11-K 1 e11-k.txt FORM 11-K FOR FISCAL YEAR END DECEMBER 31, 1999 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ---------- Commission file number: 1-14315 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: NCI 401(k) PROFIT SHARING PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: NCI BUILDING SYSTEMS, INC. 10943 NORTH SAM HOUSTON PARKWAY WEST HOUSTON, TEXAS 77064 ================================================================================ 2 NCI 401(k) PROFIT SHARING PLAN Table of Contents Independent Auditors' Report.............................................................................1 Statement of Net Assets Available for Benefits...........................................................2 Statement of Changes in Net Assets Available for Benefits................................................3 Notes to Financial Statements..........................................................................4-8 Supplemental Schedules:..................................................................................9 Schedule of Assets Held for Investment Purposes...................................................10 Schedule of Reportable Transactions...............................................................11
i 3 INDEPENDENT AUDITORS' REPORT Board of Trustees NCI 401(k) Profit Sharing Plan Houston, Texas We have audited the accompanying statements of net assets available for benefits of NCI 401(k) Profit Sharing Plan as of December 31, 1999 and 1998, and the related statement of changes in net assets available for benefits for the year ended December 31, 1999. These financial statements are the responsibility of Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1999 and 1999, and the changes in net assets available for benefits for the year ended December 31, 1999, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying Supplemental Schedules of (1) Assets Held for Investment Purposes and (2) Reportable Transactions are presented to comply with the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 and are not a required part of the financial statements. The supplemental schedules have been subjected to the same auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. /s/ KOLKHORST & KOLKHORST Kolkhorst & Kolkhorst Houston, Texas June 23, 2000 1 4 NCI 401(k) PROFIT SHARING PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS December 31, 1999 and 1998 ASSETS
DECEMBER 31, -------------------------- 1999 1998 ----------- ----------- INVESTMENTS - at fair value $58,137,738 $31,080,108 CONTRIBUTIONS RECEIVABLE Employer Contribution 1,912,230 -- Participant Contributions 158,680 -- ----------- 2,070,910 -- CASH AND CASH EQUIVALENTS 446 -- ----------- ----------- TOTAL ASSETS 60,209,094 31,080,108 LIABILITIES Accounts Payable -- -- ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $60,209,094 $31,080,108 =========== ===========
See independent auditors' report and accompanying notes to the financial statements. 2 5 NCI 401(k) PROFIT SHARING PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS Year Ended December 31, 1999 ADDITIONS TO NET ASSETS Contributions Employer $ 4,213,596 Participant 6,351,524 Rollovers 689,939 ------------- Total contributions 11,255,059 ------------- Interest and dividend income 503,065 Net unrealized appreciation (depreciation) of investments and net realized gain on sale of investments (1,985,262) ------------- Total earnings (1,482,197) ------------- TOTAL ADDITIONS 9,772,862 ------------- DEDUCTIONS FROM NET ASSETS Benefits paid to terminated participants (3,498,055) Administrative/other expenses (104,938) ------------- TOTAL DEDUCTIONS (3,602,993) ------------- NET INCREASE 6,169,869 Transfer from merged plans 22,959,117 NET ASSETS AVAILABLE FOR BENEFITS Beginning of year 31,080,108 ------------- End of year $ 60,209,094 =============
See independent auditors' report and accompanying notes to the financial statements. 3 6 NCI 401(k) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE A - DESCRIPTION OF PLAN The following description of NCI 401(k) Profit Sharing Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General The Plan is a defined contribution plan covering all employees of NCI Building Systems, Inc. and its affiliates (Company) who have completed one year of service, six months of service, effective in 1999, and have attained the age of 18. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and subsequent related amendments and revisions. Effective for 1998, the Plan changed plan trustee from Nations Bank, N.A. to American Express Trust Company. Allocation Provision Qualified participants may elect to defer a percent of their salary at each pay period. The amount of deferral may not exceed 15% of compensation for the plan year and must equal at least 1% of compensation. Elective deferrals may not exceed the amount determined by the IRS for the plan year. Participants may direct that their contributions be invested in any of the Plan investment options. Contributions The Plan provides for a matching contribution on an equal basis to all participants, with a maximum Company Contribution. For the years ended December 31, 1999 and 1998, the Company made a matching contribution equal to 83 percent and 100 percent, respectively, of the participant's contribution, up to 6 percent of the participant's eligible compensation. The employer contribution totaled $ 4,213,596 and $2,427,687 for the years ended December 31, 1999 and 1998, respectively. The Company contribution is made entirely in Company stock. Participant Accounts Each participant's account is credited with the participant's contribution and allocation of (a) the Company's contribution, if any, and (b) Plan earnings, and (c) forfeitures of terminated participants' nonvested accounts in excess of expenses. Allocations are based on participant earnings or account balances. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. 4 7 NCI 401(k) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE A - DESCRIPTION OF PLAN (CONTINUED) Vesting Participants are immediately vested in their voluntary contributions, plus actual earnings thereon. Vesting in the remainder of their accounts, as of 1999, is based on years of continuous service as follows:
Years of Service Vested Percentage ---------------- ----------------- Less than one year 0% One year 10% Two years 20% Three years 30% Four years 40% Five years 60% Six years 80% Seven or more years 100%
Expenses The Company has paid a premium to acquire a $10,000,000 fidelity bond and incurs expenses for administration, audit and tax return preparation for the Plan. The Plan may reimburse the Company for these expenses through the allocation of forfeitures. Payment of Benefits Subsequent to termination of service, a participant may request to receive payment either in a lump sum amount equal to the value of his or her vested account balance or to continue in the trust in such a manner as though the employee had not terminated his eligibility if the participant's account balance is greater than $5,000. Disposition of Forfeitures The Plan stipulates that forfeitures are used to reduce the Plan's normal administrative fees, and then should be treated as additional discretionary matching contributions for the plan year in which the forfeitures occur. Investment Options The Plan offers nine investment options in which the employees may elect to participate. Eight of the options are mutual funds, and the ninth option is the NCI Company Stock Fund. The Company's matching contribution is made in Company Stock. 5 8 NCI 401(k) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE B - SUMMARY OF ACCOUNTING POLICIES Plan assets are stated at fair market value. If available, quoted market prices are used to value investments. Participant Loans Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50 percent of their account balance, whichever is less. The loans are secured by the balance in the participants' account and bear interest at prevailing market rates. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the plan administrator to make estimates and assumptions that affect the reported amounts and disclosures. Accordingly, actual results may differ from those estimates. NOTE C - INVESTMENTS The Plan's investments are held by a financial services company-administered trust fund. The following table presents the fair values of investments. Investments that represent 5 percent or more of the Plan's net assets are separately identified. Investments at fair value as determined by quoted market price:
December 31, ----------------------------- 1999 1998 ------------- ------------- American Express Trust Income Fund II $ 8,368,106 $ 1,664,922 AXP Bond Fund 1,859,466 880,890 Founders Balanced Fund 1,600,319 1,415,043 AXP Blue Chip Advantage Fund 8,615,205 337,139 Janus Worldwide Fund 2,151,778 338,331 Neuberger & Berman Partners Trust 437,061 243,128 Baron Asset Fund 615,251 385,762 AXP Growth Fund 8,492,646 3,296,957 NCI Common Stock Fund 16,355,887 21,061,732 Money Market Fund 349,515 205,918 Loan Fund 3,337,298 1,250,286 Investment Contract with Aetna, # 005417, matures 10/23/03 5,955,206 -- ------------- ------------- $ 58,137,738 $ 31,080,108 ============= =============
Investments in the NCI Common Stock Fund are both participant and nonparticipant directed. 6 9 NCI 401(k) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE C - INVESTMENTS (CONTINUED) Changes in the NCI Common Stock Fund for the year ended December 31, 1999 are as follows: Contributions received $ 3,562,182 Benefits paid to participants (876,648) Transfers to participant directed investments (232,097) Participant loan activity (198,747) Participant forfeitures (206,813) Net depreciation (6,753,722) ----------- $(4,705,845) ===========
