-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GUuEJ1Mao6K0zbvCywA7s68Eh28PkeJ8WsZiCYMtDt6gy8EwkWbNwqfC8iUu9i69 P9Cb0Y9KKKXi1IpADaVynA== /in/edgar/work/20000613/0000950129-00-003053/0000950129-00-003053.txt : 20000919 0000950129-00-003053.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950129-00-003053 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NCI BUILDING SYSTEMS INC CENTRAL INDEX KEY: 0000883902 STANDARD INDUSTRIAL CLASSIFICATION: [3448 ] IRS NUMBER: 760127701 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14315 FILM NUMBER: 654304 BUSINESS ADDRESS: STREET 1: 7301 FAIRVIEW CITY: HOUSTON TEXAS STATE: TX ZIP: 77041 BUSINESS PHONE: 7134667788 MAIL ADDRESS: STREET 1: 7301 FAIRVIEW STREET 2: P O BOX 40220 CITY: HOUSTON STATE: TX ZIP: 77041 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL COMPONENTS INCORPORATED DATE OF NAME CHANGE: 19600201 10-Q 1 0001.txt FORM 10-Q FOR QUARTER ENDED APRIL 30, 2000 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED: April 30, 2000 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 OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 10943 N. Sam Houston Parkway W. Houston, TX 77064 - --------------------------------------- ---------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (281) 897-7788 -------------------------------------------------- REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 7301 Fairview, Houston, TX 77041 ------------------------------------------------------ FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT 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 PERIODS 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICAL DATE. Common Stock, $.01 Par Value--17,882,409 shares as of April 30, 2000 2 NCI BUILDING SYSTEMS, INC. INDEX
PART 1. FINANCIAL STATEMENTS PAGE NO. -------- ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Consolidated balance sheets 1 April 30, 2000 and October 31, 1999 Consolidated statements of income 2 Three months ended April 30, 2000 and 1999 Consolidated statements of income 3 Six months ended April 30, 2000 and 1999 Condensed consolidated statements of cash flows 4 Six months ended April 30, 2000 and 1999 Notes to consolidated financial statements 5-6 April 30, 2000 ITEM 2. Management's Discussion and Analysis of Financial 7-11 Condition and Results of Operations PART 2. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 12 ITEM 6. Exhibits and Reports on Form 8-K 12
3 NCI BUILDING SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
April 30, October 31, 2000 1999 ----------- ---------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,498 $ 16,089 Accounts receivable, net 118,861 105,608 Inventories 86,204 83,988 Deferred income taxes 6,943 6,943 Prepaid expenses 7,874 5,037 --------- --------- Total current assets 222,380 217,665 Property, plant and equipment, net 226,638 197,855 --------- --------- Excess of costs over fair value of acquired net assets 403,782 398,606 Other assets, primarily investment in joint ventures 18,162 41,357 --------- --------- Total assets $ 870,962 $ 855,483 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long term debt $ 38,797 $ 36,297 Accounts payable 57,300 65,209 Accrued compensation and benefits 12,739 17,021 Accrued income taxes 4,085 10,454 Other accrued expenses 22,137 28,113 --------- --------- Total current liabilities 135,058 157,094 --------- --------- Long-term debt, noncurrent portion 426,235 397,062 Deferred income taxes 24,012 24,037 --------- --------- Shareholders' equity: Common stock 186 186 Additional paid in capital 97,464 97,289 Retained earnings 198,884 179,815 Treasury stock (10,877) -- --------- --------- Total shareholders' equity 285,657 277,290 --------- --------- Total liabilities and shareholders' equity $ 870,962 $ 855,483 ========= =========
See Accompanying Notes to Consolidated Financial Statements -1- 4 NCI BUILDING SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended April 30, 2000 1999 --------- -------- Sales $ 232,766 $ 217,365 Cost of sales 171,356 162,981 --------- --------- Gross profit 61,410 54,384 Operating expenses 35,520 31,754 --------- --------- Income from operations 25,890 22,630 Interest expense 9,505 9,188 Other (income) expense (721) (892) Joint venture (income) expense (419) (1,039) --------- --------- Income before income taxes 17,525 15,373 Provision for income taxes 7,454 6,425 --------- --------- Net income $ 10,071 $ 8,948 ========= ========= Net income per share - basic $ .56 $ .49 ========= ========= Net income per share - diluted $ .55 $ .47 ========= =========
