-----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, UH/tcY3FzEIAoCxSLlEg9aHPKenQUA6XhlUSbcvti0UIDwTCRsVqeqUxduvVlcOE t2/u5HGyX+3+KGbp7+Q5YQ== 0000950134-98-002065.txt : 19980317 0000950134-98-002065.hdr.sgml : 19980317 ACCESSION NUMBER: 0000950134-98-002065 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980131 FILED AS OF DATE: 19980316 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NCI BUILDING SYSTEMS INC CENTRAL INDEX KEY: 0000883902 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED METAL BUILDINGS & COMPONENTS [3448] IRS NUMBER: 760127701 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19885 FILM NUMBER: 98566524 BUSINESS ADDRESS: STREET 1: P O BOX 40220 CITY: HOUSTON TEXAS STATE: TX ZIP: 77240-0220 BUSINESS PHONE: 7134667788 MAIL ADDRESS: STREET 2: P O BOX 40220 CITY: HOUSTON STATE: TX ZIP: 77240-0220 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL COMPONENTS INCORPORATED DATE OF NAME CHANGE: 19600201 10-Q 1 FORM 10-Q FOR PERIOD ENDED JANUARY 31, 1998 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: January 31, 1998 ---------------- 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 OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 7301 Fairview Houston, TX 77041 - --------------------------------------- -------------------------------------- (ADDRESS OF PRINCIPAL (ZIP CODE) EXECUTIVE OFFICES) (713) 466-7788 - ------------------------------------------------------------------------------- REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE Not Applicable - ------------------------------------------------------------------------------- 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--8,182,741 shares as of January 31, 1998 - ---------------------------------------------------------------------- 2 NCI BUILDING SYSTEMS, INC. INDEX
PART 1. FINANCIAL STATEMENTS PAGE NO. - ---------------------------- -------- ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Condensed consolidated balance sheets January 31, 1998 and October 31, 1997. 1 Condensed consolidated statements of income Three months ended January 31, 1998 and 1997. 2 Condensed consolidated statements of cash flows Three months ended January 31, 1998 and 1997. 3 Notes to condensed consolidated financial statements January 31, 1998. 4 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 5-6 PART 2. OTHER INFORMATION - ------------------------- ITEM 6. Exhibits and Reports on Form 8-K 7
3 NCI BUILDING SYSTEMS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, October 31, 1998 1997 ----------- ------------- (UNAUDITED) (NOTE) ASSETS CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 30,713,000 $ 32,166,000 ACCOUNTS RECEIVABLE 38,505,000 47,006,000 INVENTORIES 43,792,000 37,381,000 OTHER CURRENT ASSETS 4,393,000 4,405,000 ------------ ------------ 117,403,000 120,958,000 PROPERTY, PLANT AND EQUIPMENT 72,627,000 70,532,000 LESS-ACCUMULATED DEPRECIATION (20,971,000) (19,309,000) ------------ ------------ 51,656,000 51,223,000 OTHER ASSETS: EXCESS OF COSTS OVER FAIR VALUE 20,673,000 22,273,000 OTHER 3,621,000 1,878,000 ------------ ------------ 24,294,000 24,151,000 ------------ ------------ 193,353,000 $196,332,000 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: NOTES PAYABLE AND CURRENT PORTION OF LONG-TERM DEBT $ 47,000 $ 47,000 ACCOUNTS PAYABLE 15,766,000 23,921,000 OTHER CURRENT LIABILITIES 17,272,000 20,244,000 ------------ ------------ 33,085,000 44,212,000 ------------ ------------ LONG-TERM DEBT, NONCURRENT PORTION AND DEFERRED INCOME TAXES 4,277,000 4,305,000 ------------ ------------ SHAREHOLDERS' EQUITY: COMMON STOCK 82,000 81,000 PAID IN CAPITAL 53,233,000 51,110,000 RETAINED EARNINGS 102,676,000 96,624,000 ------------ ------------ 155,991,000 147,815,000 ------------ ------------ $193,353,000 $196,332,000 ============ ============
NOTE: THE BALANCE SHEET AT OCTOBER 31, 1997 HAS BEEN DERIVED FROM THE AUDITED FINANCIAL STATEMENTS AT THAT DATE. SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -1- 4 NCI BUILDING SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED JAN. 31, 1998 1997 ------------- ------------- SALES $ 97,323,000 $ 82,875,000 COST OF SALES 71,886,000 60,465,000 ------------- ------------- GROSS PROFIT 25,437,000 22,410,000 OPERATING EXPENSES 16,641,000 14,537,000 ------------- ------------- OPERATING INCOME 8,796,000 7,873,000 INTEREST EXPENSE 47,000 37,000 OTHER INCOME (699,000) (414,000) ------------- ------------- (652,000) (377,000) ------------- ------------- INCOME BEFORE TAXES 9,448,000 8,250,000 PROVISION FOR INCOME TAXES 3,396,000 3,098,000 ------------- ------------- NET INCOME $ 6,052,000 $ 5,152,000 ============= ============= NET INCOME PER SHARE - BASIC $ .74 $ .64 ============= ============= NET INCOME PER SHARE - DILUTED $ .70 $ .61 ============= =============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -2- 5 NCI BUILDING SYSTEMS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED JAN. 31, 1998 1997 ------------- ------------- CASH FROM OPERATIONS $ 1,176,000 $ 2,475,000 ------------- ------------- INVESTING ACTIVITIES: PURCHASE OF PROPERTY, PLANT AND EQUIPMENT (2,135,000) (1,709,000) OTHER (646,000) (75,000) ------------- ------------- (2,781,000) (1,784,000) ------------- ------------- FINANCING ACTIVITIES: PROCEEDS FROM STOCK OPTIONS EXERCISE 165,000 522,000 REPAYMENT OF DEBT AND OTHER (13,000) (12,000) ------------- ------------- 152,000 510,000 ------------- ------------- INCREASE (DECREASE) IN CASH $ (1,453,000) $ 1,201,000 ============= =============
