Form 11-K
Table of Contents

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, 2004

 

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

 



Table of Contents

NCI 401(k) Profit Sharing Plan

December 31, 2004 and 2003

 

Contents

 

Independent Auditor’s Report

   1

Report of Independent Registered Public Accounting Firm

   2

Financial Statements

    

Statements of Net Assets Available for Benefits

   3

Statements of Changes in Net Assets Available for Benefits

   4

Notes to Financial Statements

   5

Supplemental Schedules

    

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

   10

Index to Exhibits

    


Table of Contents

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, 2003 and the related statement of changes in net assets available for benefits for the year ended December 31, 2003. 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, 2003 and the changes in net assets available for benefits for the year ended December 31, 2003, 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.

 

Houston, Texas

June 21, 2004

 

/s/ Kolkhorst & Kolkhorst

 

1


Table of Contents

Report of Independent Registered Public Accounting Firm

 

Audit Committee and 401(k) Benefits

    Administration Committee

NCI 401(k) Profit Sharing Plan

Houston, Texas

 

We have audited the accompanying statement of net assets available for benefits of NCI 401(k) Profit Sharing Plan as of December 31, 2004, and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of NCI 401(k) Profit Sharing Plan as of and for the year ended December 31, 2003, were audited by other accountants whose report dated June 21, 2004, expressed an unqualified opinion on those statements.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (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 audit provides a reasonable basis for our opinion.

 

In our opinion, the 2004 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of NCI 401(k) Profit Sharing Plan as of December 31, 2004, and the changes in its net assets available for benefits for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying supplemental schedule is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the 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/ BKD, LLP

 

Houston, Texas

June 3, 2005

 

Federal Employer Identification Number: 44-0160260

 

2


Table of Contents

NCI 401(k) Profit Sharing Plan

Statements of Net Assets Available for Benefits

December 31, 2004 and 2003

 

 

     2004

   2003

Assets

             

Investments

   $ 104,811,451    $ 84,310,525
    

  

Receivables

             

Employer’s contribution

     3,038,586      899,766

Participants’ contributions

     55,586      43,780
    

  

       3,094,172      943,546
    

  

Cash

     11,642      11,944
    

  

Total assets

     107,917,265      85,266,015
    

  

Liabilities

             

Other Liabilities

     75,555      —  
    

  

Net Assets Available for Benefits

   $ 107,841,710    $ 85,266,015
    

  

 

See Notes to Financial Statements

 

3


Table of Contents

NCI 401(k) Profit Sharing Plan

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2004 and 2003

 

     2004

   2003

Investment Income

             

Net appreciation in fair value of investments

   $ 17,122,518    $ 8,478,050

Interest and dividends

     383,602      719,247
    

  

Net investment income

     17,506,120      9,197,297
    

  

Contributions

             

Employer

     5,578,603      3,337,994

Participants

     7,139,000      6,290,996

Rollovers

     96,419      378,028
    

  

       12,814,022      10,007,018
    

  

Total additions

     30,320,142      19,204,315
    

  

Deductions

             

Benefits paid directly to participants

     7,682,382      6,401,646

Administrative expenses

     62,065      54,175
    

  

Total deductions

     7,744,447      6,455,821
    

  

Net Increase

     22,575,695      12,748,494

Net Assets Available for Benefits, Beginning of Year

     85,266,015      72,517,521
    

  

Net Assets Available for Benefits, End of Year

   $ 107,841,710    $ 85,266,015
    

  

 

See Notes to Financial Statements

 

4


Table of Contents

NCI 401(k) Profit Sharing Plan

Notes to Financial Statements

December 31, 2004 and 2003

 

Note 1: Description of the Plan

 

The following description of NCI 401(k) Profit Sharing Plan (the Plan) provides only general information. Participants should refer to the Summary Plan Description for a more complete description of the Plan’s provisions, which is available from the plan administrator.

 

General

 

The Plan is a defined contribution plan covering all eligible employees of NCI Building Systems, Inc. and its affiliates (the Company) who have completed three months of service, are employed on the first day of the calendar quarter, and are age 18 or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

 

Contributions

 

Participants may contribute a minimum of 1% up to a maximum of 50% of their annual compensation, limited to the maximum limit determined annually by the Internal Revenue Service. Highly compensated employees may defer only 6% according to the Plan Document. The Company contributes to the Plan a matching amount equal to 66.67% of the employee’s contribution to the Plan up to 6 percent of the participant’s eligible compensation. Additional amounts may be contributed depending upon the Company’s annual Return on Assets. The Company contribution is made entirely in Company stock. Participants direct the investment of their contributions as well as the Company’s contribution into various investment options offered by the Plan. The Plan currently offers a variety of mutual funds, common/collective trust funds, the NCI Company Stock Fund and an insurance investment contract as investment options for participants.

