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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 October 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-19885
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.)
7301 Fairview
Houston, Texas 77041
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 466-7788
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$0.01 par value
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. [ ]
The aggregate market value of the voting stock held by
non-affiliates of the registrant on January 1, 1997, was $232,101,441.
The number of shares of common stock of the registrant
outstanding on January 1, 1997, was 8,022,595.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information required by Parts I and II of this Annual
Report is incorporated by reference from the registrant's 1996 Annual Report to
Shareholders, and information required by Part 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 5, 1997.
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PART I
ITEM 1. BUSINESS.
GENERAL
NCI Building Systems, Inc. (the "Company") designs,
manufactures and markets metal building and framing systems, self-storage
buildings, overhead doors and other building components for commercial,
industrial, agricultural, community service and residential uses. The Company
markets its products nationwide through direct sales forces and authorized
builder networks under several brand names, including "Metallic Buildings,"
"Mid-West Steel Buildings," "A&S Buildings," "NCI Building Components," "All
American Systems," "Steel Systems," "Mid-West Metallic", "DBCI" and "Mesco".
The Company operates from a total of 13 manufacturing facilities in the United
States. It manufactures framing systems as well as components at five of the
facilities, and components only at the regional "satellite" plants.
In April 1989, the Company leased and assumed operation of the
Houston facilities of the Mid-West Metallic division of American Buildings
Company, and purchased that facility in 1993. This facility with its framing
capacity, together with the acquisition of the rights to use the "Mid-West" and
"Metallic" names, enabled the Company to expand its product lines from building
components to metal building systems and resulted in a substantial increase in
the Company's authorized builder network in Texas and surrounding states. The
Company also established satellite manufacturing plants in Illinois,
Mississippi and California in May of 1991, 1994 and 1996, respectively, to
serve the regional markets surrounding those plants and to enhance the
Company's ability to develop and serve authorized builder networks in those
regions. In June 1996, the Company acquired a metal stud manufacturing
facility and equipment in Ennis, Texas from Alabama Metal Industries
Corporation.
The Company also has acquired a number of other businesses in
the last five fiscal years. In October 1992, the Company purchased 100% of the
capital stock of A&S Building Systems, Inc., a manufacturer of metal building
systems having a manufacturing facility with framing capacity in Caryville,
Tennessee and a network of approximately 170 authorized builders located
primarily in southeastern and midwestern states. In October 1994, the Company
acquired substantially all of the assets and business of Ellis Building
Components, Inc., a manufacturer of metal building systems having a
manufacturing facility with framing capacity in Tallapoosa, Georgia. In March
1995, the Company acquired substantially all of the assets and business of
Royal Metal Buildings, Inc., a manufacturer of metal building systems and
components with a manufacturing facility in Hobbs, New Mexico, which the
Company operates as a regional satellite plant. In November 1995, the Company
acquired substantially all of the assets and business of Doors & Building
Components, Inc., a manufacturer of roll-up steel overhead doors and interior
steel components for self-storage systems with manufacturing facilities in
Douglasville, Georgia and Chandler, Arizona. In March 1996, the Company
purchased the equipment and operating assets used by Carlisle Engineered
Metals, Inc. in its west coast component business and transferred those assets
and the acquired business to the Company's Atwater, California facility when it
was completed. In April 1996, the Company purchased substantially all of the
assets and business of the Mesco Metal Buildings division of Anderson
Industries, Inc., a manufacturer of metal building systems having manufacturing
facilities with framing capacity in Southlake, Texas and Chester, South
Carolina.
The Company was founded in 1984 and was reincorporated in
Delaware on December 31, 1991. Its principal offices are located at 7301
Fairview, Houston, Texas 77041 and its telephone number is (713) 466-7788.
Unless indicated otherwise, references herein to the Company include its
predecessors and its subsidiaries.
INDUSTRY OVERVIEW
Metal building systems are marketed for use primarily in the
construction of low-rise, non-residential structures of up to 150,000 square
feet. Based upon information published by the Metal Building Manufacturers
Association ("MBMA"), on a square footage basis metal building systems
accounted for approximately 66% of the structures of that type constructed in
1995.
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In the early years of the industry, metal building systems
were most often used for factories, warehouses, distribution centers and other
applications in which the exterior appearance of the building was not as
significant a consideration to customers as construction cost, efficiency,
speed of construction and other factors. 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 a metal building system with masonry, glass and
wood exterior facades in order to meet the aesthetic requirements of potential
customers while preserving the inherent characteristics of metal building
systems. As a result, the uses for metal building systems now include office
buildings, showrooms, retail stores, banks, schools and government and
community centers for which aesthetics and architectural features are important
considerations of the end users.
In its marketing efforts the Company and other major
manufacturers generally emphasize the following characteristics of metal
building systems to distinguish them from other methods of construction:
Short Construction Time. In many instances, it takes less
time to construct a metal building in comparison to other building types. In
addition, since most of the work is done in the factory, the likelihood of
weather interruptions is reduced.
Efficient Material Utilization. The larger metal building
manufacturers use computer-aided analysis and design to fabricate structural
members with high strength-to-weight ratios, minimizing raw materials costs.
Low Construction Costs. The in-plant manufacture of metal
building systems, coupled with automation, allows the substitution of less
expensive factory labor for much of the skilled on-site construction labor
otherwise required.
