<PAGE> 1
FORM 10-Q/A
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: July 31, 1996
---------------
Commission file number: 0-19885
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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, Texas 77041
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(Address of principal executive offices) (Zip Code)
(713) 466-7788
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Registrant's telephone number, including area code
Not Applicable
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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--7,960,677 shares as of July 31, 1996
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NCI BUILDING SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
PART 1. FINANCIAL STATEMENTS PAGE NO.
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<S> <C> <C>
Item 1. Financial Statements (unaudited)
Condensed consolidated balance sheets 1
July 31, 1996 and October 31, 1995.
Condensed consolidated statements of income 2
Three months ended July 31, 1996 and 1995.
Condensed consolidated statements of income 3
Nine months ended July 31, 1996 and 1995.
Condensed consolidated statements of cash flows 4
Nine months ended July 31, 1996 and 1995.
Notes to condensed consolidated financial statements 5-6
July 31, 1996.
ITEM 2. Management's Discussion and Analysis of Financial 7-9
Condition and Results of Operations.
PART 2. OTHER INFORMATION
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ITEM 6. Exhibits and Reports on Form 8-K 10
</TABLE>
<PAGE> 3
NCI BUILDING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS*
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1996 1995
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(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 16,310,000 $ 17,631,000
ACCOUNTS RECEIVABLE 33,115,000 19,063,000
INVENTORIES 28,539,000 16,897,000
OTHER CURRENT ASSETS 2,175,000 1,868,000
------------ ------------
80,139,000 55,459,000
PROPERTY, PLANT AND EQUIPMENT 53,978,000 34,905,000
LESS-ACCUMULATED DEPRECIATION (12,355,000 (9,276,000
------------ ------------
41,623,000 25,629,000
------------ ------------
OTHER ASSETS 26,089,000 1,994,000
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$147,851,000 $ 83,082,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
NOTES PAYABLE AND CURRENT
PORTION OF LONG-TERM DEBT $ 83,000 $ 83,000
ACCOUNTS PAYABLE 21,777,000 11,967,000
OTHER CURRENT LIABILITIES 15,732,000 11,722,000
------------ ------------
37,592,000 23,772,000
------------ ------------
LONG-TERM DEBT, NONCURRENT PORTION,
AND DEFERRED INCOME TAXES 2,903,000 1,628,000
------------ ------------
SHAREHOLDERS' EQUITY:
COMMON STOCK 81,000 63,000
PAID IN CAPITAL 17,140,000 13,696,000
RETAINED EARNINGS 90,135,000 43,923,000
------------ ------------
107,356,000 57,682,000
------------ ------------
$147,851,000 $ 83,082,000
============ ============
</TABLE>
NOTE: THE BALANCE SHEET AT OCTOBER 31, 1995 HAS BEEN DERIVED FROM THE
AUDITED FINANCIAL STATEMENTS AT THAT DATE
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
* NCI Building Systems, Inc. is filing this Form 10-K/A to correct the dates at
the top of each column on this page 1.
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NCI BUILDING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JULY 31,
1996 1995
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<S> <C> <C>
SALES $91,980,000 $58,941,000
COST OF SALES 66,504,000 42,375,000
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GROSS PROFIT 25,476,000 16,566,000
OPERATING EXPENSES 14,301,000 9,597,000
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OPERATING INCOME 11,175,000 6,969,000
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INTEREST EXPENSE 46,000 18,000
OTHER INCOME 366,000 208,000
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320,000 190,000
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INCOME BEFORE INCOME TAXES 11,495,000 7,159,000
PROVISION FOR INCOME TAXES 4,356,000 2,636,000
----------- -----------
NET INCOME $ 7,139,000 $ 4,523,000
=========== ===========
NET INCOME PER SHARE $ .85 $ .67
=========== ===========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE> 5
NCI BUILDING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JULY 31,
1996 1995
------------ ------------
<S> <C> <C>
SALES $231,501,000 $167,116,000
COST OF SALES 169,094,000 121,758,000
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GROSS PROFIT 62,407,000 45,358,000
OPERATING EXPENSES 37,395,000 27,363,000
------------ ------------
OPERATING INCOME 25,012,000 17,995,000
------------ ------------
INTEREST EXPENSE 73,000 34,000
OTHER INCOME 1,175,000 574,000
------------ ------------
1,102,000 540,000
------------ ------------
INCOME BEFORE INCOME TAXES 26,114,000 18,535,000
PROVISION FOR INCOME TAXES 9,902,000 6,871,000
------------ ------------
NET INCOME $ 16,212,000 $ 11,664,000
============ ============
NET INCOME PER SHARE $ 1.99 $ 1.73
============ ============
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE> 6
NCI BUILDING SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JULY 31,
1996 1995
----------- -----------
<S> <C> <C>
CASH FROM OPERATIONS $17,317,000 $ 8,802,000
----------- -----------
INVESTING ACTIVITIES:
PURCHASE OF PROPERTY, PLANT (7,974,000) (4,116,000)
AND EQUIPMENT
ACQUISITION OF ROYAL BUILDINGS --- (910,000)
ACQUISITION OF DBCI (11,000,000) ---
ACQUISITION OF MESCO (20,613,000) ---
ACQUISITION OF CARLISLE (2,522,000) ---
OTHER (1,959,000) 107,000
----------- -----------
(44,068,000) (4,919,000)
----------- -----------
FINANCING ACTIVITIES:
NET PROCEEDS FROM SALE OF STOCK 24,770,000 ---
PROCEEDS FROM STOCK OPTION EXERCISE 696,000 29,000
BORROWING AND REPAYMENT OF DEBT
AND OTHER (36,000) (35,000)
----------- ----------
25,430,000 (6,000)
----------- -----------
INCREASE (DECREASE) IN CASH $(1,321,000) $ 3,877,000
=========== ===========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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<PAGE> 7
NCI BUILDING SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 1996
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
10Q 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-month and nine-month
periods ended July 31, 1996, are not necessarily indicative of the
results that may be expected for the year ended October 31, 1996.
