================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
----------
Commission file number: 1-14315
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
NCI 401(k) PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
NCI BUILDING SYSTEMS, INC.
10943 NORTH SAM HOUSTON PARKWAY WEST
HOUSTON, TEXAS 77064
================================================================================
NCI 401(K) PROFIT SHARING PLAN
Table of Contents
-----------------
Independent Auditors' Report ................................. 1
Statement of Net Assets Available for Benefits ............... 2
Statement of Changes in Net Assets Available for Benefits .... 3
Notes to Financial Statements ................................ 4-7
Supplemental Schedules: ...................................... 8
Schedule of Assets Held for Investment Purposes ..... 9
Signatures ................................................... 10
i
INDEPENDENT AUDITORS' REPORT
Board of Trustees
NCI 401(k) Profit Sharing Plan
Houston, Texas
We have audited the accompanying statements of net assets available for benefits
of NCI 401(k) Profit Sharing Plan as of December 31, 2002 and 2001, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2002. These financial statements are the responsibility of
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2002 and 2001, and the changes in net assets available for benefits
for the year ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America.
Our audit was made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying Supplemental Schedule of Assets
Held for Investment Purposes is presented to comply with the Department of Labor
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 and is not a required part of the financial
statements. The supplemental schedule has been subjected to the same auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
/s/ KOLKHORST & KOLKHORST
Kolkhorst & Kolkhorst
Houston, Texas
June 13, 2003
1
NCI 401(k) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2002 and 2001
ASSETS
December 31,
--------------------------------
2002 2001
------------ ------------
INVESTMENTS - at fair value $ 71,103,941 $ 65,818,640
CONTRIBUTIONS RECEIVABLE
Employer contribution 982,831 871,211
Participant contribution 420,330 184,425
------------ ------------
1,403,161 1,055,636
CASH AND CASH EQUIVALENTS 10,419 109
------------ ------------
TOTAL ASSETS 72,517,521 66,874,385
LIABILITIES
Accounts payable -- --
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 72,517,521 $ 66,874,385
============ ============
See independent auditors' report and accompanying
notes to the financial statements.
2
NCI 401(k) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year Ended December 31, 2002
ADDITIONS TO NET ASSETS
Contributions
Employer $ 3,420,042
Participants 6,366,160
Rollovers 395,942
-------------
Total contributions 10,182,144
-------------
Interest and dividend income 723,437
Net unrealized appreciation (depreciation)
of investments and net realized gain on sale of investments 762,035
-------------
Total earnings (loss) 1,485,472
-------------
TOTAL ADDITIONS 11,667,616
-------------
DEDUCTIONS FROM NET ASSETS
Benefits paid to terminated participants (5,872,858)
Administrative/other expenses (151,622)
-------------
TOTAL DEDUCTIONS (6,024,480)
-------------
NET INCREASE 5,643,136
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 66,874,385
-------------
End of year $ 72,517,521
=============
See independent auditors' report and accompanying
notes to the financial statements
3
NCI 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
NOTE A - DESCRIPTION OF PLAN
The following description of the NCI 401(k) Profit Sharing Plan (Plan) provides
only general information. Participants should refer to the Plan agreement for a
more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering all employees of NCI Building
Systems, Inc. and its affiliates (Company) who have completed three months of
service, and have attained the age of 18. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA) and subsequent
related amendments and revisions.
Allocation Provision
Qualified participants may elect to defer a percentage of their salary at each
pay period. The amount of deferral may not exceed 50% of compensation for the
plan year and must equal at least 1% of compensation. Elective deferrals may not
exceed the amount determined by the IRS for the plan year.
Participants may direct that their contributions be invested in any of the Plan
investment options.
Contributions
The Plan provides for a matching contribution on an equal basis to all
participants, with a maximum Company contribution. For the years ended December
31, 2002 and 2001, the Company made a matching contribution equal to 66.67
percent for 2002 and 66.67 percent for 2001 of each participant's contribution,
up to 6 percent of the participant's eligible compensation. The employer
contribution totaled $3,420,042 and $3,387,235 for the years ended December 31,
2002 and 2001, respectively. The Company contribution is made entirely in
Company stock.