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -3- 6 NCI BUILDING SYSTEMS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JANUARY 31, 1998 NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed 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 footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended January 31, 1998, are not necessarily indicative of the results that may be expected for the year ended October 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report to Shareholders for the year ended October 31, 1997. NOTE 2 - INVENTORIES The components of inventory consist of the following:
January 31, October 31, 1998 1997 --------------- --------------- Raw Materials $ 34,919,000 $ 28,943,000 Work in process and finished goods 8,873,000 8,438,000 --------------- --------------- $ 43,792,000 $ 37,381,000 =============== ===============
NOTE 3 - NET INCOME PER SHARE Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding. The computation of diluted earnings per common share considers the effect of common stock equivalents. The number of shares used in the computation of basic and diluted earnings per share was 8,162,000 and 8,643,000 respectively, for the three months ended January 31, 1998, and 7,995,000 and 8,437,000 respectively for the three months ended January 31, 1997. -4- 7 NCI BUILDING SYSTEMS, INC. ITEM 2.- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Result of Operations THREE MONTHS ENDED JANUARY 31, 1998 COMPARED TO THE THREE MONTHS ENDED JANUARY 31, 1997. Sales in the first quarter of fiscal year 1998 increased by $14.4 million, or 17% compared to the first quarter of fiscal year 1997. This increase was due primarily to the increase in market penetration of building system sales and higher sales in the component division. The new manufacturing facilities for components and insulated panels which were not present in the prior year added sales of $2.2 million in the first quarter of 1998. Gross profit in the first quarter increased $3.0 million, or 14%, compared to the prior year's first quarter. Gross margin percentage declined from 27.0% last year to 26.1% in the current quarter. The increased level of component sales including the Company's door division accounted for this decline since their gross margin percentage is lower than building sales. Operating expenses which consist of engineering, selling and administrative costs increased by $2.1 million, or 14%, in the current quarter compared to the same period last year. As a percent of sales, operating expenses were 17.1% compared to 17.5% a year ago. The dollar increase was primarily related to salaries and commissions for additional employees hired to support the increase volume of orders and sales over the prior year. As a percent of sales, operating expenses declined due to spread of the fixed cost element over the higher sales base. Other income increased by $285,000 in the current quarter due to a higher level of investable cash this year compared to last year and a somewhat higher earnings rate on investments. Income before income taxes increased by $1.2 million, or 15%, as a result of the increased sales volume. As a percent of sales, income before taxes was 9.7% in the current quarter compared to 10.0% in the same quarter a year ago. The decline was primarily from the change in gross profit percentage in the current quarter. -5- 8 LIQUIDITY AND CAPITAL RESOURCES The Company has historically funded its operations from cash flow from operations and bank borrowing. It maintains a revolving credit facility with a bank lender that provides for a maximum credit on an unsecured basis of $6.0 million which matures in March, 1999. The Company has no outstanding balance under this facility and has not borrowed any funds in the current quarter. During the quarter, the Company spent $2.1 million in capital additions for its manufacturing plants and for improvements in it's management information systems. All of the funds for these additions were funded from internally generated cash. At January 31, 1998, the ratio of current assets to current liabilities was 3.5 to 1 compared to 2.7 to 1 at October 31, 1997. Cash flow generated from operations before changes in current