See Accompanying Notes to Consolidated Financial Statements -2- 5 NCI BUILDING SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Six Months Ended April 30, 2000 1999 --------- --------- Sales $ 464,818 $ 431,712 Cost of sales 344,012 323,051 --------- --------- Gross profit 120,806 108,661 Operating expenses 70,703 63,824 --------- --------- Income from operations 50,103 44,837 Interest expense 18,754 18,939 Other (income) expense (1,518) (1,562) Joint venture (income) expense (523) (1,059) --------- --------- Income before income taxes 33,390 28,519 Provision for income taxes 14,321 12,146 --------- --------- Net income $ 19,069 $ 16,373 ========= ========= Net income per share - basic $ 1.05 $ .90 ========= ========= Net income per share - diluted $ 1.03 $ .86 ========= =========
See Accompanying Notes to Consolidated Financial Statements -3- 6 NCI BUILDING SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
Six Months Ended April 30, 2000 1999 --------- -------- Cash flows from operating activities: Net income $ 19,069 $ 16,373 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,122 14,043 (Gain) loss on sale of fixed assets (64) (122) Provision for doubtful accounts 1,096 1,509 Deferred income tax provision (25) (269) Changes in working capital: Current assets (8,674) (3,469) Current liabilities (23,928) (5,438) -------- -------- Net cash provided by operating activities $ 3,596 $ 22,627 -------- -------- Cash flows from investing activities: Purchase of property, plant and equipment (13,937) (18,471) Other 2,949 (2,598) Acquisition of DOUBLECOTE L.L.C (24,408) -- -------- -------- Net cash used in investing activities (35,396) (21,069) -------- -------- Cash flows from financing activities: Proceeds from stock options exercise 516 693 Net (payments) borrowings on revolving lines of credit 49,173 3,923 Payments on long-term debt (17,500) (7,500) Purchase of treasury stock (13,980) -- -------- -------- Net cash provided by (used in) financing activities 18,209 (2,884) -------- -------- Net increase (decrease) in cash and cash equivalents $(13,591) $ (1,326) ======== ========
See Accompanying Notes to Consolidated Financial Statements -4- 7 NCI BUILDING SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2000 NOTE 1 -- BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended April 30, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ended October 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1999 filed with the Securities and Exchange Commission. NOTE 2 -- INVENTORIES The components of inventory are as follows:
April 30, October 31, 2000 1999 -------- ---------- Raw materials $66,171 $65,315 Work in process and finished goods 20,033 18,673 ------- ------- $86,204 $83,988 ======= =======
NOTE 3 - BUSINESS SEGMENTS The Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information in 1999. The Company has divided its operations into two reportable segments: engineered building systems and metal components, based on similarities in product lines, manufacturing processes, marketing and management of its businesses. Products of both segments are similar in basic raw materials used and manufacturing. The engineered building systems segment includes the manufacturing of structural framing and supplies value added engineering and drafting, which are typically not part of component products or services. The reporting segments follow the same accounting policies used for the Company's consolidated financial statements. Management evaluates a segments' performance based upon operating income. Intersegment sales are recorded based on prevailing market prices, and consist primarily of products and services provided to the engineered building systems segment by the metal building components segment, including painting and coating of hot rolled material. Information with respect to the segments is included in the Management's Discussion and Analysis of Financial Condition and Results of Operations on page 7. -5- 8 NCI BUILDING SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) APRIL 30, 2000 NOTE 4 -- NET INCOME PER SHARE Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per common share considers the effect of common stock equivalents. The computations are as follows:
