<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
-----------------------------
JULY 19, 1998
(Date of Report)
NCI BUILDING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19885 76-0127701
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
7301 FAIRVIEW
HOUSTON, TEXAS 77041
(Address of principal executive offices)
(713) 466-7788
(Registrant's telephone number,
including area code)
<PAGE> 2
As indicated in the Registrant's Form 8-K dated May 4, 1998, the
financial statements and pro forma financial information required to be filed
therewith were unavailable at such time. Such financial statements and pro
forma financial information is now available. Accordingly, Item 7 of the Form
8-K dated May 4, 1998 is hereby amended to read in its entirety as follows:
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The following unaudited and audited Financial
Statements of Amatek Holdings, Inc. and it
subsidiaries are attached hereto and made a part
hereof:
(i) Report of Ernst & Young LLP
(ii) Report of Deloitte & Touche LLP
(iii) Consolidated Balance Sheets as of
March 31, 1998 (Unaudited) and as of
December 31, 1997 and 1996
(iv) Consolidated Statements of
Operations for the three months ended
March 31, 1998 (Unaudited) and for the
three years in the period ended
December 31, 1997
(v) Consolidated Statements of Cash Flows
for the three months ended
March 31, 1998 and March 31, 1997
(Unaudited) and for the three years
in the period ended December 31, 1997
(vi) Consolidated Statements of
Stockholder's Equity for the three
months ended March 31, 1998
(Unaudited) and for the three years in
the period ended December 31, 1997
(vii) Notes to Consolidated Financial
Statements
(b) Pro Forma Financial Information.
The following unaudited Pro Forma Financial
Information of NCI Building Systems, Inc. is attached
hereto and made a part hereof:
(i) Pro Forma Condensed Combined
Consolidated Balance Sheet
(Unaudited) as of April 30, 1998
(ii) Pro Forma Condensed Combined
Consolidated Statement of Income
(Unaudited) for the Twelve Months
Ended October 31, 1997
(iii) Pro Forma Condensed Combined
Consolidated Statement of Income
(Unaudited) for the Six Months
Ended April 30, 1998
(c) Exhibits. The following exhibits are filed
herewith:
*2.1 Stock Purchase Agreement, dated
March 25, 1998, by and among BTR
Australia Limited and the
Registrant, and joined therein for
certain purposes by BTR plc
*2.2 Letter Agreement, dated May 4, 1998,
by and among the Registrant, BTR
Australia Limited and BTR plc,
amending the Stock Purchase
Agreement
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
- ------------------------------------------
* Incorporated herein by reference from the Registrant's Form 8-K dated
May 4, 1998.
<PAGE> 3
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)
By:/s/ Robert J. Medlock
----------------------------------
Robert J. Medlock, Vice President
and Chief Financial Officer
Dated: July 19, 1998
2
<PAGE> 4
CONSOLIDATED FINANCIAL STATEMENTS
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1997 AND 1996
<PAGE> 5
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors..........................................................................F-2
Independent Auditors' Report............................................................................F-3
Consolidated Balance Sheets as of March 31, 1998 (unaudited) and as of December 31, 1997
and 1996.............................................................................................F-4
Consolidated Statements of Operations for the three months ended March 31, 1998 and
March 31, 1997 (unaudited) and for the three years in the period ended December 31,
1997.................................................................................................F-5
Consolidated Statements of Cash Flows for the three months ended March 31, 1998 and
March 31, 1997 (unaudited) and for the three years in the period ended December 31,
1997.................................................................................................F-6
Consolidated Statements of Stockholder's Equity for the three months ended March 31,
1998 (unaudited) and for the three years in the period ended December 31, 1997.......................F-7
Notes to Consolidated Financial Statements..............................................................F-8
</TABLE>
F-1
<PAGE> 6
Report of Independent Auditors
Stockholder
Amatek Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Amatek Holdings,
Inc. and subsidiaries (the "Company"), as of December 31, 1997, and 1996, and
the related consolidated statements of operations, cash flows, and stockholder's
equity for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the 1995 financial statements of Metal Building
Components, Inc., a wholly owned subsidiary, which statements reflect total
revenues constituting 100% of the related consolidated totals. Those statements
were audited by other auditors.
