NCI BUILDING SYSTEMS INC - 10-K - 20030131 - EXHIBIT_10
EXHIBIT 10.12
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
This Agreement is entered into as of the 13th day of October, 1998, by
and between NCI Building Systems, Inc., a Delaware corporation (the
"Corporation") and Karen Rene Rosales, as Trustee (the "Trustee") of the Schulte
Investment Trust (the "Trust").
RECITALS:
WHEREAS, the Trustee desires to insure the lives of the Johnie Schulte,
Jr. (the "Employee") and Barbara C. Schulte, the spouse of Employee ("Spouse"),
for the benefit and protection of the Trust and its beneficiaries and, to
encourage the Employee to remain an employee of the Corporation, the Corporation
desires to assist the Trust with the Trust's life insurance program; and
WHEREAS, the Trust is the owner of the life insurance policy described
herein maintained pursuant to the terms of this Agreement, subject to the
assignment of the policy to the Corporation as described herein as security for
the repayment of amounts the Corporation contributes toward the payment of
premiums on the policy; and
WHEREAS, the Corporation and the Trustee, on behalf of the Trust,
desire to enter into a contractual arrangement to establish their respective
rights with respect to such policy;
NOW THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Designation of Policy. The life insurance policy which is the
subject of this Agreement is Policy No. 1A2348839 (the "Policy") issued by
Pacific Life (the "Insurer") on the joint lives of the Employee and the Spouse.
2. Ownership of Insurance. The Trust shall be the sole owner of the
Policy and the Trustee may exercise all the rights of ownership with respect to
the Policy on behalf of the Trust, except as otherwise hereinafter provided.
3. Dividends. All dividends declared or distributions made by the
Insurer on the Policy shall be applied to purchase additional paid-up insurance
on the joint lives of the Employee and Spouse. The parties hereto agree that the
dividend election provisions of the Policy will conform to the provisions
hereof.
4. Premium Payments. On or before the due date, the Corporation will
pay to the Insurer the full amount of each premium on the Policy, except as
provided in Section 5 of this Agreement. The Corporation hereby agrees to pay at
least eleven (11) annual premium payments on the Policy. The aggregate amount of
premiums paid by the Corporation on the Policy shall, as of any determination
date, be referred to as the "Corporation Premiums".
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT Page 1
SCHULTE INVESTMENT TRUST
5. Trust's Obligation to Corporation. The Trust shall be obligated to
repay to the Corporation the Corporation Premiums. The Trust's repayment
obligation to the Corporation described in this Section 5 shall be payable as
prescribed in Sections 9 and 12 of this Agreement. In addition, on or before the
due date of each Policy premium, the Trust will pay the Insurer (or,
alternatively, in the discretion of the Corporation, will pay to the Corporation
as reimbursement for the Corporation's payment) an amount equal to (i) the
one-year term cost of the insurance protection received by the Trust with
respect to the joint lives of the Employee and Spouse, measured by the U.S. Life
Table 38, while both are alive, and (ii) after the first to die of the Employee
and Spouse, the lesser of the P.S. 58 cost under the tables contained in Revenue
Ruling 55-747 or the Insurer's individual initial issue one-year term life
insurance rates. The Corporation shall notify the Trustee of the amount due from
the Trust hereunder at least thirty (30) days prior to the due date of each
Policy premium. If during the term of this Agreement, the method for determining
the one-year term cost of the insurance protection received by the Trust is
different than the method described in the preceding sentence due to changes in
the tax laws applicable to this Agreement or the issuance of rulings or
regulations by the Internal Revenue Service, the Trust shall pay an amount under
this Section 5 consistent with the requirements of such laws, rulings or
regulations.
6. Collateral Assignment of Policy. As security for the repayment to
the Corporation of the Corporation Premiums paid pursuant to Section 4 of this
Agreement, the Trustee on behalf of the Trust has executed an assignment of the
Policy (the "Assignment"), which Assignment is attached hereto as Exhibit A.
During the term of this Agreement, the Trust's rights of ownership with respect
to the Policy shall be limited to those specified in the Assignment and in this
Agreement. Except as provided in this Agreement, the Assignment will not be
altered without the written consent of the Corporation.
7. Right to Obtain Policy Loans. The Corporation shall have the right
to obtain Policy loans or advances on the Policy equal to the amount of the
Corporation Premiums paid to the date of the loan or advance.
8. Assignment of Trust's Interest. Except as provided otherwise in this
Section 8, the Trust may not transfer or assign its rights in the Policy (other
than the rights assigned to the Corporation pursuant to this Agreement and the
Assignment). Notwithstanding the preceding sentence, with the consent of the
Corporation and subject to the provisions of the Trust, the Trustee may assign
its rights in the Policy (other than rights assigned to the Corporation pursuant
to this Agreement and the Assignment) to another trust established by Employee.
9. Death of Employee and Spouse. Upon the last to die of the Employee
and Spouse, the Corporation shall be entitled to receive, from the proceeds of
the Policy, an amount equal to the Corporation Premiums paid pursuant to Section
4 of this Agreement, less any Policy loans or other indebtedness incurred by the
Corporation and secured by the cash surrender value of the Policy. The balance,
if any, of the proceeds of the Policy will be paid directly by the Insurer to
the Trust in the settlement option elected by the Trustee. If, pursuant to the
terms of the Assignment, the Insurer pays the Corporation amounts in excess of
the Corporation
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT Page 2
SCHULTE INVESTMENT TRUST
Premiums in connection with the death of the Employee or, if applicable, Spouse,
the Corporation shall pay such excess amounts to the Trust, as determined and
communicated to the Corporation by the Insurer.
10. Beneficiary Under Policy. The Trust shall be the beneficiary under
the Policy to receive the balance of any Policy proceeds payable on account of
the Employee's death following payment of Corporation Premiums to the
Corporation pursuant to Section 4 of this Agreement. The Trustee shall elect a
settlement option on behalf of the Trust.
11. Termination of Agreement. Subject to the provisions of Section 12,
this Agreement shall terminate on the occurrence of any of the following events:
(a) After payment of the amounts specified in Section 9
following the death of the last to die of the Employee and the Spouse;
(b) Cessation of the Corporation's business;
(c) The first day following the expiration of fifteen (15)
years from the date the Policy was issued, May 20, 1998 (the "Policy Date"); or
(d) Subject to the Corporation's obligations under Section 4
hereof, upon the election of the Corporation, provided that the Corporation
gives written notice of the Corporation's election to terminate this Agreement
pursuant to this paragraph (d) at least ninety (90) days prior to the effective
date of such termination.
12. Disposition of Policy on Termination of Agreement. If this
Agreement is terminated under Section 11, the Corporation will no longer be
obligated to pay the premium on the Policy pursuant to Section 4. If this
Agreement is terminated on account of (i) the cessation of the Corporation's
business under paragraph (b) of Section 11; (ii) the expiration of fifteen (15)
years from the Policy Date under paragraph (c) of Section 11; or (iii)
termination of the Agreement by the Corporation pursuant to paragraph (d), the
Trust shall have the right for a period of sixty (60) days following the
termination event to repay the Corporation the Corporation Premiums. The Trust
may elect to repay such premiums by surrendering the Policy and reimbursing the
Corporation for such costs from the cash surrender value of the Policy.
Alternatively, the Trust may elect to reimburse the Corporation for the
Corporation Premiums paid as of the termination date without surrendering the
Policy. Upon receipt of this amount, the Corporation shall release the
Assignment of the Policy, and the Trust shall become the sole and absolute owner
of the Policy. The Trust may thereafter elect to continue to keep the Policy in
effect by paying the premiums thereon, or alternatively, may elect to surrender
the Policy pursuant to the terms thereof. If the Trust fails to repay the
Corporation the amount of the Corporation premiums within this sixty (60) day
period, the Trustee on behalf of the Trust shall execute any and all documents
necessary to vest ownership of the Policy in the Corporation. Thereafter, the
Trust shall have no interest in the Policy.
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT Page 3
SCHULTE INVESTMENT TRUST
13. Insolvency of Corporation. In the event the Corporation becomes
insolvent during the term of the Agreement, the cash surrender value of the
Policy shall be subject to the claims of the Corporation's creditors and the
Trust shall have the status of an unsecured creditor of the Corporation with
respect to the portion of cash surrender value of the Policy, if any, otherwise
payable to the Trust under this Agreement. For purposes of the preceding
sentence, the Corporation shall be considered as "insolvent" if (i) the
Corporation is unable to pay its debts as they become due or (ii) the
Corporation is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.
14. Paid-Up Additional Life Insurance. Any payments under the Policy to
the Corporation in connection with the rights granted to the Corporation in the
Assignment shall first be made from the cash surrender value under the Policy
attributable to the paid-up additional life insurance purchased by Policy
dividends. The Trust shall have no interest in the paid-up additional life
insurance protection to the extent the death benefit or cash value thereof
exceeds the total amount which must be paid to the Corporation under this
Agreement.
15. Named Fiduciary. The Board of Directors of the Corporation (the
"Board") is designated as the "Named Fiduciary," as defined under section 402 of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of
the split-dollar life insurance arrangement set forth in this Agreement. The
business address and telephone number of the Named Fiduciary are:
Chairman of the Board of Directors
c/o Bob Medlock, Chief Financial Officer
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
(713) 466-7788
The Named Fiduciary shall have full power and authority to control and manage
the operation and administration of this Agreement and to interpret and construe
the terms hereof. The Named Fiduciary's interpretation and construction hereof
and actions hereunder shall be binding and conclusive on all persons for all
purposes. However, the Named Fiduciary may allocate its responsibilities for the
operation and administration of this Agreement, including the designation of
persons who are not named fiduciaries, to carry out all or a portion of its
responsibilities under the Agreement. The Named Fiduciary shall be responsible
for making timely delivery of any required premiums under the Policy to the
Insurer during the term of this Agreement. A copy of the Assignment and the
Policy has been provided to Employee and the Trust on behalf of the Trust upon
the execution of this Agreement.
16. Claims Procedure. Any person claiming a benefit under the Agreement
(a "Claimant") shall present the claim in writing to the Board and the Board
shall respond thereto in writing in accordance with this Section 16. If a claim
is wholly or partially denied, notice of the decision shall be furnished to the
Claimant within 60 days after receipt of the claim by the Board,
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SCHULTE INVESTMENT TRUST
unless special circumstances require an extension of time for processing the
claim, in which case a decision shall be rendered as soon as possible, but in no
event later than 120 days after receipt of the claim. Written notice of the
extension shall be furnished to the Claimant prior to the termination of the
initial 60-day period, and shall indicate the circumstances requiring the
extension and the date by which the Board expects to render its decision. The
notice of the decision shall contain the specific reason or reasons for the
denial of the claim, specific references to pertinent provisions of the
Agreement on which the denial is based, a description of any additional material
or information necessary for the Claimant to perfect the claim, an explanation
of why such additional material or information is necessary and an explanation
of the Agreement's claims review procedure. If notice of the denial is not
furnished in accordance with the above procedure, the claim shall be deemed
denied and the Claimant shall be permitted to proceed with the review procedure.
A Claimant or his duly authorized representative may appeal the denial of a
claim by making a written application to the Board requesting a review. The
Claimant or his duly authorized representative may, in connection with the
appeal, review pertinent documents and submit issues and comments to the Board
in writing. The request for a review of a denied claim must be made to the Board
within 60 days after receipt by the Claimant of written notification of denial
of a claim. A decision by the Board shall be made no later than 60 days after
its receipt of a request for a review, unless special circumstances require an
extension of time for processing the request, in which case a decision shall be
rendered as soon as possible, but in no event later than 120 days after receipt
of the request for review. If such an extension of time for review is required,
written notice of the extension shall be furnished to the Claimant prior to the
commencement of the extension. The decision on review shall be in writing and
shall include specific reasons for the decision and specific references to the
pertinent provisions of the Agreement on which the decision is based. If the
decision on review is not furnished within the appropriate time, the claim shall
be deemed denied on review. All interpretations, determinations, and decisions
by the Board in respect of any matter hereunder will be final, conclusive, and
binding upon the Board, the Trustee, the Employee, beneficiaries, and all other
persons claiming any interest under the Agreement.
17. Arbitration. If a Claimant has completed the claims procedures set
forth in Section 16 and decides to pursue his claim further, the Claimant shall
comply with the following procedures:
(a) The exclusive remedy or method of resolving all disputes
or questions arising out of or relating to this Agreement shall be arbitration.
Arbitration shall be held in Houston, Texas by three arbitrators, one to be
appointed by the Board, a second to be appointed by the Claimant, and a third to
be appointed by those two arbitrators. The third arbitrator shall act as
chairman. Any arbitration may be initiated by the Claimant by written notice to
the Board specifying the subject of the requested arbitration and appointing the
Claimant's arbitrator ("Arbitration Notice").
(b) If (i) the Board fails to appoint an arbitrator by written
notice to the Claimant within ten days after the Arbitration Notice is given, or
(ii) the two arbitrators appointed by the parties herein fail to appoint a third
arbitrator within ten days after the date of
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SCHULTE INVESTMENT TRUST
the appointment of the second arbitrator, then the American Arbitration
Association in Houston, Texas, upon application of the Claimant shall appoint an
arbitrator to fill that position.
(c) The arbitration proceeding shall be conducted in
accordance with the rules of the American Arbitration Association. A
determination or award made or approved by at least two of the arbitrators shall
be the valid and binding action of the arbitrators. The costs of arbitration
(exclusive of the expense of a party in obtaining and presenting evidence and
attending the arbitration and of the fees and expense of legal counsel to a
party, all of which shall be borne by that party) shall be borne by the Board if
the Claimant receives substantially the relief sought by the Claimant in the
arbitration, whether by settlement, award, or judgment; otherwise, the costs
shall be borne equally by the parties. The arbitration determination or award
shall be final and conclusive on the parties, and judgment upon such award may
be entered and enforced in any court of competent jurisdiction.
18. Amendment of Agreement. This Agreement shall not be amended except
by mutual written agreement between the Trustee and the Corporation which shall
be signed by such parties.
19. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Corporation and its successors and assigns and the Trust and its
successors and assigns.
20. Notice. Whenever any notice is required or permitted under this
Agreement, such notice must be in writing and personally delivered or sent by
registered or certified mail. Any notice required or permitted to be delivered
under this Agreement shall be deemed to be delivered on the date which it is
personally delivered, or, actually received at the address which such person has
previously specified by written notice to the other. Until changed in accordance
with this Agreement, the Corporation and the Trust specify their respective
addresses as set forth below:
Corporation: NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Employee: Karen Rene Rosales, Trustee
Schulte Investment Trust
-----------------------------------
Houston, Texas
21. Insurer Not a Party. The Insurer shall not be deemed to be a party
to this Agreement for any purpose, but it is the intent of the parties that the
Insurer pay amounts under the Policy in accordance with the terms of the
Assignment and this Agreement. The Insurer shall be fully discharged from any
and all liability under the terms of the Policy upon payment or other
performance of its obligations in accordance with the terms of the Policy and
the terms of this Agreement.
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SCHULTE INVESTMENT TRUST
22. Applicable Law. This Agreement shall be subject to and shall be
construed under the laws of the State of Texas unless superseded by federal law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
13th day of October, 1998, effective as of October 13, 1998, the Company acting
by and through its duly authorized officers and the Trustee acting on behalf of
the Trust.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
-------------------------------------------
Title: Vice President and CFO
----------------------------------------
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT Page 7
SCHULTE INVESTMENT TRUST
EXHIBIT 10.13
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT FOR
THE BENEFIT OF _________________________
This Management Incentive Trust Agreement is made effective the 8th day
of May, 1998, by and among MBCI Operating, L.P., a Texas Limited Partnership and
Metal Coaters Operating, L.P., a Texas Limited Partnership (hereinafter referred
to as "MBCI"), and NationsBank of Texas, N.A. (hereinafter referred to as
"Trustee").
WITNESSETH
WHEREAS, MBCI has adopted a Management Incentive Scheme (hereinafter
referred to as the "Plan"), an executed copy of which is attached hereto as
Exhibit "A" and hereby incorporated by reference, in which certain employees
have been allowed to participate; and
WHEREAS, MBCI has designated _________________________, as a
Participant under the Plan; and
WHEREAS, MBCI has incurred or expects to incur liability under the
terms of such Plan; and
WHEREAS, MBCI desires to establish an irrevocable grantor trust
(hereinafter referred to as the "Trust"), and shall transfer to such Trust
certain assets which shall be held therein for the purposes and under the
direction and constraints contained in this document, until such time as they
may be distributed under the Plan; and
WHEREAS, it is the intention of MBCI to transfer and contribute assets
to the Trust under the Plan, for the Trustee to act as a repository for and to
safeguard such assets, and, the Trustee is willing to act as Trustee under the
terms of this document and hold such assets for the purposes herein contained;
and
WHEREAS, MBCI shall appoint one or more of its employees to act as the
Trust and Plan Recordkeeper (hereafter referred to as the "Recordkeeper") to
perform such accounting and administrative services as are required by this
Trust and the Plan, and further is willing to provide said services under the
direction and requirements of this Trust or the Plan;
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein, the parties do hereby establish this Trust, agree to be bound
by and operate under the terms of this Trust Agreement, and further agree that
the assets of the Trust shall be held, administered, accounted for and
distributed under the terms and conditions enumerated herein, as follows:
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
SECTION 1. ESTABLISHMENT OF TRUST
A. MBCI hereby agrees to deposit with Trustee in trust the sum of
exactly _________________________ ($_______________), in cash, in kind, or in
other forms to be administered and together with all income and accumulations to
be disposed of as provided in this Trust Agreement, which shall become the
principal and disposed of by Trustee as provided in this Trust Agreement.
Neither Trustee nor any Plan Participant or beneficiary shall have any right to
compel any additional deposits.
B. The Trust hereby established is irrevocable by MBCI subject to the
terms and conditions of the Plan.
C. The Trust is intended to be a grantor trust, of which MBCI is the
grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
D. The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of MBCI and shall be used exclusively for
the uses and purposes of Plan Participants and general creditors as herein set
forth. Plan Participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan(s) and this Trust Agreement shall be mere unsecured
contractual rights of Plan Participants and their beneficiaries against MBCI.
Any assets held by the Trust will be subject to the claims of MBCI's general
creditors under federal and state law in the event of Insolvency, as defined in
Section 3A herein.
SECTION 2. PAYMENTS FOR THE BENEFIT OF PLAN
PARTICIPANTS AND THEIR BENEFICIARIES.
A. Annual Earnings. The Trustee shall retain, for the benefit of each
Plan Participant, all of the annual earnings of the Trust.
1. All retained, undistributed earnings shall be accumulated
with and become a part of the undistributed corpus of the Trust.
B. Vested Portion. During the term of this Trust and the Plan, MBCI may
deliver to the Trustee a schedule directing the Trustee to distribute all of the
corpus and earnings of the Trust to MBCI for the benefit of the Participant.
Upon receipt of such instruction, the Trustee shall distribute the amount
indicated by MBCI to MBCI for the benefit of the Participant. MBCI shall pay to
_________________________ all distributions of earnings in excess of the amount
required to be withheld and paid to taxing authorities. MBCI shall make
provision for the reporting and withholding of any federal, state or local taxes
that may be required to be withheld with respect to the payment of the vested
portion and shall pay amounts withheld to the appropriate taxing authorities.
MBCI shall, upon request from the Trustee, provide verification that such
amounts have been reported, withheld and paid by MBCI or the Participant.
2
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
C. The entitlement of a Plan Participant or his or her beneficiaries to
benefits under the Plan(s) shall be determined by MBCI or such party as it shall
designate under the Plan(s), and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan(s).
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS
TO TRUST BENEFICIARY WHEN MBCI IS INSOLVENT.
A. Trustee shall cease payment for the benefit of Plan Participant and
his beneficiaries if MBCI is Insolvent. MBCI shall be considered "Insolvent" for
purposes of this Trust Agreement if (1) MBCI is unable to pay its debts as they
become due, or (2) MBCI is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code.
B. At all times during the continuance of this Trust, the principal and
income of the Trust shall be subject to claims of general creditors of MBCI
under federal and state law as set forth below:
1. The Chief Executive Officer of MBCI shall have the duty to
inform Trustee in writing of Company's Insolvency. If a person claiming to be a
creditor of MBCI alleges in writing to Trustee that MBCI has become Insolvent,
Trustee shall determine whether MBCI is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits to Plan
Participants or their beneficiaries.
2. Unless Trustee has actual knowledge of MBCI's Insolvency,
or has received notice from MBCI or a person claiming to be a creditor alleging
that MBCI is Insolvent, Trustee shall have no duty to inquire whether MBCI is
Insolvent. Trustee may in all events rely on such evidence concerning MBCI's
solvency as may be furnished to Trustee and that provides Trustee with a
reasonable basis for making a determination concerning MBCI's solvency.
3. If at any time Trustee has determined that MBCI is
Insolvent, Trustee shall discontinue payments for the benefit of Plan
Participant or his beneficiaries and shall hold the assets of the Trust for the
benefit of MBCI's general creditors. Nothing in this Trust Agreement shall in
any way diminish any rights of Plan Participant or his beneficiaries to pursue
their rights as general creditors of MBCI with respect to benefits due under the
Plan(s) or otherwise.
4. Trustee shall resume the payment of benefits for the
benefit of Plan Participant or his beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
C. Provided that there are sufficient assets, if Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3B hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due for the
benefit of Plan Participant or his beneficiaries under the terms of the Plan(s)
for the period of such discontinuance, less the aggregate amount of any payments
made
3
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
to Plan Participant or his beneficiaries by MBCI in lieu of the payments
provided for hereunder during any such period of discontinuance.
SECTION 4. INVESTMENT AUTHORITY
A. In no event may Trustee invest in securities (including stock or
rights to acquire stock) or obligations issued by MBCI or any entity owning all
or part of MBCI; provided, however, that the Trustee may invest in the 9 1/4%
senior subordinated notes due 2009 issued by NCI Building Systems, Inc, a
Delaware corporation and ultimate parent company of the Company. All rights
associated with assets of the Trust shall be exercised by Trustee or the person
designated by Trustee, and shall in no event be exercisable or rest with MBCI or
the Plan Participant.
B. Subject to the exception in Paragraph A above, investments of the
Trust funds, including principal and earned and undistributed income, shall be
made by the Trustee in accordance with the instructions delivered to the
Trustee, in writing, by an officer designated, in writing, by the board of
directors of NCI Operating Corp., a Nevada corporation, which is the general
partner of MBCI.
SECTION 5. ACCOUNTING BY TRUSTEE
Trustee shall keep accurate and detailed records of all earnings,
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
MBCI and Trustee. Within thirty (30) days following the close of each calendar
quarter and within thirty (30) days after the removal or resignation of Trustee,
Trustee shall deliver to MBCI a written account of its administration of the
Trust during such year or during the period from the close of the last preceding
year to the date of such removal or resignation, setting forth all earnings,
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.
SECTION 6. RESPONSIBILITY OF TRUSTEE
A. Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims, provided, however, that Trustee shall incur
no liability to any person for any action taken pursuant to a direction, request
or approval given by MBCI which is contemplated by, and in conformity with, the
terms of the Plan(s) or this Trust and is given in writing by MBCI. The Trustee
shall not be liable to the Trust or to any person having a beneficial interest
in the Trust for any losses or decline in value which may be incurred in any
investment of the Trust, so long as the Trustee acts, without negligence, in
good faith and in accordance with the terms of this
4
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
Trust Agreement. In the event of a dispute between MBCI and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
B. If Trustee undertakes or defends any litigation arising in
connection with this Trust, MBCI agrees to indemnify Trustee against Trustee's
costs, expenses and liabilities (including, without limitation, attorneys' fees
and expenses) relating thereto and to be primarily liable for such payments.
However, MBCI's obligations to indemnify Trustee for its costs, expenses and
liabilities (including, without limitation, attorneys' fees and expenses) shall
be expressly conditioned upon a timely, written notification of a claim
submitted by Trustee to MBCI with the express understanding and agreement that
upon receipt from MBCI of its written statement of intention to accept the claim
for indemnification, MBCI shall have the sole right to retain counsel to
prosecute or defend the claim and shall, thereafter, have no obligation to the
Trustee, for its costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) incurred by Trustee. Additionally, MBCI's
obligations to indemnify Trustee are conditioned upon Trustee's full cooperation
in the defense of any claim tendered for indemnification.
C. Trustee may, at its expense, consult with legal counsel (who may
also be counsel for MBCI generally) with respect to any of its duties or
obligations hereunder.
D. Trustee may, at its expense, hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder.
E. Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
Trustee shall have no power to name a beneficiary of the policy other than the
Trust, to assign the policy (as distinct from conversion of the policy to a
different form) other than to a successor Trustee, or to loan to any person the
proceeds of any borrowing against such policy.
F. Notwithstanding any powers granted to Trustee pursuant to this Trust
Agreement or to applicable law, Trustee shall not have any power that could give
this Trust the objective of carrying on a business and dividing the gains
therefrom, within the meaning of Section 201.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 7. COMPENSATION AND EXPENSES OF TRUSTEE
A. Trustee shall be entitled to a reasonable and customary fee for
serving as Trustee.
B. Any and all expenses, costs or fees, incurred by the Trustee in the
administration of this Trust or in its capacity as Trustee hereunder, shall be
borne wholly by the Trustee without charge to or reimbursement from MBCI, the
Trust or any person having a beneficial interest in
5
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
the Trust or its assets. The fee payable to the Trustee, which may upon
agreement of MBCI and the Trustee be from time-to-time adjusted, shall be the
only sums due and payable to the Trustee.
SECTION 8. RESIGNATION AND REMOVAL OF TRUSTEE
A. Trustee may resign at any time by written notice to MBCI, which
shall be effective thirty (30) days after receipt of such notice unless MBCI and
Trustee agree otherwise.
B. Trustee may be removed by MBCI on thirty (30) days notice or upon
shorter notice accepted by Trustee.
C. Upon an event of Termination of the Plan or an event of Good Reason,
both of which are defined in the Plan, Trustee may not be removed by MBCI for
two (2) years.
D. If Trustee resigns or is removed in accordance with the terms of
this Trust Agreement, MBCI shall appoint a successor Trustee.
E. Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within thirty (30) days after receipt
of notice of resignation, removal or transfer and the appointment of a successor
Trustee, unless MBCI extends the time limit.
F. Notwithstanding anything to the contrary contained in 9B or 9E
above, if MBCI removes the Trustee because of Trustees failure to act in
accordance with the Terms of this Trust Agreement, the applicable notice period
and time for delivery of records and assets shall be shortened to ten (10) days.
G. If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 9 hereof, by the effective date of resignation or
removal in accordance with the terms of this Trust Agreement. If no such
appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
SECTION 9. APPOINTMENT OF SUCCESSOR.
A. If Trustee resigns [or is removed] in accordance with the terms of
this Trust Agreement, MBCI may appoint any third party, such as a bank trust
department or other party that may be granted corporate trust powers under state
law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by MBCI or the successor Trustee to
evidence the transfer.
6
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
SECTION 10. AMENDMENT OR TERMINATION
A. This Trust Agreement may be amended by a written instrument executed
by Trustee and MBCI. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan(s), provided, however, that any such
amendment or reformation shall be void to the extent that it adversely affects
the Participants in the Plan as a group; and
B. The Trust shall not terminate until the date on which Plan
Participants and their beneficiaries are no longer entitled to benefits pursuant
to the terms of the Plan(s). Upon termination of the Trust any assets remaining
in the Trust, after all distributions to Plan Participants, shall be returned to
MBCI.
C. Upon written approval of Participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan(s), MBCI may terminate
this Trust prior to the time all benefit payments under the Plan(s) have been
made. All assets in the Trust at termination shall be returned to MBCI.
SECTION 11. MISCELLANEOUS
A. Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
B. Benefits payable to Plan Participants and their beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
C. This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
D. If this Trust Agreement conflicts, or is held or deemed to conflict,
with any of the terms of the Plan, the terms of the Plan shall control and this
Trust Agreement shall be automatically amended to the extent necessary to remove
or resolve the conflict. The Trustee acknowledges that it has received a copy of
the Plan, as currently constituted, and agrees to promptly provide the Trustee
with all amendments to the Plan as soon as possible after their adoption.
E. In the event any section of this document shall become in fact or by
operation of law illegal or ineffective, it shall become a nullity without
invalidating the remaining sections. To the extent permitted by law, no benefits
under this Trust shall be subject to assignment, attachment, garnishment, levy,
execution or other legal process. No benefit, with the exception of an obvious
error, actually paid to any beneficiary shall be subject to reclaim by either
the Trustee or MBCI.