Three Months Ended April 30, Six Months Ended April 30, 2000 1999 2000 1999 ------- ------- ------- ------- Net income $10,071 $ 8,948 $19,069 $16,373 Add: Interest, net of tax on convertible debenture assumed converted 17 17 34 34 ------- ------- ------- ------- Adjusted net income 10,088 8,965 19,103 16,407 Weighted average common shares outstanding 17,901 18,368 18,088 18,268 Add: Common stock equivalents Stock option plan 443 657 420 746 Convertible debentures 100 100 100 100 ------- ------- ------- ------- Weighted average common shares outstanding, assuming dilution 18,444 19,125 18,608 19,114 ======= ======= ======= ======= Net income per share - Basic $ .56 $ .49 $ 1.05 $ .90 ======= ======= ======= ======= Net income per share - Diluted $ .55 $ .47 $ 1.03 $ .86 ======= ======= ======= =======
NOTE 5 - ACQUISITION On March 31, 2000, the Company acquired its partner's 50% share of DOUBLECOTE, L.L.C., a metal coil coating business that it developed and previously owned jointly with Consolidated Systems, Inc., a privately held company. The transaction was valued at approximately $26 million, and accounted for using the purchase method. The excess of cost over the fair value of the acquired assets was approximately $9 million, based on our preliminary purchase price allocation, which may be adjusted upon final valuation of certain assets and liabilities. The consolidated results of operations for the six months ended April 30, 2000 include five months of DOUBLECOTE earnings accounted for under the equity method, and one month's consolidated operations, since it was acquired on March 31, 2000. NOTE 6 - OTHER ITEMS In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial Statements. SAB 101, which is effective for the first fiscal quarter of the fiscal year beginning after December 15, 1999, provides guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. The Company will adopt SAB 101 as required in the first fiscal quarter of the fiscal year ended October 31, 2001, and is evaluating the effect that such adoption may have on its consolidated results of operations and financial position. -6- 9 NCI BUILDING SYSTEMS, INC. ITEM 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The Company's various product lines have been aggregated into two business segments: metal building components and engineered building systems. These aggregations are based on the similar nature of the products, distribution of products and management and reporting of those products within the Company. Both segments operate primarily in the nonresidential construction market. Sales and earnings are influenced by general economic conditions, the level of nonresidential construction activity, roof repair and retrofit demand and the availability and terms of financing available for construction. Products of both business segments are similar in basic raw materials used and manufacturing. Engineered building systems includes the manufacturing of structural framing and value added engineering and drafting, which are typically not part of component products or services. The Company believes it has one of the broadest product offerings of metal building products in the industry. Intersegment sales consist primarily of products and services provided to the engineered buildings segment by the components segment, including painting and coating of hot rolled material. This provides better customer service, shorter delivery time and minimizes transportation costs to the customer.
THREE MONTHS ENDED THREE MONTHS ENDED APRIL 30, 2000 APRIL 30, 1999 ---------------------- ---------------------- % % ---------- ---------- SALES TO OUTSIDE CUSTOMERS: Engineered building systems ... $ 74,379 32 $ 70,720 33 Metal building components ..... 158,387 68 146,645 67 Intersegment sales ............ 10,488 5 13,547 6 Corporate/eliminations ........ (10,488) (5) (13,547) (6) --------- --------- --------- --------- Total net sales .......... $ 232,766 100 $ 217,365 100 --------- --------- --------- --------- OPERATING INCOME: Engineered building systems ... $ 8,236 11 $ 7,163 10 Metal building components ..... 18,169 11 15,423 11 Corporate/eliminations ........ (515) -- 44 -- --------- --------- --------- --------- Total operating income ... $ 25,890 11 $ 22,630 10 --------- --------- --------- --------- TOTAL ASSETS: Engineered building systems ... $ 95,382 11 $ 86,647 10 Metal building components ..... 383,033 44 348,290 42 Corporate/eliminations ........ 392,547 45 391,754 48 --------- --------- --------- --------- Total assets ............. $ 870,962 100 $ 826,691 100 --------- --------- --------- ---------
-7- 10 NCI BUILDING SYSTEMS, INC.