 

Employer contributions of stock are valued at fair market value as quoted on the exchange on the match date. During the years ended December 31, 2004 and 2003, the Plan’s sponsor contributed $5,578,603 and $3,337,994, which represented 169,921 and 164,951 shares, respectively.

 

Participant Accounts

 

Each participant’s account is credited with the participant’s contribution, the Company’s contribution and plan earnings and is charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

 

Vesting

 

Participants are immediately vested in their voluntary contributions plus earnings thereon. Vesting in the Company’s contribution portion of their accounts plus earnings thereon is based on years of continuous service.

 

5


Table of Contents

NCI 401(k) Profit Sharing Plan

Notes to Financial Statements

December 31, 2004 and 2003

 

A participant is fully vested after 6 years of continuous service.

 

A participant becomes fully vested upon death, becoming disabled (as defined in the Plan) or attaining age 65; otherwise, the nonvested account balance is forfeited upon termination of service. Forfeitures may be used to pay for Plan administrative expenses. Remaining forfeitures are treated as additional discretionary matching contributions for the plan year in which the forfeitures occur and are allocated among active participants based upon the ratio each participant’s deferral percentage bears to the aggregate value of the deferral percentages of all eligible participants.

 

Payment of Benefits

 

Upon termination of service, a participant may elect to receive a lump-sum amount equal to the vested value of his account, NCI Common Stock for the value of the NCI Stock Fund, or subject to minimum distribution rules described in the Plan, 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, excluding rollover contributions).

 

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 rates which are commensurate with local prevailing rates as determined by the plan administrator.

 

Plan Termination

 

Although it has not expressed an intention to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of plan termination, participants will become 100% vested in their accounts.

 

Note 2: Summary of Significant Accounting Policies

 

Valuation of Investments and Income Recognition

 

Quoted market prices, if available, are used to value investments. Common/collective trust funds are valued at estimated fair value as provided by American Express Trust Company. Participant loans are valued at cost, which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

 

6


Table of Contents

NCI 401(k) Profit Sharing Plan

Notes to Financial Statements

December 31, 2004 and 2003

 

The insurance company investment contract is valued at contract value as estimated by Aetna Insurance Company. Contract value represents contributions made under the contract, plus interest at the contract rate, less funds used to pay retirement benefits.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

 

Plan Tax Status

 

The Plan obtained its latest determination letter on January 14, 2004, in which the Internal Revenue Service stated that the Plan and related trust, as then designed, were in compliance with the applicable requirements of the Internal Revenue Code and therefore not subject to tax. The Plan has been amended since receiving the determination letter. However, the plan administrator believes the Plan and related trust are currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code.

 

Payment of Benefits

 

Benefit payments to participants are recorded upon distribution.

 

7


Table of Contents

NCI 401(k) Profit Sharing Plan

Notes to Financial Statements

December 31, 2004 and 2003

 

Note 3: Investments

 

Except for its investment contract with an insurance company (Note 4), the Plan’s investments are held by a financial services company-administered trust fund. The following table presents the Plan’s investments. Investments that represent 5% or more of total plan assets are separately identified.

 

 

     2004

   2003

Investments at Fair Value as Determined by Quoted Market Price

             

Common stocks:

             

NCI Building Systems Inc., common stock 860,680 and 1,016,043 shares, respectively

   $ 32,275,500    $ 24,283,428
    

  

Mutual funds:

             

AXP S&P 500 Index Fund

     7,810,073      6,874,470

AXP Growth Fund

     6,438,504      5,656,231

Other investments under 5%

     15,001,830      11,049,919
    

  

       29,250,407      23,580,620
    

  

Investments at Fair Value as Determined by American Express Trust Company

             

Common / Collective trust funds:

             

AET Income Fund II

     26,414,521      17,167,579

Participant Loans

     6,130,175      5,462,682

Other investments under 5%

     10,648,699      7,361,060
    

  

