10-K 1 d02830e10vk.txt FORM 10-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended November 2, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-14315 NCI BUILDING SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 76-0127701 (State or other jurisdiction) (I.R.S. employer of incorporation or organization identification no.) 10943 North Sam Houston Parkway West 77064 Houston, Texas (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (281) 897-7788 Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.01 par value Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes X No --------- --------- The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant on January 15, 2003, was $418,197,589, which aggregate market value was calculated using the closing sales price reported by the New York Stock Exchange as of the last day of the registrant's most recently completed second fiscal quarter. The number of shares of common stock of the registrant outstanding on January 15, 2003, was 18,717,582. DOCUMENTS INCORPORATED BY REFERENCE Certain information required by Parts I and II of this Annual Report is incorporated by reference from the registrant's 2002 Annual Report to Shareholders, and certain information required by Parts II and III of this Annual Report is incorporated by reference from the registrant's definitive proxy statement for its annual meeting of shareholders to be held on March 14, 2003. ================================================================================ TABLE OF CONTENTS PART I Item 1. Business............................................................................................1 Item 2. Properties.........................................................................................13 Item 3. Legal Proceedings..................................................................................14 Item 4. Submission of Matters to a Vote of Security Holders................................................14 PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters..............................14 Item 6. Selected Financial Data............................................................................14 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..............15 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.........................................15 Item 8. Financial Statements and Supplementary Data........................................................15 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............15 PART III Item 10. Directors and Executive Officers of the Registrant.................................................15 Item 11. Executive Compensation.............................................................................15 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters................................................................................15 Item 13. Certain Relationships and Related Transactions.....................................................16 Item 14. Controls and Procedures............................................................................16 Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................................16 This Annual Report contains forward-looking statements concerning our business and operations. Although we believe that the expectations reflected in the 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 other 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 our filings with the SEC. We expressly disclaim any obligations to release publicly any updates or revisions to these forward-looking statements to reflect any changes in our expectations. PART I ITEM 1. BUSINESS. GENERAL NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the building industry. We operate 35 manufacturing facilities located in 16 states and Mexico. We sell metal building components and engineered building systems, offering one of the most extensive metal product lines in the building industry with well-recognized brand names. We believe that our leading market positions and strong track record of growth and profitability have resulted from our focus on: o Controlling operating and administrative costs o Managing working capital and fixed assets o Developing new markets and products o Successfully identifying strategic growth opportunities We believe that metal products have gained and continue to gain a greater share of the new non-residential construction and repair and retrofit markets. This is due to increasing acceptance and recognition of the benefits of metal products in building applications. Metal building components offer builders, designers, architects and end-users several advantages, including lower long-term costs, longer life, attractive aesthetics and design flexibility. Similarly, engineered building systems offer a number of advantages over traditional construction alternatives, including shorter construction time, more efficient use of materials, lower construction costs, greater ease of expansion and lower maintenance costs. In March 2000, we acquired the remaining 50% interest in DOUBLECOTE, L.L.C. from our previous joint venture partner. The acquisition gave us complete control over our principal metal coating facility. In December 2000, we bought substantially all of the assets of Midland Metals, Inc., an Iowa-based manufacturer of metal building components, which gave us a stronger presence in the Midwest. In June 2001, we sold our 50% interest in Midwest Metal Coatings, LLC, a joint venture that operated a hot rolled coil coating