7
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
F. The headings, subheadings and paragraph identifiers are provided for
convenience only and as such are not part of this Trust Agreement. This Trust
may be executed in multiple counterparts, each of which shall constitute an
original of this instrument.
G. Any notice to any party required by this instrument shall be in
writing, signed by the party giving notice, and shall be effective seven (7)
days after it is deposited, deemed given the United States Mail, postage paid,
return receipt requested, to the last known address of the party to whom the
notice need be given.
SECTION 12. EFFECTIVE DATE
The effective date of this Trust Agreement shall be May 8, 1998.
SECTION 13. DUTIES OF THE RECORDKEEPER
A. The Recordkeeper shall keep and maintain detailed records of each
Plan Participant's account. With respect to the individual account of each Plan
Participant, the Recordkeeper shall provide to MBCI and each Participant a
report on an annual basis which details the contributions, distributions,
changes in specific assets, cost and fair market value of assets, and earnings
thereon, which occurred during the calendar year. The report shall be
distributed within thirty (30) days after the end of each calendar year.
B. The Recordkeeper shall, upon notice from MBCI that benefits are due
to any Participant under the Plan, calculate the amount and notify the Trustee
in a timely manner so the Trustee may distribute the benefit due. Upon
notification to the Trustee and confirmation of payment from the Trustee, the
Recordkeeper shall charge the account of the Participant accordingly.
C. The Recordkeeper shall make its books, records and calculations open
and available for inspection by any Participant at all reasonable times and upon
reasonable notice; provided, however, that each Participant shall only be
entitled to inspect the books, records and calculations which pertain to that
Participant's individual account.
D. The Recordkeeper shall prepare filings required by the Internal
Revenue Service and any other federal, state or local government agency relating
to the Trust.
E. If MBCI utilizes the services of a third-party recordkeeper, then a
copy of the agreement with such recordkeeper shall be provided to Trustee.
8
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
EXECUTED ON THIS 8TH DAY OF MAY, 1998.
METAL COATERS OPERATING, L.P. MBCI OPERATING, L.P.
BY: /s/ Kenneth W. Maddox BY: /s/ Kenneth W. Maddox
------------------------------ --------------------------------
Printed Printed
Name: Kenneth W. Maddox Name: Kenneth W. Maddox
---------------------------- ------------------------------
Title: Vice President/CFO Title: Vice President/CFO
--------------------------- -----------------------------
NATIONSBANK OF TEXAS, N.A.
BY: /s/ Dennis A. Young
--------------------------------
Printed
Name: Dennis A. Young
------------------------------
Title: Senior Vice President
-----------------------------
ACCEPTED BY:
, Participant
9
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
MANAGEMENT INCENTIVE TRUST AGREEMENT
FOR THE BENEFIT OF _________________
EXHIBIT 10.14
MBCI OPERATING, L.P. AND
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT
INCENTIVE PLAN
ARTICLE I -
PURPOSE AND DEFINITIONS
SECTION 1.01: PURPOSE.
It is the purpose of the Plan to ensure the continuation of a stable,
senior management team necessary to assure and accomplish continued and dynamic
growth for the Company and to focus the attention of senior management on all
details of the consolidated operations of the Company including operating
profits and the costs of providing the working capital and fixed capital needs
of the Company.
SECTION 1.02: DEFINITIONS.
The following terms shall have the meanings indicated for the purposes
of the Plan.
a) "Annual Realized Earnings" shall mean those earnings of the Trust
other than unrealized appreciation in value of assets.
b) "Beneficiary" shall mean the person(s) or entity(ies) designated by
the Participant, in writing, to receive any remaining unpaid amounts to which
the Participant is entitled hereunder at the time of the Participant's death or
disability. In the event that the Participant fails to so designate a
Beneficiary, the Participant's estate shall be the Beneficiary.
c) "Change in Control" shall mean (i) the sale of all or substantially
all of the assets of the Company or any division thereof for which the
Participant has managerial responsibility, or (ii) the sale of 50% or more of
the partnership interests in or capital stock of the Company or any subsidiary
of the Company for which the Participant has managerial responsibility; unless
such sale is to another person or entity within the Organization, or (iii) a
change in voting control of NCI Building Systems, Inc.
d) "Company" shall mean MBCI Operating, L. P. and Metal Coaters, L.P.
(each of which are Texas limited partnerships) considered together as a
consolidated or single entity, and their respective successors and assigns.
e) "Contribution" shall mean the sum of exactly
________________________ Dollars and _________________ Cents ($__________) which
is being contributed to the Plan on a one-time basis by the Company on the
Effective Date.
MBCI OPERATING, L.P. AND Page 1
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
f) "Deferral Period" shall mean the period during which payment of the
Earned Award is deferred, beginning with the Anniversary and ending with the
Maturity Date.
g) "Earned Value" shall mean the Contribution and all appreciation and
undistributed accumulated earnings on the Contribution.
h) "Earned Value Account" shall mean the separate account for each
Participant with respect to such Participant's Earned Value.
i) "Effective Date" shall mean the effective date of the Plan, being
May 8, 1998.
j) "Executive" shall mean any common law employee of the Company, its
subsidiaries or divisions, who is a member of executive or senior management.
k) "Good Cause" shall mean:
1) the Executive's commission of an act involving fraud,
embezzlement or a felony; or
2) the repeated refusal or failure by the Executive, after
receiving written notice specifying the refusal or failure, to follow
the lawful directives of the Organization; or
3) the Executive's gross dereliction of duties to the
Organization or its affiliates, which continues after the Executive
receives written notice specifying which duties are at issue; or
4) the commission by the Executive of an act involving moral
turpitude which causes a material harm to the customer relations,
operations and business practices of the Organization or any of its
affiliates; or
5) a material breach by the Executive of any of the
Executive's agreements with the Organization, or any of its affiliates
which continues after receipt of specific written notice.
l) "Good Reason" shall exist if, without the Participant's express
written consent:
1) the Organization or the Company shall assign to the
Executive duties which materially change and diminish the Executive's
duties that the Executive was required to perform at the time that the
Executive becomes a Participant hereunder; or
2) the Organization or the Company shall, without the
Executive's consent, require the Executive to relocate the Executive's
principal business office outside the Executive's present state of
residency immediately prior to such action or assign the Executive
duties that would reasonably require such relocation; or
MBCI OPERATING, L.P. AND Page 2
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
3) the Organization or the Company materially and adversely
alters total compensation; or
4) the Organization or the Company violates, requires or
causes a Participant to violate any laws, regulations or ordinances
which cause the continuing viability of the Company or the Organization
to be in jeopardy; or
5) the Organization or the Company violates, requires or
causes a Participant to violate any material financial loan covenant of
its financing arrangements or agreements without obtaining a waiver or
consent from the lender(s) within ten (10) days from the violation; or
6) there occurs a Change in Control.
m) "Maturity Date" shall mean the date as of which a Participant's
Account first becomes payable under Section 2.04, unless accelerated as herein
stated. All valuations shall be made as of a Maturity Date.
n) "MBCI" shall mean MBCI Operating, L.P., a Texas limited partnership.
o) "NCI" shall mean NCI Building Systems, Inc., a Delaware corporation.
p) "Non-Competition Agreement" shall mean that certain Confidentiality,
Non-Competition and Non-Solicitation Agreement, dated as of May 1, 1998, between
and among NCI and each of the Participants.
q) "Organization" shall mean the Company and/or its parent, affiliates
or subsidiaries, collectively or individually.
r) "Participant" shall mean the individuals referred to on Schedule 1
attached hereto and incorporated by reference each of whom is a Participant
under the Plan.
s) "Permanently Disabled" shall mean a condition resulting from bodily
injury or disease or mental disorder such that the Participant is prevented from
performing the Participant's principal duties of employment by the Company or
the Organization. A Participant shall be presumed to be Permanently Disabled if
the Participant qualifies to receive Social Security disability benefits
(totally and permanently disabled) or if the Participant qualifies to receive
initial disability benefits under any long-term disability benefit plan
maintained by the Company or the Organization. In the event the Participant does
not qualify for either such benefit, MBCI, in its sole discretion and based upon
competent medical advice, nevertheless may determine that the Participant is and
continues to be Permanently Disabled; provided, however, a Participant shall not
be considered Permanently disabled under this definition until such condition
shall have continued uninterrupted for a period of six (6) months.
MBCI OPERATING, L.P. AND Page 3
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
t) "Permanently and Critically Disabled" shall mean a Permanent
Disability which is of such a character and nature that it renders the
Participant unable to manage his or her own financial affairs.
u) "Plan Year" shall mean the fiscal year of the Company, being the
period beginning November 1 and ending the following October 31.
v) "Plan" shall mean the MBCI Operating, L.P. and Metal Coaters, L.P.
Long-Term Management Incentive Plan as set forth herein and as amended from time
to time.
w) "Trust" shall mean the irrevocable trust arrangement established by
the Company to fund its obligations to pay the Earned Value to which a
Participant becomes entitled under Article II.
x) "Vesting Date" shall mean May 1, 2003.
ARTICLE II -
PARTICIPATION, EARNED VALUE AND PAYMENT
OF EARNED VALUE ACCOUNT
SECTION 2.01: PARTICIPATION.
In accordance with the Plan, the Company has selected certain
Executives to become Participants in the Plan. On the Effective Date, the
Participants shall be given a copy of the Plan with an Exhibit A attached
stating that Participant's percentage share of the total Contribution payable by
the Company.
SECTION 2.02: EARNED VALUE.
For each Plan Year, the Earned Value shall be calculated for each
Participant and reported to each Participant on an Earned Value Statement.
SECTION 2.03: EARNED VALUE ACCOUNT.
On or before May 8, 1998, an amount equal to the Participant's total
Contribution shall be deposited by the Company into the Trust for the benefit of
the Participant and shall be separately accounted for under the Participant's
Earned Value Account as set forth under Article III. During the Deferral Period,
the Earned Value Account shall be invested and reinvested by the Trustee in
accordance with Article III and the Trust. A separate Earned Value Account shall
be established and maintained for each Participant.
SECTION 2.04: PAYMENT OF EARNED VALUE ACCOUNT.
The Trustee shall retain for the benefit of a Participant, one hundred
percent (100%) of the Annual Realized Earnings of the Trust on a Participant's
Earned Value Account. The entire
MBCI OPERATING, L.P. AND Page 4
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
undistributed vested Earned Value Account of a participant shall be paid by the
Trustee, in cash in a single lump sum (unless the Trust holds an investment in
the 9 1/4% senior subordinated notes due 2009 (the "Notes") issued by NCI
Building Systems, Inc, a Delaware corporation and ultimate parent company of the
Company, in which case the Notes shall be distributed to the Participant in
kind) as soon as reasonably practicable following the Vesting Date with respect
thereto, but in no event later than thirty (30) days after the value of the
Earned Value Account has been determined; provided, however, that the
Participant on or before the last day of the calendar year immediately preceding
the calendar year in which benefits otherwise would become payable hereunder,
shall have the right to make a one-time irrevocable election to receive the
Earned Value Account over a two-year period as follows: (a) 50% of the Earned
Value Account on the first anniversary of the Vesting Date and (b) 100% of the
then remaining Earned Value Account on the second anniversary of the Vesting
Date. The Participant shall exercise this right by delivering to the Company and
the Trustee a written notice that states his election to defer the payment of
the Earned Value Account pursuant to the terms of this Section 2.04. The Company
shall proceed with the determination of the value of the Earned Value Account of
a Participant prudently and efficiently, in order to determine the amount
thereof that is to be paid at Maturity Date. Each Participant shall sign and
deliver to the Trustee and the Company a statement confirming that the
Participant has received the Earned Value that has been paid on the Maturity
Date.
SECTION 2.05: VESTING.
The Earned Value shall become 100% vested on the Vesting Date if, on
the Vesting Date:
a) The Participant is then and has, since the Effective Date,
continuously been employed by the Organization and has not, during such period,
breached or violated any of his covenants set forth in Sections 2 through 9 of
the Non-Competition Agreement; or
b) The Participant is not employed by the Organization but either:
1) the Participant terminated his employment for Good Reason
or
2) the employment of the Participant terminated as a result of
his being Permanently Disabled, and
the Participant has not breached or violated any of his covenants set forth in
Sections 2 through 9 of the Non-Competition Agreement during the period from the
Effective Date until the Vesting Date.
Each Participant shall have ownership of such Participant's percentage share of
the total Earned Values, subject to the vesting provisions of this Plan. Any and
all Earned Values which do not become 100% vested shall be forfeited and revert
to the Company.
MBCI OPERATING, L.P. AND Page 5
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
SECTION 2.06: CERTAIN TERMINATIONS.
Any of the foregoing to the contrary notwithstanding, in the event the
Participant's employment is terminated by the Company without Good Cause, or
where it is by reason of either the Participant's death or Participant's
becoming Permanently and Critically Disabled, any unmatured Deferral Period
shall be deemed to have reached its Maturity Date immediately upon such
termination and the corresponding Earned Value Account shall be 100% vested and
paid in accordance with Section 2.04. In the event that a Participant is
terminated for Good Cause, the Participant shall immediately cease participation
in the Plan, with such Participant's Earned Value being forfeited to the
Company.
SECTION 2.07: CHANGE IN CONTROL.
Any of the foregoing to the contrary notwithstanding, in the event that
a Change in Control occurs, any unmatured Deferral Period shall be deemed to
have reached its Maturity Date immediately prior thereto and the corresponding
Earned Value Accounts shall be paid in accordance with Section 2.04, regardless
of the Participant's employment status.
SECTION 2.08: BENEFICIARY.
In the event of the Participant's death prior to the Maturity Date, all
unpaid amounts in the Earned Value Account or Trust shall be paid to the
Beneficiary in the same manner as they would have been paid to the Participant.
ARTICLE III -
FUNDING
SECTION 3.01: ESTABLISHMENT OF TRUST.
The Company has established a Trust for the purpose of formally funding
the Company's obligations to pay the Earned Value Account.
SECTION 3.02: TRUST DEPOSITS.
The Company shall deposit with the Trustee pursuant to the Trust an
amount equal to each Earned Value of each Participant. Such deposits shall be
separately accounted for by the Trustee with respect to each Participant and
with respect to each Earned Value, under the Earned Value Account(s).
SECTION 3.03: TRUST INVESTMENT.
The Trustee shall invest and reinvest the deposits under Section 3.02
in the manner provided under the Trust.
MBCI OPERATING, L.P. AND Page 6
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
SECTION 3.04: PAYMENTS BY TRUSTEE.
The Trustee shall pay the Earned Value Account(s) of each Participant
at such time and in such manner as provided under Article II and the terms of
the Trust.
SECTION 3.05: WAIVER AND INDEMNIFICATION.
The partners, directors and employees of the Organization, and the
Company and each entity comprising a part of the Organization, are hereby
indemnified and held harmless from any and all claims, liabilities, judgments or
costs, including reasonable attorneys fees, which may be asserted or incurred
arising out of their action or inaction in adopting and administering this Plan
or in the investment of all Earned Values other than damage or loss occasioned
by intentional wrongdoing or intentional malfeasance. This indemnity shall
include all costs of defense, including attorneys fees, as they are incurred.
Each Participant in executing this Plan and accepting any benefits hereunder
hereby WAIVES ANY AND ALL CLAIMS, LIABILITIES, RIGHT TO SUE OR DEMANDS AGAINST
ANY PARTNER, DIRECTOR OR EMPLOYEE OF THE ORGANIZATION OR THE COMPANY OR ANY
OTHER ENTITY COMPRISING A PART OF THE ORGANIZATION ARISING OUT OF ANY ACTION OR
INACTION IN ADOPTING OR ADMINISTERING THIS PLAN AND HEREBY AGREES THAT THIS
WAIVER IS A VOLUNTARY RELINQUISHMENT OF THE RIGHTS OF THE PARTICIPANT TO ASSERT
A CLAIM, ENFORCE LIABILITY, OR MAKE DEMAND FROM THE PARTNERS, DIRECTORS OR
EMPLOYEES OF THE ORGANIZATION OR THE COMPANY OR ANY OTHER ENTITY COMPRISING A
PART OF THE ORGANIZATION. This waiver shall not constitute or be construed to be
a waiver of any claim, liability, right to sue or demand against the Trustee
selected by the Company.
ARTICLE IV -
PLAN ADMINISTRATION
SECTION 4.01: AUTHORITY OF MBCI.
MBCI shall administer the Plan.
SECTION 4.02: DELEGATION.
MBCI may, in its sole discretion, delegate any duties hereunder to an
officer or employee (or committee thereof) of the Organization or the Company,
who shall serve in such capacity at its pleasure.
SECTION 4.03: RECORDS AND RULES.
The Company shall keep written records sufficient to reflect the
identity of Participants, and the Earned Values. The Company shall adopt such
rules as it shall deem reasonable and appropriate to the administration of the
Plan.
MBCI OPERATING, L.P. AND Page 7
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
ARTICLE V -
MISCELLANEOUS PROVISIONS
SECTION 5.01: EMPLOYMENT AND OTHER RIGHTS.
Nothing contained herein shall require the Company or the Organization
to continue any Participant or Executive in the Company's or Organization's
employ, or require any Participant or Executive to continue in the employ of the
Company or Organization, nor does the Plan create any rights of any Participant,
Executive or Beneficiary or any obligations on the part of the Company or
Organization other than those set forth herein. The benefits payable under this
Plan shall be independent of, and in addition to, any other agreements that may
exist from time to time concerning any other compensation or benefits payable by
the Company or the Organization; provided, however, all amounts paid or payable
to a Participant (or Beneficiary) under the Plan shall be excluded for purposes
of calculating the benefit or other entitlement of any person under any other
employee benefit or compensation plan, program, practice, or policy maintained
by the Company or the Organization.
SECTION 5.02: NON-ALIENATION OF BENEFITS.
Except as otherwise provided by law, no benefit, payment or
distribution under this Plan shall be subject either to the claim of any
creditor or a Participant or Beneficiary, or to attachment, garnishment, levy,
execution or other legal or equitable process, by any creditor of such person,
and no such person shall have any right to alienate, commute, anticipate, or
assign (either at law or equity) all or any portion of any benefit, payment or
distribution under this Plan. The Plan shall not in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements, or torts of any
person entitled to benefits hereunder.
In the event that any Participant's or Beneficiary's benefits are
garnished or attached by order of any court, the Company or Organization may
elect to bring an action for a declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be paid by the
Plan. During the pendency of said action, any benefits that become payable may
be paid into the court as they become payable, to be distributed by the court to
the recipient as it deems proper at the close of said action.
SECTION 5.03: WITHHOLDING AND DEDUCTIONS.
All payments made by the Trustee under the Plan to any Participant or
Beneficiary shall be subject to applicable withholding and to such other
deductions as shall at the time of such payment be required under any income tax
or other law, whether of the United States or any other jurisdiction, and, in
the case of payments to a Beneficiary, the delivery to the Trustee of all
necessary waivers, qualifications and other documentation.
The Company shall withhold, from the Earned Value, all applicable state
and Federal tax under any income tax or other law, whether of the United States
or any other jurisdiction, unless
MBCI OPERATING, L.P. AND Page 8
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
the Participant provides to the Company the required form indicating an
exemption from such withholding.
SECTION 5.04: AMENDMENT AND TERMINATION.
The Plan may be terminated or amended at any time by MBCI, in its sole
discretion, subject to the following limitations:
a) In the event of any Plan termination, or in the event of an
amendment which shall adversely affect the right, title or interest of the
Participant (or Beneficiary) with respect to such Earned Value Account, any
unmatured Deferral Period shall be deemed to have reached its Maturity Date on
the date of such termination or amendment, and the Earned Value Account shall
thereupon be paid in accordance with Section 2.04.
b) Any of the foregoing to the contrary notwithstanding, in the event
of a Plan termination or amendment as described under item (a) above, where the
Organization provides a replacement of the terminated Plan or adversely affected
portion thereof of equivalent value, the Maturity Date with respect to any then
unmatured Deferral Period shall not be accelerated as provided under said items
but shall occur on its originally scheduled date.
SECTION 5.05: CONSTRUCTION.
In the construction of the Plan, the masculine shall include the
feminine and the singular the plural in all cases where such meanings would be
appropriate.
SECTION 5.06: CONTROLLING LAW.
The law of the State of Texas shall be the controlling state law in all
matters relating to the Plan and shall apply to the extent that it is not
preempted by the laws of the United States of America.
SECTION 5.07: EFFECT OF INVALIDITY OF PROVISION.
If any provision of this Plan is held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof, and
this Plan shall be construed and enforced as if such provision had not been
included.
SECTION 5.08: INUREMENT.
This Plan shall be binding upon and inure to the benefit of the
Organization and its successors and assigns and the Participant and any
Beneficiary, or their successors, heirs, executors, administrators and
beneficiaries.
MBCI OPERATING, L.P. AND Page 9
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
EXECUTION
IN WITNESS WHEREOF, the Company hereby adopts this Plan by causing this
Plan to be signed by its duly authorized officers this 8th day of May, 1998.
MBCI OPERATING, L.P. AND Page 10
METAL COATERS OPERATING, L.P.
LONG-TERM MANAGEMENT INCENTIVE PLAN
EXHIBIT 13
[NCI BUILDING SYSTEMS, INC. LOGO]
[NCI PICTURE]
2002 ANNUAL REPORT
[NCI BUILDING SYSTEMS, INC. LOGO]
A&S [LOGO] ABC [LOGO] AAS [LOGO]
CLASSIC [LOGO] DBCI [LOGO] DOUBLECOTE [LOGO]
IPS [LOGO] MBCI [LOGO]
MIDLAND
MESCO [LOGO] METALLIC [LOGO] METALS [LOGO]
METAL COATERS METAL COATERS
OF CALIFORNIA, INC. [LOGO] OF GEORGIA [LOGO] METAL PREP [LOGO]
MID-WEST STEEL [LOGO] STEEL SYSTEMS [LOGO]
PLANT LOCATIONS
[MAP]
[PICTURE OF ANNUAL REPORT COVER]
ON THE COVER: Payton Construction of Boston built Campanelli Stadium in
Brockton, MA. Steel was supplied by Barnes Buildings & Management Group, a
Metallic Builder.
Photos(C) 2002. Courtesy of Warren Patterson Photography. Used by permission.
NCI TODAY
o One of the largest producers of engineered metal building systems.
o The largest producer/distributor of components for building construction.
o The largest supplier of metal roofs in a multi-billion dollar roofing
industry.
o A leading provider of metal and painting services.
o An industry leader in growth, profitability and innovation.
o A low-cost supplier.
BUSINESS DESCRIPTION
CONTINUED SUCCESS
NCI Building Systems is one of the largest manufacturers and marketers of metal
building components and engineered metal building systems in North America. NCI
offers one of the most metal product lines in the building industry,
well-recognized brand names.
Through internal growth and strategic acquisitions, the company has compiled a
record of revenue earnings growth well above the industry average. NCI is a
leader in each of its key markets.
The Company is benefiting from a larger customer base, broader product lines,
expanded geographic distribution, and increased manufacturing capacity. NCI's
long term targets are 10% annual revenue 15% earnings growth and 25% return on
assets based on its sound growth strategy and a relatively stable economic
environment.
SELECTED FINANCIAL DATA
FISCAL YEAR 1993 1994 1995 1996 1997 1998(1) 1999 2000 2001 2002
-------- -------- -------- -------- -------- -------- -------- ---------- -------- --------
Sales $134,506 $167,767 $234,215 $332,880 $407,751 $675,331 $936,550 $1,018,324 $954,877 $953,442
Income before
extraordinary
loss and
cumulative
effect 6,333 10,256 17,032 24,814 27,887 37,318(2,4) 45,578(4) 44,407(4) 16,535(2,4) 32,122(4)
Income before
extraordinary
loss and
cumulative
effect per
diluted
share(3) .48 .77 1.26 1.51 1.64 2.05(2,4) 2.39(4) 2.43(4) .91(2,4) 1.72(4)
Working
Capital 15,511 16,885 31,687 51,958 76,746 58,393 59,254 56,913 49,461 80,157
Total Assets 46,733 63,373 83,082 158,326 196,332 823,537 856,367 868,921 838,812 721,265
Long-Term
Debt
(Noncurrent
portion) 1,899 326 278 1,730 1,679 444,477 397,062 374,448 321,250 291,050
Shareholders'
Equity(5) $ 28,655 $ 39,682 $ 57,682 $116,175 $147,815 $223,612 $275,994 $ 305,280 $330,343 $303,459
Average
Common Shares
(Assuming
dilution)(3) 13,156 13,390 13,530 16,455 17,085 18,192 19,100 18,286 18,265 18,692
(1) 1998 data includes the acquisition of MBCI in May 1998.
(2) Includes restructuring charges of $2.1 million ($1.3 million after tax, or
$0.07 per diluted share) in 1998; and $2.8 million ($1.8 million after
(3) Share and per share data adjusted for effect of 3/2 stock split in October
1993 and 2/1 Goodwill stock split amortization of $5.9 million, $10.9
million, $10.6 million and $11.2 million (net of tax effect), or $0.32,
$0.57,in July 1998.
(4) share, is included in income before extraordinary loss and cumulative
effect of change in accounting principal in fiscal 1998, 1999, 2000 and
2001. Goodwill is no longer amortized beginning in fiscal 2002 in 3 to the
Consolidated Financial Statements for additional information.
(5) Historically, the Company has not paid dividends.
SHAREHOLDER LETTER
[PICTURE]
FELLOW SHAREHOLDERS...
[NCI BUILDING SYSTEMS LOGO]
Any investor looking at the Selected Financial Data inside the front cover
of this annual report would probably reach the conclusion that fiscal 2002 was a
very good year for NCI in which we achieved a noteworthy improvement in
operating earnings compared with fiscal 2001. We would agree with that summary,
but the year-to-year gain actually does not give fair credit to our performance
when viewed against the competitive backdrop of perhaps the most difficult
environment in recent memory for the metal construction industry.
SHAREHOLDER LETTER 1
[BAR GRAPH]
TEN YEAR SALES
(IN MILLIONS)
Certainly, the recent demand for construction materials has been
challenging; but fiscal 2002 was a year that began with clear signs of a
recession and ended without much, if any, sustained improvement in the general
tone of incoming orders. It was a year in which industry shipments were off by
at least 10%, a decline that was sufficient to cause a number of our competitors
to report losses and to force some to downsize and cutback their production and
selling activities to conserve cash and in some cases, just to survive.
KEY COMPETITIVE ADVANTAGES HIGHLIGHTED
We were not immune to the pressures that this slowdown created, but NCI
has some fundamental advantages that enabled us to offset these forces and still
show an increase in operating earnings, admittedly with revenues that were
essentially unchanged from fiscal 2001. Those basic attributes that played such
a pivotal role in our strong relative performance included the following:
o A decentralized organization focused on delivering consistently high
customer service and operating as cost efficiently as possible.
o A nationwide network of plants and distribution centers designed to
minimize transportation costs and place NCI close to our major markets.
o An integrated manufacturing process, including coil painting and coating,
that provides not only significant, incremental profits but also valuable
flexibility to meet demanding delivery schedules.
o The broadest line of metal construction products available from any single
company, enabling us to be a single-source supplier for an extremely wide
range of customers.
o Competitive leadership in marketing both entire systems for metal
buildings as well as metal components used in repair and modernization
projects and in new construction.
o A record of innovation in introducing new products that have enhanced the
intrinsic advantages of metal construction techniques versus conventional
building processes.
o A strong financial position with cash flow well in excess of our ongoing
capital spending needs.
NCI's competitive advantages position us to provide meaningful value to
our customers and were especially important in our ability to achieve sustained
profitability during fiscal 2002. We started the fiscal year with indications
that the recession in the non-residential building industry was going to persist
for at least several quarters. That indeed proved to be the case even after we
entered spring 2002 when the seasonal factors that typically stimulate an
increased pace of construction were not sufficient to reverse the slide in the
industry figures. Still, we achieved a record for the year that included
year-to-year gains in diluted earnings per share in each of the last three
quarters. The required adoption of SFAS No. 142, a new accounting standard
relating to the amortization of goodwill, did contribute to our bottom-line
growth from a year ago; but even excluding that factor, we achieved higher
earnings per share in each of those three periods versus the comparable
year-earlier results. Even in the fourth quarter with revenues down 6 percent,
we were aided by the cost reduction steps taken and reported a recovery in
operating earnings per diluted share to $0.62 versus $0.29 in the fourth quarter
of fiscal 2001.