Ease of Expansion. Metal building systems can be modified
quickly and economically before, during or after the building is completed to
accommodate all types of expansion. Typically, a building system can be
expanded by removing the end or side walls, erecting new framework and adding
matching wall and roof panels.
Low Maintenance Costs. Unlike wood, metal will not
deteriorate because of cracking, damp rot or insect damage. Furthermore,
factory-applied roof and siding panel coatings resist cracking, peeling,
chipping, chalking and fading.
Industry demand for metal building systems is cyclical,
dependent to a large degree upon the level of non-residential construction
activity, the availability of financing for construction projects, interest
rates and other factors that affect the construction industry. According to
information published by the MBMA, industry-wide metal building system sales
increased from approximately $1.0 billion in 1982 to approximately $1.7 billion
in 1989, then declined to approximately $1.2 billion by 1991 at which time the
industry began experiencing year-to-year increases, to approximately $2.3
billion by 1995.
PRODUCTS
Metal building systems consist of pre-engineered structural
beams and panels that are manufactured in a factory and shipped to a
construction site complete and ready for assembly. The Company designs and
engineers each metal building system to meet customer specifications and to
allow for easy on-site assembly by builders or independent contractors. Metal
building systems typically consist of three subsystems: (1) primary structural
framing; (2) secondary structural framing; and (3) the covering subsystem,
which includes the roof and walls.
Primary Structural Framing. The 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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Secondary Structural Framing. The 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.
Covering Subsystem. The covering subsystem consists of roof
and siding 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 metal building system. These components
include doors, windows, gutters and interior partitions.
The Company's metal building component products consist of end
and side wall panels, roof panels, purlins, girts and other individual
components that otherwise are used in metal building systems, which are sold
directly to end users or to contractors for use in constructing small buildings
that do not require the design or structural features of complex building
systems. The Company also stocks and markets metal component parts for use in
the maintenance and repair of existing metal buildings and buildings
constructed of materials other than metal. Other component products
manufactured by the Company include roll-up doors, interior and exterior doors,
lockers, partitions, wall and header panels and related trim.
The Company has 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.
During the previous five fiscal years, the Company's revenues
attributable to metal building systems and to components were approximately as
follows:
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- --------
(IN THOUSANDS)
Metal building systems . . . . $ 61,666 $104,792 $126,665 $173,882 $212,998
Components . . . . . . . . . . 17,342 29,714 41,102 60,333 119,882
-------- -------- -------- -------- --------
Total revenues . . . . . $ 79,008 $134,506 $167,767 $234,215 $332,880
======== ======== ======== ======== ========
SALES AND MARKETING
The Company sells its products under multiple brand names
through various distribution channels. These channels include (i) sales
through the Company's authorized builder networks, (ii) direct sales to
contractors and (iii) private label sales to certain large builders.
Management believes that its multi-channel distribution strategy promotes brand
loyalty, improves customer service and increases sales. With each distribution
channel, the Company's engineering, manufacturing and marketing personnel work
directly with the builder or contractor to establish job specifications and
modifications, determine the appropriate pricing for the Company's products and
services, generate drawings and establish production and delivery schedules.
The Company sells to builders and contractors on customary payment terms.
The Metallic division and A&S sell metal building systems to
builders nationwide under the brand names "Metallic Buildings" and "A&S
Buildings," respectively. Since the Company acquired Mesco on April 1, 1996,
that division also sells metal building systems under the brand name "Mesco".
During fiscal 1995 and fiscal 1996, the combined metal building systems sales
of the Metallic division and A&S were $127.4 million and $143.3
3
5
million, respectively. During the last seven months of fiscal 1996, the sales
of Mesco were $17.9 million. The Metallic division markets through an in-house
sales force of approximately 45 persons to an authorized builder network of 406
builders. A&S has its own authorized builder network of 300 builders managed by
an in-house sales force of approximately 16 persons. Mesco has an authorized
builder network of 125 builders and an in-house sales force of 19 persons.
The Company's authorized builder networks consist of
independent general contractors which market the Company's Metallic Buildings,
A&S Buildings and Mesco products to end users. The Company enters into an
agreement with an authorized builder, which generally grants the builder the
non-exclusive right to market the Company's products in a specified territory
and which is cancelable by either party on 60 days' notice. The agreements do
not prohibit the builder from marketing metal building systems of other
manufacturers. The Company establishes an annual sales goal for each builder
and provides to the builder sales and pricing information, design and
engineering manuals, drawings and assistance, application programs for
estimating and quoting jobs and advertising and promotional literature. The
Company also defrays a portion of the builder's advertising costs and provides
volume purchasing and other pricing incentives to encourage them to deal
exclusively or principally with the Company. 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 a metal building
system on the customer's site and provide general contracting and other
services ancillary to the completion of the project. The Company sells its
products to the builder, which generally includes the price of the building as
a part of its overall construction contract with its customer.
Most of the Company's metal building system sales outside of
Texas and surrounding states are through its authorized builder networks. The
Company relies upon maintaining a satisfactory business relationship for the
continued receipt of job orders from its authorized builders and does not
consider the builder agreements to be material to its business. During fiscal
1996, the Company's largest authorized builder accounted for less than 3% of
the Company's total metal building systems sales.