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
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, based on our audits and, for 1995, the report of other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Amatek Holdings, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
July 14, 1998
F-2
<PAGE> 7
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
Metal Building Components, Inc.
We have audited the accompanying consolidated statements of operations and of
cash flows of Metal Building Components, Inc. and subsidiaries (the "Company")
for the year ended December 31, 1995 (none of which are presented herein). These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Company for
the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Houston, Texas
January 19, 1996
F-3
<PAGE> 8
Amatek Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
MARCH 31 December 31
1998 1997 1996
---------- ---------- ----------
(Unaudited)
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 1,345 $ 7,012 $ 3,622
Accounts receivable:
Trade, net of allowance for doubtful accounts of
$576, $658, and $395 45,899 44,599 41,942
Other 3,737 6,659 2,835
Inventories 48,536 43,479 32,410
Prepaid expenses 3,419 2,715 2,004
Income taxes receivable -- 437 --
Deferred tax asset 1,186 1,186 853
---------- ---------- ----------
Total current assets 104,122 106,087 83,666
Property, plant, and equipment:
Land 6,227 5,916 4,390
Buildings and improvements 41,425 40,845 31,104
Machinery and equipment 90,283 88,354 72,381
Construction-in-progress 7,116 8,272 11,659
---------- ---------- ----------
145,051 143,387 119,534
Less accumulated depreciation (41,088) (39,252) (34,813)
---------- ---------- ----------
103,963 104,135 84,721
Receivable from affiliate -- 1,364 19,261
Investments in and advances to DOUBLECOTE 19,415 19,200 19,031
Intangible assets 13,612 13,652 13,822
Other assets 5,871 5,325 --
---------- ---------- ----------
Total assets $ 246,983 $ 249,763 $ 220,501
========== ========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 9,288 $ 18,174 $ 32,638
Accrued liabilities 11,526 15,659 13,495
Income taxes payable 4,854 -- 2,544
---------- ---------- ----------
Total current liabilities 25,668 33,833 48,677
Deferred tax liability 10,588 11,142 6,776
Stockholder's equity:
Common stock - par value $-0-; 119,500, 3,500,
3,500 shares issued and outstanding at March 31,
1998, December 31, 1997, and December 31, 1996 182,172 2,600 2,600
Additional paid-in capital 4,380 4,380 4,380
Retained earnings 24,175 197,808 158,068
---------- ---------- ----------
Total stockholder's equity 210,727 204,788 165,048
---------- ---------- ----------
Total liabilities and stockholder's equity $ 246,983 $ 249,763 $ 220,501
========== ========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE> 9
Amatek Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(In Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Sales $ 86,909 $ 82,505 $ 407,967 $ 362,867 $ 315,737
Cost of sales (67,844) (63,896) (312,329) (271,299) (234,042)
---------- ---------- ---------- ---------- ----------
Gross profit 19,065 18,609 95,638 91,568 81,695
Selling, general, and administrative
expenses (9,598) (8,543) (36,637) (29,652) (24,900)
Equity in income (losses) of
DOUBLECOTE (161) (170) 83 (304) (1,293)
Interest income, net 267 267 2,019 1,871 1,379
Unusual/nonrecurring gain -- -- 3,284 -- --
---------- ---------- ---------- ---------- ----------
Income before income taxes 9,573 10,163 64,387 63,483 56,881
Provision for income taxes (3,634) (4,096) (24,647) (24,920) (22,993)
---------- ---------- ---------- ---------- ----------
Net income $ 5,939 $ 6,067 $ 39,740 $ 38,563 $ 33,888
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-5
<PAGE> 10
Amatek Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,939 $ 6,067 $ 39,740 $ 38,563 $ 33,888
Adjustments to reconcile net income to net