NOTE D - PLAN TERMINATION Although the Company has expressed no such intention, the Plan can be terminated at the Company's election. In the event of Plan termination, all Plan benefits would become 100 percent vested and payable to the participants. NOTE E- TAX STATUS The Plan obtained its latest determination letter on December 28, 1998, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. 7 10 NCI 401(k) PROFIT SHARING PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1999 NOTE F- MERGED PLAN AND INVESTMENT CONTRACT WITH INSURANCE COMPANY During the year ended December 31, 1999, the assets of a profit sharing plan for a company purchased by NCI Building Systems, Inc was merged into the Company's Plan. The net assets transferred to the Plan totaled $22,959,117. In connection with this transaction, the Plan has obtained a benefit-response investment contract with Aetna Insurance Company. Aetna maintains the contributions in a general account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The contract is included in the financial statements at contract value as reported to the Plan by Aetna. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawals or transfer of all or a portion of their investment at contract value. There are no reserves against contract value for credit risk of the contract issuer or otherwise. The contract has a fixed, guaranteed net interest rate of 5.55%. The Plan does not allow participants to make any additional contributions to this investment contract. NOTE G - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 As Of June 23, 2000, the Plan has not filed Form 5500. 8 11 SUPPLEMENTAL SCHEDULES 9 12 NCI 401(k) PROFIT SHARING PLAN FINANCIAL STATEMENTS December 31, 1999 Item 27a - Schedule of Assets Held for Investments Purposes for the Year Ended December 31, 1999
(a) (b) (c) (d) (e) Identity of Issue Description of Cost Current Borrower, Lessor, Including Maturity date, Rate Value or Similar Party of Interest, Collateral, Par or Maturity Value American Express Trust Income Fund II Mutual Fund $ 8,137,764 $ 8,368,106 AXP Bond Fund Mutual Fund 1,951,429 1,859,466 Founders Balanced Fund Mutual Fund 1,799,728 1,600,319 AXP Blue Chip Advantage Fund Mutual Fund 8,234,870 8,615,205 Janus Worldwide Fund Mutual Fund 1,534,938 2,151,778 Neuberger & Berman Partners Trust Mutual Fund 458,091 437,061 Baron Asset Fund Mutual Fund 566,536 615,251 AXP Growth Fund Mutual Fund 6,375,657 8,492,646 Loan Fund Participant Promissory notes 3,337,298 3,337,298 NCI Common Stock Fund Qualified Employer Securities 14,325,190 16,355,887 Investment Contract with Aetna, # 005417 Investment Contract, matures 10/23/03 5,955,206 5,955,206 Money Market Fund Mutual Fund 349,515 349,515 ----------- ----------- $53,026,222 $58,137,738 =========== ===========
10 13 NCI 401(k) PROFIT SHARING PLAN FINANCIAL STATEMENTS Year ended December 31, 1999 Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1999
(a) (b) (c) (d) (e) (f) (g) (h) (i) Identity Description Purchase Selling Lease Expense Cost of Current Value Net Gain of Party of Assets Price Price Expense Incurred Asset of Involved Assets on (Loss) Transaction Date AXP Growth Fund $ $ 2,071,592 $ 2,071,592 $ -- AXP Blue Chip Advantage Fund 7,370,277 7,370,277 -- NCI Common Stock Fund 2,427,696 2,427,696 -- NCI Common Stock Fund 2,420,194 2,420,194 -- Investment Contract 5,689,172 5,689,172 -- American Express Trust Income Fund II 5,689,172 5,689,172 -- Money Market Fund 2,420,194 2,420,194 -- Money Market Fund 2,427,696 2,427,696 -- Loan Fund 3,616,308 3,616,308 -- AXP Bond Fund 3,472,099 3,417,268 (54,831) AXP Growth Fund 5,015,062 5,293,250 278,188 AXP Blue Chip Advantage Fund 11,185,952 11,311,738 125,786 Janus Worldwide Fund 2,249,339 2,321,887 72,548 NCI Common Stock Fund 14,361 13,614,276 15,696,617 2,082,341 American Express Trust Income Fund II 19,899,244 20,096,427 197,183 Money Market Fund 29,102,585 29,102,585 --
There were no category (iv) reportable transactions during the year ended December 31, 1999. 11 14 SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, NCI Building Systems Inc., as administrator for the NCI 401(k) Profit Sharing Plan, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. NCI BUILDING SYSTEMS INC. (AS ADMINISTRATOR OF THE NCI 401(k) PROFIT SHARING PLAN) DATE: June 28, 2000 By: /s/ Robert J. Medlock ---------------------------------- Robert J. Medlock Executive Vice President and Chief Financial Officer 12 15 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT ------- ---------------------- 23.1 Consent of Independent Auditors