The Mid-West division primarily markets metal building systems
under the brand name "Mid-West Steel Buildings" directly to contractors in
Texas and surrounding states using a sales force of ten persons. The Company
also sells metal building systems through the All American division under the
name "All American Systems" and various private labels.
Metal building components are sold directly to contractors and
other customers by the NCI Building Components division under the brand name
"NCI Building Components." The NCI Building Components division utilizes an
in-house sales force of approximately 60 persons. Roll-up doors, interior and
exterior doors, lockers, interior partitions and walls and header panels and
trim are sold directly to contractors and other customers by the Doors &
Building Components division under the brand names "Doors & Building
Components" or "DBCI". These components also are produced by that division for
integration into self storage and metal building systems sold by other
divisions of the Company. The Doors & Building Components division has an
in-house sales force of approximately six persons.
The Company also seeks to develop niche markets, which may
initially represent a small percentage of sales but present growth
opportunities and other advantages. The Company's Steel Systems division sells
its self-storage systems and components under the brand name "Steel Systems."
The Classic Metal Homes division's metal framing systems for residential-use
homes were in initial development during fiscal 1996.
The Company also markets its products to international
builders. Approximately 4.2%, 2.3% and 4.4% of the Company's sales in fiscal
1994, fiscal 1995 and fiscal 1996, respectively, were to customers located in
foreign countries. No single foreign country has represented a steady market
for the Company's products. Foreign sales are made in United States dollars
and under letters of credit.
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DESIGN AND MANUFACTURE
After the Company receives an order, the Company's engineers
design the metal building system to meet the customer's requirements and to
satisfy applicable building codes. In order to expedite this process, the
Company uses computer-aided design and engineering systems to generate
engineering and erection drawings and a bill of materials for the manufacture
of the building system.
Once the specifications and designs of the customer's project
have been finalized, the manufacturing process begins at one of the Company's
five full manufacturing facilities in Texas, Georgia, South Carolina or
Tennessee. The fabrication of the primary structural framing consists of a
process in which pieces of rigid steel plates are punched and sheared and then
routed through an automatic welding machine and sent through further fitting
and welding processes. This process is the most labor intensive in the
fabrication of metal building systems.
The secondary structural framing and the covering subsystem
are roll-formed steel products that are manufactured at the Company's full
manufacturing facilities as well as its regional satellite plants. 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. The
fabrication of the secondary framing and covering subsystems is more automated
and, thus, is less labor intensive than that of the primary structural framing.
Once manufactured, structural framing members and covering
subsystems are shipped to the job site for assembly by local contractors. The
Company generally is not responsible for any on-site construction. The time
elapsed between the Company's 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.
The doors, lockers, interior partitions and other panels and
trim products of the Doors & Building Components division are manufactured at
plants in Georgia, Texas and Arizona, each of which operates independently of
the Company's other component plants. The products are roll-formed or
fabricated at each plant using roll-formers and other metal working equipment.
Orders are processed at the division's home office in Georgia and sent to the
appropriate plant, which is generally determined in a manner to obtain the
lowest shipping cost. The division's capacity allows it to ship orders in a
two- to three-week time period.
RAW MATERIALS
The principal raw material used in the manufacture of the
Company's metal building and component products is steel. Components are
fabricated from common steel products produced by mills including bars, plates,
sheets and galvanized sheets. In fiscal 1996, the Company purchased more than
40% of its steel requirements from National Steel Corporation. No other steel
supplier accounted for more than 6% of the Company's steel purchases. The
Company believes concentration of its steel purchases among a small group of
suppliers that have mills and warehouse facilities in close proximity to the
facilities of the Company enables it, as a large customer of those suppliers,
to obtain better service and delivery than many other steel purchasers. These
suppliers generally maintain an inventory of the types of materials required by
the Company, enabling the Company to utilize a form of "just-in-time" inventory
management with regard to raw materials. The Company expects moderate steel
price increases during fiscal 1997.
The Company does not have any long-term contracts for the
purchase of raw materials. A prolonged labor strike against one or more of its
principal domestic suppliers could have a material adverse effect on the
Company's operations. Alternative sources, however, including foreign steel,
are currently believed to be sufficient to maintain required deliveries.
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BACKLOG
At October 31, 1996, the total backlog for orders believed by
the Company to be firm was $85.6 million. This compares with a total backlog
of $65.6 million at October 31, 1995 and $62.8 million at October 31, 1994.
The increases in backlog reflect the results of the marketing activities of the
Company, particularly the expansion of its authorized builder networks, market
demand and the acquisitions and satellite plant openings completed by the
Company since 1992. Job orders generally are cancelable by customers at any
time for any reason and, 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 October 31, 1996 currently is
scheduled to extend beyond October 31, 1997.
WARRANTIES
The Company provides a limited warranty on all fabricated
products. This warranty generally provides for repair or replacement of
fabricated and roll-formed materials, but does not include the cost of field
installation. The Company also passes through to its customers certain
warranties it receives on paint coatings, which vary from three to 20 years,
and the 20-year warranties it receives on galvalume coated steel. To respond
to certain competitive situations, the Company may provide a limited weather
tightness warranty of up to 20 years covering potential leakage on certain
roofing systems offered by the Company. The Company has not experienced any
significant claims under any of its warranties.