RESOURCE REALLOCATION AND EXPANSION CONTRIBUTE TO EARNINGS IMPROVEMENT
During fiscal 2002 we realized further benefits
2 NCI BUILDING SYSTEMS, INC. o 2002 ANNUAL REPORT
SHAREHOLDER LETTER
during the industrywide slowdown to rationalize as a result of our efforts to
rationalize capacity and lower operating expenses. This was not the typical
downsizing alternative that many companies have been forced to execute because
of the necessity of enhancing cash flow. For NCI, it was a series of actions
intended...to realign our resources, gain more operating efficiency and improve
customer service. We were careful to communicate to customers that this was not
a retrenchment from any market but rather an opportunity, while incoming orders
were soft, to shift certain equipment to other facilities and rationalize our
operating scope by closing five of our then-40 facilities. In some areas where
we closed a plant, our sales for fiscal 2002 were actually up from the prior
year, affirming our intent to use this program to aid, not impede, our growth.
In terms of operating efficiency, the facility changes implemented did lower
costs and generate higher economies of scale. This was particularly noticeable
in our coil painting line that serves not only NCI, but other customers as well.
Having the capacity to paint and coat coil steel has proven to be a very
important investment for NCI, enabling us to avoid an outsourcing process for
others which significantly complicates their ability to guarantee delivery
schedules.
We also took advantage of our financial position to expand our geographical
scope by opening a new components plant during the third fiscal quarter in Big
Rapids, Michigan. This is an attractive area for our business where we already
had established a marketing presence through shipments from other plants. Having
a facility there is allowing us to offer improved customer service and thereby
increase our penetration. This expansion is contributing positively to our
growth. Against the backdrop of plant closures and operational cutbacks by
others, this step also underscores our enthusiasm for the metal construction
industry and the competitive edge our strong balance sheet affords us to expand
selectively and economically, in this case by purchasing an existing building
and moving available manufacturing equipment into it.
COMPONENTS COMPLEMENT METAL SYSTEMS AND FACILITATE CUSTOMER GROWTH
The addition of a strong metal components business four years ago through the
acquisition of Metal Buildings Components, Inc. (MBCI) is continuing to prove a
substantial positive assist to our overall marketing program. The benefit of
being able to sell metal components to the market for repair and renovation
projects has been especially helpful during the downturn in the pace of new
construction that we are currently experiencing. We are also using this product
breadth, which ranges from the largest steel structures to individual metal roof
and wall components, to expand our customer base. Our business, like most, is
one in which the best accounts are successful at least in part because they have
a strong, well-established team of suppliers. At the same time, there are always
opportunities to start new relationships. For fiscal 2002 as a whole, we added a
significant number of new component customers and a 13% increase in new
builders. We were coming off strong momentum from this same type of sales effort
in fiscal 2001 and are very gratified with this ongoing trend that includes
promising penetration with our national accounts program. The real significance
of this effort is not so much what the incremental business totaled in fiscal
2002. Rather, we are optimistic about what the increasing business with these
new accounts will mean to future sales. If we are successful in delivering
value, NCI will supply more of these needs and increase our sales regardless of
what the overall industry trends may be.
[BAR GRAPH]
SHAREHOLDERS' EQUITY
(IN MILLIONS)
SHAREHOLDER LETTER 3
POSITIVE CASH FLOW FUNDS FURTHER DEBT REDUCTION
One of our key strategic goals for fiscal 2002 was to use our positive
cash flow to reduce our debt further, while still funding the projects necessary
to support future operations. We successfully reduced our debt by $70 million in
fiscal 2002, following a reduction of $50 million in fiscal 2001. Borrowings at
the close of the fiscal year were $297 million, equivalent to a reasonable
debt-to-capital ratio of 49%. It is significant to note that our debt is down
from $368 million at the end of fiscal 2001 and has declined 47% from $558
million in fiscal 1998, only four years ago. We should generate at least $50
million in free cash flow during fiscal 2003, providing options for managing our
balance sheet and ensuring our flexibility to seize any business opportunities
that satisfy our acquisition criteria and add to our long-term potential.
FURTHER IMPROVEMENTS EXPECTED IN FISCAL 2003
As was the case a year ago, we face an uncertain, near-term outlook for
non-residential construction spending. The upside leverage in our operating
structure compounds the difficulty in translating any macro-economic picture
into one for NCI. The 41% gain in diluted earnings per share in the fourth
quarter of fiscal 2002, excluding the extraordinary loss on debt refinancing and
the effect of SFAS No. 142, underscores how quickly that leverage can translate
into significant year-to-year gains. One should especially note that the fourth
quarter gain was achieved on 6% lower sales from the prior year, reflecting
primarily the cost savings we realized from various actions during the year. We
certainly remain positive about NCI's longer term potential and expect to
participate fully in any sustained recovery in commercial construction. Our best
guide for investors regarding annual earnings is that we believe our success in
maintaining a low-cost operating structure and our active marketing programs
should enable us in the next few years to achieve record yearly earnings, above
the $2.39 per diluted share we attained as recently as three years ago. This is
not a realistic target for fiscal 2003, but we believe it is definitely
attainable at some future point for NCI.
In closing, we would like to note that within the climate of new standards
being promulgated for certification of financial statements, NCI's goal has
always been to provide clear, straightforward and accurate guidance
simultaneously to all investors.
Finally, we would like to extend a sincere "thank you" to our
shareholders, customers and our suppliers for your continued support. And, of
course, thank you to the employees within NCI who were challenged by a year that
was truly unlike any other that they have experienced while being a part of this
Company. They responded well in a difficult environment, and we are very pleased
with the high level of confidence and commitment that is being openly expressed
within NCI about our potential for further recovery and for setting new highs in
sales and income in the years ahead. Growth is indeed an integral part of the
NCI culture, and we fully share this optimism about our longer term potential!
/s/ A. R. Ginn /s/ Johnie Schulte, Jr.
A. R. Ginn Johnie Schulte, Jr.
Chairman of the Board President and Chief Executive Officer
4 NCI BUILDING SYSTEMS, INC. o 2002 ANNUAL REPORT
COMPANY REVIEW
[PICTURE]
THE IMPORTANCE OF CHANGE
[NCI BUILDING SYSTEMS, INC. LOGO]
Virtually all companies affirm the importance of change, and many even embrace
that concept by stating it explicitly in their corporate mission statements. At
NCI change is a way of life. From an adjustment in the US interest rates to a
new regime in a foreign land, the economic and political winds of change
continually create new scenarios for American business. The evolution of the NCI
business paradigm prompts the implementation of new procedures and new products
to keep NCI on course for growth. Our history tells that story. We have embraced
the concept of change and established open avenues of discussion for better ways
to conduct business at NCI.
COMPANY REVIEW 5
[PICTURE]
6 NCI BUILDING SYSTEMS, INC. o 2002 ANNUAL REPORT
COMPANY REVIEW
[PICTURES]
NCI, a leader in the well-established, multi-billion dollar metal
construction industry, has a record embracing change as a positive force. We too
certainly struggle with identifying where change should occur and at times with
implementing new processes, but we have not been reluctant to take steps that
included a number of significant acquisitions, the introduction of new products
and a realignment of facilities and personnel to have the strongest team
possible. Founded as a marketer of complete systems for metal buildings, we are
now one of the largest suppliers in the metal construction industry with a
comprehensive product line covering not only systems for buildings exceeding one
million square feet in size, but also a full line of metal components used for
metal roof and wall systems, overhead doors and various trim accessories. Our
growth through internal expansion as well as strategic acquisitions has included
the addition of capacity for coating and painting metal coils that serves all of
our needs and is marketed to other companies as well. NCI's integrated
manufacturing operations provide a distinct competitive advantage over most of
our competitors, reducing our costs and providing valuable flexibility for us to
meet customers delivery requirements, regardless of how demanding they may be.
One of the newly popular corporate maxims is total quality management
where a business recognizes that the standards to be regarded as important are
those set by its customers and not by its own strategic planners. This is not a
new concept at NCI. We have long held that delivering a consistently high level
of customer service was the vital factor in the equation for long-term growth
and financial success. We work hard to listen to our customers who frequently
identify new market niches which we can enter through innovative products. Our
ability to respond to these needs, however, depends on several critical
attributes including the following:
ONE-STOP SHOPPING
With the broadest array of steel construction products, we provide "one-
stop shopping" for anyone in the steel construction market. Our goal is
delivering value; namely, providing consistently high quality products at
competitive prices with dependable service. "Value" is an easy word to state but
a deceptively difficult concept to execute.
COMPANY REVIEW 7
[PICTURE]
8 NCI BUILDING SYSTEMS, INC. o 2002 ANNUAL REPORT
COMPANY REVIEW
[PICTURES]
At NCI we recognize price as an important factor, but are committed to
building relationships with our customers that recognize the role of other
variables such as product innovation, consistent quality and dependable shipping
schedules. We are proud of the long-term business dealings we have developed
with some of the nation's largest builders who recognize that we must generate a
sufficient return on our investments to allow us to support their very growth by
maintaining modern facilities, up-to-date information systems and a record of
product innovations.
NATIONWIDE MARKET COVERAGE
Our 35 manufacturing plants and distribution centers provide virtually
nationwide market coverage for both our metal components and metal building
systems products. During fiscal 2002 we shifted resources within our plants to
generate higher economies of scale and still maintain the same high level of
market service. We were one of the few companies in our industry to expand
during this period. Through our new metal components facility in Michigan, we
are increasing our share in that market in a move that strongly reinforces our
confidence in the additional growth potential of the overall metal construction
market.
METAL COIL COATING/PAINTING AND INTEGRATION
As we have grown, one of our goals has been to become vertically
integrated by adding capacity to the areas that play a major role in the
production of our products. One of the most important of these areas is the
coating and painting of light gauge steel coils. Although building such capacity
requires a considerable investment, we have successfully added sufficient
manufacturing equipment to meet our own needs and to market these services to
others. We allocate a majority of our capacity to meet NCI's own requirements;
and by owning our coating/painting assets, we can better control our inventories
and meet customers' delivery needs. During fiscal 2002, we shifted certain
equipment to gain higher economies of scale from our coating/painting equipment
and were rewarded by a positive contribution to earnings from this portion of
our business. Having sufficient demand to operate these facilities continuously
is essential to achieving a positive return, and we
COMPANY REVIEW 9
[PICTURE]
10 NCI BUILDING SYSTEMS, INC. o 2002 ANNUAL REPORT
COMPANY REVIEW
[PICTURES]
believe that NCI's market position in coil painting and coating now affords us a
strong competitive position in this service area that will account for an
increasing share of our sales and earnings in the future.
MARKETING INNOVATION
Our history includes the introduction of numerous new products and
services that not only added incremental sales, but also expanded the basic use
of metal construction products. One of the best examples of this is the "pier
and header" technique introduced in fiscal 2001 for constructing self-storage
warehouses. The lower cost and added convenience of metal construction products
have been essential to the fast-growing popularity of these storage facilities,
and our proprietary system allows customers to erect these warehouses more
quickly and safely with features that allow more storage room. In the metal
components area, another good example of our innovation is our development of
processes to manufacture larger panels as well as insulated ones that make metal
buildings practical alternatives to panels built with conventional techniques in
colder geographic regions. During fiscal 2002, we added the ability to
manufacture these insulated panels with an acrylic-based, textured finish that
increases architectural appeal.
Other examples of NCI's drive to increase our market share include the
introduction of structural beams and trusses for large structures. As metal
continues to grow in popularity within the entire building industry, items such
as these beams and trusses will facilitate the construction of large buildings
such as major distribution centers and sports arenas. We entered the growing
market for entire, large-scale building systems through our Long Bay System,
first marketed three years ago. Although the recession has slowed the growth in
new construction of these facilities, most consider this a temporary pause in a
long-term record of growth. Our Long Bay System is supporting our national
accounts program, designed to build relationships between NCI and major
customers. We have long worked with a variety of builders and are confident
about the opportunity for us to gradually build a strong position in this market
niche.
COMPANY REVIEW 11
COMPANY REVIEW
[PICTURES]
CHANGING FOR THE FUTURE
Helping our employees realize their full potential is imperative to NCI's
future. We continue to emphasize the importance of ongoing training for all of
our managers and have more recently extended these classes to customers seeking
to learn more about using metal construction products. Although no one activity
or initiative ensures our future success as a corporation, investing in programs
that challenge our employees to do their best - and equipping them with the
tools to execute their responsibilities - is perhaps the best way to guarantee
that NCI will surmount its future challenges. Most analysts expect metal
products to continue accounting for an increasing share of the total market for
construction products. We concur with that assessment and have proven the
flexibility of the NCI organization not just to adapt to different market
conditions but to be a catalyst for change. We are indeed excited about the
longer term outlook for NCI.
[PICTURE]
12 NCI BUILDING SYSTEMS, INC o 2002 ANNUAL REPORT
Return on Assets is defined as operating
income divided by average operating assets
used in the business. NCI's management and
directors are thoroughly convinced that this
ratio is the best measure of operating
performance. Tight control over inventory,
receivables, and fixed investments is as
important as, and interrelated to, the
income statement. Return on Assets is a
proxy for cash flow, which can reward
shareholders with undiluted growth.
FINANCIAL REVIEW 13
CONSOLIDATED STATEMENTS OF INCOME
NCI BUILDING SYSTEMS, INC.
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Fiscal year ended... October 31, 2000 October 31, 2001 NOVEMBER 2, 2002
-------------------- ---------------- ---------------- ----------------
Sales ................................................................... $ 1,018,324 $ 954,877 $ 953,442
Cost of sales ........................................................... 761,702 741,674 740,577
-------------- -------------- --------------
Gross profit ...................................................... 256,622 213,203 212,865
Selling, general and administrative expenses ............................ 131,484 133,331 140,641
Goodwill amortization ................................................... 11,468 12,232 --
Restructuring charge .................................................... -- 2,815 --
-------------- -------------- --------------
Income from operations ............................................ 113,670 64,825 72,224
Interest expense ........................................................ (39,069) (33,090) (21,591)
Other income, net ....................................................... 2,672 951 1,459
-------------- -------------- --------------
Income before income taxes, extraordinary loss and
cumulative effect of change in accounting principle ............... 77,273 32,686 52,092
Provision for income taxes .............................................. 32,866 16,151 19,970
-------------- -------------- --------------
Income before extraordinary loss and cumulative
effect of change in accounting principle .......................... 44,407 16,535 32,122
Extraordinary loss on debt financing, net of tax ........................ -- -- (808)
Cumulative effect of change in accounting principle, net of tax ......... -- -- (65,087)
-------------- -------------- --------------
Net income (loss) ....................................................... $ 44,407 $ 16,535 $ (33,773)
============== ============== ==============
Income (loss) per share:
Basic:
Income before extraordinary loss and cumulative
effect of change in accounting principle .......................... $ 2.48 $ .91 $ 1.74
Extraordinary loss on debt refinancing, net of tax ................ -- -- (0.04)
Cumulative effect of change in accounting principle, net of tax ... -- -- (3.52)
-------------- -------------- --------------
Net income (loss) ................................................. $ 2.48 $ .91 $ (1.82)
============== ============== ==============
Diluted:
Income before extraordinary loss and cumulative
effect of change in accounting principle .......................... $ 2.43 $ .91 $ 1.72
Extraordinary loss on debt refinancing, net of tax ................ -- -- (0.04)
Cumulative effect of change in accounting principle, net of tax ... -- -- (3.49)
-------------- -------------- --------------
Net income (loss) .................................................. $ 2.43 $ .91 $ (1.81)
============== ============== ==============
See accompanying notes to the consolidated financial statements.
14 2002 ANNUAL REPORT
CONSOLIDATED BALANCE SHEETS
NCI BUILDING SYSTEMS, INC.
(IN THOUSANDS)
October 31, 2001 NOVEMBER 2, 2002
---------------- ----------------
ASSETS
Current assets:
Cash and cash equivalents ......................................................... $ 21,125 $ 9,530
Accounts receivable, net .......................................................... 107,981 94,956
Inventories ....................................................................... 72,464 68,445
Deferred income taxes ............................................................. 5,884 7,448
Prepaid expenses .................................................................. 5,553 6,129
-------------- --------------
Total current assets ......................................................... 213,007 186,508
Property, plant and equipment, net .................................................... 224,593 205,334
Excess of cost over fair value of acquired net assets ................................. 387,268 318,247
Other assets .......................................................................... 13,944 11,176
-------------- --------------
Total assets ................................................................. $ 838,812 $ 721,265
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ................................................. $ 46,250 $ 6,250
Accounts payable .................................................................. 72,426 49,012
Accrued compensation and benefits ................................................. 11,897 22,418
Other accrued expenses ............................................................ 32,973 28,671
-------------- --------------
Total current liabilities .................................................... 163,546 106,351
Long-term debt, noncurrent portion .................................................... 321,250 291,050
Deferred income taxes ................................................................. 23,673 20,405
Shareholders' equity:
Preferred stock, $1 par value, 1.0 million shares authorized, none outstanding .... -- --
Common stock, $.01 par value, 50.0 million shares authorized; 18.6 million
shares and 18.7 million shares issued in 2001 and 2002, respectively ......... 186 187
Additional paid-in capital ........................................................ 95,649 97,903
Retained earnings ................................................................. 239,461 205,688
Treasury stock; (0.3 million and 0.02 million
shares in 2001 and 2002, respectively), at cost ................................... (4,953) (319)
-------------- --------------
Total shareholders' equity ................................................... 330,343 303,459
-------------- --------------
Total liabilities and shareholders' equity ................................... $ 838,812 $ 721,265
============== ==============
See accompanying notes to the consolidated financial statements.
FINANCIAL REVIEW 15
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NCI BUILDING SYSTEMS, INC.
(IN THOUSANDS)
Common Additional Retained Treasury Shareholders'
Stock Paid-In Capital Earnings Stock Equity
---------- --------------- ---------- ---------- -------------
Balance, October 31, 1999 ................ $ 186 $ 97,289 $ 178,519 $ -- $ 275,994
Treasury stock purchases ................. -- -- -- (20,416) (20,416)
Proceeds from exercise
of stock options ..................... -- 122 -- -- 122
Treasury stock used for
stock option exercises ............... -- (843) -- 1,442 599
Tax benefit from stock option exercises .. -- 319 -- -- 319
Treasury stock used for contribution
to 401(k) plan ....................... -- 337 -- 3,918 4,255
Net income ............................... -- -- 44,407 -- 44,407
---------- --------------- ---------- ---------- -------------
Balance, October 31, 2000 ................ 186 97,224 222,926 (15,056) 305,280
Treasury stock purchases ................. -- -- -- (909) (909)
Treasury stock used for
stock option exercises ............... -- (3,219) -- 6,239 3,020
Tax benefit from stock option exercises .. -- 1,619 -- -- 1,619
Treasury stock issued for debt payment ... -- (48) -- 422 374
Treasury stock used for contribution
to 401(k) plan ....................... -- 73 -- 4,351 4,424
Net income ............................... -- -- 16,535 -- 16,535
---------- --------------- ---------- ---------- -------------
Balance, October 31, 2001 ................ 186 95,649 239,461 (4,953) 330,343
Treasury stock purchases ................. -- -- -- (175) (175)
Treasury stock used for stock
option exercises ..................... -- (1,007) -- 3,938 2,931
Tax benefit from stock option exercises .. -- 825 -- -- 825
Common stock issued for contribution
to 401(k) plan ....................... 1 2,435 -- -- 2,436
Treasury stock used for contribution
to 401(k) plan ....................... -- 1 -- 871 872
Net loss ................................. -- -- (33,773) -- (33,773)
---------- --------------- ---------- ---------- -------------
BALANCE, NOVEMBER 2, 2002 ................ $ 187 $ 97,903 $ 205,688 $ (319) $ 303,459
========== =============== ========== ========== =============
See accompanying notes to the consolidated financial statements.
16 2002 ANNUAL REPORT
CONSOLIDATED STATEMENTS OF CASH FLOWS
NCI BUILDING SYSTEMS, INC.
(IN THOUSANDS)
Fiscal year ended... October 31, 2000 October 31, 2001 NOVEMBER 2, 2002
-------------------- ---------------- ---------------- ----------------
Cash flows from operating activities:
Net income (loss) ........................................... $ 44,407 $ 16,535 $ (33,773)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Cumulative effect of change in accounting
principle, net of tax ................................... -- -- 65,087
Extraordinary loss on debt refinancing, net of tax ...... -- -- 808
Depreciation and amortization ........................... 33,487 36,646 24,928
(Gain) loss on sale of fixed assets ..................... (201) 166 (782)
Restructuring charge .................................... -- 2,815 --
Provision for doubtful accounts ......................... 2,645 2,396 2,743
Deferred income tax provision (benefit) ................. 1,494 (799) (895)
Changes in operating assets and liabilities,
net of effect of acquisitions:
Accounts, notes and other receivables ................... (7,403) 8,991 10,282
Inventories ............................................. (1,472) 16,181 4,019
Prepaid expenses ........................................ (2,056) 1,991 (576)
Accounts payable ........................................ 7,856 (6,149) (23,414)
Accrued expenses ........................................ (5,917) 2,921 11,330
---------------- ---------------- ----------------
Net cash provided by operating activities ................... 72,840 81,694 59,757
Cash flows used in investing activities:
Proceeds from sale of fixed assets ...................... 383 103 5,788
Proceeds from sale of joint venture ..................... -- 4,000 --
Acquisition of DOUBLECOTE, L.L.C ........................ (24,408) -- --
Acquisition of Midland Metals, Inc. ..................... -- (5,521) --
Changes in other noncurrent assets ...................... 2,780 145 (521)
Capital expenditures .................................... (28,885) (15,026) (9,175)
---------------- ---------------- ----------------
Net cash used in investing activities ....................... (50,130) (16,299) (3,908)
Cash flows used in financing activities:
Proceeds from stock options exercised ..................... 721 3,020 2,931
Net borrowings (payments) on revolving lines of credit .... 20,145 (6,938) (75,450)
Borrowings on long-term debt .............................. -- -- 125,000
Payments on long-term debt ................................ (36,250) (42,442) (119,750)
Purchase of treasury stock ................................ (20,416) (909) (175)
---------------- ---------------- ----------------
Net cash used in financing activities ....................... (35,800) (47,269) (67,444)
Net increase (decrease) in cash and cash equivalents ............ (13,090) 18,126 (11,595)
Cash at beginning of period ..................................... 16,089 2,999 21,125
---------------- ---------------- ----------------
Cash at end of period ........................................... $ 2,999 $ 21,125 $ 9,530
================ ================ ================
See accompanying notes to the consolidated financial statements.
FINANCIAL REVIEW 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NCI BUILDING SYSTEMS, INC.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Reporting Entity
These financial statements include the operations and activities of NCI Building
Systems, Inc. and its subsidiaries (the "Company") after the elimination of
intercompany accounts and balances. The Company designs, manufactures and
markets metal building systems and components primarily for non-residential
construction use. During 2002, the Company adopted a revised accounting calendar
which incorporates a four-four-five week calendar each quarter with year end on
the Saturday closest to October 31. The year end for fiscal 2002 is November 2,
2002.
(b) Revenue Recognition
The Company recognizes revenues when the following conditions are met:
persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, the price is fixed or determinable and collectibility is
reasonably assured. Generally, these criteria are met at the time product is
shipped or services are complete. Adequate provision is made, upon shipment, for
estimated product returns and warranties. Costs associated with shipping and
handling of products are included in cost of sales.
(c) Accounts Receivable and Related Allowance
The Company reports accounts receivable net of the allowance for doubtful
accounts of $3.9 million and $5.7 million at October 31, 2001 and November 2,
2002, respectively. Trade accounts receivable are the result of sales of
building systems and components to customers throughout the United States and
affiliated territories including international builders who resell to end users.
All sales are denominated in United States dollars. Credit sales do not normally
require a pledge of collateral; however, various types of liens may be filed to
enhance the collection process.
(d) Inventories
Inventories are stated at the lower of cost or market value, using specific
identification or the weighted-average method for steel coils and other raw
materials.
The components of inventory are as follows:
October 31, 2001 NOVEMBER 2, 2002
---------------- ----------------
(in thousands)
Raw materials ......................... $ 55,310 $ 49,064
Work in process and finished goods .... 17,154 19,381
---------------- ----------------
$ 72,464 $ 68,445
================ ================
During fiscal 2002, the Company purchased approximately 76% of its steel
requirements from National Steel Corporation, Bethlehem Steel Corporation and
U.S. Steel. No other steel supplier accounted for more than 8% of steel
purchases for the same period.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated using the
straight-line method over their estimated useful lives. Computer software
developed or purchased for internal use is depreciated using the straight-line
method over its estimated useful life.
Depreciation expense for the fiscal years ended 2000, 2001 and 2002 was $19.0
million, $22.4 million and $22.9 million, respectively.
Property, plant and equipment consist of the following:
October 31, 2001 NOVEMBER 2, 2002
---------------- ----------------
(in thousands)
Land .................................. $ 12,920 $ 11,700
Buildings and improvements ............ 113,918 111,991
Machinery, equipment and furniture .... 152,685 152,719
Transportation equipment .............. 4,008 3,679
Computer software and equipment ....... 31,552 32,325
---------------- ----------------
315,083 312,414
Less accumulated depreciation ......... (90,490) (107,080)
---------------- ----------------
$ 224,593 $ 205,334
================ ================
18 2002 ANNUAL REPORT
Estimated useful lives for depreciation are:
Buildings and improvements........................ .... 10-40 years
Machinery, equipment and furniture...................... 5-13 years
Transportation equipment................................ 3-10 years
Computer software and equipment.......................... 3-7 years
(f) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with an original maturity date of three months or less to be
cash equivalents. Total interest paid for the fiscal years ended 2000, 2001 and
2002 was $37.2 million, $29.9 million and $28.9 million, respectively. Income
taxes paid, including refunds and prepayments, for the years ended October 31,
2000, 2001 and November 2, 2002 was $42.9 million (of which $11.7 million
related to 1999, but was payable in 2000), $12.1 million (of which $4.5 million
related to 2000, but was payable in 2001) and $18.9 million (of which $3.5
million related to 2001, but was payable in 2002), respectively. Noncash
investing or financing activities included: $2.3 million for the 2000 401(k)
plan contributions through the third quarter of fiscal 2000, and $1.9 million
for the related 1999 contributions which were paid in common stock in 2000; $2.5
million for the 2001 401(k) plan contributions through the third quarter of
fiscal 2001, and $1.9 million for the related 2000 contributions which were paid
in common stock in 2001; $2.4 million for the 2002 401(k) plan contributions
through the third quarter of fiscal 2002, and $0.9 million for the related 2001
contributions which were paid in common stock in 2002.
(g) Goodwill
The Company reviews the carrying values of goodwill and identifiable intangibles
whenever events or changes in circumstances indicate that such carrying values
may not be recoverable and annually for goodwill as required by the Statement of
Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible
Assets. Unforeseen events, changes in circumstances and market conditions and
material differences in the value of intangible assets due to changes in
estimates of future cash flows could negatively affect the fair value of the
Company's assets and result in a non-cash impairment charge. Some factors
considered important which could trigger an impairment review include the
following: significant underperformance relative to expected historical or
projected future operating results, significant changes in the manner of the
Company's use of the acquired assets or the strategy for its overall business
and significant negative industry or economic trends. Fair value is the amount
at which the asset could be bought or sold in a current transaction between
willing parties and may be estimated using a number of techniques, including
quoted market prices or valuations by third parties, present value techniques
based on estimates of cash flow, or multiples of earnings or revenue performance
measures. The fair value of the asset could be different using different
estimates and assumptions in these valuation techniques. Refer to Note 3 for
additional discussion of the adoption of SFAS No. 142. (h) Use of Estimates The
preparation of financial statements in conformity with generally accepted
accounting principles requires management 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.
Examples include provisions for bad debts, inventory reserves, accruals for
employee benefits, warranties and certain contingencies. Actual results could
differ from those estimates.
(i) Advertising Costs
Advertising costs are expensed as incurred. Advertising expense was $3.1
million, $3.5 million and $2.5 million in fiscal 2000, 2001 and 2002,
respectively.
(j) Long-Lived Assets
Impairment losses are recognized when indicators of impairment are present and
the estimated undiscounted cash flows are not sufficient to recover the asset's
carrying amount. The impairment loss would be calculated as the amount by which
the carrying value of the asset exceeds its fair value. Assets held for disposal
are measured at the lower of carrying value or estimated fair value, less costs
to sell.
(k) Stock-Based Compensation
The Company uses the intrinsic value method in accounting for its stock-based
employee compensation plans.
(l) Reclassifications
Certain prior year amounts have been reclassified to conform to the current year
presentation.