facility, to our joint venture partner. In October 2001, we announced the closing of five of our manufacturing facilities, which we completed during the first quarter of fiscal 2002. Two of the closings resulted from ongoing synergies realized from our 1998 acquisition of Metal Building Components, Inc. ("MBCI"). The operations of the other three facilities were consolidated into our other manufacturing facilities that could efficiently provide delivery and service to those geographic areas. In the second quarter of fiscal 2001, we discovered errors in a new accounting and financial system that impacted certain inventories and related liabilities, which resulted in a restatement of our financial results for the third and fourth quarters of 1999, fiscal year 2000 and the quarter ended January 31, 2001. The restatement was reflected in our Annual Report on Form 10-K/A for the fiscal year ended October 31, 2000 and our Quarterly Report on Form 10-Q/A for the quarter ended January 31, 2001 filed with the SEC. All financial information in this Annual Report on Form 10-K for fiscal 2000 and 2001 reflect this restatement. See "Item 3. Legal Proceedings" for a description of litigation matters related to our restatement. We were founded in 1984 and we reincorporated in Delaware in 1991. Our principal offices are located at 10943 North Sam Houston Parkway West, Houston, Texas 77064 and our telephone number is (281) 897-7788. Unless indicated otherwise, references in this report to NCI, us, or we include our predecessors and our subsidiaries. We file annual, quarterly and current reports and other information with the SEC. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, along with any amendments to those reports, are available free of charge at our corporate website at "http://www.ncilp.com." 1 BUSINESS SEGMENTS We have divided our operations into two reportable segments: engineered building systems and metal building components, based upon similarities in product lines, manufacturing process, marketing and management of its business. Products of both segments are similar in basic raw materials used. The engineered building systems segment includes the manufacturing of structural framing and includes value added engineering and drafting, which are typically not part of metal building component products or services. Our approximate sales to outside customers, operating income and total assets attributable to these business segments were as follows for the periods indicated (in thousands):

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: 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% ============ ============ ============ ============ ============ ============ TOTAL ASSETS: 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% ============ ============ ============ ============ ============ ============

For more business segment information, please see the supplementary business segment information contained in footnote 14 to our consolidated financial statements included in our 2002 Annual Report to Shareholders. Metal Building Components. We are the largest domestic supplier of metal building components to the nonresidential building industry and have a market share at least twice that of our largest competitor. We are also one of the largest suppliers in the U.S. of roll-up doors for self-storage facilities. We design, manufacture, sell and distribute one of the widest selections of components for a variety of new construction applications as well as repair and retrofit uses. The following are the types of components we sell: o Metal roof and wall systems o Fascia systems o Roll-up doors o Mansard systems o Interior and exterior doors o Trim and accessories Our components are used in the following markets: o Industrial o Governmental o Community o Commercial o Agricultural o Residential As part of our metal building components manufacturing, we also provide hot roll and light gauge metal coil coating and painting services and products. We coat and paint hot roll and light gauge metal coils for our own use in metal building components manufacturing, supplying substantially all of our internal metal coating and painting 2 requirements. On average, our internal use accounts for about 52% of our production. We also coat and paint hot roll metal coils and light gauge metal for third parties for a variety of applications, including heating and air conditioning systems, water heaters, lighting fixtures and office furniture. We market our metal building components products and metal coating and painting services nationwide primarily through a direct sales force under several brand names. These brand names include "Metal Building Components," "American Building Components," "Doors and Building Components," "ABC," "DBCI," "MBCI," "Midland Metals," "IPS," "Metal Coaters," "Metal-Prep," "NCI Metal Depot" and "DOUBLECOTE." Engineered Building Systems. We are one of the largest domestic suppliers of engineered building systems. We design, manufacture and market engineered building systems, self-storage building systems and metal home framing systems for commercial, industrial, agricultural, governmental, community and residential uses. We market these systems nationwide through authorized builder networks totaling over 1,400 builders and a direct sales force under several brand names. These brand names include "Metallic Buildings," "Metallic de Mexico," "Mid-West Steel Buildings," "A & S Buildings," "All American Systems," "Classic," "Steel Systems" and "Mesco." INDUSTRY