COMPETITION
The Company competes with a number of other manufacturers of
metal building systems and components, ranging from small local firms to large
national firms, some of which may have greater financial, management and
marketing resources than the Company. Most of these competitors operate on a
regional basis, although the Company believes that four other manufacturers of
metal building systems and several manufacturers of components have nationwide
coverage. In addition, the Company and others in the metal building systems
and components industry compete with alternative methods of building
construction. Competition is based primarily on such factors as price, speed
of construction, quality of builder/dealer networks, the ability to provide
added value in the design of buildings and, among metal building and component
manufacturers, service, quality and delivery times.
Based on data reported to the MBMA for the calendar year 1995,
the Company believes it ranks as the fourth largest domestic manufacturer of
metal building systems, with approximately 12% of total reported industry
sales. The Company believes that the two largest metal building manufacturers
taken together have approximately 40% of industry sales reported to the MBMA.
Reliable information about component sales and the Company's ranking in that
market is not available, but the Company is not a significant factor in that
market. Foreign companies are not presently a significant factor in the
domestic marketplace, and the Company does not expect them to be in the near
future because of transportation costs and the short lead times generally
required by customers.
REGULATORY MATTERS
The Company's manufacturing facilities are subject to water
and air pollution control standards mandated by federal, state and local laws.
The Company believes it is in substantial compliance with all environmental
standards applicable to its operations. The Company does not anticipate
material capital expenditures to meet current environmental quality control
standards, but there can be no assurance that more stringent regulatory
standards will not be established which might require such expenditures. The
metal building systems manufactured by the Company must meet zoning and
building code requirements promulgated by local governmental agencies.
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PATENTS, LICENSES AND PROPRIETARY RIGHTS
The Company has a perpetual, nonexclusive license from Metal
Building Components, Inc. to manufacture, distribute, market and sell its
standing seam roof systems. The Company does not consider the license to be
material to its business due to the availability of other standing seam roof
systems, including its own roof system. The Company has a United States patent
on its Retro-R(R) retrofit metal panel and has applied for another patent with
respect to its Retro-R(R) panel. Another patent application is pending for a
vented closure for a metallic roofing system. Patent protection is not
considered by the Company to be a material competitive factor in its industry.
The Company has registered trademarks in the United States for
"Metallic" and design, "Retro-R", "Pittsburgh Loc," Trapezoidal Loc", "NCI" and
design, "A&S Building Systems", "Mid-West Steel Building Company", design for
Mid-West Steel, "Classic Metal Home" and design, "A&S" and design, "Mesco" and
design and "ARS" and design. In addition, the Company has pending U.S.
trademark registrations for "Royal K-70", "Dura-20", "VL-12", "VL-16",
"VL-18", "Metallic Building Company", "Steel System" and design, "NCI Express"
and design, "NCI Building Components", "NCI", "DBCI", "All American Systems",
"NCI" and design and "Vertical Loc." The "Metallic" and design mark is also
pending registration in Mexico.
EMPLOYEES
As of October 31, 1996, the Company employed approximately
2,163 employees, of whom 142 were management and supervisory personnel, 189
were administrative personnel, 191 were sales personnel, 206 were engineers and
draftsmen, and 1,435 were manufacturing personnel. The Company's employees are
not represented by a labor union or collective bargaining agreement, although
the United Steel Workers of America petitioned the National Labor Relations
Board to be recognized as the collective bargaining representative of the
production and maintenance employees of the Company's Tallapoosa facility. An
election for that purpose was held in January 1996 and the union lost the
election to be recognized as the collective bargaining representative of such
employees. The Company regards its employee relations as satisfactory.
ITEM 2. PROPERTIES.
The Company conducts manufacturing operations at the following
facilities:
Square Owned/
Facility Products Feet Leased
-------- -------- ------ ------
Houston, Texas (opened 1989) Metal building systems(1) 382,000 Owned
Components; overhead doors
Tallapoosa, Georgia (acquired 1992) Metal building systems(1) 246,000 Leased
Components
Caryville, Tennessee (acquired 1992) Metal building systems(1) 193,800 Owned
Components
Chester, South Carolina (acquired 1996) Metal building systems(1) 124,000 Owned
Components
Southlake, Texas (acquired 1996) Metal building systems(1) 123,000 Owned
Components
Houston, Texas (opened 1984) Components 97,000 Owned
Jackson, Mississippi (opened 1994) Secondary structures 96,000 Owned
Covering subsystems
Components
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Mattoon, Illinois (opened 1991) Secondary structures 90,600 Owned
Covering subsystems
Components
Atwater, California (opened 1996) Secondary structures 85,700 Owned
Covering subsystems
Components
Hobbs, New Mexico (acquired 1995) Secondary structures 60,800 Leased
Covering subsystems
Components
Douglasville, Georgia (acquired 1995) Overhead doors 60,000 Owned
Components
Chandler, Arizona (acquired 1995) Overhead doors 35,000 Leased
Components
Ennis, Texas (acquired 1996) Components 33,000 Owned
Studs
- ------------
(1) Includes primary structures, secondary structures and covering
subsystems.