       43,193,395      29,991,321
    

  

Investment at Contract Value

             

Investment Contract with Aetna, #014241, 02/17/04

     —        6,270,773

Other investments under 5%

     92,149      184,383
    

  

       92,149      6,455,156
    

  

Total investments

   $ 104,811,451    $ 84,310,525
    

  

During the years ended 2004 and 2003, the Plan’s investments (including gains and losses on investments bought, sold and held during the year) appreciated in value by $17,122,518 and $8,478,050, respectively as follows:

     2004

   2003

Investments at Fair Value as Determined by Quoted Market Price

             

Common stocks

   $ 12,606,229    $ 3,291,014

Mutual Funds

     2,873,715      4,050,124
    

  

       15,479,944      7,341,138
    

  

Investments at Fair Value as Determined by American Express Trust Company

             

Common / collective trust funds

     1,642,574      1,136,912
    

  

Net appreciation in fair value

   $ 17,122,518    $ 8,478,050
    

  

 

Interest and dividends realized on the Plan’s investments for the years ended 2004 and 2003 were $383,602 and $719,247, respectively.

 

8


Table of Contents

NCI 401(k) Profit Sharing Plan

Notes to Financial Statements

December 31, 2004 and 2003

 

Note 4: Contract with Insurance Company

 

The Plan has entered into a benefit-responsive investment contract with Aetna Insurance Company (Aetna). 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 average yield and crediting interest rates ranged from 5.5% to 6.0% for 2004 and 2003. Crediting interest rate is based on agreed-upon formula with the issuer, but cannot be less than 3.5%.

 

The Plan does not allow participants to make any additional contributions to these investment contracts.

 

Note 5: Related Party Transactions

 

Certain plan investments are shares of mutual funds managed by American Express Trust Company, which is the trustee and the record keeper of the Plan. Fees paid by the Plan for these services amounted to $32,563 and $44,174 for the years ended December 31, 2004 and 2003, respectively.

 

The Plan incurs expenses related to general administration. The plan sponsor pays these expenses and certain accounting fees relating to the Plan.

 

Note 6: Risks and Uncertainties

 

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.

 

9


Table of Contents

Supplemental Schedule


Table of Contents

NCI 401(k) Profit Sharing Plan

EIN 76-0127701 PN 001

Schedule H, Line 4i – Schedule of Assets (Held at End of Year)

Year Ended December 31, 2004

 

Identity of Issue


  

Description of Investment


   Current Value

* AET HORIZON LONG-TERM

   Collective Funds-Balanced    $ 1,619,012

* AET HORIZON MEDIUM-TERM

   Collective Funds-Balanced      2,440,748

* AET HORIZON SHORT-TERM

   Collective Funds-Balanced      492,269

* AET MIDCAP GROWTH II

   Collective Funds-Balanced      3,473,615

* AET MONEY MARKET I

   Collective Funds      654,478

* AET SMALL CAP VALUE II

   Collective Funds-Equity      1,968,577

* AETNA, #14174, 1/4/05

   Investment Contract      92,149

* AET INCOME II

   Collective Funds-Income      26,414,521

* AXP GROWTH

   Mutual Funds-Equity      6,438,504

* AXP S&P 500 INDEX

   Mutual Funds-Equity      7,810,073

* NCI BUILDING SYSTEMS, INC.

   Common Stock      32,275,500

    NEUBERGER BERMAN PARTNERS

   Mutual Funds-Equity      3,878,023

    OAKMARK EQUITY AND INCOME

   Mutual Funds-Balanced      2,071,079

    PIMCO TOTAL RETURN

   Mutual Fund-Fixed      3,639,619

    STI CLASSIC CAPITAL APPRECIATION

   Mutual Funds-Equity      137,543

    TEMPLETON FOREIGN

   Mutual Funds-Int’l      5,275,566

* PARTICIPANT LOANS

   Loans      6,130,175
         

          $ 104,811,451
         


* Indicates a party-in-interest as defined by ERISA

 

10


Table of Contents

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)

June 29, 2005

       
    By:   /s/ Frances R. Powell
        Frances R. Powell
        Executive Vice President, Chief Financial
        Officer and Treasurer

 

11


Table of Contents

INDEX TO EXHIBITS

 

Exhibit

    
23.1    Consent of Independent Auditors
23.2    Consent of Independent Registered Public Accounting Firm