Participant Accounts
Each participant's account is credited with the participant's contribution and
allocation of (a) the Company's contribution, if any, and (b) Plan earnings
(loss), and (c) forfeitures of terminated participants' nonvested accounts in
excess of expenses. Allocations are based on participant earnings or account
balances. The benefit to which a participant is entitled is the benefit that can
be provided from the participant's account.
4
NCI 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
NOTE A - DESCRIPTION OF PLAN (CONTINUED)
Vesting
Participants are immediately vested in their voluntary contributions, plus
actual earnings thereon. Vesting in the remainder of their accounts is based on
years of continuous service as follows:
Years of Service Vested Percentage
---------------------------- -----------------
Less than one year 0%
One, but less than two 10%
Two, but less than three 20%
Three, but less than four 40%
Four, but less than five 60%
Five, but less than six 80%
Six or more 100%
Expenses
The Company has paid a premium to acquire a $10,000,000 fidelity bond and incurs
expenses for administration, audit and tax return preparation for the Plan. The
Plan may reimburse the Company for these expenses through the allocation of
forfeitures.
Payment of Benefits
Subsequent to termination of service, a participant may request to receive
payment either in a lump sum amount equal to the value of his or her vested
account balance or to continue in the trust in such a manner as though the
employee had not terminated his eligibility if the participant's account balance
is greater than $5,000.
Disposition of Forfeitures
The Plan stipulates that forfeitures are used to reduce the Plan's normal
administrative fees, and then should be treated as additional discretionary
matching contributions for the plan year in which the forfeitures occur.
Investment Options
The Plan offers eleven investment options in which the employees may elect to
participate. Ten of the options are mutual funds, and the eleventh option is the
NCI Company Stock Fund. The Company's matching contribution is made in NCI
Company Stock.
5
NCI 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
NOTE B - SUMMARY OF ACCOUNTING POLICIES
Plan assets are stated at fair market value. If available, quoted market prices
are used to value investments.
Participant Loans
Participants may borrow from their fund accounts a minimum of $1,000 up to a
maximum of $50,000 or 50 percent of their account balance, whichever is less.
The loans are secured by the balance in the participants' account and bear
interest at prevailing market rates.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect the reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
NOTE C - INVESTMENTS
The Plan's investments are held by a financial services company-administered
trust fund. The following table presents the fair values of investments.
Investments that represent 5 percent or more of the Plan's net assets are
separately identified.
Investments at fair value as determined by quoted market price:
December 31,
------------------------------
2002 2001
------------ ------------
American Express Trust Income Fund II $ 14,134,304 $ 9,985,299
AXP Bond Fund 3,959,735 2,893,042
American Express Trust Horizon Short-term 287,468 67,104
American Express Trust Horizon Medium-term 1,685,809 1,568,815
American Express Trust Horizon Long-term 366,885 137,579
AXP Blue Chip Advantage Fund 5,018,897 6,797,470
Janus Worldwide Fund 2,918,612 3,645,802
Neuberger & Berman Partners Trust 1,037,441 917,713
Baron Asset Fund 1,936,420 1,434,082
AXP Growth Fund 4,224,705 5,694,973
NCI Common Stock Fund 22,856,319 20,966,854
Money Market Fund 284,123 388,154
Loan Fund 5,113,667 4,318,233
Investment Contract with Aetna, # 014241, matures 2/17/04 7,002,980* 6,634,752
Investment Contract with Aetna, # 014174, matures 1/04/05 276,576* 368,768
------------ ------------
$ 71,103,941 $ 65,818,640
============ ============
*Includes accrued income of $1,124,856
6
NCI 401(k) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
NOTE C - INVESTMENTS (CONTINUED)
Investments in the NCI Common Stock Fund are both participant and nonparticipant
directed.