The principal executive offices of the Company occupy 33,600 square
feet of the principal manufacturing facility in Houston. The principal offices
of A&S, DBCI and Mesco occupy 16,000 square feet of the Caryville facility,
4,000 square feet of the Douglasville facility, and 16,800 square feet of the
Southlake facility, respectively. The Company also maintains several drafting
office facilities and retail locations in various states. These office
facilities are subject to short-term leases.
ITEM 3. LEGAL PROCEEDINGS.
The Company is involved in various legal proceedings that the
Company considers to be in the normal course of business. Management of the
Company believes that such litigation will not result in any material losses.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
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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 the Company's 1996 Annual Report to Shareholders, bottom of page
31, regarding the market for common stock of the Company.
During fiscal 1996, the Company issued and sold the following
securities without registration under the Securities Act of 1933, as amended
("Securities Act"); no underwriters were involved in either of the
transactions:
In November 1995, the Company issued 300,000 shares of Common
Stock to Doors & Building Components, Inc., of which David B. Curtis
was the sole shareholder, in connection with the acquisition by the
Company of substantially all of the assets of that company. The
issuance of the Common Stock was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) because
the transaction did not involve a public offering.
In April 1995, the Registrant issued a $1,500,000 principal
amount, 7% subordinated convertible debenture due April 1, 2001, to
Anderson Industries, Inc. in connection with the purchase of the Mesco
Metal Buildings division of that company. The convertible debenture
was concurrently distributed by that company to John T. Eubanks, its
principal shareholder. The convertible debenture is convertible into
Common Stock of the Company after April 1, 1997 at a conversion price
of $29.925 per share. No underwriters participated in the
transaction. The issuance of the convertible debenture was exempt
from the registration requirements of the Securities Act pursuant to
Section 4(2) because the transaction did not involve a public
offering. Upon conversion thereof, the issuance of the Common Stock
will be exempt from the registration requirements of the Securities
Act pursuant to Section 3(a)(9) thereof.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this Item is incorporated by
reference from the Company's 1996 Annual Report to Shareholders, top of page 1.
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 the Company's 1996 Annual Report to
Shareholders: Management's Discussion and Analysis of Results of Operations
and Financial Condition, pages 28 through 30.
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 the Company's 1996 Annual Report to Shareholders.
Pages of
Annual Report
to Shareholders
---------------
Selected Financial Data 1
Consolidated statements of income for
each of the three years in the period
ended October 31, 1996 17
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11
Consolidated balance sheets at
October 31, 1996 and 1995 18
Consolidated statements of shareholders'
equity for each of the three years in the
period ended October 31, 1996 19
Consolidated statements of cash flows
for each of the three years in the
period ended October 31, 1996 20
Notes to consolidated financial statements 21 - 26
Report of independent auditors 27
Management's Discussion and Analysis of
Results of Operations and Financial Condition 28 - 30
Unaudited Quarterly Financial Data 31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
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PART III
The information required by Items 10 through 13 of Part III is
incorporated by reference from the indicated pages of the Company's definitive
proxy statement for its annual meeting of shareholders to be held on March 5,
1997.
Pages of
Proxy Statement
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY. 3 - 6
ITEM 11. EXECUTIVE COMPENSATION. 7 - 11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT. 1 - 3
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 17
11
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PART IV
ITEM 14. 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 of the Company
(filed as Exhibit 3.1 to the Company's registration
statement no. 33-45612 and incorporated herein)
3.2 Certificate of Amendment to Restated Certificate of
Incorporation of the Company (filed as Exhibit 3.1.1 to
the Company's registration statement no. 33-45612 and
incorporated herein)
3.3 Certificate of Amendment to Restated Certificate of
Incorporation of the Company (filed as Exhibit 3.3 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1994 and incorporated herein)
3.4 Amended and Restated By-Laws of the Company, as amended
through February 5, 1992 (filed as Exhibit 3.2 to the
Company's registration statement no. 33-45612 and
incorporated herein)
4.1 Form of certificate representing shares of Company's
common stock (filed as Exhibit 4.1 to the Company's
registration statement no. 33-45612 and incorporated
herein)
4.2 Stock Registration Agreement, dated April 10, 1989,
between the Company and Equus II Incorporated, formerly
Equus Investments II, L.P. ("Equus") (filed as Exhibit
4.2 to the Company's registration statement no.
33-45612 and incorporated herein)
4.3 Credit Agreement, dated April 30, 1993, between
NationsBank of Texas, N.A. and NCI Building Systems,
L.P. (filed as Exhibit 4.7 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
31, 1993 and incorporated herein)
4.4 First Amendment Agreement, dated February 28, 1994,
between NationsBank of Texas, N.A. and NCI Building
System, L. P. (filed as Exhibit 4.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 31, 1994 and incorporated herein)
4.5 Second Amendment Agreement, dated February 28, 1995,
between NationsBank of Texas, N.A. and NCI Building
Systems, L.P. (filed as Exhibit 4.13 to the Company's
registration statement no. 33- 99560 and incorporated
herein)
12
14
4.6 $6,000,000 Revolving Credit Note, dated April 30, 1993,
in favor of NationsBank of Texas, N.A., executed by NCI
Building Systems, L.P. (filed as Exhibit 4.8 to the
Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1993 and incorporated herein)
4.7 $1,750,000 Revolving Credit Note, dated February 28,
1994, in favor of NationsBank of Texas, N.A., executed
by NCI Building Systems, L.P. (filed as Exhibit 4.6 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1994 and incorporated herein)
4.8 Guaranty, dated April 30, 1993, between NationsBank of
Texas, N.A. and the Company (filed as Exhibit 4.9 to
the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1993 and incorporated herein)
4.9 Guaranty, dated April 30, 1993, between NationsBank of
Texas, N.A. and A & S Building Systems, Inc. (filed as
Exhibit 4.10 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1993 and
incorporated herein)
4.10 Loan Agreement "A," dated September 1, 1991, between
the City of Mattoon and the Company (filed as Exhibit
4.11 to the Company's registration statement no.