SIX MONTHS ENDED SIX MONTHS ENDED APRIL 30, 2000 APRIL 30, 1999 ---------------------- ---------------------- % % --------- ---------- SALES TO OUTSIDE CUSTOMERS: Engineered building systems ... $ 151,157 33 $ 146,458 34 Metal building components ..... 313,661 67 285,254 66 Intersegment sales ............ 21,693 5 27,946 6 Corporate/eliminations ........ (21,693) (5) (27,946) (6) --------- --------- --------- --------- Total net sales .......... $ 464,818 100 $ 431,712 100 --------- --------- --------- --------- OPERATING INCOME: Engineered building systems ... $ 15,301 10 $ 16,316 11 Metal building components ..... 35,719 11 28,740 10 Corporate/eliminations ........ (917) -- (219) -- --------- --------- --------- --------- Total operating income ... $ 50,103 11 $ 44,837 10 --------- --------- --------- ---------
THREE MONTHS ENDED APRIL 30, 2000 COMPARED TO THREE MONTHS ENDED APRIL 30, 1999 Consolidated sales for the second quarter of fiscal 2000 increased by $15.4 million, or 7%, compared to the second quarter of fiscal 1999. This increase in sales includes a $2.8 million contribution from DOUBLECOTE, which was acquired on March 31, 2000. ENGINEERED BUILDING SYSTEMS For the quarter, engineered building systems sales increased by $3.7 million, or 5%, compared to the same period in 1999. This increase was in line with general increases in the metal building industry sales for the same period. For the quarter, this segment accounted for 32% of total sales compared to 33% for the same period in 1999. As of April 30, 2000, the backlog of orders for this segment was up 16% compared to April 30, 1999. Operating income of engineered building systems increased in the second quarter of fiscal 2000 by 15% to $8.2 million compared to $7.2 million in the second quarter of fiscal 1999. Improved manufacturing efficiencies and better performance from one of the segment's regional operations in the current quarter accounted for these gains. As a percent of engineered building systems' sales, operating income improved to 11% in the current quarter compared to 10% in the prior year's second quarter. METAL BUILDING COMPONENTS For the quarter, metal building component sales increased by $11.7 million, or 8%, compared to the same period in 1999. The second quarter's increase was less than the first quarter percentage increase due to the seasonal nature of the business in the second quarter of the fiscal year. This segment accounted for 68% of consolidated sales in the second quarter of fiscal 2000 compared to 67% for the same period in fiscal 1999. Operating income for the second quarter of fiscal year 2000 increased by 18% over the prior year's second quarter. Operating income increased at a faster rate than sales due to better utilization of manufacturing facilities and improved cost controls in the quarter. CONSOLIDATED OPERATING EXPENSES, consisting of engineering, drafting, selling and administrative costs, increased to $35.5 million in the second quarter compared to $31.8 million in the second quarter last year. This represented an increase of 12% which was higher than the 7% increase in sales. Operating expenses grew at a faster rate than -8- 11 sales due primarily to a larger operating and selling base required to support anticipated growth in fiscal 2000 and information technology cost related to the completion of various systems implementations. INTEREST EXPENSE increased to $9.5 million in the second quarter of fiscal 2000 compared to $9.2 million in the second quarter of fiscal 1999. Increased borrowings to fund the acquisition of DOUBLECOTE and the repurchase of common stock and the general increase in floating interest rates in fiscal 2000 accounted for this increase. JOINT VENTURE INCOME includes 50% interests in both light gauge and heavy gauge coating operations in the United States and a 50% interest in a Mexico drafting and sales operation. Income is recognized on the equity method of accounting. On March 31, 2000, the company acquired the remaining 50% interest in DOUBLECOTE ( the light gauge coating operation). Since DOUBLECOTE was consolidated for one month of the second quarter, joint venture income represented only two months compared to three months in the second quarter of fiscal 1999. SIX MONTHS ENDED APRIL 30, 2000 COMPARED TO SIX MONTHS ENDED APRIL 30, 1999 Consolidated sales for the six months ended April 30, 2000, increased by $33.1 million, or 8%, compared to the six months ended April 30, 1999. Most of this increase was attributable to the metal building components segment, which was up 10% over the prior year's six month period. ENGINEERED BUILDING SYSTEMS For the six months, sales increased by $4.7 million, or 3%, compared to the same period in fiscal 1999. Poor performance in one of the regional operating units in the first quarter resulted in a six month increase that was slightly less than the increase achieved in the second quarter. Engineered building systems accounted for 33% of total consolidated sales in the first six months of fiscal 2000 compared to 34% for the same period in fiscal 1999. Operating income declined in the current six months