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, 1995.
NOTE 2 -- INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1996 1995
----------- -----------
<S> <C> <C>
Raw materials $22,684,000 $12,597,000
Work in process 5,855,000 4,300,000
----------- -----------
$28,539,000 $16,897,000
=========== ===========
</TABLE>
NOTE 3 -- NET INCOME PER SHARE
Net income per common share is computed by dividing net income after
taxes by the weighted average number of common shares outstanding,
after giving effect to common stock equivalents. The number of shares
used in the computation for the three months ended July 31, 1996 and
1995 was 8,393,000 and 6,759,000, respectively. The number of shares
used in the computation for the nine months ended July 31, 1996 and
1995 was 8,138,000 and 6,747,000, respectively.
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<PAGE> 8
NOTE 4 - ACQUISITIONS
In November, 1995, the Company acquired substantially all the assets
and assumed certain liabilities of Doors and Building Components, Inc.
(DBCI), a manufacturer of overhead doors, for approximately $18.0
million. The excess of cost over the fair value of the acquired net
assets was approximately $11.8 million. In April, 1996, the Company
acquired substantially all the assets and assumed certain liabilities
of Mesco Metal Buildings (Mesco) for approximately $22.0 million,
including a cash consideration of convertible debenture due April 1,
2001. The debenture is convertible into common stock any time after
April 1, 1997, at a conversion price of $29.925 per share and may be
redeemed, at the option of the Company, in whole or part, at any
time after April 1, 1997, at 100% of the principal amount thereof, plus
accrued interest, provided the market price (as defined) at the time is
at least 150% of the conversion rate. The excess of cost over the fair
value of the acquired net assets was approximately $10.9 million. The
consolidated results of operations for 1996 include DBCI and MESCO
since the date of acquisitions. The acquisitions were accounted for
using the purchase method. Assuming the acquisitions of DBCI and MESCO
had been consummated November 1, 1994, the pro forma unaudited results
of operations are as follows (in thousands, except per share date):
<TABLE>
<CAPTION>
Nine Months Ended July 31,
1996 1995
----------- -----------
<S> <C> <C>
Sales $ 246,045 $ 219,081
Net income 17,621 14,915
Net income per share $ 2.16 $ 2.21
</TABLE>
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<PAGE> 9
NCI BUILDING SYSTEMS, INC.
Item 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
THREE MONTHS ENDED JULY 31, 1996 COMPARED TO THREE MONTHS ENDED
JULY 31, 1995
Sales in the third quarter of fiscal year 1996 increased by $33.0 million, or
56%, compared to the third quarter of fiscal year 1995. Approximately $19
million of this amount resulted from the acquisitions of Mesco Metal Buildings
("Mesco") and Doors and Buildings Components, Inc.("DBCI") in April 1996 and
November 1995, respectively. The remaining increase of 24% over the third
quarter of 1995 resulted from the expansion of the Company's builder
organization, increased market penetration in the components division of the
Company and the opening of a new manufacturing facility in California which
increased market penetration in the western region of the United States.
Gross profit for the third quarter of fiscal 1996 increased $8.9 million, or
54%, compared to the prior years' third quarter. Gross profit percentage
decreased from 28.1% last year to 27.7% in the current year. This decrease in
gross profit percentage resulted from lower margins in the DBCI operation,
opening of the Western plant which operated less efficiently during the quarter
than the other facilities and the increase in component sales during the
quarter.