33-45612 and incorporated herein)
4.11 $250,000 Promissory Note A, dated October 31, 1991, in
favor of the City of Mattoon executed by the Company
(filed as Exhibit 4.12 to the Company's registration
statement no. 33-45612 and incorporated herein)
4.12 Loan Agreement "B," dated September 1, 1991, between
the City of Mattoon and the Company (filed as Exhibit
4.13 to the Company's registration statement no.
33-45612 and incorporated herein)
4.13 $250,000 Promissory Note B, dated January 20, 1992, in
favor of the City of Mattoon executed by the Company
(filed as Exhibit 4.14 to the Company's registration
statement no. 33-45612 and incorporated herein)
4.14 Stock Retention and Registration Agreement, dated
November 13, 1995, by and between the Company, Doors &
Building Components, Inc., and David B. Curtis (filed
as Exhibit 4.14 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1995 and
incorporated herein)
*4.15 7% Convertible Subordinated Debenture dated April 1,
1996 Due April 1, 2001 between NCI Building Systems,
Inc. and John T. Eubanks
10.1 Employment Agreement, dated April 10, 1989, between the
Company and Johnie Schulte, Jr. (filed as Exhibit 10.1
to the Company's registration statement no. 33-45612
and incorporated herein)
10.2 Amendment to Employment Agreement, dated February 21,
1992, between the Company and Johnie Schulte, Jr.
(filed as Exhibit 10.1.1 to the Company's registration
statement no. 33-45612 and incorporated herein)
10.3 Summary of Bonus Program (filed as Exhibit 10.2 to the
Company's registration statement no. 33-45612 and
incorporated herein)
13
15
10.4 Employee Stock Option Plan (filed as Exhibit 4.1 to the
Company's registration statement no. 33-52080 and
incorporated herein)
10.5 Amendment No. 1 to Stock Option Plan (filed as Exhibit
4.2 to the Company's registration statement no.
33-52080 and incorporated herein)
10.6 Amendment No. 2 to Stock Option Plan (filed as Exhibit
10.6 in the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1992 and incorporated
herein)
10.7 Form of Employee Stock Option Agreement (filed as
Exhibit 4.3 to the Company's registration statement no.
33-52080 and incorporated herein)
10.8 Form of Director Stock Option Agreement (filed as
Exhibit 4.4 to the Company's registration statement no.
33-52080 and incorporated herein)
10.9 License Agreement, dated June 30, 1989, between Metal
Building Components, Inc. and the Company (filed as
Exhibit 10.6 to the Company's registration statement
no. 33-45612 and incorporated herein)
10.10 401(k) Profit Sharing Plan (filed as Exhibit 4.1 to the
Company's registration statement no. 33-52078 and
incorporated herein)
10.11 Form of Metallic Builder Agreement (filed as Exhibit
10.10 to the Company's registration statement no.
33-45612 and incorporated herein)
10.12 Form of A&S Builder Agreement (filed as Exhibit 10.17
to the Company's Annual Report on Form 10- K for the
fiscal year ended October 31, 1992 and incorporated
herein)
10.13 Purchase Agreement, dated September 7, 1994, between
NCI Building Systems, L.P., Ellis Building Components,
Inc., Tony Ellis and Ronald Ellis (filed as Exhibit 2.1
to the Company's Current Report on Form 8-K dated
October 14, 1994 and incorporated herein)
10.14 Amendment to Purchase Agreement, dated October 14,
1994, between NCI Building Systems, L.P., Ellis
Building Components, Inc., Tony Ellis and Ronald Ellis
(filed as Exhibit 2.2 to the Company's Current Report
on Form 8-K dated October 14, 1994 and incorporated
herein)
*10.15 Form of Mesco Metal Buildings Agreement
10.16 Amendment No. 3 to Stock Option Plan (filed as Exhibit
4.6 to the Company's Registration Statement No.
333-12921 and incorporated herein)
10.17 Asset Purchase Agreement, dated October 13, 1995, by
and among Doors & Building Components, Inc., David B.
Curtis, DBCI Acquisition Corp. and the Company (filed
as Exhibit 2 to the Company's Current Report on Form
8-K dated November 13, 1995 and incorporated herein)
10.18 Asset Purchase Agreement, dated April 1, 1996, by and
among Anderson Industries, Inc., Charles W. Anderson,
Thomas L. Anderson, Jr., John T. Eubanks, Robert K.
Landon, NCI Building Systems, L.P. and the Company
(filed as Exhibit 2 to the Company's Current Report on
Form 8-K dated April 1, 1996 and incorporated herein).