(m) Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The Company adopted SFAS
No. 144 as of November 1, 2001, and the adoption of the statement did not have a
significant impact on the Company's financial position and results of
operations.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 will generally require gains and losses on extinguishments of debt
to be classified as income or loss from continuing operations rather than as
extraordinary items as previously required under SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt. Extraordinary treatment will be required for
certain extinguishments as provided in APB No. 30, Reporting the Results of
Operations. Accordingly, gains or losses from
FINANCIAL REVIEW 19
extinguishments of debt for fiscal years beginning after May 15, 2002 will not
be reported as extraordinary items unless the extinguishment qualifies as an
extraordinary item under the provisions of APB No. 30. Upon adoption, any gain
or loss on extinguishment of debt previously classified as an extraordinary item
in prior periods presented that does not meet the criteria of APB No. 30 for
such classification will be reclassified to conform with the provisions of SFAS
No. 145. During the fourth quarter of fiscal 2002, the Company refinanced their
debt and wrote off $1.2 million ($0.8 million after tax) of unamortized deferred
financing costs and classified the loss as an extraordinary item. Upon adoption
of SFAS No. 145, the Company will evaluate the appropriateness of income
statement classification of the loss.
In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS No. 146 nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS
No. 146 is effective for exit or disposal activities that are initiated after
December 31, 2002 with early application encouraged. The Company does not expect
that the adoption of the statement will have a significant impact on the
Company's financial position and results of operations.
During November 2002, the Emerging Issues Task Force ("EITF") reached a
consensus on EITF Issue 00-21, Multiple-Deliverable Revenue Arrangements, which
addresses how to account for arrangements that may involve the delivery or
performance of multiple products, services, and/or rights to use assets. The
final consensus will be applicable to agreements entered into in fiscal periods
beginning after June 15, 2003, with early adoption permitted. The Company does
not expect that the adoption will have a significant impact on the Company's
financial position and results of operations.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition to SFAS No. 123's fair value method of accounting for stock-based
employee compensation. While the Statement does not amend SFAS No. 123 to
require companies to account for employee stock options using the fair value
method, the disclosure provisions of SFAS No. 148 are applicable to all
companies with stock-based employee compensation, regardless of whether they
account for that compensation using the fair value method of SFAS No. 123 or the
intrinsic value method of APB No. 25, Accounting for Stock Issued to Employees.
The Company is currently evaluating whether to adopt the provisions of SFAS No.
148 relating to the SFAS No. 123 fair value method of accounting for stock-based
employee compensation.
2. LONG-TERM DEBT
October 31, 2001 NOVEMBER 2, 2002
---------------- ----------------
(in thousands)
Five-year revolving credit line with
banks bearing interest at rates of
30-day and 90-day LIBOR plus 1.375%
(weighted average interest rate of 4.9%
at October 2001), maturing on July 1,
2003 ..................................... $ 122,750 $ --
Five-year term loan payable to banks
bearing interest at a rate of 90-day
LIBOR plus 1.375% (4.0% at October 31,
2001) repayable beginning on October 31,
1998, in quarterly installments
beginning with $7.5 million and
gradually increasing to $12.5 million on
the maturity date, July 1,
2003 ..................................... 83,750 --
Term note payable to banks bearing
interest at a rate of 90-day LIBOR plus
1.375% (4.0% at October 31, 2001),
maturing on July 1, 2003 ................. 36,000 --
Five-year revolving credit line with
banks bearing interest at rates of
30-day and 90-day LIBOR plus 2.5%
(weighted average interest rate of 4.7%
at November 2, 2002), maturing on
September 15, 2007 ....................... -- 47,300
Six-year term loan payable to banks
bearing interest at a rate of 90-day
LIBOR plus 3.25% (5.1% at November 2,
2002) repayable beginning on December
31, 2002, in quarterly installments of
$1.6 million with a final payment of
$89.1 million on the maturity date,
September 15, 2008........................ -- 125,000
Unsecured senior subordinated notes
bearing interest at a rate of 9.25%,
maturing on May 1, 2009 .................. 125,000 125,000
---------------- ----------------
367,500 297,300
Current portion of long-term debt ........ (46,250) (6,250)
---------------- ----------------
$ 321,250 $ 291,050
================ ================
Aggregate required principal reductions are as follows for the respective fiscal
years (in thousands):
On September 15, 2002, the Company had a senior credit facility with a syndicate
of banks, which consisted of (i) a five-year revolving credit facility of up to
$200 million (outstanding balance of $83.8 million at September 15, 2002), (ii)
a five-year term loan facility in the original principal amount of $200 million
(outstanding balance of $50.0 million at September 15, 2002) and (iii) a $40
million term note (outstanding balance of $34.1 million at September 15, 2002).
20 2002 ANNUAL REPORT
On September 16, 2002, the Company completed a $250 million senior secured
credit facility with a group of lenders and used the initial borrowings to repay
in full the then existing credit facility. The new facility includes a $125
million, five-year revolving loan maturing on September 15, 2007 and a $125
million, six-year term loan maturing on September 15, 2008. The term loan
requires mandatory prepayments of $1.6 million each quarter beginning in
December 2002 with a final payment of $89.1 million at maturity.
The new senior credit facility is secured by security interests in (1) accounts
receivable, inventory and equipment and assets related thereto such as related
software, chattel paper, instruments and contract rights of the Company
(excluding foreign operations) and (2) 100% of the capital stock and other
equity interests in each of the direct and indirect operating domestic
subsidiaries of the Company.
The new senior credit agreement includes covenants which, among other things,
limit certain debt ratios and require minimum interest coverage and the
maintenance of a minimum net worth. The new senior credit agreement also limits
the amount of permitted spending for capital additions, the repurchase of stock,
payment of dividends, the disposition of assets and the amount of investments
and other indebtedness.
Borrowings under the new senior credit facility may be prepaid and the voluntary
reduction of the unutilized portion of the five-year revolver may be made at any
time, in certain amounts, without premium or penalty but subject to LIBOR
breakage costs. The Company is required to make mandatory prepayments on the new
senior credit facility upon the occurrence of certain events, including the sale
of assets and the issuance and sale of equity securities, in each case subject
to certain limitations. These prepayments must first be applied to the term loan
and then to reduction of the revolving commitment. The Company also is required
to reduce the capacity of the revolver by $25 million if it issues an additional
series of its senior subordinated notes due May 1, 2009, and in any event by
December 31, 2005.
Loans on the new senior credit facility bear interest, at the Company's option,
as follows: (1) base rate loans at the base rate plus a margin that fluctuates
based on the Company's leverage ratio and ranges from 1.0% to 1.75% on the
revolving loan and from 2.0% to 2.25% on the term loan and (2) LIBOR loans at
LIBOR plus a margin that fluctuates based on the Company's leverage ratio and
ranges from 2.0% to 2.75% on the revolving loan and from 3.0% to 3.25% on the
term loan. Base rate is defined as the higher of Bank of America, N.A. prime
rate or the overnight Federal Funds rate plus 0.5% and LIBOR is defined as the
applicable London interbank offered rate adjusted for reserves.
In addition, the Company has outstanding $125 million of unsecured senior
subordinated notes, which mature on May 1, 2009. The notes bear interest at
9.25%. The indenture governing the Company's senior subordinated notes includes
covenants which, among other things, limit the repurchase of stock, the payment
of cash dividends, the disposition of assets and the amount of investments and
other indebtedness.
As a result of the September 16, 2002 refinancing of the senior credit facility,
unamortized deferred financing costs of $1.2 million ($0.8 million after tax
effect of $0.4 million) were written off during the fourth quarter of fiscal
2002. At October 31, 2001 and November 2, 2002, the remaining unamortized
balance in deferred financing costs was $5.9 million and $5.8 million,
respectively.
At November 2, 2002, the Company had approximately $75 million in unused
borrowing capacity (net of outstanding letters of credit of $3 million) under
the new senior credit facility, of which a total of $20 million could be
utilized for standby letters of credit.
At November 2, 2002, the fair value of the Company's long-term debt, based on
current interest rates and quoted market prices was $297.8 million, compared
with the carrying amount of $297.3 million.
3. ADOPTION OF SFAS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS"
Effective November 1, 2001, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets, which prohibits the amortization of goodwill and intangible
assets with indefinite useful lives. SFAS No. 142 requires that these assets be
reviewed for impairment at least annually. Intangible assets with finite lives
will continue to be amortized over their estimated useful lives.
In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, the Company historically
evaluated goodwill for impairment by comparing the entity level unamortized
balance of goodwill to projected undiscounted cash flows, which did not result
in an indicated impairment. SFAS No. 142 requires that goodwill be tested for
impairment at the reporting unit level upon adoption and at least annually
thereafter, utilizing a two-step methodology. The initial step requires the
Company to determine the fair value of each reporting unit and compare it to the
carrying value, including goodwill, of such unit. If the fair value exceeds the
carrying value, no impairment loss would be recognized. However, if the carrying
value of the reporting unit exceeds its fair value, the goodwill of this unit
may be impaired. The amount, if any, of the impairment would then be measured in
the second step. The Company determined the fair value of each reporting unit by
using a combination of present value and multiple of earnings valuation
techniques and compared it to each reporting unit's carrying value. The Company
completed the first step during
FINANCIAL REVIEW 21
the second quarter which indicated that goodwill recorded in the metal building
components segment was impaired as of November 1, 2001. Due to the potential
impairment, the Company then completed step two of the test to measure the
amount of the impairment. Based on that analysis, a transitional impairment loss
of $67.4 million ($65.1 million after tax effect of $2.3 million) was recognized
as a cumulative effect of a change in accounting principle.
The following tables reflects the Company's comparative income before the
cumulative effect of the change in accounting principle and goodwill
amortization under SFAS No. 142 (in thousands):
Fiscal year ended... October 31, 2000 October 31, 2001 NOVEMBER 2, 2002
-------------------- ---------------- ---------------- ----------------
Reported income before cumulative effect of
change in accounting principle(1) .............. $ 44,407 $ 16,535 $ 31,314
Add back: Goodwill amortization, net of tax .... 10,565 11,229 --
---------------- ---------------- ----------------
Adjusted income before cumulative effect of
change in accounting principle ................. 54,972 27,764 31,314
Cumulative effect of change in accounting
principle, net of tax .......................... -- -- (65,087)
---------------- ---------------- ----------------
Adjusted net income (loss) ..................... $ 54,972 $ 27,764 $ (33,773)
================ ================ ================
Basic income (loss) per share:
Reported income before cumulative effect of
change in accounting principle(1) .............. $ 2.48 $ .91 $ 1.70
Add back: Goodwill amortization, net of tax ... .59 .62 --
---------------- ---------------- ----------------
Adjusted income before cumulative effect of
change in accounting principle ................. 3.07 1.53 1.70
Cumulative effect of change in accounting
principle, net of tax .......................... -- -- (3.52)
---------------- ---------------- ----------------
Adjusted net income (loss) ..................... $ 3.07 $ 1.53 $ (1.82)
================ ================ ================
Diluted income (loss) per share:
Reported income before cumulative effect of
change in accounting principle(1) .............. $ 2.43 $ .91 $ 1.68
Add back: Goodwill amortization, net of tax .... .58 .61 --
---------------- ---------------- ----------------
Adjusted income before cumulative effect of
change in accounting principle ................. 3.01 1.52 1.68
Cumulative effect of change in accounting
principle, net of tax .......................... -- -- (3.49)
---------------- ---------------- ----------------
Adjusted net income (loss) ..................... $ 3.01 $ 1.52 $ (1.81)
================ ================ ================
(1) For fiscal year ended November 2, 2002, reported income before cumulative
effect of change in accounting principle includes an extraordinary loss on debt
refinancing of $1.2 million ($0.8 million after tax) or $0.04 per diluted share.
Refer to Note 2 for further discussion of the debt refinancing.
The following table displays the changes in the carrying amount of goodwill by
operating segment for the fiscal year ended November 2, 2002 (in thousands):
(2) Allocation refers to the reclassification of goodwill from corporate to the
engineered building systems segment and metal buildings components segment. SFAS
No. 142 requires the review of prior acquisitions to determine reasonableness of
goodwill. Prior to adoption of SFAS No. 142, goodwill resulting from
acquisitions was considered on a consolidated basis.
(3) Other refers to a purchase accounting adjustment to goodwill associated with
a contingency that was resolved during fiscal 2002 relating to a specifically
identified deferred tax asset from a prior acquisition.
22 2002 ANNUAL REPORT
4. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Taxes on income from
continuing operations consist of the following:
Fiscal year ended... October 31, 2000 October 31, 2001 NOVEMBER 2, 2002
---------------- ---------------- ----------------
(in thousands)
Current
Federal ................ $ 28,501 $ 15,319 $ 18,821
State .................. 2,871 1,631 2,044
---------------- ---------------- ----------------
Total current .......... 31,372 16,950 20,865
Deferred
Federal ................ 1,378 (734) (833)
State .................. 116 (65) (62)
---------------- ---------------- ----------------
Total deferred ......... 1,494 (799) (895)
---------------- ---------------- ----------------
Total provision ........ $ 32,866 $ 16,151 $ 19,970
================ ================ ================
The reconciliation of income tax computed at the United States federal statutory
tax rate to the effective income tax rate is as follows:
Fiscal year ended... October 31, 2000 October 31, 2001 NOVEMBER 2, 2002
---------------- ---------------- ----------------
Statutory federal
income tax rate ........ 35.0% 35.0% 35.0%
State income taxes ........ 2.7% 3.1% 2.5%
Non-deductible
goodwill amortization .. 4.1% 10.1% --
Other ..................... 0.7% 1.2% 0.8%
---------------- ---------------- ----------------
Effective tax rate ........ 42.5% 49.4% 38.3%
================ ================ ================
Significant components of the Company's deferred tax liabilities and assets are
as follows:
October 31, 2001 NOVEMBER 2, 2002
---------------- ----------------
(in thousands)
Deferred tax assets:
Inventory ........................... $ 1,095 $ 1,627
Bad debt reserve .................... 1,371 1,992
Accrued insurance reserves .......... 1,764 2,624
Warranty reserve .................... 1,050 1,405
Restructuring and impairment ........ 1,042 617
Accrued and deferred compensation ... 715 1,393
Other reserves ...................... 569 568
---------------- ----------------
Total deferred tax assets .............. 7,606 10,226
Deferred tax liabilities:
Depreciation and amortization ....... 22,094 21,061
Other ............................... 3,301 2,122
---------------- ----------------
Total deferred tax liabilities ......... 25,395 23,183
---------------- ----------------
Net deferred tax liability ............. $ (17,789) $ (12,957)
================ ================
Other accrued expenses include accrued income taxes of $1.1 million at October
31, 2001 and $2.1 million at November 2, 2002.
5. OPERATING LEASE COMMITMENTS
Total rental expense incurred from operating non-cancelable leases for the
fiscal years ended 2000, 2001 and 2002 was $7.0 million, $7.3 million and $6.9
million, respectively. Aggregate minimum required annual payments on long-term
operating leases at November 2, 2002 were as follows for the respective fiscal
years (in thousands):
In June 1998, the Board of Directors adopted a Shareholders' Rights Plan in
which one preferred stock purchase right ("Right") was declared as a dividend
for each common share outstanding. Each Right entitles shareholders to purchase,
under certain conditions, one one-hundredth (1/100th) of a share of newly
authorized Series A Junior Participating Preferred Stock at an exercise price of
$62.50. Rights will be exercisable only if a person or group acquires beneficial
ownership of 20% or more of the common shares or commences a tender or exchange
offer, upon consummation of which such person or group would beneficially own
20% or more of the common shares. In the event that a person or group acquires
20% or more of the common shares, the Rights enable dilution of the acquiring
person's or group's interest by providing for a 50% discount on the purchase of
common shares by the non-controlling shareholders.
The Company will generally be entitled to redeem the Rights at $0.005 per Right
at any time before a person or group acquires 20% or more of the common shares.
Rights will expire on June 24, 2008, unless earlier exercised, redeemed or
exchanged.
7. SHAREHOLDERS' EQUITY
On November 3, 1999, the Company's Board of Directors authorized the repurchase
of 1.0 million shares of the Company's common stock, and an additional 1.5
million shares on November 7, 2000. Subject to applicable federal securities
law, such purchases occur at times and in amounts that the Company deems
appropriate. No time limit was placed on the duration of the repurchase program.
Shares
FINANCIAL REVIEW 23
repurchased are reserved primarily for later re-issuance in connection with the
Company's stock option and 401(k) profit sharing plans. As of November 2, 2002,
the Company had repurchased 1.3 million shares of its common stock for $21.5
million since the inception of the repurchase program in November 1999.
Changes in treasury common stock, at cost, were as follows:
Number of Shares Amount
---------------- ------------
(in thousands)
Balance, October 31, 2000 ................ 893 $ 15,056
Purchases ............................. 63 909
Issued in exercise of stock options ... (370) (6,239)
Issued for debt payment ............... (25) (422)
Issued in 401(k) contributions ........ (260) (4,351)
--------------- ------------
Balance, October 31, 2001 ................ 301 4,953
Purchases ............................. 12 175
Issued in exercise of stock options ... (240) (3,938)
Issued in 401(k) contributions ........ (53) (871)
--------------- ------------
BALANCE, NOVEMBER 2, 2002 ................ 20 $ 319
=============== ============
8. STOCK OPTION PLAN
The Board of Directors has approved an employee stock option plan under which
both statutory and non-statutory options may be granted. All options granted
through November 2, 2002 are non-statutory options. This plan permits the future
granting of stock options as an incentive and reward for key management
personnel. At October 31, 2001 and November 2, 2002, a total of 1.4 million
shares and 1.0 million shares, respectively, were available under this plan for
the future grant of options. Shares subject to options that expire or terminate
without exercise become available for further grants of options. Options expire
ten years from date of grant. Generally, the right to acquire the option shares
is earned in 25% increments over the first four years of the option period.
Stock option transactions during 2000, 2001 and 2002 are as follows (in
thousands, except per share amounts):
Options exercisable at fiscal years ended 2000, 2001 and 2002 were 1.1 million,
0.9 million and 1.0 million, respectively. The weighted average exercise prices
for options exercisable at fiscal years ended 2000, 2001 and 2002 were $13.05,
$16.29 and $17.98, respectively. Exercise prices for options outstanding at
November 2, 2002 range from $6.25 to $28.13. The weighted average remaining
contractual life of options outstanding at November 2, 2002 is 6.9 years.
The following summarizes additional information concerning outstanding options
as of November 2, 2002:
Options Outstanding
Range of Number of Weighted Average Weighted Average
Exercise Prices Options Remaining Life Exercise Price
--------------- --------- ---------------- ----------------
$ 6.25 - 11.50 93,500 1.8 years $ 8.25
$ 12.00 - 15.75 1,004,570 7.3 years $ 15.10
$ 16.38 - 28.13 764,152 7.0 years $ 20.90
---------
1,862,222
=========
Options Exercisable
Range of Number of Weighted Average
Exercise Prices Options Exercise Price
--------------- --------- ----------------
$ 6.25 - 11.50 93,500 $ 8.25
$ 12.00 - 15.75 404,124 $ 14.76
$ 16.38 - 28.13 460,298 $ 22.77
--------
957,922
========
In accordance with the terms of APB No. 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of the grant, the Company records no compensation expense for its
stock option awards. The following disclosure provides pro forma information as
if the fair value based method had been applied in measuring compensation
expense. The weighted average grant-date fair value of options granted during
2000, 2001 and 2002 was $9.49, $11.89 and $10.56, respectively. These values
were estimated using the Black-Scholes option-pricing model with the following
weighted average assumptions: no expected dividend, expected volatility of 50.0%
for 2000, 71.8% for 2001, and 62.7% for 2002, risk-free interest rates ranging
from 6.2% to 6.8% for 2000, 5.1% to 5.3% for 2001, and 4.6% to 4.9% for 2002 and
expected lives of 7 years.
24 2002 ANNUAL REPORT
The pro forma impact on income and earnings per share is as follows
(in thousands, except per share data):
Fiscal year ended October 31, 2000 October 31, 2001 NOVEMBER 2, 2002
----------------- ---------------- ---------------- ----------------
Reported income before
extraordinary loss and
cumulative effect of change
in accounting principle ....... 44,407 $ 16,535 $ 32,122
Pro forma compensation
expense, net of tax ........... 1,490 1,690 2,170
---------------- ---------------- ----------------
Pro forma income before
extraordinary loss and
cumulative effect of change
in accounting principle ....... $ 42,917 $ 14,845 $ 29,952
================ ================ ================
Pro forma basic
income per share .............. $ 2.40 $ 0.82 $ 1.62
Pro forma diluted
income per share .............. $ 2.36 $ 0.82 $ 1.62
Because options vest over several years and additional option grants are
expected, the effects of these calculations are not likely to be representative
of similar future calculations.
9. NET INCOME PER SHARE
Basic and diluted net income per share computations were derived using the
following information:
Fiscal year ended... Oct. 31, 2000 Oct. 31, 2001 NOV. 2, 2002
-------------------- ------------- ------------- -------------
(in thousands, except per share data)
Income before extraordinary loss
and cumulative effect of change
in accounting principle ............ $ 44,407 $ 16,535 $ 32,122
Extraordinary loss, net of tax ..... -- -- (808)
Cumulative effect of change in
accounting principle, net of tax ... -- -- (65,087)
------------- ------------- -------------
Net income (loss) ........... 44,407 16,535 (33,773)
Interest, net of tax, on
convertible debenture
assumed converted .................. 66 27 --
------------- ------------- -------------
Adjusted net income (loss) ......... $ 44,473 $ 16,562 $ (33,773)
============= ============= =============
Weighted average common
shares outstanding ................. 17,904 18,075 18,512
Common stock equivalents:
Stock options ........... 282 148 180
Convertible debenture ... 100 42 --
------------- ------------- -------------
Weighted average common
shares outstanding, assuming
dilution ........................... 18,286 18,265 18,692
============= ============= =============
10. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) profit sharing plan (the "Savings Plan") which covers
all eligible employees. The Savings Plan requires the Company to match employee
contributions up to a certain percentage of a participant's salary. No other
contributions may be made to the Savings Plan. Contributions expense for the
fiscal years ended 2000, 2001 and 2002 was $3.7 million, $3.5 million and $3.6
million, respectively, for contributions to the Savings Plan.
11. ACQUISITIONS
On March 31, 2000, the Company acquired its partner's 50% share of DOUBLECOTE,
L.L.C., a metal coil coating business that it developed and previously owned
jointly with Consolidated Systems, Inc., a privately held company. The
transaction was valued at approximately $24.4 million, and was accounted for
using the purchase method. The excess of cost over the fair value of the
acquired assets was approximately $10 million.
12. RESTRUCTURING
In October 2001, management announced a plan to realign its manufacturing
capabilities to increase efficiencies, raise productivity and lower operating
expenses. The pretax restructuring charge of $2.8 million relates to the planned
closing of five manufacturing facilities as part of this plan. This included a
$2.1 million non-cash charge for an identified impairment to property, plant and
equipment for the expected loss on the sale of two of the five facilities. The
actions were substantially completed by the end of the first quarter of fiscal
2002. During fiscal 2002, the Company recognized a gain of $1.3 million ($0.8
million after tax) for the sale of certain real estate and equipment associated
with the restructuring. The remaining two facilities, not yet sold, have a net
carrying value of $2.9 million and the Company does not anticipate a selling
price significantly different from this amount.
13. CONTINGENCIES
The Company's primary steel suppliers, Bethlehem Steel Corporation and National
Steel Corporation, filed for protection under Federal Bankruptcy laws on October
15, 2001, and March 6, 2002, respectively. During fiscal 2002, the Company
purchased approximately 63%, respectively, of its steel requirements from these
two suppliers. The Company does not maintain an inventory of steel in excess of
its current production requirements. Should both companies cease operations,
essential supply of primary raw materials could be temporarily interrupted.
25 FINANCIAL REVIEW
The Company believes that its other primary steel supplier, U.S. Steel, can meet
its demand for steel if its supply from Bethlehem Steel and/or National Steel is
interrupted.
As a result of the Company's restatement of its financial results for the last
half of fiscal 1999, all of fiscal 2000 and the first quarter of fiscal 2001,
several class action lawsuits were filed against the Company and certain of its
current officers in the United States District Court for the Southern District
of Texas, commencing in April 2001. The plaintiffs in the actions purport to
represent purchasers of NCI common stock during various periods ranging from
August 25, 1999 through April 12, 2001. The lawsuits were consolidated into one
class action lawsuit on August 16, 2001. On January 10, 2002, the court
appointed lead plaintiffs for the consolidated lawsuit. The lead plaintiffs
filed a consolidated amended complaint on February 1, 2002. In the consolidated
complaint the plaintiffs allege, among other things, that during the financial
periods that were restated the Company made materially false and misleading
statements about the status and effectiveness of a management information and
accounting system used by its components division and costs associated with that
system, failed to assure that the system maintained books and records accurately
reflecting inventory levels and costs of goods sold, failed to maintain internal
controls on manual accounting entries made to certain inventory-related accounts
in an effort to correct the data in the system, otherwise engaged in improper
accounting practices that overstated earnings, and issued materially false and
misleading financial statements. The plaintiffs further allege that the
individual defendants traded in the Company's common stock while in possession
of material, non-public information regarding the foregoing. The plaintiffs in
the consolidated complaint assert various claims under Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and seek unspecified amounts of
compensatory damages, interest and costs, including legal fees. On March 15,
2002, the Company filed its Motion to Dismiss Plaintiffs' Amended Consolidated
Class Action Complaint and Memorandum in Support. The Motion to Dismiss is
currently pending before the court. The Company and the individual defendants
deny the allegations in the complaint and intend to defend against them
vigorously. The consolidated lawsuit is at a very early stage. Consequently, at
this time the Company is not able to predict whether it will incur any liability
in excess of insurance coverages or to estimate the damages, or the range of
damages, if any, that the Company might incur in connection with the lawsuit, or
whether an adverse outcome could have a material adverse impact on its business,
consolidated financial condition or results of operations.
The Company is involved in various other legal proceedings and contingencies
that are considered to be in the ordinary course of business. The Company
believes that these legal proceedings will not have a material adverse effect on
its business, consolidated financial condition or results of operations.
14. BUSINESS SEGMENTS
The Company has divided its operations into two reportable segments: engineered
building systems and metal building components, based upon similarities in
product lines, manufacturing processes, marketing and management of its
businesses. Products of both segments are similar in basic raw materials used.
The engineered building systems segment includes the manufacturing of structural
framing and supplies and value added engineering and drafting, which are
typically not part of component products or services. The reporting segments
follow the same accounting policies used for the Company's consolidated
financial statements. Management evaluates a segment's performance based upon
operating income. Intersegment sales are recorded based on weighted average
costs, and consist primarily of products and services provided to the engineered
building systems segment by the metal building components segment, including
painting and coating of hot rolled material. The Company is not dependent on any
one significant customer or group of customers. Substantially all of the
Company's sales are made within the United States. Financial data for prior
periods has been reclassified to conform to the current presentation.
26 2002 ANNUAL REPORT
Summary Financial Databy Segment
NCI BUILDING SYSTEMS, INC.
(IN THOUSANDS, except percentages)
2000 % 2001 % 2002 %
------------ ----- ------------ ----- ------------ -----
Sales to outside customers:
Engineered building systems ................... $ 337,849 33 $ 320,789 34 $ 317,926 33
Metal building components ..................... 680,475 67 634,088 66 635,516 67
Intersegment sales ............................ 51,869 5 43,620 5 44,725 5
Corporate/eliminations ........................ (51,869) (5) (43,620) (5) (44,725) (5)
------------ ----- ------------ ----- ------------ -----
Total net sales ........................... $ 1,018,324 100 $ 954,877 100 $ 953,442 100
============ ===== ============ ===== ============ =====
Operating income:(1)
Engineered building systems ................... $ 48,446 14 $ 43,827 14 $ 28,695 9
Metal building components ..................... 96,099 14 60,746 10 70,407 11
Restructuring charge .......................... -- -- (2,815) -- -- --
Corporate/eliminations ........................ (30,875) -- (36,933) -- (26,878) --
------------ ----- ------------ ----- ------------ -----
Total operating income .................... $ 113,670 11 $ 64,825 7 $ 72,224 8
============ ===== ============ ===== ============ =====
Property, plant and equipment, net:
Engineered building systems ................... $ 48,530 21 $ 48,424 22 $ 44,006 21
Metal building components ..................... 161,733 70 156,977 70 144,971 71
Corporate ..................................... 20,779 9 19,192 8 16,357 8
------------ ----- ------------ ----- ------------ -----
Total property, plant and equipment, net .. $ 231,042 100 $ 224,593 100 $ 205,334 100
============ ===== ============ ===== ============ =====
Depreciation and amortization:(1)
Engineered building systems ................... $ 8,134 24 $ 8,008 22 $ 6,401 26
Metal building components ..................... 13,208 39 13,367 36 13,859 56
Corporate ..................................... 12,145 37 15,271 42 4,668 18
------------ ----- ------------ ----- ------------ -----
Total depreciation and amortization ....... $ 33,487 100 $ 36,646 100 $ 24,928 100
============ ===== ============ ===== ============ =====
Capital expenditures:
Engineered building systems ................... $ 12,813 44 $ 3,728 25 $ 1,589 17
Metal building components ..................... 9,217 32 8,689 58 6,691 73
Corporate ..................................... 6,855 24 2,609 17 895 10
------------ ----- ------------ ----- ------------ -----
Total capital expenditures ................ $ 28,885 100 $ 15,026 100 $ 9,175 100
============ ===== ============ ===== ============ =====
Total assets:(2)
Engineered building systems ................... $ 102,322 12 $ 93,094 11 $ 206,429 29
Metal building components ..................... 380,312 44 343,112 41 468,667 65
Corporate/eliminations ........................ 386,287 44 402,606 48 46,169 6
------------ ----- ------------ ----- ------------ -----
Total assets .............................. $ 868,921 100 $ 838,812 100 $ 721,265 100
============ ===== ============ ===== ============ =====
(1) Operating income and depreciation and amortization were impacted in fiscal
2002 due to the adoption of SFAS No.142 which prohibits the amortization of
goodwill.