OVERVIEW The building industry encompasses a broad range of metal products, principally composed of steel, sold through a variety of distribution channels for use in diverse applications. These metal products include metal building components and engineered building systems. Metal Building Components. Manufacturers of metal components supply products to the building industry. These products include roof and wall panels, doors, metal partitions, metal trim and other related accessories. These products are used in new construction and in repair and retrofit applications for commercial, industrial, agricultural, governmental, community and residential uses. Metal building components are used in a wide variety of construction applications, including purlins and girts, roofing, walls, doors, trim and other parts of traditional buildings, as well as in architectural applications and engineered building systems. We estimate the metal building components market including roofing applications to be a multi-billion dollar market, although market data is limited. We believe that the metal building components business is less affected by economic cycles than the engineered building systems business due to the use of metal building components in repair and retrofit applications. We believe that metal products have gained and continue to gain a greater share of new construction and repair and retrofit markets due to increasing acceptance and recognition of the benefits of metal products in building applications. Metal roofing accounts for a significant portion of the overall metal building components market, but less than 10% of total annual roofing material expenditures. As a result, we believe that significant opportunities exist for metal roofing, with its advantages over conventional roofing materials, to increase its overall share of this market. Metal roofing systems have several advantages over conventional roofing systems, including the following: o Lower lifecycle cost. The total cost over the life of metal roofing systems is lower than that of conventional roofing systems for both new construction and retrofit roofing. For new construction, the cost of installing metal roofing is greater than the cost of conventional roofing. Yet, the longer life and lower maintenance costs of metal roofing make the cost more attractive. For retrofit roofing, although installation costs are 60-70% higher for metal roofing due to the need for a sloping support system, the lower ongoing costs more than offset the initial cost. o Increased longevity. Metal roofing systems generally last for 20 years without requiring major maintenance or replacement. This compares to five to ten years for conventional roofs. The cost of leaks and roof failures associated with conventional roofing can be very high, including damage to building interiors and disruption of the functional usefulness of the building. Metal roofing prolongs the intervals between costly and time-consuming repair work. o Attractive aesthetics and design flexibility. Metal roofing systems allow architects and builders to integrate colors and geometric design into the roofing of new and existing buildings, providing an increasingly fashionable means of enhancing a building's aesthetics. Conventional roofing material is generally tar paper or a gravel surface, and building designers tend to conceal roofs made with these materials. 3 Engineered Building Systems. Engineered building systems consist of engineered structural members and panels that are welded and roll formed in a factory and shipped to a construction site complete and ready for assembly. Engineered building systems manufacturers design an integrated system that meets applicable building code requirements. These systems consist of primary structural framing, secondary structural members (purlins and girts) and covering for roofs and walls. Over the last 15 years, engineered building systems have significantly increased penetration of the market for nonresidential low rise structures and are being used in a broad variety of other applications. According to the Metal Building Manufacturers Association ("MBMA"), reported sales of engineered building systems have increased from approximately $1.5 billion in 1993 to $2.5 billion in 2000. We believe this increase resulted primarily from (1) the significant cost advantages offered by these systems, (2) increased architectural acceptance of engineered building systems for construction of commercial and industrial building projects, (3) advances in design versatility and production processes and (4) a favorable economic environment through the year 2000. In 2001, the MBMA reported a decline of 20% in sales, which was in-line with the general decline in non-residential construction. This downturn continued into 2002 with a further decline of 10%. Industry sales are expected to improve as non-residential construction markets show improvements. We believe the cost of an engineered building system generally represents approximately 15-20% of the total cost of constructing a building, which includes land cost, labor, plumbing, electrical, heating and air conditioning systems installation and interior finish. Technological advances in products and materials, as well as significant improvements in engineering and design techniques, have led to the development of structural systems that are compatible with more traditional construction materials. Architects and designers now often combine an engineered building system with masonry, glass and wood exterior