14
16
*13 1995 Annual Report to Shareholders. With the exception
of the information incorporated by reference into Items
5, 6, 7, and 8 of this Form 10-K, the 1995 Annual
Report to Shareholders is not to be deemed filed as
part of this Form 10-K.
*21 List of Subsidiaries
*23 Consent of Ernst & Young LLP
*27 Financial Data Schedule
- -----------
* Filed herewith
(b) Reports on Form 8-K.
None.
15
17
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 27th day of
January, 1997.
NCI BUILDING SYSTEMS, INC.
By: /s/ Johnie Schulte
------------------------------------
Johnie Schulte, 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 27th day of January, 1997.
Name Title
/s/ Johnie Schulte President, Chief Executive Officer and Director
- -------------------------- (principal executive officer)
Johnie Schulte
/s/ Robert J. Medlock Vice President, Chief Financial Officer and Treasurer
- -------------------------- (principal financial and accounting officer)
Robert J. Medlock
Director
- --------------------------
Thomas C. Arnett
/s/ William D. Breedlove Director
- --------------------------
William D. Breedlove
/s/ Gary L. Forbes Director
- --------------------------
Gary L. Forbes
/s/ Leonard F. George Executive Vice President and Director
- --------------------------
Leonard F. George
16
18
/s/ Robert N. McDonald Director
- --------------------------
Robert N. McDonald
/s/ C.A. Rundell, Jr. Director
- --------------------------
C. A. Rundell, Jr.
/s/ Daniel D. Zabcik Director
- --------------------------
Daniel D. Zabcik
17
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NCI BUILDING SYSTEMS, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at ----------------- Balance
Beginning Charged to Costs at End
Description of Period and Expenses Deductions(1) of Period
----------- ---------- ---------------- ------------- ---------
Year ended October 31, 1996:
Reserves and allowances
deducted from asset accounts:
Allowance for uncollectible
accounts and backcharges . . . . . . . . . $ 1,339,772 $ 680,633 $ 391,203 $ 1,629,202
Year ended October 31, 1995:
Reserves and allowances
deducted from asset accounts:
Allowance for uncollectible
accounts and backcharges . . . . . . . . . $ 1,040,828 $ 1,101,038 $ 802,094 $ 1,339,772
Year ended October 31, 1994:
Reserves and allowances
deducted from asset accounts:
Allowance for uncollectible
accounts and backcharges . . . . . . . . . $ 990,012 $ 651,215 $ 600,399 $ 1,040,828
- --------------
(1) Uncollectible accounts, net of recoveries.
18
20
INDEX TO EXHIBITS
Sequentially
Numbered
Page
------------
3.1 Restated Certificate of Incorporation of the Company
(filed as Exhibit 3.1 to the Company's registration
statement no. 33-45612 and incorporated herein)
3.2 Certificate of Amendment to Restated Certificate of
Incorporation of the Company (filed as Exhibit 3.1.1
to the Company's registration statement no. 33-45612
and incorporated herein)
3.3 Certificate of Amendment to Restated Certificate of
Incorporation of the Company (filed as Exhibit 3.3 to
the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1994 and incorporated
herein)
3.4 Amended and Restated By-Laws of the Company, as
amended through February 5, 1992 (filed as Exhibit
3.2 to the Company's registration statement no.
33-45612 and incorporated herein)
4.1 Form of certificate representing shares of Company's
common stock (filed as Exhibit 4.1 to the Company's
registration statement no. 33-45612 and incorporated
herein)
4.2 Stock Registration Agreement, dated April 10, 1989,
between the Company and Equus II Incorporated,
formerly Equus Investments II, L.P. ("Equus") (filed
as Exhibit 4.2 to the Company's registration
statement no. 33-45612 and incorporated herein)
4.3 Credit Agreement, dated April 30, 1993, between
NationsBank of Texas, N.A. and NCI Building Systems,
L.P. (filed as Exhibit 4.7 to the Company's Annual
Report on Form 10-K for the fiscal year ended October
31, 1993 and incorporated herein)
4.4 First Amendment Agreement, dated February 28, 1994,
between NationsBank of Texas, N.A. and NCI Building
System, L. P. (filed as Exhibit 4.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 31, 1994 and incorporated herein)
4.5 Second Amendment Agreement, dated February 28, 1995,
between NationsBank of Texas, N.A. and NCI Building
Systems, L.P. (filed as Exhibit 4.13 to the Company's
registration statement no. 33-99560 and incorporated
herein)
4.6 $6,000,000 Revolving Credit Note, dated April 30,
1993, in favor of NationsBank of Texas, N.A.,
executed by NCI Building Systems, L.P. (filed as
Exhibit 4.8 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1993 and
incorporated herein)
19
21
Sequentially
Numbered
Page
------------
4.7 $1,750,000 Revolving Credit Note, dated February 28,
1994, in favor of NationsBank of Texas, N.A.,
executed by NCI Building Systems, L.P. (filed as
Exhibit 4.6 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1994 and
incorporated herein)
4.8 Guaranty, dated April 30, 1993, between NationsBank
of Texas, N.A. and the Company (filed as Exhibit 4.9
to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1993 and incorporated
herein)
4.9 Guaranty, dated April 30, 1993, between NationsBank
of Texas, N.A. and A & S Building Systems, Inc.