(2) Changes in total assets from 2001 to 2002 were primarily attributable to
allocation of goodwill in accordance with SFAS No. 142 as discussed in Note 3.
FINANCIAL REVIEW 27
REPORT OF INDEPENDENT AUDITORS
NCI BUILDING SYSTEMS, INC.
The Board of Directors and Shareholders
NCI Building Systems, Inc.
We have audited the accompanying consolidated balance sheets of NCI Building
Systems, Inc. as of November 2, 2002 and October 31, 2001, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three fiscal years in the period ended November 2, 2002. 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 conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of NCI Building
Systems, Inc. at November 2, 2002 and October 31, 2001 and the consolidated
results of its operations and its cash flows for each of the three fiscal years
in the period ended November 2, 2002, in conformity with accounting principles
generally accepted in the United States.
As discussed in Note 3 to the consolidated financial statements, effective
November 1, 2001, the Company changed its method of accounting for goodwill.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
28 2002 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
NCI BUILDING SYSTEMS, INC.
RESULTS OF OPERATIONS
The following table presents, as a percentage of sales, certain selected
consolidated financial data for the Company for the periods indicated:
Fiscal year ended... Oct. 31, 2000 Oct. 31, 2001 NOV. 2, 2002
-------------- -------------- --------------
Sales ..................................... 100.0% 100.0% 100.0%
Cost of sales ............................. 74.8 77.7 77.7
============== ============== ==============
Gross profit .......................... 25.2 22.3 22.3
Selling, general and
administrative expenses ............... 12.9 13.9 14.7
Goodwill amortization ..................... 1.1 1.3 --
Restructuring Charge ...................... -- 0.3 --
-------------- -------------- --------------
Income from operations .................... 11.2 6.8 7.6
Interest expense .......................... (3.8) (2.3) (3.5)
Other income, net ......................... 0.2 0.1 0.2
-------------- -------------- --------------
Income before income taxes,
extraordinary loss and cumulative
effect of change in accounting
principle ............................. 7.6 3.4 5.5
Provision for income taxes ................ 3.2 1.7 2.1
-------------- -------------- --------------
Income before extraordinary loss
and cumulative effect of change
in accounting principle ............... 4.4 1.7 3.4
Extraordinary loss on debt
refinancing, net of tax -- -- (0.1)
Cumulative effect of change in
accounting principle, net of tax ...... -- -- (6.8)
-------------- -------------- --------------
Net income (loss) ......................... 4.4 %1.7% (3.5)%
============== ============== ==============
SUPPLEMENTARY BUSINESS SEGMENT INFORMATION
The Company's various product lines have been aggregated into two business
segments: engineered building systems and metal building components. These
aggregations are based on the similar nature of the products, distribution of
products, and management and reporting for those products within the Company.
Both segments operate primarily in the non-residential construction market.
Sales and earnings are influenced by general economic conditions, the level of
non-residential construction activity, roof repair and retrofit demand and the
availability and terms of financing available for construction. The reporting
segments follow the same accounting policies used for the Company's consolidated
financial statements.
Products of both business segments are similar in basic raw materials used.
Engineered building systems include the manufacturing of structural framing and
value added engineering and drafting, which are typically not part of component
products or services. The Company believes it has one of the broadest product
offerings of metal building products in the industry.
Intersegment sales are based on weighted average costs, and consist primarily of
products and services provided to the engineered buildings segment by the
component segment, including painting and coating of hot rolled material. This
provides better customer service, shorter delivery time and minimizes
transportation costs to the customer. Segment information is included in the
three-year comparison in Note 14 of the consolidated financial statements.
RESULTS OF OPERATIONS FOR FISCAL 2002 COMPARED TO 2001
Consolidated sales for fiscal 2002 were $953.4 million compared with $954.9
million for fiscal 2001. Sales were flat despite a continued slowdown in
non-residential construction. Many companies in the metal construction industry
have shown declines in the past years and this trend has continued through
fiscal 2002. Various trade reports have estimated that spending on
non-residential construction declined at least 10% in 2002. The Company believes
that it performed at a higher sales level than the
FINANCIAL REVIEW 29
industry due to its continued ability to increase market penetration, the
expansion of its structural operations and the growth in new products.
Intersegment sales of $44.7 million represent products and services provided by
the metal building components segment, principally components sales to the
engineered buildings segment in fiscal 2002.
Engineered Building Systems' sales were $317.9 million for fiscal 2002 compared
with $320.8 million for fiscal 2001. The sales were down slightly due to the
industry decline in non-residential construction. There has been an overall
decline in larger, more expensive projects and increased focus on smaller, more
complex projects.
Operating income of the engineered building systems segment declined in fiscal
2002 by 35%, to $28.7 million, compared to $43.8 million in the prior year. This
decline resulted from lower selling prices due to competition, higher cost of
engineering and drafting due to an increase in the complexity of orders and
higher freight costs. As a percent of sales, operating income in fiscal year
2002 was 9% compared to 14% in fiscal 2001.
Metal Building Components' sales for fiscal 2002 were $635.5 million compared to
$634.1 million for fiscal 2001. Sales were up slightly despite the double-digit
decline in the industry due to additional market penetration.
Operating income of the metal building components segment increased $9.7
million, or 16%, to $70.4 million, in fiscal 2002 compared to $60.7 million in
the prior year. This increase was attributable to increased plant efficiencies
resulting from the plant closures implemented in the first quarter.
Selling, general and administrative expenses, consisting of engineering and
drafting, selling and administrative costs, increased 5%, to $140.6 million in
fiscal 2002 compared to $133.3 million in the prior year. This increase was
mainly attributable to cost increases in the areas of employee benefits,
particularly health care, general insurance, bonuses and engineering and
drafting costs. As a percent of sales, selling, general and administrative
expenses for fiscal 2002 were 15% compared to 14% for fiscal 2001, excluding
goodwill amortization in the prior year.
Consolidated interest expense for fiscal 2002 decreased by 35%, to $21.6 million
compared to $33.1 million for the prior year. This decline resulted from lower
average interest rates in fiscal 2002 and a decrease in outstanding debt for the
period of $70.2 million.
Other income, net includes a gain of $1.3 million ($0.8 million after tax) in
fiscal 2002 resulting from the sale of three facilities and related equipment
which were associated with the restructuring actions and closure of five plants
in October 2001.
Other matters
Effective November 1, 2001, the Company adopted SFAS No. 142. In accordance with
this standard, the Company ceased amortization of all goodwill as of the
effective date. This resulted in a favorable impact to consolidated pre-tax
income from operations of $12.2 million and to net income of $11.2 million ($.61
per diluted share) for the year ended November 2, 2002.
During the second quarter of fiscal 2002, the Company completed the transitional
review for goodwill impairment required under SFAS No. 142. This review
indicated that goodwill recorded in the metal building components segment was
impaired as of November 1, 2001. Accordingly, the Company measured and
recognized a transitional impairment charge of $67.4 million ($65.1 million
after tax) as a cumulative effect of a change in accounting principle. See Note
3 of the "Notes to Consolidated Financial Statements" for additional discussion
of the impact of this statement on the Company's consolidated financial
statements.
On September 16, 2002, the Company completed a $250 million senior secured
credit facility with a group of lenders and used the initial borrowings to repay
in full the then existing credit facility. The new facility includes a $125
million, five-year revolving loan maturing on September 15, 2007 and a $125
million, six-year term loan maturing on September 15, 2008. The Company borrowed
approximately $46 million under the new revolving loan and $125 million under
the new term loan to repay the then current senior bank indebtedness
outstanding. As a result of this debt restructuring of the senior credit
facility, there were unamortized deferred financing costs of $1.2 million ($0.8
million after tax) written off during the fourth quarter of fiscal 2002.
RESULTS OF OPERATIONS FOR
FISCAL 2001 COMPARED TO 2000
Consolidated sales for fiscal 2001 of $954.9 million declined by 6% compared to
the prior year. The decline in sales resulted from the general slowdown in
non-residential construction, which began in March 2001 and the severe weather
conditions which impacted sales in the first and second quarter of fiscal 2001.
Based on available industry information, the Company believes that the industry
decline was greater than 20% in 2001. Sales of $22.3 million were derived during
fiscal 2001 from the inclusion of DOUBLECOTE for all of fiscal 2001 compared to
only seven months in fiscal 2000 and the acquisition of Midland Metals in
November 2000. The Company believes that it performed at a higher sales level
than the industry due to increased market penetration and the addition of new
customers, the expansion of its structural operations and the growth in new
products, particularly its long bay building system. Intersegment sales of $43.6
million represent products and services provided by the
30 2002 ANNUAL REPORT
metal building components segment, principally components sales to the
engineered buildings segment in fiscal 2001.
Engineered Building Systems sales declined by $17.1 million, or 5%, in fiscal
2001 as compared to fiscal 2000. This decline resulted from the industry decline
in nonresidential construction. Although the industry declined by greater than
20%, the Company believes that increased market penetration and the increase in
customer base allowed it to perform at a higher sales level than the industry in
fiscal 2001. The expansion of the structural operations and growth of the long
bay building systems product lessened the impact on the Company of the general
decline in industry sales.
Operating income of this segment declined by 10% in fiscal 2001 compared to
fiscal 2000 as a result of the decline in volume and less efficient utilization
of its manufacturing facilities and higher fixed costs per dollar of sales. As a
percent of sales, operating income was 14% for fiscal years 2001 and 2000.
Metal Building Components sales declined by $46.4 million, or 7%, in fiscal 2001
compared to fiscal 2000. The acquisition of DOUBLECOTE in the middle of fiscal
2000 and the acquisition of Midland Metals early in fiscal 2001 lessened the
impact of the decline compared to general industry activity.
Operating income of this segment declined by $35.4 million, or 37%, compared to
fiscal 2000. The decline was greater than the sales decline due to heightened
price competition, less efficient utilization of manufacturing facilities
resulting from the lower sales volume and higher manufacturing costs,
particularly utility costs in the coating operations which rose $3.4 million
over the prior year.
Consolidated operating expenses, excluding the restructuring charge, increased
by $2.6 million, or 2%, in fiscal year 2000. This increase related primarily to
costs associated with health care, professional services and payroll costs which
were not offset by an increase in volume. In October 2001, management announced
a plan to realign its manufacturing capabilities to increase efficiencies, raise
productivity, and lower operating expenses. The pretax restructuring charge of
$2.8 million relates to the planned closing of five manufacturing facilities as
part of this plan. This included a $2.1 million noncash charge for an identified
impairment to plant, property and equipment for the expected loss on the sale of
two of the five facilities. The actions are scheduled to be completed by the end
of the first quarter of fiscal 2002 and are expected to save approximately $5.0
million in costs on an annual basis.
Consolidated interest expense of $33.1 million declined by $6.0 million compared
to the prior year. This decline resulted from lower variable interest rates at
October 31, 2001 compared to October 31, 2000 of 4.8% and 8.1%, respectively,
and a decrease in outstanding debt for the period of $49.8 million.
LIQUIDITY AND CAPITAL RESOURCES
At November 2, 2002, the Company had working capital of $80.2 million compared
to $49.5 million at the end of fiscal 2001. Net working capital at November 2,
2002 includes a reduction in current maturities of long-term debt of $40.0
million related to the debt refinancing discussed below and in Note 2 to the
consolidated financial statements. Excluding this reduction, working capital
would have been $40.2 million at November 2, 2002, a reduction of $9.3 million
from the end of fiscal 2001. This decline resulted primarily from a cash
reduction of $11.6 million used to reduce debt, an increase of $10.5 million in
accrued compensation and benefits related to increased accruals for employee
benefits, particularly bonuses, a decrease of $17.0 million to receivables and
inventory, offset by a decrease in accounts payable of $23.4 million. During
fiscal 2002, the Company generated cash flow from operations of $59.8 million.
This cash flow, along with cash from the beginning of the period, was used to
fund capital expenditures of $9.2 million and repay $70.2 million in debt under
the Company's senior credit facilities.
On September 15, 2002, the Company had a senior credit facility with a syndicate
of banks, which consisted of (i) a five-year revolving credit facility of up to
$200 million (outstanding balance of $83.8 million at September 15, 2002), (ii)
a five-year term loan facility in the original principal amount of $200 million
(outstanding balance of $50.0 million at September 15, 2002) and (iii) a $40
million term note (outstanding balance of $34.1 million at September 15, 2002).
On September 16, 2002, the Company completed a $250 million senior secured
credit facility with a group of lenders and used the initial borrowings to repay
in full the then existing credit facility. The new facility includes a $125
million, five-year revolving loan maturing on September 15, 2007 and a $125
million, six-year term loan maturing on September 15, 2008. The term loan
requires mandatory prepayments of $1.6 million each quarter beginning in
December 2002 with a final payment of $89.1 million at maturity.
The new senior credit facility is secured by security interests in (1) accounts
receivable, inventory and equipment and related assets such as software, chattel
paper, instruments and contract rights of the Company (excluding foreign
operations) and (2) 100% of the capital stock and other equity interests in each
of the direct and indirect operating domestic subsidiaries of the Company.
The new senior credit agreement includes covenants which, among other things,
limit certain debt ratios and require minimum interest coverage and the
maintenance of a minimum net worth. The new
FINANCIAL REVIEW 31
senior credit agreement also limits the amount of permitted spending for capital
additions, the repurchase of stock, payment of cash dividends, the disposition
of assets and the amount of investments and other indebtedness.
Borrowings under the new senior credit facility may be prepaid and the voluntary
reduction of the unutilized portion of the five-year revolver may be made at any
time, in certain amounts, without premium or penalty but subject to LIBOR
breakage costs. The Company is required to make mandatory prepayments on the new
senior credit facility upon the occurrence of certain events, including the sale
of assets and the issuance and sale of equity securities, in each case subject
to certain limitations. These prepayments must first be applied to the term loan
and then to the reduction of the revolving commitment. The Company also is
required to reduce the revolving commitment by $25 million if it issues an
additional series of its senior subordinated notes due May 1, 2009, and in any
event by December 31, 2005.
Loans on the new senior credit facility bear interest, at the Company's option,
as follows: (1) base rate loans at the base rate plus a margin that fluctuates
based on the Company's leverage ratio and ranges from 1.0% to 1.75% on the
revolving loan and from 2.0% to 2.25% on the term loan and (2) LIBOR loans at
LIBOR plus a margin that fluctuates based on the Company's leverage ratio and
ranges from 2.0% to 2.75% on the revolving loan and from 3.0% to 3.25% on the
term loan. Base rate is defined as the higher of Bank of America, N.A. prime
rate or the overnight Federal Funds rate plus 0.5% and LIBOR is defined as the
applicable London interbank offered rate adjusted for reserves. Based on its
current leverage ratios, the Company will pay a margin of 1.5% on base rate
loans and 2.5% on LIBOR loans under the revolving loan and a margin of 2.25% on
base rate loans and 3.25% on LIBOR loans under the term loan.
At November 2, 2002, the Company had approximately $75 million in unused
borrowing capacity (net of letters of credit outstanding of $3 million) under
the new senior credit facility, of which a total of $20 million can be utilized
for standby letters of credit.
In addition, the Company has outstanding $125 million of unsecured senior
subordinated notes, which mature on May 1, 2009. The notes bear interest at
9.25%. The indenture governing the Company's senior subordinated notes includes
covenants which, among other things, limit the repurchase of stock, the payment
of cash dividends, the disposition of assets and the amount of investments and
other indebtedness.
Under the most restrictive of the covenants limiting the Company's ability to
pay cash dividends and repurchase capital stock, the Company had available
approximately $4.8 million to use for those purposes at November 2, 2002.
Inflation has not significantly affected the Company's financial position or
operations. Metal building components and engineered building systems sales are
affected more by the availability of funds for construction than interest rates.
No assurance can be given that inflation or interest rates will not fluctuate
significantly, either or both of which could have an adverse effect on the
Company's operations.
Liquidity in future periods will be dependent on internally generated cash
flows, the ability to obtain adequate financing for planned capital expenditures
of approximately $11 million and expansion when needed, and the amount of
increased working capital necessary to support expected growth. Based on the
current capitalization, it is expected that future cash flows from operations
and availability of alternative sources of external financing should be
sufficient to provide adequate liquidity for the foreseeable future. As of
November 2, 2002, the Company had approximately $75 million (net of outstanding
letters of credit of $3 million) in unused borrowing available under its senior
credit facility, subject to compliance with the terms of these facilities.
CRITICAL ACCOUNTING POLICIES
The consolidated financial statements of the Company are prepared in accordance
with United States generally accepted accounting principles, which require the
Company to make estimates and assumptions. The significant accounting policies
of the Company are disclosed in Note 1 to the consolidated financial statements.
The following discussion of critical accounting policies addresses those
policies which are both important to the portrayal of the Company's financial
condition and results of operations and require significant judgment and
estimates. The Company bases its estimates and judgment on historical experience
and on various other factors that are believed to be reasonable. Actual results
may differ from these estimates under different assumptions or conditions.
Revenue recognition
The Company recognizes revenues when all of the following conditions are met:
persuasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, the price is fixed or determinable, and collectability is
reasonably assured. Generally, these criteria are met at the time product is
shipped or services are complete. Adequate provision is made, upon shipment, for
estimated product returns and other costs. Costs associated with shipping and
handling of products are included in cost of sales.
Accruals for employee benefits
The Company is self insured for a substantial portion of the cost of employee
group and medical insurance and for the cost of workers compensation benefits.
The Company purchases insurance from
32 2002 ANNUAL REPORT
third parties which provides individual and aggregate stop loss protection for
these costs. For health and medical costs, the Company uses estimates for
incurred but unreported claims as of each balance sheet date. These estimates
are based on current and historical experience in claims costs, known trends in
health care cost and other information available from the third party insurance
company which administers claims. For workers compensation costs, the Company
monitors the number of accidents and the severity of such accidents to develop
appropriate reserves for expected costs to provide both medical care and
benefits during the period an employee is unable to work. These reserves are
developed using third party estimates of the expected cost and length of time an
employee will be unable to work based on industry statistics for the cost of
similar disabilities. This statistical information is trended to provide
estimates of future expected cost based on the factors developed from the
Company's experience of actual claims cost compared to original estimates.
The Company believes that the assumptions and information used to develop these
accruals provide the best basis for these estimates each quarter. However,
significant changes in expected medical and health care costs, negative changes
in the severity of previously reported claims or changes in legislative laws and
statutes which govern the administration of these plans could have an impact on
the determination of the amount of these accruals in future periods. For fiscal
2002, the Company expensed approximately $21 million for employee benefits and
at November 2, 2002, the balance of the employee benefits accrual was $8.8
million.
Goodwill
The Company reviews the carrying values of its long-lived assets, including
goodwill and identifiable intangibles, whenever events or changes in
circumstances indicate that such carrying values may not be recoverable and
annually for goodwill as required by SFAS No. 142. Unforeseen events, changes in
circumstances and market conditions and material differences in the value of
intangible assets due to changes in estimates of future cash flows could
negatively affect the fair value of the Company's assets and result in a
non-cash impairment charge. Some factors considered important which could
trigger an impairment review include the following: significant underperformance
relative to expected historical or projected future operating results,
significant changes in the manner of the Company's use of the acquired assets or
the strategy for its overall business and significant negative industry or
economic trends. Fair value is the amount at which the asset could be bought or
sold in a current transaction between willing parties and may be estimated using
a number of techniques, including quoted market prices or valuations by third
parties, present value techniques based on estimates of cash flow, or multiples
of earnings or revenue performance measures. The fair value of the asset could
be different using different estimates and assumptions in these valuation
techniques. At November 2, 2002, the total value of goodwill was $318.2 million.
As required by SFAS No. 142, goodwill must be tested for impairment at the
reporting unit level upon adoption and at least annually thereafter, utilizing a
two-step methodology. The initial step requires the Company to determine the
fair value of each reporting unit and compare it to the carrying value,
including goodwill, of such unit. The Company determined the fair value of each
reporting unit by using a combination of present value and multiple of earnings
valuation techniques and compared it to each reporting unit's carrying value. If
the fair value exceeds the carrying value, no impairment loss would be
recognized. However, if the carrying value of the reporting unit exceeds its
fair value, the goodwill of this unit may be impaired. The amount, if any, of
the impairment would then be measured in the second step. The Company completed
the first step during the second quarter of fiscal 2002 which indicated that
goodwill recorded in the metal building components segment was impaired as of
November 1, 2001. Due to the potential impairment, the Company then completed
step two of the test to measure the amount of the impairment. Based on that
analysis, a transitional impairment charge of $67.4 million ($65.1 million after
tax) was recognized as a cumulative effect of a change in accounting principle.
The Company updated this review at year end as required by SFAS No. 142 and
identified no additional impairment of goodwill. See Note 3 of the consolidated
financial statements for additional discussion of the adoption of SFAS No. 142.
Allowance for Doubtful Accounts
The Company's allowance for doubtful accounts reflects reserves for customer
receivables to reduce receivables to amounts expected to be collected.
Management uses significant judgment in estimating uncollectible amounts. In
estimating uncollectible amounts, management considers factors such as current
overall economic conditions, industry-specific economic conditions, historical
customer performance and anticipated customer performance. While the Company
believes these processes effectively address its exposure for doubtful accounts
and credit losses have historically been within expectations, changes in the
economy, industry, or specific customer conditions may require adjustments to
the allowance for doubtful accounts recorded by the Company. The Company had bad
debt expense of $2.7 million for fiscal 2002 and at November 2, 2002, the
balance of the consolidated allowance for doubtful accounts was $5.7 million.
Contingencies
As discussed in Note 13 to the consolidated financial statements, the Company is
involved in various legal proceedings and other contingencies and the Company
records liabilities for these types of matters in accordance with Statement of
Financial Accounting
33 FINANCIAL REVIEW
Standards No. 5, Accounting for Contingencies (SFAS No. 5). SFAS No. 5 requires
a liability to be recorded based on the Company's estimates of the probable cost
of the resolution of a contingency. The actual resolution of these contingencies
may differ from the Company's estimates and an appropriate adjustment to income
could be required in a future period.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001, with earlier application encouraged. The Company adopted SFAS
No. 144 as of November 1, 2001, and the adoption of the statement did not have a
significant impact on the Company's financial position and results of
operations.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 will generally require gains and losses on extinguishments of debt
to be classified as income or loss from continuing operations rather than as
extraordinary items as previously required under SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt. Extraordinary treatment will be required for
certain extinguishments as provided in APB No. 30, Reporting the Results of
Operations. Accordingly, gains or losses from extinguishments of debt for fiscal
years beginning after May 15, 2002 will not be reported as extraordinary items
unless the extinguishment qualifies as an extraordinary item under the
provisions of APB No. 30. Upon adoption, any gain or loss on extinguishment of
debt previously classified as an extraordinary item in prior periods presented
that does not meet the criteria of APB No. 30 for such classification will be
reclassified to conform with the provisions of SFAS No. 145. During the fourth
quarter of fiscal 2002, the Company refinanced their debt and wrote off $1.2
million ($0.8 million after tax) of unamortized deferred financing costs and
classified the loss as an extraordinary item. Upon adoption of SFAS No. 145, the
Company will evaluate the appropriateness of income statement classification of
the loss.
In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS No. 146 nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS
No. 146 is effective for exit or disposal activities that are initiated after
December 31, 2002 with early application encouraged. The Company does not expect
that the adoption of the statement will have a significant impact on the
Company's financial position and results of operations.
During November 2002, the Emerging Issues Task Force ("EITF") reached a
consensus on EITF Issue 00-21, Multiple-Deliverable Revenue Arrangements, which
addresses how to account for arrangements that may involve the delivery or
performance of multiple products, services, and/or rights to use assets. The
final consensus will be applicable to agreements entered into in fiscal periods
beginning after June 15, 2003, with early adoption permitted. The Company does
not expect that the adoption will have a significant impact on the Company's
financial position and results of operations.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition to SFAS No. 123's fair value method of accounting for stock-based
employee compensation. While the Statement does not amend SFAS No. 123 to
require companies to account for employee stock options using the fair value
method, the disclosure provisions of SFAS No. 148 are applicable to all
companies with stock-based employee compensation, regardless of whether they
account for that compensation using the fair value method of SFAS No. 123 or the
intrinsic value method of APB No. 25, Accounting for Stock Issued to Employees.
The Company is currently evaluating whether to adopt the provisions of SFAS No.
148 relating to the SFAS No. 123 fair value method of accounting for stock-based
employee compensation.
LEGAL PROCEEDINGS
Commencing in April 2001, several class action lawsuits were filed against the
Company and certain of our present officers in the United States District Court
for the Southern District of Texas. The plaintiffs in the actions purport to
represent purchasers of our common stock during various periods ranging from
August 25, 1999 through April 12, 2001. The complaints assert various claims
under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and seek
unspecified amounts of compensatory damages, interest and costs, including legal
fees. The Company denies the allegations in the complaints and intends to defend
them vigorously. The lawsuits are at a very early stage. Consequently, it is not
possible at this time to predict whether the Company will incur any liability or
to estimate the damages, or the range of damages, if any, that the Company might
incur in connection with such actions, or whether an adverse outcome could have
a material adverse impact on our business, consolidated financial condition or
results of operations.
34 2002 ANNUAL REPORT
The Company is involved in various other legal proceedings and contingencies
that are considered to be in the ordinary course of business. The Company
believes that these legal proceedings will not have a material adverse effect on
its business, consolidated financial condition or results of operations.
MARKET RISK DISCLOSURE
The Company is subject to market risk exposure related to changes in interest
rates on its senior credit facility, which includes revolving credit notes and
term notes. These instruments bear interest at a pre-agreed upon percentage
point spread from either the prime interest rate or LIBOR. Under its senior
credit facility, the Company may, at its option, fix the interest rate for
certain borrowings based on a spread over LIBOR for 30 days to six months. At
November 2, 2002, the Company had $172.3 million outstanding under its senior
credit facility. Based on this balance, an immediate change of one percent in
the interest rate would cause a change in interest expense of approximately $1.7
million on an annual basis. Based on October 31, 2001 outstanding floating rate
debt, a one percent change in the interest rate would have caused a change in
interest expense of approximately $2.4 million on an annual basis. The Company's
objective in maintaining these variable rate borrowings is the flexibility
obtained regarding early repayment without penalties and lower overall cost as
compared to fixed-rate borrowings.
GROWTH The company is dedicated to increasing its market share through strong
marketing and low cost, quality manufacturing. Special niches that provide
unusual profit and growth opportunities are sought. Overall profit growth of at
least 15% per year is a strategic goal of the company with larger increments
possible in the short-term. This growth may be internally generated or it may
come from carefully selected acquisitions.
DIVIDENDS The company's officers and directors are all significant stock or
option holders. Thus, there is much sympathy for dividends. However, it is
considered appropriate, at this stage of the company's development and in view
of the available returns, to invest that money in the growth of the company and
the repayment of debt as opposed to paying dividends.
COMPENSATION The company believes in providing base salaries for its management
on the low side of the industry norm with opportunities for performance based
bonuses. Specifically, Return on Assets and growth in earnings per share are the
criteria for the performance measurement.
CORPORATE RESPONSIBILITY The company is committed to the goal of being an
exemplary corporate citizen. Toward that end, we have an intense safety program
ongoing in the workplace and some of the best safety records in our industry. We
have proper awareness and concern for the overall environment. Besides
employment, there are also advancement opportunities due to the growth of the
company. Finally, we employ high quality engineering professionals to ensure
that our products are designed using sound engineering practices and principles.