facades to meet the aesthetic requirements of customers while preserving the inherent characteristics of engineered building systems. As a result, the uses for engineered building systems now include office buildings, showrooms, retail stores, banks, schools, warehouses, factories, distribution centers, government buildings and community centers for which aesthetics and architectural features are important considerations of the end-users. In our marketing efforts, we and other major manufacturers generally emphasize the following characteristics of engineered building systems to distinguish them from other methods of construction: o Shorter construction time. In many instances, it takes less time to construct an engineered building than other building types. In addition, because most of the work is done in the factory, the likelihood of weather interruptions is reduced. o More efficient material utilization. The larger engineered building systems manufacturers use computer-aided analysis and design to fabricate structural members with high strength-to-weight ratios, minimizing raw materials costs. o Lower construction costs. The in-plant manufacture of engineered building systems, coupled with automation, allows the substitution of less expensive factory labor for much of the skilled on-site construction labor otherwise required for traditional building methods. o Greater ease of expansion. Engineered building systems can be modified quickly and economically before, during or after the building is completed to accommodate all types of expansion. Typically, an engineered building system can be expanded by removing the end or side walls, erecting new framework and adding matching wall and roof panels. o Lower maintenance costs. Unlike wood, metal will not deteriorate because of cracking, rot or insect damage. Furthermore, factory-applied roof and siding panel coatings resist cracking, peeling, chipping, chalking and fading. Consolidation. Over the last several years, there has been consolidation in the metal building components and engineered building systems industry, which includes a large number of small local and regional firms. We believe that this industry will continue to consolidate, driven by the needs of manufacturers to increase manufacturing capacity, 4 achieve greater process integration and add geographic diversity to meet customers' product and delivery needs, improve production efficiency and manage costs. PRODUCTS AND MARKETS Our product lines consist of metal building components and engineered building systems. Metal Building Components. Our metal building components consist of individual components, including secondary structural framing, covering systems and associated metal trims, that are sold directly to contractors or end-users for use in the building industry, including the construction of metal buildings. We also stock and market metal component parts for use in the maintenance and repair of existing buildings. Specific component products consist of end and side wall panels, roof panels, purlins, girts, partitions, header panels and related trim and screws. We believe we offer the widest selection of metal building components in the building industry. Purlins and girts are medium gauge, roll formed steel components. They are supplied to builders for secondary structural framing. We custom produce purlins and girts for our customers and offer the widest selection of sizes and profiles in the United States. Covering systems, consisting of wall and roof panels, protect the rest of the structure and the contents of the building from the weather. They also contribute to the structural integrity of the building. Our metal roofing products are attractive and durable. We use standing seam roof technology to replace traditional built-up and single-ply roofs as well as to provide a distinctive look to new construction. We manufacture and design metal roofing systems for sales to regional metal building manufacturers, general contractors and subcontractors. We believe we have the broadest line of standing seam roofing products in the building industry. We also have developed and patented a retrofit metal panel, Retro-R(R), that is used to replace wall and roof panels of metal buildings. Retro-R(R) can be installed over the top of existing metal panels to remodel or preserve a standing structure. Although metal roofing is somewhat more expensive than traditional roofing in upfront costs, its durability and low maintenance costs make metal roofing a lower cost roofing product after the first 10 years. We manufacture overhead doors and interior and exterior doors for use in metal and other buildings. We are one of the largest suppliers in the U.S. of roll-up doors to builders of self-storage facilities. During fiscal 2000, we introduced our new "pier and header" system that is used in the construction of self-storage warehouse facilities. Conventional metal building systems require approximately ten steps and processes to construct the areas between and above the doors of self-storage units. Our pier and header system requires only two and produces a facility that is more aesthetically pleasing with a clean, uncluttered profile. We provide our own metal coating and painting products and services for use in component manufacturing. We also provide pre-painted hot roll coils to manufacturers of engineered building systems and metal building components. We also pre-paint light gauge steel coils for steel mills, which supply the painted coils to various industrial