive Plan
(as amended through December 12, 2002) in effect for A.R.
Ginn, Jr. and Kenneth W. Maddox

10.15 Form of Metallic Builder Agreement (filed as Exhibit 10.10 to
NCI's registration statement no. 33-45612 and incorporated by
reference herein)

10.16 Form of A&S Builder Agreement (filed as Exhibit 10.17 to NCI's
Annual Report on Form 10-K for the fiscal year ended October
31, 1992 and incorporated by reference herein)

10.17 Stock Purchase Agreement, dated March 25, 1998, by and among
BTR Australia Limited and NCI, and joined therein for certain
purposes by BTR plc (filed as Exhibit 2.1 to NCI's Current
Report on Form 8-K dated May 19, 1998 and incorporated by
reference herein)

10.18 Letter Agreement, dated May 4, 1998, by and among NCI, BTR
Australia Limited and BTR plc, amending the Stock Purchase
Agreement (filed as Exhibit 2.2 to NCI's Current Report on
Form 8-K dated May 19, 1998 and incorporated by reference
herein)

10.19 Note Purchase Agreement, dated April 30, 1999, by and among
NCI, the guarantors named therein, Warburg Dillon Read LLC,
Montgomery NationsBanc Securities LLC, First Union Capital
Markets Corp. and Bear, Stearns & Co. Inc. (filed as Exhibit
10.18 to NCI's registration statement no. 333-80029 and
incorporated by reference herein)

10.20 Registration Rights Agreement, dated May 5, 1999, by and among
NCI, the guarantors named therein, Warburg Dillon Read LLC,
Montgomery NationsBanc Securities LLC, First Union Capital
Markets Corp. and Bear, Stearns & Co. Inc. (filed as Exhibit
10.19 to NCI's registration statement no. 333-80029 and
incorporated by reference herein)

10.21 Indenture, dated May 5, 1999, by and among NCI, the guarantors
named therein and Harris Trust Company of New York (filed as
Exhibit 10.20 to NCI's registration statement no. 333-80029
and incorporated by reference herein)

10.22 Agreement Regarding Retirement, dated July 31, 2000, between
NCI and C.A. Rundell, Jr. (filed as Exhibit 10.15 to NCI's
Annual Report on Form 10-K/A for the fiscal year ended October
31, 2000 and incorporated by reference herein)

*13 2002 Annual Report to Shareholders. With the exception of the
information incorporated by reference into Items 5, 6, 7, 7A
and 8 of this Form 10-K, the 2002 Annual Report to
Shareholders is not to be deemed filed as part of this Form
10-K.

*21 List of Subsidiaries

*23.1 Consent of Independent Auditors

*23.2 Report of Independent Auditors

- ----------
* Filed herewith