FORWARD LOOKING STATEMENTS
"This Annual Report contains 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,
fluctuations in customer demand and other patterns, raw material pricing,
competitive activity and pricing pressure, the ability to make strategic
acquisitions 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 most recent
annual and quarterly reports on Forms 10-K and 10-Q.The Company expressly
disclaims any obligation to release publicly any updates or revisions to these
forward-looking statements to reflect any changes in its expectations."
35 FINANCIAL REVIEW
QUARTERLY FINANCIAL INFORMATION
NCI BUILDING SYSTEMS, INC.
(IN THOUSANDS, EXCEPT PER SHARE DATA)
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
FISCAL YEAR 2001
Sales ..................................................... $ 216,562 $ 208,184 $ 259,114 $ 271,017
Gross profit .............................................. $ 50,130 $ 46,128 $ 59,421 $ 57,524
Income before extraordinary loss and cumulative
effect of change in accounting principle .............. $ 2,842 $ 1,245 $ 7,109 $ 5,339
Income before extraordinary loss and cumulative effect
of change in accounting principle per share:(1),(2)
Basic ................................................. $ .16 $ .07 $ .39 $ .29
Diluted ............................................... $ .16 $ .07 $ .39 $ .29
FISCAL YEAR 2002
Sales ..................................................... $ 228,565 $ 213,224 $ 257,837 $ 253,816
Gross profit .............................................. $ 45,545 $ 45,519 $ 61,415 $ 60,386
Income before extraordinary loss and cumulative
effect of change in accounting principle .............. $ 3,090 $ 4,817 $ 12,570 $ 11,645
Income before extraordinary loss and cumulative effect
of change in accounting principle per share:(1)
Basic ................................................. $ .17 $ .26 $ .68 $ .62
Diluted ............................................... $ .17 $ .26 $ .67 $ .62
(1) The sum of the quarterly income per share amounts may not equal the annual
amount reported, as per share amounts are computed independently for each
quarter and for the full year based on the respective weighted average common
shares outstanding.
(2) Includes restructuring charge of $2.8 million in the fourth quarter of 2001
($1.8 million after tax).
PRICE RANGE OF COMMON STOCK
NCI BUILDING SYSTEMS, INC.
The Company's common stock is listed on the NYSE under the symbol "NCS." As of
January 15, 2003, there were 132 holders of record of the Company's common
stock. The Company has over 8,500 beneficial owners. The following table sets
forth the quarterly high and low sale prices of the Company's common stock, as
reported by the NYSE, for the prior two years.
Fiscal Year 2001 High Low Fiscal Year 2002 High Low
---------------- --------- --------- ---------------- --------- --------
January 31 .......................... $ 22.50 $ 15.44 February 2........................... $ 19.25 $ 12.75
April 30 ............................ $ 22.70 $ 9.30 May 4 ............................... $ 24.75 $ 16.53
July 31 ............................. $ 18.55 $ 12.56 August 3............................. $ 24.90 $ 15.05
October 31 .......................... $ 17.95 $ 11.00 November 2........................... $ 19.95 $ 16.85
36 2002 ANNUAL REPORT
Edilberto Abarca Patsy Abbott Shirley Abbott James Abercrombie Paul Abercrombie
Donnie Abernathy Harvel Abernathy Pamela Abney Isaac Abraham Fernando Abril
Stacey Accuri Manuel Acencio Flavio Acosta Ramon Acosta Rufino Acosta Barbara
Adair Ronnie Adair Jr Belinda Adams Floyd Adams Louis Adams Neal Adams Roddrick
Adams Sammy Adams Daniel Adams Jerome Adamski Alexander Adkins Chester Adkins
Michael Adkins Amma Adu Russell Agao Amy Agnew David Aguilar Edmundo Aguilar
Enrique Aguilar Ernesto Aguilar Jose Aguilar Ramon Aguilar Sebastian Aguilar
Sergio Aguinaga Benjamin Aguirre Felipe Aguirre Humberto Aguirre Martin Aguirre
Raul Aguirre Nana Agyei Saeed Ahmadian Deandre Aikens Steven Akin Arturo Alanis
Francisco Alarcon Julio Alarcon Ramone Albarran Jesus Alcala Susan Aldrich
Demetrius Alexander James Alexander Jeff Alexander John Alexander Juan Alfaro
David Alibrandi Billy Allen Harold Allen Kerry Allen Robert Allen Ron Allen
Timothy Allen Carrie Allen Jason Allen Kenneth Allen Brenda Allred Alejandro
Almazan Patricia Almazan Minnie Almazan Refugio Almeida Fernando Almontes Shelby
Alred Jose Alvarado Antonio Alvarez Antonio Alvarez Francisco Alvarez Jessica
Alvarez Jesus Alvarez Juan Alvarez Pedro Alvarez Ernesto Amaya Francisco Amaya
Jose Amaya Ruben Ambriz Edgar Amezquita Isaac Amoah Vincent Ampofo Carl Anderson
Gregory Anderson Jenny Anderson Jimmy Anderson Jimmy Anderson John Anderson
Michael Anderson Richard Anderson Melecio Andres Christopher Andrew Arnold
Andrews David Andrews Sophia Androwski Alvaro Angel Javier Anguiano Juan
Anguiano Faustino Antunez Emmanuel Antwi Duane Appel Jose Aragon Jesus Arambula
Brian Aranda Carlos Aravjo Shannon Archer Andy Arciba Robert Ardie Adrian
Arellano Juan Arellano Wilfrido Arellano Luis Arenas Michael Arender Jose
Argueta Cristian Arias Egetzain Arias Jose Arias Oscar Arias Jose Arias-Bonilla
Monique Arismendez Jorge Armenta Phil Armenta Ramon Armenta-Osorio Randy Arms
Joseph Arnold Dennis Arns Charly Arreaga Mario Arredondo Efrain Arriaga Emilio
Arriaga Ubaldo Arriaga Carlos Arteaga Milton Arvie Raymond Arzu Edenilson
Asencio Tony Ashy Jr Taiwo Asoro Sydney Atkinson James Atkinson Sr Steven
Ausborn Jr Greg Auvenshine Ruben Avelar Windell Avery Florencio Avila Juan Avila
Juan Avila Maria Avila Daniel Avilez Teresa Awbrey Mike Ayala Toribio Ayala
Victor Ayala Maclean Ayerite Cheryl Ayers Christina Ayers Ronnie Ayers Bilal
Ayhan Soner Ayhan Jesse Azevedo Martin Azevedo Astrid Azpeitia Octavio B Vaughn
Bacon Robert Bacon Jr Rogelio Badillo Lorenzo Baez Roger Baggett Allen Bailey
Craig Bailey James Bailey Joe Bailey Lloyd Bailey Ricky Bailey Thomas Bailey
William Bailey Antonia Bailey Brian Bailey Pamela Bailey Richard Bails Shana
Baird Kathryn Baird Donald Bajohr Clyde Baker Heather Baker Milton Baker Mitch
Baker Roy Baker Thomas Baker Dale Baker Hale Baker Randal Baker Robert Baker
Luis Balarezo Carl Baldwin Michael Baldwin James Ballew Jr Estevan Bana Eduardo
Bananao Michael Bancerowski Caren Bancroft Dayrl Bancroft Kenneth Bandilla
Riyazulla Bangarapet J Banister Taher Banker Mark Baragar Jose Barahona Ygnacio
Barba David Barber Mazie Barber Michael Barber Wesley Barber Nailya Barenbaum
Shane Barner Bradley Barnes Brian Barnes Charles Barnes Charles Barnes Rodney
Barnes Leslie Barnett Mark Barnhart William Baron Felix Baroza Christopher
Barrentine Abel Barrera Albertano Barrera Jose Barrera Jose Barrera Marcos
Barrera Mariel Barrera Miguel Barrera Primitivo Barrera Fermin Barrios Natividad
Barron Jody Bartkus Douglas Bartlow Guillermo Bartolon Bryan Barton Marcus
Basher Michael Bastien Kalyan Basu Ruben Batangan Aaron Batchellor Elmer
Batchelor Kevin Bate Ronald Bates Jake Bausman Jose Bautista Juan Bautista
Michelle Baxley Alan Baxter Joseph Bay Thomas Beaird Jearl Beal Earl Bean
Candice Beasley Charles Beasley Don Beasley Michael Beasley Lawrence Beasley Jr
Robert Beatty Mary Beauchamp Hugo Becerra Juan Becerra Joseph Becker M Becker
Arthur Bedolla Ronnie Beeler Seth Beeler Tony Begay Rene Behan Roy Belanger
Jonathon Belcher Clyde Bell David Bell Matthew Bell Milton Bell Tammy Bell
Steven Bell Gail Bellow Lauren Belt Melissa Beltrami Humberto Benavides Ignacio
Benavides Henry Benavidez James Bender Wesley Bender Randy Benefield Jr Dennis
Benge Ted Benic Edilberto Benitez Juan Benitez Luis Benitez Marcelino Benitez
Santiago Benitez Donald Benkert Eddie Bennatt Amanda Bennett Anthony Bennett
Charles Bennett John Bennett Leha Bennett Michael Bennett Tavi Bennett Larry
Bennett Jr Jerry Benson Jerry Bentley Dave Beoman Arturo Bergantinos Maria rosa
Bergantinos Mylene Bergantinos Roberto Bergantinos Willie Berlanga Fernando
Bermudez Gustavo Bernal Odis Berrios Michael Berry Steven Berry Leroy Berry Jr
Kelly Berryhill Jeffrey Berryman Kenneth Besson Beth Beswick Jerry Bevans Jr
Rajesh Bhatt Saleem Bhujwala Joey Bickford Daniel Bidwell Dennis Biggs Jr Ronnie
Bigham Kenneth Billanti Shannon Billings William Bills Charles Bing James
Bingham Quentin Birdine Phillip Birdwell Tom Bishop Andy Bjorson Allan Black
James Black Judy Black Timmy Black Tyrone Blades Thomas Blair Charles Blakely
Tanis Blanchelande James Blaney Leroy Blankenburg Donald Blanks Robert Blaydes
Debbie Bledsoe Kwabena Boadu Gabriel Boafo Joe Boatright Joe Boatright Teodoro
Bobadilla Richard Bobbitt Tony Bobbitt Linda Bode Jeffery Bodiford Brenda Bogan
Craig Bogan Bryan Bogan Bobby Bolden William Bolden Howard Boldt Jr William
Bolinger Doreen Bolinger Jacqueline Bolton Martha Bon Bertran Bonilla Jose
Bonilla Jose Bonilla Jimmy Bonner David Bonner Israel Borjas Kwasi Bortey Ralph
Borunda Arthur Boshears Sammy Boshears Walter Boshears Gerald Bosler Larry
Bostic Joseph Bouchard Bounmy Bounlom Murphy Bouquet Jr Jose Bourbois Jr Stacy
Bovee James Bowden Morris Bowen Ronald Bowling Sammy Bowling Randy Bownds Royce
Bownds Jr Darrell Boyd Illya Boyd Nicholas Boyd Quincey Boyd Stephen Boyd Steven
Boyd Thomas Boyd Steward Boyd Ada Boyd Jonita Boyer Teddy Boyer David Brabec
Michael Bradley Joseph Brady Claire Brady Robert Bragg Timothy Bramblett Kevin
Bramer Gary Branham Jr Brian Brasher Scottie Brazil Tracy Brazil Timothy Breheny
A Brehm Daniel Brenner Jesse Brewer Kenneth Brewer Robert Brewer Sam Brewer
Jamie Brewster Timothy Bridgeforth Jr Phillip Bridgersii Darrell Bridges Tresa
Bridges William Briedel Donald Bright Billy Brimer Joann Brimer Roger Brinson
Karen Brisco Gregory Britt Paula Britt Valentina Brittain Rickey Brittain Edward
Britton Oscar Briz Jr Anne Broaddus Everette Brock Johnny Brock Keith Brock
Randell Brockett Guillermo Brol Brenda Brooks Jess Brooks Johnny Brooks Allen
Broussard Allen Brown Carrie Brown David Brown Derek Brown Derrick Brown Earnest
Brown Joseph Brown Kenneth Brown Mark Brown Michael Brown Patricia Brown Paul
Brown Rickey Brown Robert Brown Rod Brown Tedi Brown Thomas Brown Timothy Brown
Yolanda Brown James Brown Jerry Brown Christina Brown Gail Brown Kevin Brown
Silas Brown III Jeffrey Bruce Garrick Brugeyroux Tedrick Brunson Billy Bryan
Larry Bryan Jack Bryant Joseph Bryant Samuel Bryant June Bryant III Ken
Buchinger Dan Buckner Timothy Budde Douglas Budnek Marvin Buesing Huong Bui
Chris Buie Charles Bullock Eugene Bump Jeffery Bumphis Clinton Burden Sean
Burden Betty Burgess Steven Burgess Teresa Burk Stephen Burke Jeffrey Burkett
Teresa Burkett Craig Burman Larry Burnett Bryan Burningham James Burns Paul
Burns Scott Burrous Cash Burthold Scott Burthold Mark Bush David Bushman Angel
Bustillo Carol Busyczak Kimberly Bute Philip Butler Willie Butler Timothy Butler
Greg Byers Steven Byers Anthony Bynum Arthur Byrd Finley Byrd Enoch Byrge
Freeman Byrge Derek Byse Flavio Caballero Katrina Caballero Arthur Cabrera
Channa Cacomanolis Jeffrey Caddel Albert Cade Robert Caggiano Solange Cailet
Jacqulyn Cain Kevin Cain Angela Calabrese Gabriel Calderon Kevin Caldwell Jr
Aroldo Calito Rodney Callaway Julie Camara Alfonso Camarena Jose Camarena Henry
Camargo Luis Camarillo Roberto Camarillo Patricia Cameron Irene Campbell John
Campbell Mark Campbell Marshall Campbell Paul Campbell Ezequiel Campos Jesus
Campos Santos Campos Senovio Campos Yosihijro Campos Ricky Cancino Connie Cannon
Janell Cannon Jose Cano Neil Cantor Alex Cantu Francisco Cantu Billy Caperton
Joe Caperton Jimmy Caples Christopher Capley Gregorio Carbajal Pedro Carbajal
Guillermo Carcamo Myriam Carcamo Jeremy Carden Francisco Cardenas Hector
Cardenas Jaime Cardenas Pedro Cardenas Selvin Cardenas Jose Cardoza Daniel
Carias Jerry Carlton Paula Carmany Gustavo Carnaval Judgeston Carnes Clifton
Carney Gloria Carney Kenneth Carter Marc Carolan Paul Caron Mary Carpenter Joel
Carranza Jose Carranza Ricardo Carranza Joe Carraway Brandon Carrell Agustin
Carreto Ernest Carrier Antonio Carrion Lonnie Carroll Robert Carroll Stephen
Carroll Gene Carroll Glenn Carstens Benjamin Carter Larry Carter Rex Carter
Helen Casey Sean Cash Leopoldo Casillas Francisco Casillas-martin Oscar Casimiro
Bernardo Castelan Miguel Castelano Sandra Castellano Fernando Castellanos Olvin
Castellanos Reynaldo Castellanos Antonio Castillo Edgar Castillo Esteban
Castillo Francisco Castillo Michael Castillo Larry Castleberry Anthony Castro
Herbert Castro Jaime Castro Javier Castro Maria Castro Antonio Castro Jr Edward
Catchings Caliste Catia Johnny Cattenhead Jr Bryan Caudle John Causley William
Cavanaugh Nicky Cavazos Praxedis Cavazos Patricia Cavin Adrian Cazares Juan
Cecenas Dustin Ceder Carlos Centeno Adam Cepeda Jose Cepeda Timothy Cerny Jesus
Cervantes Perfecto Cervantez Albert Chadwell Mario Chagolla David Chambliss Lane
Champagne Charles Chandler David Chandler Joe Chandler Jr Paul Chandrapal
Darrell Chaney Fernando Chapa Victor Chapa Jackey Chapman Lyle Chapman Robert
Chapman Thales Charchalac Patsy Chastain Ronald Chastain Sr William Chatterton
Ernesto Chavez Felix Chavez Nelson Chavez Raul Chavez Ruben Chavez Mark Chavez
Alvin Cherry Edward Childress Tim Childress Arlis Chowns Jeremy Chrislip Todd
Christensen Jamie Christensen Gerald Chumley Felix Chun Lim Chung Moises Cinco
Juan Ciriaco Gilbert Cisneros Arthur Clark Christian Clark Donald Clark Jerry
Clark Trevor Clark Trisha Clark Gregory Clark Martin Clarke Antonio Claros Jerry
Clary Adolfo Claudio Michael Clay Monte Clayton Terry Clayton Ryan Clear James
Cleer Marlo Clegg Michael Clements Benny Clemments Marvin Cleveland Theodore
Clifkoep Russell Clifton Edwin Clignett John Clough Virginia Clower Joe Cobb
Anthony Coble Luis Cobos Russell Cochran Egetzain Cocuy Barney Cogswell Kirk
Cole Randy Cole William Cole Joe Coleman Mikell Coleman Tracy Coleman William
Coleman Geronimo Collazo Jeffrey Collier Larry Collier Bennie Collins Curtis
Collins Donna Collins James Collins Kevin Collins James Collins Carlos Colon Jon
Colston Theodore Combs Verna Combs Joan Comer Floyd Comerford Derek Conard Mark
Condren Paul Cone William Cone Christopher Conn Levon Conner Ronald Conner
Steven Conner Abdula Contek Anthony Contreras Basilio Contreras Eduardo
Contreras Evaristo Contreras Frank Contreras Isabel Contreras Jesse Contreras
Jesus Contreras Jose Contreras Rene Contreras Silvino Contreras Virgilio
Contreras Jesse Coody Brandon Cook Candace Cook Donald Cook Gregory Cook
Michelle Cook Nicholas Cook William Cook Freddie Cook Victor Cook Shanda Cook
Carl Cooley Jennifer Cooley James Coone Calvin Cooper David Cooper Michael
Cooper Darrell Coots Timothy Cope Robert Copenhaver Julie Coppage Rene Corado
Richard Corbitt Jose Cordero Jack Cordes Reyna Cordova Jose Cornejo Marcos
Cornejo William Cornejo Romulo Cornelio Kyle Cornett Javier Corona Sergio Corona
Manuel Cortes Jaime Cortes-sanchez Francisco Cortez Jesus Cortez Salvador Cortez
Naomi Cortez Jose Cortinas John Cosper Jr Brian Cosson Joe Costilla Gary Coursey
David Covarrubias Enrique Covarrubias Hector Covarrubias Odilon Covarrubias
Michael Cowan Marilyn Cox Warren Crabb Christopher Craft William Craft Randy
Craig Gary Crausbay Anthony Cravalho John Craver James Crawford Randall Crawley
Alan Creekmore Catherine Creel Charles Crist Andrew Croniser Justin Crook Jason
Cross Gary Crotwell Josh Crouch Chad Crowe Curtis Crowe Samuel Crowe Alfredo
Cruz Jerry Cruz Jose Cruz Jose Cruz Mirlando Cruz Sergio Cruz Mario Cuc Javier
Cuello Victor Cuevas Ashli Cullins Rodney Culliver Harold Cunningham Tony Curtis
Michael Custer Richard Dahlgren Esteban Dait Robert Dalton Elias Damian Rafael
Danas Ralfael Danas Jr Samuel Dandy Dao Dang Kelly Danker Thomas Danley Daryl
Darby Stanley Darrin Harold Daugherty Patrick Daugherty Renee Daughtry Lee David
Jr Samuel Davidson Billy Davis Brandon Davis Brian Davis Christopher Davis
Dajuana Davis Dennis Davis Derrick Davis Dorothy Davis Edward Davis James Davis
Johnny Davis Rechard Davis Undara Davis Wilbert Davis Wilma Davis Robert Davis
Jeffrey Davis Edwin Davis Jr Mike Davison Brenda Dawson Jesus De Jesus Reynaldo
De la Cruz Ines De La Cruz Jr Alberto De La Garza Roberto De Leon Larry Dean
Steven Dean Drew Dearman Ronda Deblance Christopher Debord David Debruler Lisa
Deckard Leslie Decker Wilton Decuir Sr Barry Deese Tomas Degante Trinidad
Degollado Jaime Del Gadillo Jr Cesar Delacruz Matias Delagarza Katheryn Delaney
Patrick Delaney II Ronnie Delapaz Carlos Deleon Julio Deleon Marcos Delgado Mary
Delgado Ramon Delgado Isidoro Delgado Francois Delien Waylon Dellingner Michael
Deloach Eric Delvechio Boyd Mark Dempsey Frank Dennis Isaac Dennis Terance
Dennis Adam Densmore Christopher Densmore Mark Denton Alexander Dercach Johnny
Derossett Mark Detwiler Dennis Deville Carol Devine Adria Dewberry Everardo Diaz
Hector Diaz Herminio Diaz Lopez Jose Diaz Luis Diaz Maynor Diaz Miguel Diaz
Charles Dickinson Edward Dickinson Lonnie Dickson Jr Minh Diep Beth Dillard
Gregory Dillard Charles Dillon William Dinkins Jacob Disciplina Robert Disney
Kyle Dittl David Dixon Laytonga Dixon Don Dixon Rolando Dizon Khalinh Doan Mark
Dobbins Anthony Dobson Keithdreath Dockery Tommy Doddridge James Dodson Richard
Dodson Ronald Dodson Daniel Doherty Anthony Domicolo Alfonso Dominguez Jose
Dominguez Hector Dominguez Derrick Donahue Robert Donahue Susan Donaldson Elmer
Donley James Donovan Gary Donovan Yves Dorgilus Julie Doss Wallace Doss Ramona
Dosser Wendi Dosser Aly Dosso Rebecca Dotson Stephen Dotson Tammie Doty Anna
Douangmala Rick Doucet Chris Douglas Michael Douglas Craig Douglas Perry
Douglass Gerald Dowd Theresa Downs Martin Doyle Derrick Drake Sladana Draskovic
Fred Drilling Don Driver Larry Driver Kurt Drobisch Sheila Drown Harold Drum
Julie Drummond Gene Dryden Sergio Duarte David Dubois Jerry Dubose Shawanda
Dudley Gary Dukes Gerald Dukes Andrew Dumas Jr Henry Dumesnil Jackie Duncan Joe
Duncan Shawn Duncan Daphne Duncan Daniel Dungan Ricky Dunlap Jeffrey Dunlap
Christopher Dunn Michael Dunn Alvaro Duran Francisco Duran Santos Duran L Durand
III Jessica Dusek A Dutton Cathy Duty Albert Duval Jr David Dye George Dye Larry
Dye Michael Dyer Timothy Dykes James East Roberto Echeverria Chadrick Eddleman
Eric Eddy George Eddy Diana Eder Boyd Eder Franklin Edgmon Jr Carl Edney Jr Kay
Edson Derrick Edwards Jacqueline Edwards Owen Edwards Ronnie Edwards William
Edwards Dennis Edwards Dawn Edwards Donna Edwards William Edwards Jr Aniceto
Elias Jesus Elizalde John Eller Tamera Elliott David Ellis Hugh Ellis Timothy
Ellis Walter Ellison Roberto Elorza James Elswick Alesha Emge Juan Encarnacion
Albert Encinas Stephanie Enge Richard Engeldinger Louie Engelke Rhonda Engelman
Lonnie England Michael England Steve England Jennifer Engel Cheryl Engle Robert
Engler Jack English Joseph Ennis Juan Enriquez William Eoff Steven Epp Bonnie
Erickson Kenneth Ernest Gabriel Escalante Pedro Escalante Ernesto Escalona Jose
Escareno Alberto Escobar Jose Escobar Juan Escoto Vida Eshun Monica Espinosa Joe
Esquivel John Esquivel Benito Estrada Costantino Estrada Jesus Estrada Maria
Estrada Rodolfo Estrada Jr John Eubanks James Evans Ollie Evans M elita Evans
Carl Evans Jr Edward Evans Jr Richard Everett Lisa Everroad Linda Eyeington
Peggy Fairbank Mozell Fairley Jr Andre Falls George Farley Kenneth Farmer Thomas
Farmer Brandy Farrar Debbie Farrister Debra Farrister Gerald Farrister Carol
Fatheree Christopher Fatimiro James Fawcett Alfredo Fedelin Helen Feeney Jose
Feliciano Marion Felipe John Felts Gayle Ferguson Sergio Fernandez Jeffrey Fero
Marcelo Ferreyra Misael Ferrufino Lisa-marie Feyerabend Michael Ficker Clifton
Fields Curtis Fields Thomas Fields Vernon Fields Rene Filiciano Zamor Fils
Amanda Fink Jerry Finley Russell Finley William First Teodoro Fiscal Christopher
Fischer Keith Fischer Alan Fisher Thomas Fisher Mary Fitzgerald Kevin Fleming
Scott Fleming Debra Flippen Adan Flores Bertin Flores Carlos Flores Chad Flores
Crecencio Flores Damion Flores Elias Flores Elias Flores Elodia Flores Jorge
Flores Jose Flores Jose Flores Luis Flores Marcos Flores Raul Flores Ricardo
Flores Rogelio Flores Sigfredo Flores Vicente Flores Annette Flores Manuel
Flores Jr Raul Flores Jr Carolyn Flowers Jesse Flowers Archie Floyd Kenneth
Floyd Troy Floyd Bob Flugrad Colt Foley Andrew Follett Thomas Fondren Norman
Fontenot Thomas Ford Robert Fordham William Forest Dwayne Forrest Robert Forshee
Jr Jennifer Fort Herman Foster Sharon Foster Randy Fouse Joel Fowler Kevin
Fowler Michael Fowler Jerry Fowler Jr Dean Fox Grady Fox Russell Fox John Frank
Paul Franklin Ted Franklin Brian Frantz Julia Frazee Charles Frazier Oscar
Freeman Rogers Freeman Sampson Freeman Jr Tania Freitas Paul Freker Kofi
Frempong John French Luis Frias Marco Frias Carl Fries Reed Froebel Randall
Froehlich Richard Fucik Amilcar Fuentes Douglas Fuentes Hugo Fuentes Isidoro
Fuentes Jose Fuentes Jose Fuentes Lesther Fuentes Juan Fuentes Jr Johnny Fulks
Ronny Fulks Dennis Fuller Doug Fuller David Fulton Ann Fults Drayton Fults Jr
Jose Funes David Fuqua Duane Furry Michael Fuselier Scott Fuselier Jimmy Gabriel
Luis Gaeta Scott Gaffney Charles Gagne Jr Kristina Gahimer William Gaines Walter
Galdamez Freddy Galindo Rigoberto Galindo Jorge Galindo-Castro Jorge Gallardo
Marcial Gallardo Robert Gallaway Robert Galley Charles Galloway Lucio Galvan
Manuel Galvan Luis Galvez Reynaldo Galvez Ruben Galvez Keny Galvez-galo Richard
Gamble Wilson Gamboa Larry Gamel April Ganado Arlie Gandy Michael Gannon Arturo
Gaona Ruben Garces Abraham Garcia Adrian Garcia Alan Garcia Albino Garcia Andres
Garcia Arturo Garcia Brenda Garcia David Garcia Eleno Garcia Elmer Garcia
Filiberto Garcia Jesus Garcia John Garcia Jorge Garcia Jorge Garcia Jose Garcia
Jose Garcia Jose Garcia Jose Garcia Julian Garcia Kristine Garcia Mariano Garcia
Mario Garcia Melesio Garcia Miguel Garcia Ricardo Garcia Samuel Garcia Urbano
Garcia Valentin Garcia Joe Garcia Rudolph Garcia IV Raphael Gardella Eric Gardia
Shendra Gardner Elton Gardner Heidi Gardner Lori Garlitch James Garmon James
Garner Debra Garrett Brian Garry Alejandro Garza Daniel Garza David Garza Fidel
Garza Gustavo Garza Heraldo Garza Homero Garza Juan Garza Ramiro Garza Robert
Garza Victor Garza Betty Garza Gaspar Puentes-Mendez Laura Gates Thomas Gaughan