cash (used in) provided by operating
activities:
Depreciation and amortization 2,019 1,639 6,844 5,477 4,136
Provision for deferred income taxes (554) 1,866 4,033 716 82
Provision for losses on accounts receivable
(82) 1,867 262 (266) 71
Changes in operating assets and
liabilities:
Increase in accounts receivable -
trade (1,218) 924 (2,919) (5,517) (1,980)
Increase in other accounts
receivable 2,922 (1,357) (3,824) (2,326) 134
Increase in inventories (5,057) 102 (11,069) (6,744) 5,383
Increase in prepaid expenses (704) 208 (711) (1,163) (123)
(Increase) decrease in other
assets (546) 84 (5,962) 1,018 (432)
(Decrease) increase in accounts
payable and accrued liabilities (13,019) (18,808) (12,300) 13,169 2,307
(Decrease) increase in income
taxes payable 4,854 1,053 (2,544) 1,239 (1,438)
---------- ---------- ---------- ---------- ----------
Net cash (used in) provided by operating
activities (5,446) (6,355) 11,550 44,166 42,028
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (1,646) (5,847) (27,166) (21,146) (12,501)
Proceeds from sale of property, plant, and
equipment -- -- 1,632 73 32
Advances to and investments in
DOUBLECOTE (376) (369) (86) (2,000) (2,835)
Cash paid for acquired business -- -- -- (21,221) --
---------- ---------- ---------- ---------- ----------
Net cash used in investing activities (2,022) (6,216) (25,620) (44,294) (15,304)
FINANCING ACTIVITIES
Net borrowings under credit facilities -- -- -- -- (4,754)
Dividend Paid to Parent (179,572) -- -- -- --
Capital Contribution from Parent 179,572 -- -- -- --
Proceeds to related party 1,801 13,549 17,460 1,080 (21,471)
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities 1,801 13,549 17,460 1,080 (26,225)
---------- ---------- ---------- ---------- ----------
Net (decrease) increase in cash and cash
equivalents (5,667) 978 3,390 952 499
Cash and cash equivalents at beginning of
year 7,012 3,622 3,622 2,670 2,171
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of year $ 1,345 $ 4,600 $ 7,012 $ 3,622 $ 2,670
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-6
<PAGE> 11
Amatek Holdings, Inc. and Subsidiaries
Consolidated Statements of Stockholder's Equity
(In Thousands)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $ 2,600 $ 4,380 $ 85,617 $ 92,597
Net income -- -- 33,888 33,888
---------- ---------- ---------- ----------
Balance at December 31, 1995 2,600 4,380 119,505 126,485
Net income -- -- 38,563 38,563
---------- ---------- ---------- ----------
Balance at December 31, 1996 2,600 4,380 158,068 165,048
Net income -- -- 39,740 39,740
---------- ---------- ---------- ----------
Balance at December 31, 1997 2,600 4,380 197,808 204,788
Net income -- -- 5,939 5,939
Dividend to Parent -- -- (179,572) (179,572)
Capital contribution from Parent 179,572 -- -- 179,572
---------- ---------- ---------- ----------
Balance at March 31, 1998
(Unaudited) $ 182,172 $ 4,380 $ 24,175 $ 210,727
========== ========== ========== ==========
</TABLE>
See accompanying notes.
F-7
<PAGE> 12
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All outstanding common stock of Amatek Holdings, Inc. ("AHI"), is owned by
Amatek Limited (the "Parent," which is an Australian company), a wholly owned
subsidiary of BTR Nylex (an Australian company), which is ultimately owned by
BTR plc (a British company). AHI is a manufacturer of steel roofing and siding
products. Principal markets are in the continental United States.
The consolidated financial statements include the accounts of AHI and all
majority-owned subsidiaries (the "Company"). The Company's investment in
DOUBLECOTE, L.L.C. ("DOUBLECOTE"), is accounted for using the equity method (see
Note 9). All significant intercompany balances and transactions have been
eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of all cash balances and highly liquid
investments which have a maturity of three months or less when acquired.