Operating expenses which consist of engineering, sales and administrative costs
increased by $4.7 million, or 49%, in the current quarter compared to the same
period a year ago. The dollar increase was primarily from the additional costs
of Mesco and DBCI and increased sales and marketing to support the Western
facility.
As a percent of sales, operating expenses were 15.5% compared to 16.3% a year
ago. Operating expenses increased less rapidly than the increase in sales
volume due to better leverage of fixed operating costs and lower level of
operating expenses level in both the Mesco and DBCI operation.
The increase in other income of $158,000 in the current quarter compared to the
third quarter last year resulted primarily from higher interest income on
invested cash due to higher average investments in the quarter and higher rates
of return compared to the prior year.
Income before income taxes increased by $1.7 million, or 65%, as a result of
somewhat lower gross margin percentage, decline in operating expenses as a
percent of sales and higher other income. As a percent of sales, pre tax income
was 12.5% in the current quarter of fiscal 1996 compared to 12.1% in the same
quarter a year ago.
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<PAGE> 10
NINE MONTHS ENDED JULY 31, 1996 COMPARED TO NINE MONTHS ENDED
JULY 31, 1995
Sales for the nine months ended July 31, 1996 increased $64.4 million or 39%
over the same period a year ago. Approximately $29 million of this increase
resulted from the inclusion of Mesco and DBCI in the current year. Other
factors which contributed to this increase were increased sales through the
authorized builder organization, increased market penetration in the components
business and continued geographic expansion primarily in the western area which
was aided by the addition of the new manufacturing location in California.
Gross profit increased 38% for the nine month period ended July 31, 1996
compared to the same period a year ago. This increase was comparable to the
sales increase for the year. As a percent of sales, gross profit was 27.0% in
the current period compared to 27.1% in the same period last year.
Operating expenses increased $10.0 million, or 37%, compared to the nine months
ended July 31, 1995. As a percent of sales, operating expenses were 16.2% and
16.4%, respectively, for the nine month periods ended July 31, 1996 and 1995.
The dollar increase in expenses resulted from the higher level of sales for the
current period primarily in the area of drafting and selling expenses and the
inclusion of the operating expenses of Mesco and DBCI in the current year. The
decline as a percent of sales resulted from the spreading of the fixed portion
of operating expenses over the increased sales volume.
Interest expense increased by $39,000 due to debt incurred in connection with
the acquisition of Mesco. Other income increased by $601,000 as a result of
higher income from invested cash in the current year.
As a percent of sales income before taxes increased to 11.3% from 11.1% in the
prior year as a result of lower fixed operating expenses per sales dollar in the
current period and the higher level of other income.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically funded its operations from cash flow from
operations, equity sale of its common stock 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 1997. In addition,
the Company has a $1.0 million six year reducing revolving credit line from a
bank. The Company had no outstanding balance under these revolving credit
facilities at July 31, 1996 and did not borrow under either credit agreement
during the quarter.
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<PAGE> 11
At July 31, 1996, the ratio of current assets to current liabilities was 2.2 to
1 compared to a ratio of 2.1 to 1 at October 31, 1995 and had outstanding
funded debt of $1.7 million. The capital spending related primarily of the
building of its plant in California, purchase of a facility in Ennis, Texas to
be used in its components operations, purchase of computer hardware and
software, and manufacturing equipment at all locations to enhance productivity.
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 in future periods.
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<PAGE> 12
NCI BUILDING SYSTEMS, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<S> <C>
27 Financial Data Schedule
(b) There were no reports filed under Form 8-K for the quarter ended
July 31, 1996.
</TABLE>
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)
Date: September 15, 1996 /s/ ROBERT J. MEDLOCK
-------------------------- --------------------------
Robert J. Medlock
Vice President and
Chief Financial Officer
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<PAGE> 13
Index to Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 16,310,000
<SECURITIES> 0
<RECEIVABLES> 34,610,000
<ALLOWANCES> 1,495,000
<INVENTORY> 28,539,000
<CURRENT-ASSETS> 80,139,000
<PP&E> 53,978,000
<DEPRECIATION> (12,355,000)
<TOTAL-ASSETS> 147,851,000
<CURRENT-LIABILITIES> 37,592,000
<BONDS> 0
<COMMON> 81,000
0
0
<OTHER-SE> 107,275,000
<TOTAL-LIABILITY-AND-EQUITY> 147,851,000
<SALES> 91,980,000
<TOTAL-REVENUES> 91,980,000
<CGS> 66,504,000
<TOTAL-COSTS> 14,374,000
<OTHER-EXPENSES> (366,000)
<LOSS-PROVISION> (73,000)
<INTEREST-EXPENSE> 46,000
<INCOME-PRETAX> 11,495,000
<INCOME-TAX> 4,356,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,139,000
<EPS-PRIMARY> .85
<EPS-DILUTED> 0
</TABLE>