Changes in the NCI Common Stock Fund for the year ended December 31, 2002 are as
follows:
Contributions received $ 3,708,716
Benefits paid to participants (1,802,942)
Transfers to participant directed investments (4,784,714)
Participant loan activity (300,821)
Participant forfeitures (27,912)
Net appreciation 5,003,051
------------
$ 1,795,378
============
NOTE D - PLAN TERMINATION
Although the Company has expressed no such intention, the Plan can be terminated
at the Company's election. In the event of Plan termination, all Plan benefits
would become 100 percent vested and payable to the participants.
NOTE E- TAX STATUS
The Plan obtained its latest determination letter on December 28, 1998, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue Code. The
Plan has been amended since receiving the determination letter. However, the
Plan administrator believes that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Internal Revenue
Code.
NOTE F- INVESTMENT CONTRACT WITH INSURANCE COMPANY
The Plan has two benefit-responsive investment contracts with Aetna Insurance
Company. Aetna maintains the contributions in a general account. The account is
credited with earnings on the underlying investments and charged for participant
withdrawals and administrative expenses. The contracts are included in the
financial statements at contract value as reported to the Plan by Aetna.
Contract value represents contributions made under the contracts, plus earnings,
less participant withdrawals and administrative expenses. Participants may
ordinarily direct the withdrawals or transfer of all or a portion of their
investment at contract value.
There are no reserves against contract value for credit risk of the contract
issuer or otherwise. The contracts have a fixed, guaranteed net interest rate of
5.55% and 5.97%.
The Plan does not allow participants to make any additional contributions to
these investment contracts.
7
SUPPLEMENTAL SCHEDULE
8
NCI 401(k) PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 2002
Schedule of Assets Held for Investment Purposes
for the Year Ended December 31, 2002
(a) (b) (c) (d) (e)
-------------------------------------------------------------------------------------------------------------------------
Description of investment
Identity of issue, Including maturity date, rate
borrower, lessor, Of interest, collateral, par Current
or similar party or maturity value Cost Value
-------------------------------------------------------------------------------------------------------------------------
American Express Trust Income Fund II Mutual Fund $ 13,920,622 $ 14,134,304
AXP Bond Fund Mutual Fund 3,933,901 3,959,735
AET Horizon Short-term Mutual Fund 290,532 287,468
AET Horizon Medium-term Mutual Fund 1,803,801 1,685,809
AET Horizon Long-term Mutual Fund 417,863 366,885
AXP Blue Chip Advantage Fund Mutual Fund 7,969,886 5,018,897
Janus Worldwide Fund Mutual Fund 3,767,631 2,918,612
Neuberger & Berman Partners Trust Mutual Fund 1,312,477 1,037,441
Baron Asset Fund Mutual Fund 2,475,905 1,936,420
AXP Growth Fund Mutual Fund 7,579,097 4,224,705
Loan Fund Participant Promissory notes 5,113,667 5,113,667
NCI Common Stock Fund Qualified Employer Securities 18,023,453 22,856,319
Investment Contract with Aetna, Investment Contract, matures 7,002,980* 7,002,980*
#005417 2/17/04
Investment Contract with Aetna, Investment Contract, matures 276,576* 276,576*
#014174 1/04/05
Money Market Fund Mutual Fund 284,123 284,123
------------ ------------
$ 74,172,514 $ 71,103,941
============ ============
*Includes accrued income of $1,124,856
9
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act
of 1934, NCI Building Systems Inc., as administrator for the NCI 401(k) Profit
Sharing Plan, has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
NCI BUILDING SYSTEMS INC.
(AS ADMINISTRATOR OF THE NCI 401(k)
PROFIT SHARING PLAN)
DATE: June 25, 2003 By: /s/ Robert J. Medlock
---------------------
Robert J. Medlock
Executive Vice President and Chief Financial
Officer
10
INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- -------------------------------
23 Consent of Independent Auditors