INVENTORY
Inventories are valued at the lower of cost or market, determined on the
first-in, first-out method.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. The cost of repairs and
maintenance is charged to operations as incurred. Depreciation of property,
plant, and equipment is provided on a straight-line basis over the estimated
useful lives of the assets as follows:
Building and improvements 40 years
Machinery and equipment 4 to 13 years
Computer and office equipment 3 to 10 years
F-8
<PAGE> 13
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. This statement generally requires a
periodic review of long-lived assets for indications that their carrying amounts
may not be recoverable, and governs the measurement and disclosure of any
resulting impairment loss. Its application did not have a material impact on the
Company's financial position or results of operations.
INCOME TAXES
The Company uses SFAS No. 109, Accounting for Income Taxes, in accounting for
income taxes. This statement requires an asset and liability approach for
financial accounting and reporting of income taxes.
INTANGIBLE ASSETS
Goodwill of $15,479,000, $15,333,000, and $14,777,000, which relates to the
acquisition of certain assets and other stockholder interest at March 31, 1998
and December 31, 1997 and 1996, respectively, is being amortized on a
straight-line basis over 20 years. Accumulated amortization of goodwill was
$1,867,000, $1,681,000, and $955,000 as of March 31, 1998 and December 31, 1997
and 1996, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments (cash, accounts
receivable, and accounts payable) approximates fair value.
MANAGEMENT ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-9
<PAGE> 14
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
1. OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS
Certain reclassifications have been made to 1996 financial information in order
to conform to 1997 presentation.
In the opinion of management, the unaudited consolidated financial statements
include all adjustments, consisting solely of normal recurring adjustments,
necessary for a fair presentation of the financial position as of March 31,
1998, and the results of operations and cash flows for each of the three-month
periods ended March 31, 1998 and 1997. Although management believes the
disclosures in these financial statements are adequate to make the information
presented not misleading, certain information and footnote disclosures normally
included in annual audited financial statements prepared in accordance with
generally accepted accounting principals have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange Commission. The
results of operations and the cash flows for the three-month period ended March
31, 1998 are not necessarily indicative of the results to be expected for the
full year.
2. INVENTORIES
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997 1996
---------- ---------- ----------
(Unaudited)
<S> <C> <C> <C>
Raw materials $ 36,267 $ 34,638 $ 22,581
Finished goods 12,269 8,841 9,829
---------- ---------- ----------
Total $ 48,536 $ 43,479 $ 32,410
========== ========== ==========
</TABLE>
F-10
<PAGE> 15
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
3. NOTES PAYABLE TO BANK
The Company had an overdraft line of credit facility for $10 million which
terminated on March 31, 1998. There were no advances outstanding at March 31,
1998 and December 31, 1997 and 1996.
4. RELATED PARTY TRANSACTIONS
The Company periodically advances funds to its Parent and charges the Parent
interest at a rate which approximates prime for net advances. In addition, the
Company remits its federal income taxes payable to the Parent (see Notes 5 and
7). Based on intercompany lending rates for advances and payables with similar
terms, the fair value of these advances approximates their carrying values.
5. FEDERAL INCOME TAX
The provisions for federal income taxes are composed of the following (in
thousands):
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Current income taxes $ 4,189 $ 2,229 $20,612 $24,203 $22,917
Deferred income taxes (555) 1,867 4,035 717 76
------- ------- ------- ------- -------
Total $ 3,634 $ 4,096 $24,647 $24,920 $22,993
======= ======= ======= ======= =======
</TABLE>
The effective income tax rate of the Company approximates the sum of the
statutory federal income tax rate and certain state income tax rates less
related federal tax benefit.
F-11
<PAGE> 16
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
5. FEDERAL INCOME TAX (CONTINUED)
Significant components of the Company's deferred tax assets and liabilities were
as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997 1996
------------------------ ----------------------- ------------------------
CURRENT LONG-TERM CURRENT LONG-TERM CURRENT LONG-TERM
------------------------ ----------------------- ------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Property $ -- $(14,368) $ -- $(14,069) $ -- $ (9,442)
Insurance
reserves 782 782 -- 461 --
Bad debt reserve 248 248 -- 147 --
Inventory 183 183 -- 245 --
Deferred
compensation
and incentive
plan -- 3,780 -- 2,931 -- 2,660
Other (27) (27) -- -- 11
---------------------- ---------------------- ---------------------
Total $ 1,186 $ 10,588 $ 1,186 $(11,138) $ 853 $ (6,771)
====================== ====================== =====================
Total deferred tax
assets $ 4,993 $ 4,346 $ 3,524
Total deferred tax
liabilities (14,395) (14,298) (9,442)
-------- -------- --------
Net deferred tax
liability $ (9,402) $ (9,952) $ (5,918)
======== ======== ========
</TABLE>
6. LEASES
The Company leases certain equipment (primarily vehicles) and operating
facilities under operating leases expiring at various dates through 2000. Total
rental expense under operating leases was $1,514,000, $1,291,000, and $1,096,000
in 1997, 1996, and 1995, respectively.