by 6% to $15.3 million compared to $16.3 million for the same period in fiscal 1999. This decline is attributed to first quarter results for which operating income was down 23% as compared to the first quarter of 1999. As a percent of sales, operating income was 10% in the six months ended April 30, 2000 compared to the 11% for the same period in fiscal 1999. METAL BUILDING COMPONENTS For the six months, sales increased by $28.4 million, or 10%, compared to the same period in fiscal 1999. Higher sales resulted from a general increase in industry sales, higher volume in painting and coating resulting from increased activity, and higher sales in the self-storage industry. This segment accounted for 67% of total sales in the six months ended April 30, 2000 compared to 66% in the same period of fiscal 1999. Operating income increased by $7.0 million, or 24%, compared to the same period in fiscal 1999. This increase was due primarily to the increased sales volume and higher plant utilization in the current year. As a percent of sales, operating income improved to 11% in fiscal 2000 compared to 10% in fiscal 1999. CONSOLIDATED OPERATING EXPENSES increased by $6.9 million, or 11%, in the current six months compared to the same period of 1999. Operating expenses increased at a faster rate than sales due to costs incurred to meet expected increases in sales demand and technology related costs incurred to complete projects in the six month period. As a percent of sales, operating expenses were 15.2% in fiscal 2000 compared to 14.8% in the same period in fiscal 1999. INTEREST EXPENSE for the six month period was $18.8 million compared to $18.9 million in the prior year's six month period. Lower average borrowing levels in fiscal 2000 were offset by higher rates in the current year. JOINT VENTURE operations are described under the three month discussion. The decline in joint venture income resulted in the difference in accounting treatment for DOUBLECOTE as a result of its acquisition discussed above. -9- 12 LIQUIDITY AND CAPITAL RESOURCES As of April 30, 2000, the Company had working capital of $87.3 million compared to $60.6 million at the end of fiscal 1999. The majority of this increase came from a reduction in current liabilities related to payments of year end incentives and income tax payments for fiscal 2000. The Company generated cash flow from operations before changes in working capital components of $36.2 million during the first six months of fiscal 2000. This cash flow, along with additional borrowings under the Company's credit agreements of $31.7 million, was used to finance the acquisition of DOUBLECOTE, net repurchases of Company common stock of $13.9 million and capital expenditures of $13.9 million. Because of the seasonal nature of the Company's operations, working capital needs are generally funded by debt borrowings early in the year with the majority of debt reduction occurring in the second half of the year as sales and income increase. The Company has a $440 million senior credit facility from a syndicate of banks, which includes a $40 million 364-day facility and a $200 million five-year revolver which matures on July 1, 2003. In addition, the Company has a five-year term loan which matures on July 1, 2003 and requires current quarterly payments of $8.75 million in the second quarter of 2000 and gradually increasing to $12.5 million at maturity. As of April 30, 2000, the Company had $196.2 million outstanding under the revolving credit facility and had $143.8 million outstanding under the five-year term loan. Loans bear interest, at the Company's option, as follows: (1) base rate loans at the base rate plus a margin that ranges from 0% to 0.5% and (2) LIBOR loans at LIBOR plus a margin that ranges from 0.75% to 2.0%. Base rate is defined as the higher of the Bank of America, N.A. prime rate or the overnight Federal funds rate plus 0.5% and LIBOR is defined as the applicable London interbank offered rate adjusted for reserves. Based on its current ratios, the Company is paying a margin of 1.375% on LIBOR loans and 0% on base rate loans. The 364-day revolver matures on May 1, 2001. Borrowing under the senior credit facility may be prepaid and the voluntary reduction of the unutilized portion of the five-year revolver may be made at any time, in certain amounts, without premium or penalty but subject to LIBOR breakage costs. The Company is required to make mandatory prepayments on the senior credit facility upon the occurrence of certain events, including the sale of assets and the issuance and sale of equity securities, in each case subject to certain limitations. In addition, the Company has $125 million of senior subordinated notes, which mature on May 1, 2009. The notes bear interest at the rate of 9.25%. During the first six months of fiscal 2000, the Company spent $13.9 million for capital additions for plant expansions, capital replacements and betterments and the completion of management information systems. The Company plans to spend an additional $12 million in capital additions during fiscal 2000. Delays, changes or cancellations of planned