(filed as Exhibit 4.10 to the Company's Annual Report
on Form 10-K for the fiscal year ended October 31,
1993 and incorporated herein)
4.10 Loan Agreement "A," dated September 1, 1991, between
the City of Mattoon and the Company (filed as Exhibit
4.11 to the Company's registration statement no.
33-45612 and incorporated herein)
4.11 $250,000 Promissory Note A, dated October 31, 1991,
in favor of the City of Mattoon executed by the
Company (filed as Exhibit 4.12 to the Company's
registration statement no. 33-45612 and incorporated
herein)
4.12 Loan Agreement "B," dated September 1, 1991, between
the City of Mattoon and the Company (filed as Exhibit
4.13 to the Company's registration statement no.
33-45612 and incorporated herein)
4.13 $250,000 Promissory Note B, dated January 20, 1992,
in favor of the City of Mattoon executed by the
Company (filed as Exhibit 4.14 to the Company's
registration statement no. 33-45612 and incorporated
herein)
4.14 Stock Retention and Registration Agreement, dated
November 13, 1995, by and between the Company, Doors
& Building Components, Inc., and David B. Curtis (Filed
as Exhibit 4.14 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1995 and
incorporated herein)
*4.15 7% Convertible Subordinated Debenture dated April 1,
1996 Due April 1, 2001 between NCI Building Systems,
Inc. and John T. Eubanks
10.1 Employment Agreement, dated April 10, 1989, between
the Company and Johnie Schulte, Jr. (filed as Exhibit
10.1 to the Company's registration statement no.
33-45612 and incorporated herein)
10.2 Amendment to Employment Agreement, dated February 21,
1992, between the Company and Johnie Schulte, Jr.
(filed as Exhibit 10.1.1 to the Company's
registration statement no. 33-45612 and incorporated
herein)
20
22
Sequentially
Numbered
Page
------------
10.3 Summary of Bonus Program (filed as Exhibit 10.2 to
the Company's registration statement no. 33-45612 and
incorporated herein)
10.4 Employee Stock Option Plan (filed as Exhibit 4.1 to
the Company's registration statement no. 33-52080 and
incorporated herein)
10.5 Amendment No. 1 to Stock Option Plan (filed as
Exhibit 4.2 to the Company's registration statement
no. 33-52080 and incorporated herein)
10.6 Amendment No. 2 to Stock Option Plan (filed as
Exhibit 10.6 in the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1992 and
incorporated herein)
10.7 Form of Employee Stock Option Agreement (filed as
Exhibit 4.3 to the Company's registration statement
no. 33-52080 and incorporated herein)
10.8 Form of Director Stock Option Agreement (filed as
Exhibit 4.4 to the Company's registration statement
no. 33-52080 and incorporated herein)
10.9 License Agreement, dated June 30, 1989, between Metal
Building Components, Inc. and the Company (filed as
Exhibit 10.6 to the Company's registration statement
no. 33-45612 and incorporated herein)
10.10 401(k) Profit Sharing Plan (filed as Exhibit 4.1 to
the Company's registration statement no. 33-52078 and
incorporated herein)
10.11 Form of Metallic Builder Agreement (filed as Exhibit
10.10 to the Company's registration statement no.
33-45612 and incorporated herein)
10.12 Form of A&S Builder Agreement (filed as Exhibit 10.17
in the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1992 and incorporated
herein)
10.13 Purchase Agreement, dated September 7, 1994, between
NCI Building Systems, L.P., Ellis Building
Components, Inc., Tony Ellis and Ronald Ellis (filed
as Exhibit 2.1 in the Company's Current Report on
Form 8-K dated October 14, 1994 and incorporated
herein)
10.14 Amendment to Purchase Agreement, dated October 14,
1994, between NCI Building Systems, L.P., Ellis
Building Components, Inc., Tony Ellis and Ronald
Ellis (filed as Exhibit 2.2 in the Company's Current
Report on Form 8-K dated October 14, 1994 and
incorporated herein)
*10.15 Form of Mesco Metal Buildings Agreement
21
23
Sequentially
Numbered
Page
------------
10.16 Amendment No. 3 to Stock Option Plan (filed as
Exhibit 4.6 to the Company's Registration Statement
No. 333-12921 and incorporated herein)
10.17 Asset Purchase Agreement, dated October 13, 1995, by
and among Doors & Building Components, Inc., David B.
Curtis, DBCI Acquisition Corp. and the Company (filed
as Exhibit 2 to the Company's Current Report on Form
8-K dated November 13, 1995 and incorporated herein)
10.18 Asset Purchase Agreement, dated April 1, 1996, by and
among Anderson Industries, Inc., Charles W. Anderson,
Thomas L. Anderson, Jr., John T. Eubanks, Robert K.
Landon, NCI Building Systems, L.P. and the Company
(filed as Exhibit 2 to the Company's Current Report
on Form 8-K dated April 1, 1996 and incorporated
herein)
*13 1995 Annual Report to Shareholders. With the
exception of the information incorporated by
reference into Items 5, 6, 7, and 8 of this Form
10-K, the 1995 Annual Report to Shareholders is not
to be deemed filed as part of this Form 10-K.
*21 List of Subsidiaries
*23 Consent of Ernst & Young LLP
*27 Financial Data Schedule
- ---------------
* Filed herewith
22