users, including manufacturers of engineered building systems, metal building components and lighting fixtures. Our metal coating and painting operations apply a variety of paint systems to metal coils. The process generally includes cleaning and painting the coil and slitting it to customer specifications. We believe that pre-painted metal coils are a better quality product, environmentally cleaner and more cost-effective than painted metal products prepared in other manufacturers' in-house painting operations. Painted metal coils also offer manufacturers the opportunity to produce a broader and more aesthetically pleasing range of products. Engineered Building Systems. Engineered building systems consist of pre-engineered structural members and panels that are welded and roll formed in a factory and shipped to a construction site complete and ready for assembly. We design an integrated engineered building system that meets customer specifications and allows easy on-site assembly by the builder or independent contractor. Engineered building systems typically consist of three systems: o Primary structural framing. Primary structural framing, fabricated from heavy-gauge steel, supports the secondary structural framing, roof, walls and all externally applied loads. Through the primary framing, the force of all applied loads is structurally transferred to the foundation. 5 o Secondary structural framing. Secondary structural framing consists of medium-gauge, roll-formed steel components called purlins and girts. Purlins are attached to the primary frame to support the roof. Girts are attached to the primary frame to support the walls. The secondary structural framing is designed to strengthen the primary structural framing and efficiently transfer applied loads from the roof and walls to the primary structural framing. o Covering systems. Covering systems consist of roof and wall panels. These panels not only lock out the weather but also contribute to the structural integrity of the overall building system. Roof and siding panels are fabricated from light-gauge, roll-formed steel. Accessory components complete the engineered building system. These components include doors, windows, gutters and interior partitions. Our "Long Bay System" allows for the construction of metal buildings with base spacings of up to 60 feet without internal supports. This compares to base spacings of up to 30 feet under other engineered building systems. The Long Bay System virtually eliminates all welding at the site, which significantly reduces erection time compared with conventional steel construction. Our Long Bay System is designed for larger buildings that typically require less custom engineering and design than our other engineered building systems, which allows us to meet our customers' needs more quickly. SALES, MARKETING AND CUSTOMERS Metal Building Components. We sell metal building components directly to regional manufacturers, contractors, subcontractors, distributors, lumberyards, cooperative buying groups and other customers under the brand names "Metal Building Components," "American Building Components," "ABC," "MBCI," "Midland Metals," "NCI Metal Depot," "DOUBLECOTE," "IPS," "Metal Coaters" and "Metal Prep." Roll-up doors, interior and exterior doors, interior partitions and walls, header panels and trim are sold directly to contractors and other customers under the brand names "Doors & Building Components" or "DBCI." These components also are produced for integration into self storage and engineered building systems sold by us. We also operate three retail stores that sell components directly to the public. We market our components products within four product lines: commercial/industrial, architectural, agricultural and residential. Customers include regional engineered building systems manufacturers, general contractors, subcontractors, roofing installers, architects and end-users. Commercial and industrial businesses are heavy users of metal building components and metal buildings systems. Standing seam roof and architectural customers are growing in importance. As metal buildings become a more acceptable building alternative and aesthetics become an increasingly important consideration for end-users of metal buildings, we believe that architects are participating in metal building design and purchase decisions to a greater extent. Wood frame builders also purchase our metal building components through distributors, lumberyards, cooperative buying groups and chain stores for various uses, including agricultural buildings. Residential customers are generally contractors building upscale homes that require an architect-specified product. Our metal building components sales operations are organized into four geographic regions. Each region is headed by a general sales manager supported by individual plant sales managers. In addition, each of our metal coating facilities has its own sales manager. Each local sales office is located adjacent to a manufacturing plant and is staffed by a direct sales force responsible for contacting customers and architects and a sales coordinator who supervises the sales process from the time the order is received until it is shipped and invoiced. The regional and local focus of our customers requires extensive knowledge of local business conditions. During fiscal 2002, our largest customer for metal building components accounted for less than 3% of our total sales. We provide our customers with product catalogs tailored to our product lines, which include product specifications and suggested list prices. Some of our catalogs are available on-line through the Internet, which enables architects and other customers to download drawings for use in developing project specifications. Customers place orders via telephone or facsimile to a sales coordinator at the regional office who enters it onto a standard order form. The form is then sent via computer to the plant and downloaded automatically to the production machines. 