Floyd Gauntt Jack Gay Joann Gay Earl Gay Jr Jerry Gazley Carol Geary Brian
Geffre Donna Gendreau Charles Gentry Jerry Gernand Robert Geter James Giacomo
James Gibbins Christopher Gibson Elizabeth Gibson James Gibson Jason Gibson
Randall Gibson Randy Gibson Ronald Gibson Susan Gibson Judy Gibson Bruce
Gilbreath John Gilbreath Greggory Giles James Gill Ronald Gill Jason Gilliam
Albert Ginn Kelly Ginn Jeffery Girdler Alvaro Giron James Gladden Charles Glady
Anthony Glass Charla Glass Daniel Glenn Darryl Glenn Jeffrey Glosser Pete Glover
Paul Goad Phillip Goad Randal Gober Lakeram Gobin Gary Goble Gregory Godfrey
Rafael Godinez Robert Godwin Gary Goelzer Jason Goff Darryl Goins Mark Goins
Steven Goins Donald Golden Micheal Golden Dean Goldman Robert Goldman Dennis
Golladay Baltazar Gomez Christobal Gomez Daniel Gomez Miguel Gomez Pedro Gomez
Ricardo Gomez Gerber Gongora Arnulfo Gonzales Ismael Gonzales Manuel Gonzales
Natalio Gonzales Danubio Gonzalez Francisco Gonzalez Hector Gonzalez Israel
Gonzalez Joe Gonzalez Joel Gonzalez Jose Gonzalez Jose Gonzalez Jose Gonzalez
Juan Gonzalez Juan Gonzalez Mario Gonzalez Mark Gonzalez Martin Gonzalez
Porfirio Gonzalez Raul Gonzalez Rigoberto Gonzalez Eduardo Gonzalez III Phillip
Goode Bradley Goodman Roy Goodman Russel Goodmen Barbara Goodson Gerald Goodson
Philip Goodwin Gavin Gordon Walter Gordon Tina Gordon Meagan Goudeau Anthony
Gracia Ryan Graff James Graham Walter Graham Abraham Granados Joe Granados
Victor Granados Davudovich Grandez David Grant Stanley Grant Cristina Grasso
Douglas Graves Catherine Graves Octavia Graves Jeremiah Graves Jay Greathouse
Charles Green David Green Eileen Green Jeffrey Green Jimmy Green Kelvin Green
Robert Green Scott Green Verily Green William Green Dan Greer Mark Greer Tiffany
Gregg Paul Gregory Johnny Grein James Griffin Patrick Griffin Ronnie Griffin
Allen Griffin Russell Griffith Jr Lovie Griggs Noe Grimaldo James Griner Tony
Grise Henry Gross Michael Gross Debra Grow Jose Guardado Ramiro Guerra April
Guerrero Juan Guerrero Elpidio Guevara Jesus Guevara Joaquin Guevara Jose
Guevara Jose Guevara Jose Guevara Royce Guill Fred Guiterrez Jr Conrad Gullett
Brian Gulley Jimmy Gulley Thomas Gunn Jr Raymond Gunsauley Jr Greg Gunter
Scottie Gunter Mario Gurrola Agustin Gutierrez Alejandra Gutierrez Alejandro
Gutierrez Federico Gutierrez Guadalupe Gutierrez Heliodoro Gutierrez Milton
Gutierrez Noe Gutierrez Rene Gutierrez Serigo Gutierrez Brian Guy Dora Guzman
Fortino Guzman Gerardo Guzman Hector Guzman Hilario Guzman Joseph Guzman Juan
Guzman Luis Guzman Rodolfo Guzman Robert Gwynn Kyle Gwynn Yaw Gyamera Abena
Gyamerah Earl Hacker Timothy Hackler Robert Hadden Isaac Hagans Jr James Hagen
Kathy Hager John Hahn Robert Haigler Dustin Hall Floyd Hall Mark Hall Mark Hall
Michael Hall Thomas Hall Bradley Hall Jesse Hall III James Hallberg Richard Ham
John Hamburg Saad Hamdi Darryl Hamilton James Hamilton Jeffrey Hamilton George
Hamm Bobbie Hammond Charles Hammond Dianne Hammond Roy Hammonds Dustin Hampton
Harvey Hampton Allison Hand Michael Hand Kent Haney Rodney Hankins Charles Hanks
Walt Hannath Roger Hansen Donald Hanson Joe Hanson Ron Hanson Christina Hanvey
Steven Hanvey Daniel Happel Mike Harbour Robert Harbuck David Harden Phillip
Hardesty Dora Harding Bryce Hardwick Josh Hardy Kenneth Hardy Luis Hardy Jenny
Hare Richard Haren Michael Harendt Angela Harley Joseph Harnage Gary Harness
David Harp Robert Harper Jerry Harpster Alean Harris Andrew Harris Kari Harris
Ronnie Harris Anthony Harrison Charles Harrison Ronnie Harrison Leon Hart
Leonard Hart Henry Hartley Franklin Hartman Jr Matthew Hartnup Adel Hasan Karen
Haskins Dalton Hatcher Mark Hatfield Ricky Hatfield Kenneth Hatten Jr Joseph
Haudey Debbie Hauptman Judy Havel Billy Havins Mark Hawkins Patrick Hawkins
Marvin Hayden Penny Haynes Ralph Hays Ralph Hays Jr Roy Hearn Samuel Heatherly
Chris Hebert Francis Heck Steven Heil Robert Heinemann Garrett Heinrich Kristi
Heinrich William Heiser Frank Helton Ronald Helton Jr Jackie Hembree Johnnie
Hembree Luis Hemerith Hector Hemmer Carlies Henderson Ernest Henderson Kelvin
Henderson Sandra Henderson James Henderson Jr W Hendricks Ralph Hendrickson
Sammie Hendrix Denise Henegar Braulio Henriquez Jaime Henriquez Jose Henriquez
Kennard Henry Patricia Henry Randy Henry Renee Henry Donna Hensley E Hensley
Mary Hensley Tony Hensley David Hensley Toy Henson Christopher Herd Charles
Herman Anthony Hernandez Armando Hernandez Benis Hernandez Candelario Hernandez
David Hernandez Dimas Hernandez Eduardo Hernandez Felix Hernandez Fermin
Hernandez Gerardo Hernandez Gustavo Hernandez Hector Hernandez Hector Hernandez
Ignacio Hernandez Ignacio Hernandez J Hernandez Jaime Hernandez Javier Hernandez
Jessica Hernandez Jesus Hernandez Jose Hernandez Jose Hernandez Juan Hernandez
Juan Hernandez Juan Hernandez Julio Hernandez Leodegario Hernandez Luis
Hernandez Manuel Hernandez Manuel Hernandez Mauricio Hernandez Miguel Hernandez
Miguel Hernandez Miguel Hernandez Pedro Hernandez Pedro Hernandez Ramiro
Hernandez Rocki Hernandez Rony Hernandez Rurick Hernandez Sam Hernandez Ulises
Hernandez Victor Hernandez Victor Hernandez Raymond Hernandez Pete Hernandez Jr
Pete Hernandez Jr Jose Hernanes Shannon Herndon Cirilo Herrera Eduardo Herrera
Edwin Herrera Jorge Herrera Jose Herrera Lorenzo Herrera Oscar Herrera Sergio
Herrera Thomas Herrera Hilario Herrera Jr Arnold Herron Charles Herschlag
Rosemary Hesskew Roy Hickenbottom John Hicklin III Delaine Hicks Don Hicks
Jeffery Hicks Terrell Hicks Billy Higdon Bonnie Higgins Jeffrey Hildebrand John
Hildebrand Bradford Hill Eddie Hill John Hill Kenneth Hill Alice Hill Sherry
Hill Danny Hillard William Hilley Jeff Hillhouse David Hillstrom Steven Hines
Fernando Hinojosa Donna Hise Raymond Hobbs John Hockenberry Casey Hodges Bruce
Hodgson Robert Hoekstra Gordon Hoene Joan Hoesl Gailene Hofer Carl Hoffart Jaime
Hoffman Jesus Hoffman Robert Hogan Douglas Holbert Paul Holden Richard Holiday
Jr Bruce Holladay Lee Hollas Dwain Holliefield June Hollis Willie Holloman
Maiani Holloway Orie Holly Edward Holm Ellard Holmbeck Christopher Holmes Jesse
Holst Abraham Holt Alfonzo Holts J Honeycutt Rajesh Honnavara Buck Hood Jason
Hood Kenneth Hood Lenard Hooker Christina Hooks Brian Hoover Harry Hoover Jr
James Hope Jr Adam Horton Eric Horton Lacey Horton Lloyd Horton III Kevin
Hoskins Marty Hoskins Ronnie Hoskins Ladonna Houston Joseph Hovater Donald
Howard Kenneth Howard Willie Howard James Howard Linda Howard Michael Howell Jr
Porfirio Huanca Jewell Hubbard Larry Hubbard David Hubbard Jr Jeffrey Huber
Charles Hubert Adrian Hudson James Hudson Ralph Hudson Wendell Hudson Adan
Huerta Juan Huerta David Huff Brian Huffaker Chad Huffman James Huffman Jeremy
Huffmeister Mitchell Huffty Anthony Hughes Damian Hughes Jeffery Hughes Scott
Hughes Roc Hughes Eric Hugo Bradford Hugunin Claude Hull Denise Hull Chad Hulsey
Kenneth Hulsey Robert Hulsey Rodney Hulsey Ronald Hulsey Donnie Humphries Desi
Hunt Donna Hunt Marie Hunt Johnny Hunter Kareen Hunter Karen Hunter Thomas
Hunter Kelly Huntsman Joe Hurst Joshua Hurst Shawn Hurst Timothy Hurt Shan
Hutchinson Cynthia Hutson Dorlesa Hutto Lovely Imarhia Oscar Inclan Jose Infante
Steven Inge Shane Inglesby Chanpheng Inthavong Vilayphone Inthavong Bong
Inthavongsa Kao Inthavongsa Soukkaseum Inthavongsa Jose Iraheta Brenda Irby
Maurice Irby Troy Irby Chad Irwin Eric Irwin Glen Ivey Robert Ivey Jim Ivins
Deciderio Ixmay-Chanchava Rick Jablonski Glenn Jackoviak Eugene Jackson Gerald
Jackson Henry Jackson Henry Jackson Kirby Jackson Michael Jackson Scott Jackson
Timothy Jackson Tommy Jackson Candido Jaimes Cayetano Jaimes Oscar Jaimes Raunel
Jaimes Alvaro Jaime-Soto Brian Jaks Richard James Jamie Janacek Sheila Janot
Thomas Jansen Kalpesh Jariwala Jimmy Jarrell Michael Jarrell Robert Jarrell
Robert Jarrell Jr Bonnie Jarvis Elvir Jasaraj Linton Jason Mel Jastram Mohamed
Jatip Gregory Jaussaud Ephraim Jaussi Bassam Jawhary Nathan Jay Jimmy Jeffers
Larry Jeffers Calvin Jefferson Ladonna Jefferson George Jeffries Bassel Jelahej
Nicholas Jellerson James Jenkins Larry Jennings Richard Jensen Timothy Jerkins
David Jeror Procter Jesse Linda Jett Hernan Jimenez Juan Jimenez Saul Jimenez
Stan Jimerson Jose Jiminez Jason Jobe Jarrod Johns James Johns Clara Johns Brad
Johnson Damon Johnson Diron Johnson Elvin Johnson Fredrick Johnson Georganna
Johnson Hazel Johnson Jeremy Johnson Jerry Johnson Jerry Johnson John Johnson
Johnny Johnson Joseph Johnson Kent Johnson Luther Johnson Mcray Johnson Michael
Johnson Pamela Johnson Richard Johnson Rickie Johnson Robert Johnson Rufus
Johnson Steven Johnson Thomas Johnson Waylon Johnson Dale Johnson Elijah Johnson
John Johnson M Johnson Thomas Johnson Christine Johnson Franklin Johnson Jr
Joseph Johnson Jr Jane Johnston Timmy Jolley Cindy Jones James Jones Jeffrey
Jones Keith Jones Kevin Jones Lois Jones Ronald Jones William Jones Willie Lee
Jones C Jones David Jones David Jones Gary Jones Lynda Jones Mark Jones Terrell
Jones Diane Jones-thome Michael Jordan Ray Jordan Steffanie Jordan Kenny Joslin
Charles Joyner Jr Hector Juarez Dann Juntunen Garrett Jurgajtis Ty Kaase Scott
Kaiser David Kalina Leslie Kane Fred Karnes Allen Keehnel Tracy Keeling Jerry
Kees Harold Kees Steve Kehrli June Keith Brenda Kelley Penny Kelley Willie
Kelley Tracy Kelley Frankie Kellum Jimmy Kellum Joey Kellum Susan Kelly William
Kelly Frank Kempa Bonnita Kennedy John Kennedy Jon Kennedy Jr William Kern Jr
Dann Kerns Joseph Kerr David Kerr Sr Robert Kesler Randall Ketcham Bounpanh
Khamphoumy Phosy Khottavong Bouakeo Khounsavanh Veo Khounvichit Negassi Kidane
James Kidwell Eric Kinard Bryan Kindall Clarence Kindall Chad Kiner Harold King
James King Keith King Melvin King Richard King Robert King Thomas King Gerald
King John King Lee Kinney Bradley Kinsey Kenneth Kipp Justin Kirby Korey
Kirchner Andrea Kirkpatrick Lev Kitaynik Robert Kite Jerry Kitts Jenny Kizner
Jurgen Klein Richard Klein Kevin Kleinhans Dustin Kluck Joshua Knight Lorie
Knight Penny Knight Bobby Knight II Dennis Knighten Keith Knighton Kenneth
Knighton Nathan Knox Bridget Kobler Jeffrey Koehoorn John Koenig Fredrick
Koetting Kyle Kogge Crystal Kohutek Edwin Kohutek Jr Michael Kollmann Janet
Konadu Bhasker Kondakalla Edward Kopech Mark Korhonen Jeremy Kost Randell Kotara
Adolph Kovasovic Jr Mitchell Kowen Charles Kozlovsky Betty Kraber Angela Kralis
Travis Kreger Randy Krile Kristina Krouse Ritesh Kumar John Kuzdal John La salle
Bernie Laguna Jose Laguna Colin Lally Stephanie Lamb William Lamb Gary Lambdin
Brandon Lambert Barry Laminack Glynn Laminack Edmond Lancaster Troy Lancaster
Cecil Land Oscar Land Jr Dezola Landing Gloria Landrum Johnny Landrum Randall
Landrum Michael Lane Donna Laney Lakheda Lang Robert Lang William Lange Charles
Langley Billy Langston Faye Langston Larry Lanham Tina Lanham Samuel Lanier Joe
Lanning Kimet Lansing Jose Lara Juan Lara William Largent Miguel Larios Jeremy
Lariosa David Later David Latin Roger Latour Kimberly Lauraitis Tommy Laurent
Mark Laverdiere Stephen Lavery Jenifer Lawrence William Lawrence David Lawson
Kevin Lawson Larry Lawson Monica Lawson Ora Lawson James Lawson David Lay Jeff
Lay John Lay Lewis Lay James Layton Francisco Lazo Bobby Lea Brian Leach Joseph
Leach Brad Lebeter Joseph Lebuis Antonio Ledezma Maria Ledezma Blong Lee Cynthia
Lee David Lee Gary Lee Gregory Lee Hue Lee Jabiari Lee Kenneth Lee Leng Lee Loy
Lee Amanda Leffler Dianna Lehman Jeffrey Leist Timothy Lemkau Howard Lemmons Jr
Raul Lemus Carel Lenoir Jeremy Leopard Barbara Letinich Robert Letsinger Edward
Leverette Paula Levien Henry Lewis John Lewis Ken Lewis Teddy Lewis William
Lewis Charles Lewis Jr Niem Liamvongdevane Lider Liang Sean Libbey Clinton
Lighthall Jr Joel Lightsey Henry Lilie Jaime Lima Torbjorn Lindblad Brian
Lindenberger Brenda Linderman Deborah Lindley Ezra Lindley Tammy Lindley Ava
Lindsey Robert Lipham James Lipscomb Ramiro Lira David Little Robert Little K
Littlefield Wayne Litzinger Daoyou Liu Brandon Lloyd James Lloyd Jeffrey Lloyd
Rubin Lloyd Virgilio Lobrin Robert Lockey Charles Lockhart Mary Lockwood Kevin
Logsdon Audie Long John Long Patti Long Vivian Long William Long Jr Eugene
Longnecker Jr Abel Longoria Eddie Longoria Eugene Lonsdale Jr Abraham Lopes Ana
Lopez Concepcion Lopez Dawn Lopez Delfino Lopez Eudelia Lopez Francisco Lopez
Guadalupe Lopez Jose Lopez Jose Lopez Jose Lopez Juan Lopez Juan Lopez Juan
Lopez Pablo Lopez Pedro Lopez Pedro Lopez Reinaldo Lopez Rolando Lopez Ruben
Lopez Ruben Lopez Salvador Lopez Santos Lopez Victor Lopez Sabino Loredo
Sengpheth Louangdara Richard Loudin Bobby Love Calvin Love Marcia Lovelady Billy
Lowe Lee Lowe Sheila Lowe Terry Lowe Tania Lower James Lowery Jimmy Lowery
Antionett Loyd Gerber Loza Javier Lozano Victor Lozano Jr Panh Luangxay Susan
Luangxay Bonifacio Luax Bobby Lucas Gary Lucas Roger Lucas Juan Lucero Flavio
Lucio Federico Lugo Gabriel Lugo Mario Lugo Mark Luigs Miguel Luis Alberto Lujan
Hector Lujano Dawnyel Lumley Andres Luna Jose Luna Juan Luna Pablo Luna Leisha
Lunceford Dung Luong Travis Lux Shelia Lyons Douglas Lyons Melissa Lytle Leonid
Lyubimtsev Dennis Maas Gerald Mabey Howell Mabry Mauricio Macias Timothy Mack
Max Madani Kenneth Maddox Michael Madron Steve Madron Wesley Madron Willard
Madron William Madron Karen Madry Agustin Magallon Robert Magill Troy Mahaffey
Carl Mahan Apolinar Maldon ado Jesus Maldonado Jose Maldonado Orlando Maldonado
Otto Maldonado Ruben Maldonado John Malette Eric Malicoat Donald Mallory Shawn
Malloy Donna Malone Timothy Malone Melvyn Mamula David Mancia Francisco Mancia
Craig Mangold Benjamin Mangrum Christopher Mann Garland Mann Travis Manous Jose
Manriquez Marcelino Marin Robert Marinella Juan Marines Rogelio Marines Pamela
Markins Steve Marlow Robin Marlow Santos Marquez Julian Marquina Ralph Marten
Alan Martin Bobby Martin Christopher Martin Jose Martin Joseph Martin Lance
Martin Leslie Martin Matthew Martin Robert Martin Ronnie Martin Keith Martin
Shannon Martindale Agustin Martinez Alberto Martinez Alfonso Martinez Alvino
Martinez Anthony Martinez Antonio Martinez Arlos Martinez Arnold Martinez Carlos
Martinez Cristobal Martinez Daniel Martinez Denys Martinez Domingo Martinez
Edmundo Martinez Edwin Martinez Eliseo Martinez Ernestina Martinez Felipe
Martinez Felix Martinez Filimon Martinez Gilber Martinez Hector Martinez Henry
Martinez J Martinez Jaime Martinez Jose Martinez Juan Martinez Mario Martinez
Michael Martinez Miguel Martinez Noe Martinez Oscar Martinez Patricio M artinez
Pedro Martinez Rafael Martinez Ruben Martinez Stella Martinez Tomas Martinez
Victor Martinez Charlie Marzahn Jr Edyvan Marzo Hafis Masha Anthony Mason
Kenneth Mason Mark Mason Maurice Mason Jr Mark Massengale Michael Massengill
Ashlie Massey Mark Massey Christopher Massie Peggy Massingill Eric Masterson
Camerino Mata Larry Mathews Brian Mathis Carol Mathis Lori Mathis Maureen Mathis
Sandra Matlock Anthony Matos Linda Matthews Michael Matulich Thomas Matusick
Elton Maxwell Michael May Lisa May Tania Maynez Elvis Mays Mark Maytum Anthony
Mbah Dewey McAdams Murphy McBrayer Jr Rocky McBurnett Teena McBurnett Lisa
McCane Susan McCarty Virgil McCarty Daniel McClain Jerry McClarty Barry McClure
Christopher McClure Gilbert McCormick John McCormick Lillian McCray Jeremy
McDaniel Sharon McDaniel Terry McDaniel Timothy McDaniel Dennis McDeavitt
Kimberly McDeerman John McDonald Ira McDonald Jr Carlos McDowell Michael McDuff
Mark McElhinney John McElrath Micah McElroy Lowell McElwee James McEwen Shane
McGaha Gregory McGee Jr Eugene McGhee Jeffery McGowan Hugh McGowan Scott
McGregor Randy McGrone Scott McHugh Scott McIintyre Lester McIntyre III Chester
McKamey Roger McKamey Brian McKamie Jason McKee Kevin McKee Shawn McKeel John
McKenzie Maria McKinney Terry McKinney David McKinzey Amber McKnight Billy
McManus Douglas McMullan Candace McNamee Willie McNeil Marianne McNeill James Mc
Neill Jr Nicholas McPherson Stirling McPherson Marinda McRae William McReynolds
III Mary McVaigh Bradley Meade Eugene Meadows Tom Meadows Ronald Meadows Aubria
Mebane Francisco Medellin Hector Medellin Ruben Medina Robert Medlock Carlos
Medrano Jaime Medrano Juan Medrano Manuel Medrano Clayton Meeks John Meeks
Richard Mehringer Francisco Mejia Joel Mejia Jose Mejia Juan Mejia Manuel Mejia
Reinaldo Mejia-Galvez Juan Mejia-Vicente Pablo Melendez Jr Leonel Mena Martin
Mena Salvador Menchaca John Mendes Jr Carlos Mendez Heraclio Mendez Lorenzo
Mendez Vidal Mendez Dav Mendoza Heriberto Mendoza Hipolito Mendoza Jorge Mendoza
Jose Mendoza Pedro Mendoza Howard Menifee Jr William Meredith Jacqueline Merrell
Wylle Merrill Patrick Merritt Walter Mershon Walter Mertens Jr Keith Messamore
Brian Metcalf Ricky Metzler Christopher Meyers Melisa Meyers Noble Meyers
Armando Meza David Meza Joseph Michalek Cynthia Midgett Royal Milam John Milani
Luke Milbourne Myles Millard Albert Miller Bryan Miller Cameron Miller Danny
Miller Deborah Miller Jeffrey Miller Karen Miller Kenneth Miller Larry Miller
Mack Miller Keith Miller Christina Miller David Miller David Miller James Miller
Shelley Miller David Mills Kenneth Mills Randy Mills Randy Mince Jose Minero
Tanya Minnick Omar Miranda Kelly Mireles Charles Mitchell Cory Mitchell Chad
Mitchell Luis Mixa Rocky Mixon Larry Mobley Deoborah Moffett Michael Moffett
Larry Moffitt Jr Anthony Moise Farilio Moise Parra Moises Daniel Molina Fredy
Molina Guillermo Molina Jose Molina Jose Molina Noe Molina Obdulio Molina Martin
Molloy David Molnar Kenneth Monday Cirilo Mondragon Juan Mondragon Jose Monreal
Randall Monroe Jose Monsivaiz Manolito Montana Ernesto Montero Jose Monterrosa
Polidecto Monterrosa Wilkin Monterrosa Frederick Montgomery Guadalupe Montoya
Jose Montoya Karla Montoya Brian Moody Bruce Moody Jucory Moon Alice Moore Carl
Moore Grady Moore James Moore James Moore Michael Moore Michael Moore Misti
Moore Peggy Moore Timothy Moore Todd Moore Inocencio Mora Julio Mora Luis Mora
Carlos Morales Eribrto Morales Gregorio Morales Jose Morales Jose Morales Jose
Morales Daniel Moran Phillip Moran Matthew Moreau Darryl Moreland Cesar Moreno
Javier Moreno Patrick Moreno Manuel Moreno Jr Christopher Morgan Eric Morgan
Jeffrey Morgan Jesse Morgan Kenneth Morgan Curtis Morgan Sr Laneia Morning
Santos Morquez-Andrade Allen Morris Brantley Morris Leon Morris Linda Morris
Marie Morris Michael Morris Roger Morris Christine Morris-Hart Clifford Morrison
Greta Morrow Rick Morrow Keith Morton Jr Wilma Moser B Mosier Kitty Mosley
Yolanda Mottu Matthew Mowery Jerry Moy Daniel Mozisek Steven Mueller Jerry
Mullaney Jeff Mullaney Albert Muller III Amy Mullins Jesus Muniz Margaret Muniz
Rafael Muniz Alejandro Munoz Fernando Munoz Javier Munoz Julio Munoz Roberto
Munoz Teresa Munoz Victor Munoz Benny Murillo Ramon Murillo Joseph Murphy Rhonda
Murphy Brad Murray Brandy Murray Jared Murray Thomas Murray Martin Murrell
Anthony Myers Anwar Myers Kenneth Myers Dawn Mynatt Mark Myrick Jose Najera
Patrick Nalley Anthony Nalls Krishna Nandakumar Savita Nangia Stephen Napier
Charlie Naranjo Christina Narvaiz Jonathan Natera Imtiyaz Nathani Cathy Naus
Silvia Nava Fidelmar Navarrete Jose Navarrete Melki Navarrete David Navarro
Jorge Navarro Sundar Nayak James Neaderhiser Michael Neal Douglas Nease Alana
Nedderman Vernon Needham Scott Neel Ronald Neeley Scott Neer Albert Neipling
Darwin Nelson Debra Nelson Kenneth Nelson Stanley Nelson Joey Nelson James
Nelson Jr Michael Nesbitt Daniel New John New Leslie Newborn Burt Newman Robert
Newman Valerie Newman Francis Newman Paul Newport Thong Ngo Andy Nguyen John
Nguyen Lam Nguyen Nga Nguyen Richard Nguyen Sonny Nguyen Vinh Nguyen Jeffrey
Nicks James Niemi Southzay Nifong Andre Nitkowski Jack Nixon Deborah Noe Cathy
Noel Michael Noel Windell Noel Gabino Nolasco Pedro Nolasco Roy Nolen
Christopher Norman Woodard Norman Noah Norman Deborah Norris Charles Norton Carl
Norvell W Norwood Jr Matthew Novosel Jerry Noyes Leo Nugent Martin Nunez
Natividad Nunez Tofua-ofa Nuusi-Pututau Nena O'Brien Jesus Ocampo Francisco
Ochoa Albert Ochoa Robert O'Connor Loren O'Connor Robert O'Dell Terry O'Dell
Amos Odit Derrick Odom Deborah Odum Jason Oelschlegel Patrick Ofori Charles
O'Hara Sherry O'Hara Steve Olagues Francis Oldham Michael O'Leary Francisco
Oliba Wayne Oliphant Luis Olivo Jr Everardo Olvera Feliciano Olvera Reynaldo
Olvera Santiago Olvera Pablo Onofre Jose Orellana Dodjie Oriondo Vincent Orlando
Antonio Orozco Jose Orozco David Ortega Victor Ortega Carol Ortiz Isidro Ortiz
Jose Ortiz Mauro Ortiz Maximo Ortiz Rick Orvis David Osborn Larry Osborne Joanna
Osburg Lino Oseguera Emmanuel Osei Samuel Osei-nti Wendell O'Shields Mark
Ostrander Alisha Otto Patricia Outlaw Ventura Ovalle Daryl Overbay Donny
Overcast Paul Overman Hershel Owen Kerry Owen Sheila Owen James Owens Stephen
Owens Stephen Owens Larry Owings Isaac Owusu Isaac Pabon Chester Pace Eliseo
Padilla Jose Padilla Luis Padilla Martin Padilla Omar Padilla Edwardo Padron Jr
Deanne Page Michael Page Robert Paige Jr Heraclio Palacios Nicasio Palencia
Norma Palma Yuri Paltsev Luis Parada Benny Parker Charlene Parker Jeffrey Parker
Leonard Parker Paul Parker Royal Parker James Parks Kristin Parlato Harold
Parman Christopher Parr Roberto Parra Billy Parrish John Pate Tim Pate Robert
Pate IV Dhiru Patel Kirit Patel Christine Patterson Larry Patterson Richard
Patterson Derwood Patton Rick Patton Rebecca Paul Robert Pawelek Jana Payne
Jerry Payne Mike Payne Sean Payne Emilio Paz Jacobo Paz Jerry Paz Dan Peak Mark
Pearce Dennis Pearman Donald Pearson Kevin Pebley Dale Peck Ryan Peck J Pelaez
Julio Pelico Desiderio Pena Eliu Pena Gabriel Pena Idalia Pena Joel Pena Maria
Pena Pablo Pena Arturo Pena Jose Penado O Pendergraff Sheila Pendleton Gary Penn
Marvin Penney Roy Pennington Linda Pentz Les Pepper III Federico Perales
Jeremiah Perales Juan Peraza Alvaro Pereira Arturo Perez Carlos Perez Erik Perez
Ernest Perez Federico Perez Francisco Perez Francisco Perez Gerasmo Perez Hector
Perez Jeronimo Perez Jesus Perez Jose Perez Jose Perez Juan Perez Santiago Perez
Shelly Perez Claude Perilli Brent Perkins Justin Perkins Missey Perkins Debetrio
Perla Gary Perry Conrad Perry II Lloyd Perry III Tamara Peters Terry Peters
Brian Peterson John Peterson Neil Petrillo Gerald Pettit Bret Pettit Leroy Pewee