Aggregate minimum lease payments under operating leases are as follows (in
thousands):
<TABLE>
<S> <C>
1998 $ 508
1999 567
2000 391
2001 72
------
$1,538
======
</TABLE>
F-12
<PAGE> 17
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
7. SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest during the years ended December 31, 1997, 1996, and 1995
was $81,000, $80,000, and $131,000, respectively. Cash paid for income taxes
during the years ended December 1997, 1996, and 1995 was $24,349,000,
$21,402,000, and $23,639,000, respectively.
8. EMPLOYEE BENEFIT PLANS
The Company sponsors a 401(k) savings plan for its full-time employees. The
Company matches 100% of employee-elected pre-tax contributions to a maximum of
4% of their salaries. The Company's contributions were $1,132,000, $943,000, and
$830,000 in 1997, 1996, and 1995, respectively.
An Incentive Compensation Plan (the "Plan") was established in 1992, in part
because of the purchase of the minority interest of a partnership of which
certain officers of the Company were limited partners. Under the terms of the
Plan, an annual contribution is determined based upon the Company's earnings and
revenues. Annual contributions are placed in trust (with the trustee,
NationsBank) and vest to participants over a seven- to ten-year period. In the
event that a participant voluntarily leaves the Company or is terminated for
"good cause," the unvested portion of contributions to the Plan is forfeited to
the Company. The contributions were $4,302,000, $3,714,000, and $2,766,000 for
1997, 1996, and 1995, respectively.
9. INVESTMENT IN DOUBLECOTE
The Company, through a subsidiary, owns 50% of the common stock in DOUBLECOTE, a
corporate joint venture.
F-13
<PAGE> 18
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
9. INVESTMENT IN DOUBLECOTE (CONTINUED)
Summarized financial information of DOUBLECOTE is as follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997 1996
---------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Current assets $ 9,210 $ 8,165 $ 7,266
Noncurrent assets 28,102 28,601 30,524
---------- ---------- ----------
Total assets $ 37,312 $ 36,766 $ 37,790
========== ========== ==========
Liabilities - advances from stockholder $ 37,157 $ 36,404 $ 36,232
Other liabilities 1,505 1,390 2,753
Stockholder's equity:
Contributed capital 2,000 2,000 2,000
Accumulated deficit (3,350) (3,028) (3,195)
---------- ---------- ----------
Total liabilities and stockholder's equity $ 37,312 $ 36,766 $ 37,790
========== ========== ==========
Sales $ 6,427 $ 30,348 $ 28,034
Cost of sales (5,722) (26,150) (24,682)
---------- ---------- ----------
Gross profit 705 4,198 3,352
Selling, general, and administrative expenses (303) (1,080) (964)
Interest expense (724) (2,952) (2,997)
---------- ---------- ----------
Net income (loss) $ (322) $ 166 $ (609)
========== ========== ==========
</TABLE>
The facility owned by DOUBLECOTE was completed and began operations in 1995
DOUBLECOTE is charged interest at prime for advances by the Company. Total
interest income earned by the Company was $1,500,000 in 1997 and 1996 and
$1,465,000 in 1995.
F-14
<PAGE> 19
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
10. LUBBOCK PLANT FIRE
In February 1997, the Company's Lubbock, Texas, plant sustained major damage
from a fire. The Company has since rebuilt the plant, and resumed operations in
July 1997.