projects could increase or decrease capital spending from the amounts anticipated at the current time. Inflation has not significantly affected the Company's financial position or operations. Metal components and engineered building systems sales are affected more by the availability of funds for construction than interest rates. No assurance can be given that inflation or interest rates will not fluctuate significantly, either or both of which could have an adverse effect on the Company's operations. Liquidity in future periods will be dependent on internally generated cash flows, the ability to obtain adequate financing for capital expenditures and expansion when needed, and the amount of increased working capital necessary to support expected growth. Based on current capitalization, it is expected that future cash flows from operations and the availability of alternative sources of external financing should be sufficient to provide adequate liquidity for the foreseeable future. -10- 13 IMPACT OF YEAR 2000 ISSUE During 1999, the Company completed a review of its computer systems to identify the systems that could be affected by the year 2000 issue and implemented its plans to ensure that its management information systems ("MIS") and computer software were year 2000 compliant. To date, the company has not experienced any year 2000 problems with either its internal MIS or with any third parties with whom it transacts business. The Company believes that it has addressed all issues which could have a material adverse effect on its business, financial condition or results of operations. MARKET RISK DISCLOSURE The Company is subject to market risk exposure related to changes in interest rates on its senior credit facility, which includes revolving credit notes and term notes. These instruments carry interest at a pre-agreed upon percentage point spread from either the prime interest rate or LIBOR. Under its senior credit facility, the Company may, at its option, fix the interest rate for certain borrowings based on a spread over LIBOR for 30 days to six months. At April 30, 2000, the Company had $340.0 million outstanding under its senior credit facility. Based on this balance, an immediate change of one percent in the interest rate would cause a change in interest expense of approximately $3.4 million on an annual basis. The Company's objective in maintaining these variable rate borrowings is the flexibility obtained regarding early repayment without penalties and lower overall cost as compared to fixed-rate borrowings. FORWARD LOOKING STATEMENTS This Form 10-Q contains forward-looking statements concerning the business and operations of the Company. Although the Company believes that the expectations reflected in these 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 factors include, but are not limited to, industry cyclicality and seasonality, adverse weather conditions, fluctuations in customer demand and order patterns, raw material pricing, competitive activity and pricing pressure, the ability to make strategic activities accretive to earnings, and general economic conditions affecting the construction industry as well as other risks detailed in the Company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended October 31, 1999. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its expectations. -11- 14 NCI BUILDING SYSTEMS, INC. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Stockholders (the "Annual Meeting") on Wednesday, March 1, 2000. At the Annual Meeting, the stockholders of the Company elected three Class I directors to serve until the annual meeting of stockholders to be held in 2003. Of the 16,866,733 shares of Common Stock, $0.01 par value, of the Company present at the Annual Meeting, in person or by proxy, the following table shows the votes cast for and withheld from each of the three nominees for director:
Votes Cast Votes Withheld Nominee For Nominee From Nominee ------- ----------- ------------ CLASS I: A. R. Ginn 16,321,234 545,499 Kenneth W. Maddox 16,320,034 546,699 Daniel D. Zabcik 16,310,834 555,899
In addition to Messrs. Ginn, Maddox and Zabcik, the following persons have a term of office as a director of the Company that continued after the Annual Meeting: William D. Breedlove, Gary L. Forbes, Robert N. McDonald, Robert J. Medlock, C.A. Rundell, Jr. and Johnie Schulte. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 27 Financial Data Schedule (b) REPORTS ON FORM 8-K None -12- 15 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. NCI BUILDING SYSTEMS, INC. -------------------------- (Registrant) Date: June 13, 2000 By: /s/ ROBERT J. MEDLOCK -------------------------- Robert J. Medlock Executive Vice President and Chief Financial Officer -13- 16 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule
EX-27 2 0002.txt FINANCIAL DATA SCHEDULE
5 1,000 6-MOS OCT-31-2000 NOV-01-1999 APR-30-2000 2,498 0 122,682 3,821 86,204 222,380 285,073 58,435 870,962 135,058 0 0 0 186 285,471 870,962 464,818 464,818 344,012 414,715 0 1,096 18,754 33,390 14,321 0 0 0 0 19,069 1.05 1.03
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