Alan Peyton George Pfeiffer Mark Pfeiffer Troy Pfeiffer Navinh Phangnivong
Khonthong Phasavath William Phelps Aaron Phillips Brandi Phillips Darrell
Phillips Denford Phillips Eric Phillips Michael Phillips Patricia Phillips
Tabatha Phillips William Phillips Tammy Philpot Ren Phoeuk A-Fou Phong Somphorn
Phothirat Florencio Piedra Charles Pierce James Pierce Tim Pierce Everett
Pietras Brian Pike Kerry Pike Hugh Pilgrim Anthony Pillar Isreal Pineda Alberto
Pinedo Seshu Pinnamaneni Adolphus Pinson Kathy Pitcock Daniel Pittman Jerry
Pittman Kenny Pittman Derek Pitts Quincy Pitts Roy Pitts Elizabeth Pizzi Darun
Platt Dennis Platt Hairon Pleitez Timothy Plotner Barbara Pointer Betty Polak
Romeo Polio William Polio James Pollard Gonzalez Pompello Shelley Pool Regina
Poole Stephen Poole Deborah Poparad Connye Pope Janice Pope John Pope Abundio
Porcayo Miguel Portillo Jorge Posada Joyce Posey David Pounds Christina Pounds
Christopher Powell John Powell Mark Powell Karen Powell Clyde Powers John Powers
Pamela Powers Jesus Prado Chhunna Prak Albert Predmore Katrina Predmore James
Prewitt Braddrick Price Charles Price Franklin Price Jr Greg Price James Price
Nora Price Steve Price Ronnie Prokisch Vickie Prokisch Ricky Pryor Kenneth
Puckett Keith Pudvah Ismael Pulido Juan Pulido Juan Pulido Jr Jose Punnachalil
Andrea Purcell Alan Pyles Bill Pyles Larry Pyles Larry Pyles Terry Pyles Anthony
Quarshie Miriam Quezada Johnny Quinn Jose Quintanilla Jose Quinteros Jose
Quinteros Abbas Qureshi Mehmood Qureshi John Raines Jr Charles Rainwater Gregory
Rainwater Mark Rainwater Raymond Rainwater Gloria Rakstis Amanda Ramage Juan
Ramblas Roger Rambo Adrain Ramirez Alberto Ramirez Breondan Ramirez Dennie
Ramirez Everardo Ramirez Ivan Ramirez Jesus Ramirez Jose Ramirez Jose Ramirez
Kristin Ramirez Maria Ramirez Michelle Ramirez Ramiro Ramirez Rogelio Ramirez
Rosendo Ramirez Teodoro Ramirez Vicente Ramirez Xavier Ramirez Veinna Ramirez
Antonio Ramos Gregory Ramos Jose Ramos Juan Ramos Manuel Ramos Matthew Ramos
Raul Ramos Billie Ramsey Sheldon Randolph Emily Ranesbottom Severino Rangel Lee
Ransburg David Rape Mogor Raphael John Rapozo Mary Rashchke Donna Rascoe Nick
Raso Gerard Rateau Randall Ratliff Rocky Rau Robbie Rau Scott Rawlings Joseph
Ray Penny Ray Kelli Ray Barney Ray III Eddie Read Terri Readshaw Frederick
Reardon Fortunato Rebollar Francisco Rebollar David Rector Kyle Rector Paul Reda
James Redd Curtis Redmond Darrell Redmond Johnnie Reed Steven Reed Stephanie
Reed Brian Reese James Reese James Reese Sr Austreberto Regino Robert Rehman
Cody Reid Michael Reid Stanley Reid David Reinhart Larry Reis Larry Rejcek Larry
Renney Jesse Renteria Juan Resendiz Pedro Retamal Arturo Reyes Bonifacio Reyes
Dionicio Reyes Eugenio Reyes Francisco Reyes J Reyes Jose Reyes Michael Reyes
Michael Reyes Pedro Reyes Rodolfo Reyes Armando Reyes-Maldonado Aaron Reyna Jose
Reyna Chris Reynolds Fred Reynolds Terry Reynolds Rhonda Reynolds Kevin Rhine
Charles Rhodes David Rhodes William Rhodes Daryl Rice Judy Rice Scott Rice
Andrew Rice III Angela Richards Ross Richards Kimberly Richardson Richard
Richardson Ronnie Richardson Kristopher Richey Alvan Richey Jr Kris Richmond
Yancy Richmond Hubert Rickelman Gail Riddle George Rideout Don Riggs George
Riggs Gildardo Rincon Steven Rinker Oria Rio Enrique Rios Erick Rios Ignacio
Rios Jaime Rios Jose Rios Salome Rios Jack Ritchie Jr Hugo Rivas Adan Rivera
Hector Rivera Heladio Rivera Israel Rivera Jose Rivera Jose Rivera Jose Rivera
Jose Rivera Santos Rivera Cynthia Rivera John Rizzi Otis Roach Clint Roady Brian
Roark Eula Robbins Russell Roberson Bryan Roberts Charles Roberts Joseph Roberts
Linda Roberts Meredith Roberts Michael Roberts Corey Robertson David Robertson
Keith Robertson John Robertson Robert Robertson Sr Bradley Robeson Jan Robichaux
A Robinson Alonzo Robinson Bobby Robinson Brian Robinson David Robinson James
Robinson John Robinson Matthew Robinson Willie Robinson Travis Robinson Jose
Robles Armando Rocha Paul Rochester Edgar Rodas Jonathan Rodden John Rode Kevin
Rodrigue Armando Rodriguez Artemio Rodriguez Carlos Rodriguez Charles Rodriguez
Cheryl Rodriguez Deyni Rodriguez Filimon Rodriguez Hector Rodriguez Jacinto
Rodriguez Jaime Rodriguez Jesus Rodriguez Jose Rodriguez Juan Rodriguez Manuel
Rodriguez Mario Rodriguez Miguel Rodriguez Pedro Rodriguez Ray Rodriguez Refugio
Rodriguez Rene Rodriguez Roberto Rodriguez Rodolfo Rodriguez Sandra Rodriguez
Vicente Rodriguez Jesus Rodriguez Vincent Rodriguez Juan Rodriguez Jr Rodolfo
Rodriguez Jr Carolyn Roe Billy Roehling Marvin Roehling Cassandra Rogers Cecil
Rogers Daniel Rogers James Rogers Jason Rogers Michael Rogers Mike Rogers
Michael Rogers Edward Rogowski Jose Rojas Ramiro Rojas Juan Rojas-cabrera Jeremy
Romack Thomas Romack Emigdio Roman Inez Roman Misael Roman Santos Roman
Sinforoso Roman Juan Romero Laura Romero Mariasela Romero Orlando Romero Osmin
Romero Pauline Romero Reynaldo Romero Ricardo Romero Roberto Romero Victor
Romero Reynaldo Romero Jr Thomas Rood Jason Rooks Randall Root Jarrod Roper
Jason Roper Ramona Roque Howard Rosado Roberto Rosado Juan Rosales Nazario
Rosales Frank Rosales Jr Felix Rosas Joe Rosas Jr Brian Rose John Rose Roy Rose
Daniel Roselien John Ross Miguel Rostro Larry Rowden Danny Rowell Laura Royalty
Kathleen Rubalcaba Angel Rubio Christopher Rubio Cristina Rubio Guadalupe Rubio
Jesse Ruby Jr Natasha Rucker Roberto Rueda Mark Ruehl Bryan Ruggles Ernest Ruh
Arturo Ruiz Danilo Ruiz Francisco Ruiz Hector Ruiz Everett Russell Gary Russell
Gary Russell Linda Russell Rodney Russell William Russell Jeffrey Rutherford
Thomas Rutherford Bobby Rutledge Donald Rutledge Latonia Rutledge Susan Ruybal
John Ryder Mark Sabado Ronald Sabisch Ignacio Saenz Javier Saenz George Sago III
Arturo Salazar Eduardo Salazar Erasmo Salazar Javier Salazar Javier Salazar Juan
Salazar Leon Salazar Luis Salazar Marco Salazar Leonardo Salcido Daniel Saldana
Ivan Saldana Tomas Saldana Sergio Saldivar Jose Sales Angel Salgado Rufino
Salgado Vicki Salhus Acencio Salinas Rafael Salinas Simon Salinas Rafael Salinas
Jose Salmeron Marcial Salmeron Walter Salmeron Dawn Salmons Ciro Samperi Dustin
Sample Gwendolyn Sample Constantino Sanchez David Sanchez Gerardo Sanchez Jose
Sanchez Jose Sanchez Juan Sanchez Luis Sanchez Ray Sanchez Rudolfo Sanchez Clay
Sanders Dale Sanders Daryl Sanders Marcus Sanders Paul Sanders Patricia Sanders
Edward Sanderson Mark Sanderson Greta Sandifer Andres Sandoval Juan Sandoval
Noel San doval Sixto Sandoval Pheng Sanesomkane Joe Sanford Manuel Santamaria
Isaias Santana Jorge Santana-Torres Maritza Santiago Eulalio Santivanes Loyle
Sapaugh Liza Sapaugh Stephen Sapp Melinda Saranthus Loretto Saravia Christopher
Sarte Michael Saturday Ignacio Saucedo Jose Saucedo Raunel Saucedo Raymundo
Saucedo Glenn Saunders Keo Savavong Khamphouth Savavong Darrell Sawin Jeanette
Saxon Thomson Sayavong Judy Sayavong Sherry Saylor Randy Sayre Jr Bounlai
Saysombath Lester Scarbro Thomas Scarinza Richard Schaefer Edward Schattel III
David Scheckler Raymond Schenk Fred Scherff Calvin Scheuermann Mary E. Schimmels
Sharon Schippers Michael Schmidt Philip Schnur Christina Schoelen Melissa
Schramm Judith Schroeder Scott Schroeder Vicky Schroeder Ronald Schroeder Fred
Schubert Johnie Schulte Charles Schultz Jr Craig Schupp Sylvia Sciancalepore
Doyle Scott Kenneth Scott Roderick Scott Jefferson Scoville Carl Scroggins
Elvira Seamans Kevin Searcy Brian Seavey Felipe Sebastian Curtis Seber Jim Seber
Kelli Seber Matthew Sebesta Raymond Sebesta Jr Gregory Sechrist Ernest Seideman
Emmett Sellers Gerald Semien Harry Sengrath Sysai Sengrath Terry Sensing Jose
Sequeiram Uvaldo Serna John Serrano Johnny Serrano Thomas Serrano III Apolonio
Serrato Blas Serrato Domingo Serrato Froylan Serrato Jose Serrato Lazaro Serrato
Pablo Serrato Thomas Sewell James Sexton Johnny Sexton Rick Shadden Dewayne
Shaleen Zachary Shamp Denny Sharp Kevin Sharp Louise Sharp Terry Sharp Nelson
Shaw Richard Shaw Jeryl Shaw Gary Shears Gary Shears Scott Shed Patty Sheely Roy
Shelnutt Stephen Shelton Nelson Shepard Arash Shiehbeiki Rhonda Shifflett Scott
Shimkus Jeffrey Shingler Tracy Shirels Christopher Shirrell Carl Shiveley Jr
John Shivers Donald Shockey Jim Shockley David Shope Diane Shroyer Douglas Shull
Josh Shultz W Shurtleff Scott Shutters Alla Shvarts Vincent Siegel Eduardo
Sierra Jose Sierra Rodney Sifers Ricky Silcox Jose Silva Martin Silva Shelby
Simmons James Simpson Brady Sims Jerrie Sims Kimberly Sims Beau Sinclair Sharon
Sinclair Abijah Singer Derek Singleton Jeffrey Singleton Stephanie Singleton
David Sipes Jacob Sipes Anthony Siriani Jr Kynoi Sisomboun Scott Siverly
Soudaphone Sivilay Leslie Skaggs Carl Skeene Carl Skeene C Skillern Duane
Slatter Elaine Slaughter Jimmy Slaughter Jr Jack Slauter John Sligh Michael
Sloan Thomas Slovacek Billy Slover Samuel Slover Jr Ronald Sluder William
Smedley David Smiddy Teddy Smiddy Alfred Smith Allen Smith Billy Smith Bobby
Smith Bonnie Smith Brian Smith Brian Smith Chad Smith Craig Smith Deidra Smith
Earlie Smith Gregory Smith James Smith Jason Smith Johnny Smith Justin Smith
Leonard Smith Mark Smith Marvin Smith Melanie Smith Michael Smith Pat Smith
Phyllis Smith Rhodney Smith Rickey Smith Robert Smith Robert Smith Rodney Smith
Roger Smith Sherry Smith Steven Smith Tamara Smith Walter Smith Willie Smith
Janet Smith Jill Smith Shirley Smith Millard Smith III Larry Smith Jr Willie
Smith Jr Daniel Smith Jr Connie Smithson Danny Smock Joseph Smothers Thomas
Smothers Charles Snodderly Steven Snodgrass Larry Snow Candy Snyder Anthony
Soares Richard Sobetski Poch Soeun Larry Sofka Malcolm Sojourner Michael
Sojourner Jose Solano Roy Solano Vernon Soley Cynthia Solis Ricardo Solis
Charles Sonsteng Rolando Sontay Santiago Sontay Kerry Sorensen Erasmo Soria
Regino Soria-Arenas Jose Sorto Aurelio Sosa Gaudencio Sosa Daniel Soto Jose
Sotomayor Marcus Southern Kevin Spann Randall Spears Sandra Speck John Spence
James Spence Gregory Spivey Gregory Spizer Tracy Spradlin Roland Stafford
William Standefer III Marvin Stanford Michael Stanford Sr Charles Stanley Marlon
Stanton Donna Stark Michael Stash Elton Steadham Acey Steel Aurbin Steel Aurbin
Steel Jr Stacy Steele William Steelman Shirley Steen Daniel Steffen Steven
Steffen Horace Stegall Sandra Steger Roger Steil Emil Stensland Todd Stephan
Calvin Stephens David Stephens James Stephens Tommie Stephen Johnny Stephens Jr
Daniel Sterrett Paula Stevens Ray Stevens Steven Stevens William Steward Charles
Stewart Craig Stewart Karen Stewart Marshall Stewart Michael Stewart Mitchell
Stewart Ralph Stewart Richard Stewart Robert Stewart Jr Ronnie Stiggers Gerald
Stigler Caleb Stokes Matthew Stone Steven Stone Toney Stone David Stoneking
Debra Storey Marlon Storey Vincent Storey Tracy Stout Galina Strakh Albert
Strangfeld Jr Spencer Stratton Shelley Straub Robin Strickland Fred Strickler Jr
Matthew Strong Charity Strong Jack Stroud Dorothy Styer Darwing Suarez Derwin
Sullivan Arlene Sullivan John Summerall Dewey Summerville William Summerville
Scott Sundin Jose Sura Jose Sura Anthony Surman Jasper Surmieda Michael Sussmann
Yuthachai Suvunrungsi Steven Swancey Bill Swaney David Swearingen Chadwick Sweat
Terry Swenson Steven Swierc Michael Szymanski James Tabor Don Tackett Tammy
Tafoya Thonglith Taionkeo Jennifer Takasaki John Talbert Thomas Tanner Chhorn
Tap Waldo Tappe Aaron Tarabori Billy Taylor David Taylor Dwight Taylor Gregory
Taylor James Taylor Jason Taylor Kimberly Taylor Lawrence Taylor Leroy Taylor
Melvin Taylor Michael Taylor Paul Taylor Randy Taylor Roger Taylor Roger Taylor
Wade Taylor Brenda Taylor Rubin Taylor Jr Robert Tays Richard Teale Sherry
Teasley James Teel Brian Teeter Martin Tellez Gerald Tennant Pedro Teodoro
Arthur Terry Victor Terry Jana Thamm Amber Theall Stephen Theall Thomas Thelen
Matthew Thiem Jimmy Thigpen Dennis Thomas Dwight Thomas Joel Thomas Larry Thomas
Lovie Thomas Mary Thomas Robert Thomas William Thomas Valton Thomas Jr Nancy
Thom-Fletcher Anthony Thompson Bernard Thompson Brandon Thompson Christopher
Thompson Freddy Thompson James Thompson Jimmy Thompson Kimberly Thompson Laura
Thompson Linda Thompson Mike Thompson Nathan Thompson Richard Thompson Richard
Thompson Sandra Thompson M Thompson Michael Thompson Louis Thompson Jr Martin
Thompson Jr Gary Thomsen Troy Thomson Forrest Thopson Penny Thorn Anna Thornton
L Thornton Jr Khamphanh Thosychanh Tam Thudo Jimmy Thurman Robert Tibbs Arvle
Tidwell Michael Tighe Christian Tijerina John Tillman Rella Tillman Keevan Timm
Philip Todd Wiley Todd Darrin Togtman Claude Toler James Tollett James Tolly
Jerry Tolly Linda Tolpa David Tomberlin Marsha Tomlinson Shari Tompkins Jerry
Toney Yonel Torchon Jose Torres Sunny Torres Victor Torres Geoff Toune Jose
Tovar Ignacio Tovias Jane Townsend Chieu Tran Ni Tran Quoc Tran Mark Travland
Cherise Tredo Alfonso Trejo Jose Trejo Jorge Trevino Tiburcio Tristan Terry
Trudell Samuel Trujillo Brad Tucker David Tucker Patrick Tucker Paul Tucker
Harry Tucker Jr Buearl Tungate Maurice Tuohy Kimberly Tupman Pablo Turcios Benny
Turner Benton Turner Charles Turner James Turner James Turner Kevin Turner Moses
Turner Michael Turpin Randy Tweedt Richard Tyson Tana Tyson Donny Uherek Jose
Ulloa Oscar Umana Martin Umanzor Jeffrey Underberg Becky Unger Percy Upshaw
Patricia Urbanski Florentino Uribe Michael Utley Toni Vaccaro Jose Valdes Ramon
Valdez Antonio Valdivia Jose Valentin Ron Valentine Oscar Valenzuela Bernardino
Valero Jasper Valero Laura Valley Tim Vanzant Joseph Vanbebber Linnie Vance
Ricky Vance Harvey Vandever Dau Vang Jack Vang Lau Vang Ma Vang William Vang
Xiong Vang Charles Vanhuss John Vanlandingham Mark Vansaun Arturo Vargas Bertin
Vargas Rene Vargas Joshua Varin Atanasio Vasquez Joaquin Vasquez Raul Vasquez
Geri Vaughan James Vaughan Mary Vaughn Phyllis Vaughn Timothy Vaughn Wayne
Vaughn Pamla Vaughn-Mitchell Simon Vayner Francisco Vazquez Jesus Vazquez Jose
Vazquez Juan Vazquez Miguel Vazquez Rhonda Vazquez Jose Vega Rogelio Vega Jesus
Vega Jr Raul Velasco Alfredo Velasquez Cruz Velasquez Jose Velasquez Jose
Velasquez Mauro Velasquez Richard Ventrca Jr Delfino Ventura Inmar Ventura Jose
Ventura James Venus Jr Jose Vera Raul Verdugo Ruben Verdugo Jerry Vess Troy Vest
Armando Vicente Carlos Vicente Eleodoro Vicente Elicio Vicente Guillermo Vicente
Leonidas Vicente Marco Vicente Margarito Vicente Ovidio Vicente Roberto Vicente
Francisco Vicente-Pelico Carlos Vicente-Tzun Luis Vicente-Vicente Robert Vickers
John Vickery Lucio Vidal-Guerrero Aurelio Vidals Joel Viechnicki Luis Viera
Bonnie Vigdal Kheuavanh Vilaythong Outhay Vilaythong Phitsamy Vilaythong Serafin
Villafuerte Perla Villagrana Jose Villanueva Julian Villanueva Martin Villanueva
Rae Villar Lionzo Villareal Sr Adrian Villares Reynaldo Villarreal Carlos
Villatoro Eusebio Villatoro Magdaleno Villatoro William Villatoro Manfredo
Villeda Floriberto Villegas Marco Villegas Barry Vines Jerry Vines Randall Vines
Scott Vinson Sergio Viveros Erica Voltes Aaron Vortis Farshad Vossoughi James
Vowels Xuan Vu Jeffrey Waclawczyk Frank Wade Kristie Wagner Leslie Wagoner
Charleston Walker Donna Walker George Walker George Walker Johnny Walker
Theodore Walker Timothy Walker Tina Walker Wayne Walker Jeffrey Walker Kenneth
Wallace Randy Walls Tommy Walshak Emily Walters Booker Walton James Walton David
Ward Gerald Ward Kelvin Ward Lynn Ward Sonny Ward William Ward Jr Romelle Ware
Leo Warneck Alex Warner Tarvis Warner Delvin Warner Deidre Warren William Warren
Steven Wasson Richard Waters Gerald Watkins Saul Watkins Jeffrey Watson Daniel
Watts Jr Sandra Wawarosky Samuel Waxman Tonia Way Ronald Weast Norma
Weatherspoon Frances Weaver Stephen Weaver Wayland Webb Robert Webb Ronny Webb
Daye Weber Juan Weira-garcia Anneliese Welch Daniel Welch Jackson Welch William
Welch Cyrena Welch Angela Wells Billy Wells Kimball Wells Robbie Wells Deborah
Wells Marty Wells Robert Wendorf Jr Jackie West Paul West William West John West
Jamie Westbrooks Phil Wetherby Patrick Wetzig Rubalee Whatley Jeff Wheeler
Stephanie Wheeler Julie Whitaker Brenda White Isaac White Jeanette White Jimmy
White Margaret White Matthew White Vickie White William White Donna White
Luverna White Raymond Whitehead Jr Ron Whiteley Annie Whiteside Janice Whitetree
Robb Whitinger Angela Whittemore Gregory Wiatrek Connie Widmar Tracy Widner Lynn
Widrick Robert Wiggins Robert Wikoff Michael Wilburn Randy Wilken Phillip
Wilkerson Michael Willenborg Brandon Williams Cedric Williams Charles Williams
Christopher Williams Christopher Williams Davis Williams Everette Williams Frank
Williams Gary Williams George Williams James Williams Jerry Williams Jerry
Williams Joel Williams Jonathan Williams Karl Williams Kenneth Williams Kenneth
Williams Larry Williams Marcus Williams Michael Williams Orin Williams Patrick
Williams Paul Williams Shirley Williams Thomas Williams Tina Williams Vincent
Williams Wonderaye Williams Michael Williams Jr Brian Williamson Glenn
Williamson James Williford Bobby Wilson Chad Wilson Darren Wilson Fannie Wilson
Fate Wilson Harold Wilson James Wilson Jamie Wilson Kathy Wilson Richard Wilson
Robert Wilson Scott Wilson Stephen Wilson Thad Wilson Joel Wilson William Wilson
Donald Wilson Jr Billy Wingate Daryl Wingo Louis Winkelmann Arthur Winkler David
Wirt Jr Keith Wishart Ted Wishart Alison Witham Michael Witt Travis Wittman John
Wolf III Jeremy Wolford Charles Wolke H Womack Brian Wood Chadwick Wood Connie
Wood Harriett Wood Joseph Wood Roger Wood Stephen Wood Charlotte Woodall Willie
Woodard Michelle Woodring Stacy Woodring Corey Woods Kenneth Woods Kenneth Woods
Michael Woods Warren Woods Robin Woodward Dennis Wooten Cynthia Wooten Flor
Wordell Millard Wratten Crista Wrenn Don Wrenn Corey Wright Jimmy Wright Michael
Wright Kenneth Wright Tina Wright James Wright Jr Nancy Wymore Lamphay Xayavong
Raymundo Xilos Bee Xiong Pao Xiong Glen Yaeger Beverly Yahnke William Yarbrough
Tony Ybanez Larry Yee Sheila Yee Gary Young Jerone Young Jess Young Michael
Young O Young William Young Jian Yu Robert Zabcik Antonino Zamora David Zamora
Eduardo Zamora Oscar Zamora Ahad Zangbari Melvin Zapalac Mario Zapata Marcelo
Zarco Mary Zeagler Thomas Zeigler Roberto Zelaya Gary Zielstorf William Zietz
Darald Zinger Nancy Znidarsic Martha Zuniga James Zunt Jon Zurn
OFFICERS DIRECTORS SENIOR EXECUTIVES
A.R. GINN A.R. GINN(1) JIMMY D. ANDERSON
Chairman of the Board Chairman of the Board President, DBCI
JOHNIE SCHULTE JOHNIE SCHULTE(1) CHARLES W. DICKINSON
President & Chief President & Chief Executive Vice President
Executive Officer Executive Officer Metal Components
KENNETH W. MADDOX WILLIAM D. BREEDLOVE(2) MARK W. DOBBINS
Executive Vice President, Vice Chairman Vice President, Metal
Administration Hoak Breedlove Components
Wesneski & Co.
ROBERT J. MEDLOCK
Executive Vice President SHELDON R. ERIKSON(2) KEITH E. FISCHER
Chief Financial Officer, Chairman, President & Executive Vice President
Treasurer Chief Executive Officer of Engineered Buildings
Cooper Cameron Corporation
WILLIAM A. LAWRENCE KELLY R. GINN
Vice President and GARY L. FORBES(2) President, Metal Components
Controller Vice President, EQUUS
Incorporated RICHARD F. KLEIN
DONNIE R. HUMPHRIES President, Metal Coaters
Secretary W. BERNARD PIEPER(2)
Private Investor FREDERICK D. KOETTING
President, Engineered
Buildings
TODD R. MOORE
Vice President,
General Counsel
KIM WELLS
President, MESCO
WILLIAM M. YOUNG
President, A&S
(1) Executive Committee
(2) Compensation Committee
and Audit Committee
CORPORATE HEADQUARTERS
NCI BUILDING SYSTEMS, INC.
10943 North Sam Houston Parkway West
Houston, Texas 77064
281-897-7788
COMMON STOCK TRANSFER
AGENT & REGISTRAR
COMPUTER SHARE
INVESTOR SERVICES
2 North Lasalle Avenue
Chicago, Illinois 60602
LEGAL COUNSEL
GARDERE WYNNE SEWELL LLP
AUDITORS
ERNST & YOUNG LLP
FORM 10-K
The Company's Annual Report on Form 10-K
Report for the year ended November 2, 2002, as
filed Exchange Commission, is available
without charge upon request to Robert J.
Medlock at the address The Company's common
stock is traded on the New York Stock Exchange
(NYSE) under the trading symbol NCS.
ANNUAL MEETING
The Annual Meeting of Shareholders of NCI
Building Systems will be held at 10:00 a.m. on
Friday, Schulte Conference Center in Houston,
Texas. Shareholders of record as of January 2,
2003 will be entitled to vote at this time.
[NCI PICTURE]
[NCI BUILDING SYSTEMS, INC. LOGO]
10943 North Sam Houston Parkway West Houston, Texas 77064
281-897-7788 o www.ncilp.com
EXHIBIT 21
NCI BUILDING SYSTEMS, INC.
List of Subsidiaries
NCI Holding Corp. Delaware
NCI Operating Corp. Nevada
Metal Coaters of California, Inc. Texas
NCI Building Systems, L.P. Texas
A&S Building Systems, L.P. Texas
Metal Building Components, L.P. Texas
NCI Group, L.P. Texas
Building Systems de Mexico, S.A. de C.V. Mexico
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the 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., Registration Statements (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., and Registration Statement
(Form S-4 No. 333-80029) of NCI Building Systems, Inc. and in the related
Prospectus of our report dated December 10, 2002, with respect to the
consolidated financial statements of NCI Building Systems, Inc. incorporated by
reference in the Annual Report (Form 10-K) for the fiscal year ended November 2,
2002, and our report dated December 10, 2002 with respect to the financial
statement schedule of NCI Building Systems, Inc. included in the Annual Report
(Form 10-K) for the fiscal year ended November 2, 2002.
/s/ ERNST & YOUNG LLP
Houston, Texas
January 28, 2003
EXHIBIT 23.2
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
NCI Building Systems, Inc.
We have audited the consolidated financial statements of NCI Building Systems,
Inc. as of November 2, 2002 and October 31, 2001, and for each of the three
fiscal years in the period ended November 2, 2002, and have issued our report
thereon dated December 10, 2002 (incorporated by reference in this Annual Report
on Form 10-K). Our audits also included the financial statement schedule listed
in the Index at Item 14(a) of this Annual Report on Form 10-K. This schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Houston, Texas
December 10, 2002
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