The Company maintains insurance under one policy for both property damage and
business interruption applicable to its production facilities. The policy
provides coverage subject to a $25,000 deductible. Insurance recoveries as of
December 31, 1997 included $1.5 million for property damage and $500,000 for
business interruption. The Company is pursuing additional recoveries of $4
million related to the damage of the Lubbock plant.
Insurance recoveries for property damage associated with events of this type
require the recognition of a new cost basis for the rebuilt facility. As a
result, the Company has recognized a $3.3 million unusual/nonrecurring
adjustment in its income statement for the year ended December 31, 1997. Total
spending to restore the Lubbock plant was approximately $4.8 million.
11. ACQUISITION OF BUSINESS
On April 1, 1996, the Company purchased certain assets of Steelco Metal
Construction Products and Construction Metals ("Steelco") for a total cost of
approximately $21,221,000. Steelco was engaged in the manufacturing of steel
roofing and siding products. The acquisition was accounted for as a purchase.
The excess of the purchase price over the fair values of the net assets acquired
of $11,266,000 has been recorded as goodwill and is being amortized over a
period of 20 years. The statement of operations for 1996 includes the operating
results of Steelco since the date of acquisition.
12. YEAR 2000 (UNAUDITED)
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 major system failure or
F-15
<PAGE> 20
Amatek Holdings, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (continued)
12. YEAR 2000 (UNAUDITED) (CONTINUED)
miscalculation. 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. However, if such modifications or conversions are not
made, or not completed timely, the Year 2000 issue could have a material impact
on the Company's operations.
13. COMMITMENTS AND CONTINGENCIES
In March 1998, the Company entered into an agreement with NCI Building Systems,
Inc. to purchase 100% of the stock of the Company, which was effective May 4,
1998. Upon the successful completion of this acquisition, certain executives of
the Company will receive compensation payments totaling approximately $8.5
million.
F-16
<PAGE> 21
NCI BUILDING SYSTEMS INC./AMATEK HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
APRIL 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
NCI AHI AHI AHI ACQUISITION PRO FORMA
ASSETS HISTORICAL HISTORICAL ADJUSTMENTS ADJUSTED ADJUSTMENTS COMBINED
---------- ---------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents 37,972 1,401 (1,401) B -- (27,800) C 10,172
Accounts receivable, net 35,954 49,262 49,262 85,216
Inventory, net 40,725 49,107 49,107 89,832
Deferred income taxes 3,462 2,721 2,721 6,183
Income tax receivable -- 2,913 2,913 2,913
Prepaid expenses 1,233 3,541 3,541 4,774
------------------------------------------------------------------ --------
Total current assets 119,346 108,945 (1,401) 107,544 (27,800) 199,090
Property, plant and equipment 74,381 145,804 145,804 220,185
Accumulated depreciation (22,623) (41,704) (41,704) (64,327)
------------------------------------------------------------------ --------
51,758 104,100 -- 104,100 -- 155,858
Goodwill 20,361 13,466 -- 13,466 388,000 C 421,827
Capitalized debt issue costs -- -- -- -- 10,822 L 10,822
Investment in and advances to DOUBLECOTE -- 19,473 19,473 19,473
Other assets 5,237 6,446 6,466 11,683
------------------------------------------------------------------ --------
Total assets 196,702 252,430 (1,401) 251,029 371,022 818,753
================================================================== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt 47 -- -- 22,500 E 22,547
Accounts payable 14,993 14,584 14,584 29,577
Accrued expenses 13,658 10,299 10,299 9,199 C 33,156
Accrued income taxes (662) 2,202 2,202 1,540
------------------------------------------------------------------ --------
Total current liabilities 28,036 27,085 -- 27,085 31,699 86,820
Long-term debt, non-current portion 1,653 -- -- 517,500 E 519,153
Deferred income taxes 2,596 13,468 13,468 16,064
Shareholders' equity:
Common stock 83 182,172 182,172 (182,163) F 90
