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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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
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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
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NCI 401(k) PROFIT SHARING PLAN
<TABLE>
Table of Contents
<S> <C>
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
</TABLE>
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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
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NCI 401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1999 and 1998
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
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
=========== ===========
</TABLE>
See independent auditors' report and accompanying notes to the financial
statements.
2
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NCI 401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 1999
<TABLE>
<S> <C>
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
=============
</TABLE>
See independent auditors' report and accompanying notes to the financial
statements.
3
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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.
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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:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
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%
</TABLE>
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.
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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:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1999 1998
------------- -------------
<S> <C> <C>
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
============= =============
</TABLE>
Investments in the NCI Common Stock Fund are both participant and nonparticipant
directed.
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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:
<TABLE>
<S> <C>
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)
===========
</TABLE>
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
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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
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SUPPLEMENTAL SCHEDULES
9
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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
<TABLE>
<CAPTION>
(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
<S> <C> <C> <C>
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
=========== ===========
</TABLE>
10
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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
<TABLE>
<CAPTION>
(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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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 --
</TABLE>
There were no category (iv) reportable transactions during the year ended
December 31, 1999.
11
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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
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
23.1 Consent of Independent Auditors
</TABLE>