assets and liabilities was $8.7 million. Liquidity in future periods will be dependent on internally generated cash flows, the ability to obtain adequate external financing for expansion, when needed, and the amount of increased working capital necessary to support expected growth. Based on current capitalization, it is expected future cash flows from operations and the availability of alternative sources of external financing should be sufficient to provide adequate liquidity in future periods. The Company has conducted a comprehensive review of its computer systems to identify the systems that could be affected by the "Year 2000" issue and is implementing its plan to resolve the issue. The Year 2000 problem is a result of computer programs being written using two digits (rather than four) to define the applicable year. Any of the Company's programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a major system failure or miscalculations. The Company presently believes that, with modifications to existing software and converting to new software, the Year 2000 problem will not pose significant operational problems for the Company's computer systems as so modified and converted. The Company is well under way with its project plans and expects to complete systems corrections by December 31, 1998. The related cost is not expected to be material to the Company's results of operations or financial position. - -------------------------------------------------------------------------------- "This Form 10-Q may contain 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, fluctuation in customer demand and order pattern 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, 1997. The Company expressly disclaims any obligation to release publicity any updates or revisions to these forward-looking statements to reflect any change in its expectations." -6- 9 NCI BUILDING SYSTEMS, INC. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT NUMBER DESCRIPTION ------- ----------- *10.20 Amendment No. 1 to the NCI Building Systems, Inc. Nonqualified Stock Option Plan *27 Financial Data Schedule
------------------ * Filed herewith (b) There were no reports filed under Form 10-K for the quarter ended January 31, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NCI BUILDING SYSTEMS, INC. -------------------------- (Registrant) /s/ ROBERT J. MEDLOCK Date: March 15, 1998 -------------------------- --------------------- Robert J. Medlock Vice President and Chief Financial Officer -7- 10 EXHIBIT INDEX -------
EXHIBIT NUMBER DESCRIPTION - ------- ----------- *10.20 Amendment No. 1 to the NCI Building Systems, Inc. Nonqualified Stock Option Plan *27 Financial Data Schedule
- ------------------- *Filed herewith EX-10.20 2 AMENDMENT NO. 1 TO NON-QUALIFIED STOCK OPTION PLAN 1 AMENDMENT NO. 1 TO THE NCI BUILDING SYSTEMS, INC. NONQUALIFIED STOCK OPTION PLAN MARCH 4, 1998 The NCI Nonqualified Stock Option Plan (amended and restated as of December 12, 1996) (the "Plan") is hereby amended as follows: 1. Section 9 of the Plan is hereby restated in its entirety as follows: 9. RIGHTS OF ESTATE OR BENEFICIARIES IN EVENT OF DEATH. If a participant dies prior to termination of his or her right to exercise an option in accordance with the provisions of the Plan or his or her stock option agreement without having totally exercised the option, the option may be exercised during the remainder of the Option Period by the participant's estate or by the person who acquired the right to exercise the option by bequest or by reason of the death of the participant, either pursuant to the laws of descent and distribution or by beneficiary designation; however, the option must be exercised prior to the date of expiration of the Option Period or one year from the date of the participant's death, whichever first occurs. The participant may designate a beneficiary to exercise an option pursuant to this Section 9 in the event of his or her death on a form designated by the Board for such purpose. 2. Section 13 of the Plan is hereby restated in its entirety as follows: 13. NON-ASSIGNABILITY. Options may not be transferred other than by will or by the laws of descent and distribution or by a beneficiary designation made by the participant. During a participant's lifetime, options granted to a participant may be exercised only by the participant. Signed to be effective the date first written above. /s/ DONNIE R. HUMPHRIES -------------------------------- Donnie R. Humphries, Secretary EX-27 3 FINANCIAL DATA SCHEDULE
5 3-MOS OCT-31-1998 NOV-01-1997 JAN-31-1998 3,071,000 0 40,051,000 1,546,000 43,792,000 116,182,000 72,627,000 20,971,000 193,353,000 33,085,000 0 0 0 82,000 155,909,000 193,353,000 97,323,000 97,323,000 71,886,000 16,593,000 699,000 48,000 47,000 9,448,000 3,396,000 0 0 0 0 6,052,000 .74 .70
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