Additional paid-in capital 55,262 4,380 4,380 27,813 F 87,455
Retained earnings 109,072 25,325 (1,401) B 23,924 (23,825) F 109,171
------------------------------------------------------------------ --------
Total shareholders' equity 164,417 211,877 (1,401) 210,476 (178,177) 196,716
------------------------------------------------------------------ --------
Total liabilities and shareholders' equity 196,702 252,430 (1,401) 251,029 (371,022) 818,753
================================================================== ========
</TABLE>
<PAGE> 22
NCI BUILDING SYSTEMS INC./AMATEK HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED OCTOBER 31, 1997
--------------------------------------------------------
HISTORICAL Pro Forma
---------------------- Acquisition Pro Forma
NCI AHI Adjustments Combined
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 407,751 $ 407,967 $ -- $ 815,718
Cost of sales 299,407 312,329 -- 611,736 D
---------- ---------- ---------- ----------
Gross profit 108,344 95,638 -- 203,982
Selling, general and administrative costs 66,055 36,637 9,700 H 108,646 D
(3,746) H
---------- ---------- ---------- ----------
Income from operations 42,289 59,001 (5,954) 95,336
Equity income (loss) in DOUBLECOTE -- 83 -- 83
Nonrecurring gain -- 3,284 -- 3,284
Interest expense (163) -- (42,050) I (44,377)
(2,164) I
Other income 1,999 2,019 (1,390) J 2,628
---------- ---------- ---------- ----------
Income (loss) before taxes 44,125 64,387 (51,558) 56,954
Tax provision 16,238 24,647 (15,488) K 25,397
---------- ---------- ---------- ----------
Net income $ 27,887 $ 39,740 $ (36,070) $ 31,557
========== ========== ========== ==========
Weighted average shares - basic 8,056 -- 700 8,756
Weighted average shares - diluted 8,535 -- 700 9,235
========== ==========
Net income per share - basic 3.46 -- -- 3.60
Net income per share - diluted $ 3.28 -- -- $ 3.42
========== ==========
</TABLE>
<PAGE> 23
NCI BUILDING SYSTEMS INC./AMATEK HOLDINGS INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED APRIL 30, 1998
---------------------------------------------------------
HISTORICAL Pro Forma
--------------------------- Acquisition Pro Forma
NCI AHI Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 192,672 $ 232,864 $ -- $ 425,536
Cost of sales 140,621 183,815 -- 324,436 D
------------ ------------ ------------ ------------
Gross profit 52,051 49,049 -- 101,100
Selling, general and administrative costs 34,030 31,822 4,850 H 61,437 D
(700) H
(8,565) G
------------ ------------ ------------ ------------
Income from operations 18,021 17,227 4,415 39,663
Equity income (loss) in DOUBLECOTE -- (57) -- (57)
Nonrecurring gain -- 3,284 -- 3,284
Interest expense (84) -- (21,025) I (22,191)
(1,082) I
Other income 1,492 1,219 (695) J 2,016
------------ ------------ ------------ ------------
Income (loss) before taxes 19,429 21,673 (18,387) 22,715
Tax provision 6,981 8,196 (5,009) K 10,168
------------ ------------ ------------ ------------
Net income $ 12,448 $ 13,477 $ (13,378) $ 12,546
============ ============ ============ ============
Weighted average shares - basic 8,195 -- 700 8,895
Weighted average shares - diluted 8,693 -- 700 9,393
============ ============
Net income per share - basic 1.52 -- -- 1.41
Net income per share - diluted $ 1.44 -- -- $ 1.34
============ ============
</TABLE>
<PAGE> 24
NCI BUILDING SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(A) BASIS OF PRESENTATION - The Unaudited Pro Forma Condensed Combined
financial statements are presented to give pro forma effect to the
acquisition of Amatek Holdings, Inc. and Subsidiaries (AHI).
The purchase method of accounting has been used in preparing the Unaudited
Pro Forma Condensed Combined Financial Statements of the Company with
respect to the acquisition of AHI. The statement of income for the six
months ended April 30, 1998 and fiscal year ended October 31, 1997 combines
the results of operations for the Company's six months ended April 30, 1998
and fiscal year ended October 31, 1997 with AHI's results for the six
months ended April 30,1998 and fiscal year ended December 31, 1997,
respectively. Purchase accounting values have been assigned on a
preliminary basis and will be adjusted upon the completion of a valuation
study.
(B) The unaudited condensed balance sheets for AHI as of December 31, 1997 and
April 30, 1998 have been adjusted to exclude the cash not acquired as
subject to the stock purchase agreement.
(C) To reflect the purchase of AHI for consideration of $550 million in cash
plus $32 million in equity issued to AHI employees to replace the
management incentive plan in place at AHI. In addition, there are estimated
to be $18 million in transaction costs. Goodwill has been preliminarily
calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase Price
Cash $550,000
Equity issued 32,200
Estimated transaction costs 17,800
Less: Net assets acquired 212,000
--------
Goodwill $388,000
</TABLE>
(D) Anticipated synergies and cost savings resulting from internal rather
than third party coating of NCI products, plant consolidations, sales and
marketing consolidation, purchasing efficiencies and administrative cost
savings and efficiencies of approximately $15 million annually has not
been reflected in the above unaudited pro forma condensed combined
financial statements.
(E) For purposes of the unaudited pro forma condensed combined balance sheets,
the proceeds for the AHI acquisition were assumed to have been provided
with $27.8 million of available cash and additional borrowings as follows:
<TABLE>
<S> <C>
AHI net assets acquired,
plus excess of purchase price over net assets $600,000
Less:
Excess cash used to fund acquisition 27,800
Equity issued 32,200
--------
$540,000
Current portion $22,500
Long-term portion $517,500
</TABLE>
(F) To record the elimination of the AHI stock acquired, offset by the impact
on shareholder's equity of the additional 700,000 shares of NCI common
stock issued to certain officers and employees of AHI in exchange for
their interests in AHI's management incentive plan.
<PAGE> 25
NCI BUILDING SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(G) To record elimination of compensation paid to certain management of AHI
due to change in ownership control of AHI.
(H) To record additional amortization expense associated with the goodwill
generated from the AHI acquisition (assigned useful life of 40 years),
offset by elimination of a management incentive charge incurred by AHI
on a historical basis ($3.746 million for the year, $0.7 million for the
six months).
(I) To record additional interest expense and amortization of debt issuance
costs related to debt incurred in connection with the acquisition of
AHI.
(J) To eliminate income from daily cash investment interest income for the
portion of the Company's excess cash utilized for the acquisition.
(K) To record the tax effect on the pro forma adjustments.
(L) To record cost related to the issuance of debt, as discussed in Note (E).
<PAGE> 26
EXHIBIT INDEX
*2.1 Stock Purchase Agreement, dated March 25, 1998, by and
among BTR Australia Limited and the Registrant, and joined
therein for certain purposes by BTR plc
*2.2 Letter Agreement, dated May 4, 1998, by and among the
Registrant, BTR Australia Limited and BTR plc, amending the
Stock Purchase Agreement
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche LLP
- -----------------------
* Incorporated herein by reference from the Registrant's Form 8-K dated
May 4, 1998.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements (Form
S-8 No. 333-14957 and No. 33-52078) pertaining to the 401(k) Profit Sharing
Plan of NCI Building Systems, Inc. and (Form S-8 No. 333-34899, No. 33-52080
and No. 333-12921) pertaining to the Nonqualified Stock Option Plan of NCI
Building Systems, Inc. of our report dated July 14, 1998 with respect to the
consolidated financial statements of Amatek Holdings, Inc. included in this
Current Report (Form 8-K).
ERNST & YOUNG LLP
Houston, Texas
July 16, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements (Form
S-8 No. 333-14957 and No. 33-52078) of NCI Building Systems, Inc. 401(k) Profit
Sharing Plan and (Form S-8 No. 333-34899, No. 33-52080, and No. 333-12921) of
NCI Building Systems, Inc. Nonqualified Stock Option Plan of our report dated
January 19, 1996 (relating to the consolidated financial statements of Metal
Building Components, Inc. not presented separately herein) appearing in this
Current Report on Form 8-K.
DELOITTE & TOUCHE LLP
Houston, Texas
July 17, 1998