6 We have a small number of national accounts for our coating and painting products and services and rely on a single sales manager. Engineered Building Systems. We sell engineered building systems to builders nationwide under the brand names "Metallic Buildings," "Mid-West Steel Buildings," "A&S Buildings" and "Mesco." We market engineered building systems through an in-house sales force to authorized builder networks of over 1,400 builders. We market engineered building systems under the brand name "Mid-West Steel Buildings" directly to contractors in Texas and surrounding states using an in-house sales force. We also sell engineered building systems under the names "All American Systems" and "Steel Systems" to various private labels. Our authorized builder networks consist of independent general contractors that market our Mid-West Steel Buildings, Metallic Buildings, A&S Buildings and Mesco products to end-users. Most of our sales of engineered building systems outside of Texas and surrounding states are through our authorized builder networks. We rely upon maintaining a satisfactory business relationship for continuing job orders from our authorized builders and do not consider the builder agreements to be material to our business. During fiscal 2002, our largest customer for engineered building systems accounted for less than 1% of our total sales. We enter into an agreement with an authorized builder, which generally grants the builder the non-exclusive right to market our products in a specified territory. The agreement is cancelable by either party on 60 days notice. The agreement does not prohibit the builder from marketing engineered building systems of other manufacturers. We establish an annual sales goal for each builder and provide the builder with sales and pricing information, design and engineering manuals, drawings and assistance, application programs for estimating and quoting jobs and advertising and promotional literature. We also defray a portion of the builder's advertising costs and provide volume purchasing and other pricing incentives to encourage it to deal exclusively or principally with us. The builder is required to maintain a place of business in its designated territory, provide a sales organization, conduct periodic advertising programs and perform construction, warranty and other services for customers and potential customers. An authorized builder usually is hired by an end-user to erect an engineered building system on the customer's site and provide general contracting and other services related to the completion of the project. We sell our products to the builder, which generally includes the price of the building as a part of its overall construction contract with its customer. Our Long Bay System provides us with an entree to larger builders. This also provides us with new opportunities to cross-sell our other products to these new builders. During fiscal 2001, we introduced a National Accounts program. This program is designed to provide our builders with access to the largest contractors and developers in the United States. We currently have a team of nine people who comprise our National Accounts group. We market our engineered building systems and our Long Bay System under this program using the brand name "Metallic Buildings." MANUFACTURE AND DESIGN Metal Building Components. We operate 27 facilities used for manufacturing of metal building components for the building industry, including our doors and our metal coating and painting operations. We believe this broad geographic penetration gives us an advantage over our components competitors because major elements of a customer's decision are the speed and cost of delivery from the manufacturing facility to the product's ultimate destination. With the exception of our architectural and standing seam products, we are not involved in the design process for the components we manufacture. We also own a fleet of trucks to deliver our products to our customers in a more timely manner than most of our competitors. Our doors, interior partitions and other related panels and trim products are manufactured at dedicated plants in Georgia, Texas and Arizona. Orders are processed at the Georgia plant and sent to the appropriate plant, which is generally determined based upon the lowest shipping cost. Metal component products are roll-formed or fabricated at each plant using roll-formers and other metal working equipment. In roll forming, pre-finished coils of steel are unwound and passed through a series of progressive forming rolls which form the steel into various profiles of medium-gauge structural shapes and light-gauge sheets and panels. 7 We operate two metal coating and painting facilities for hot rolled, medium gauge steel coils and three metal coating and painting facilities for painting light gauge steel coils. These facilities primarily service our needs, but we also process steel coils at these facilities for other manufacturers. Metal coating and painting processes involve applying various types of chemical treatments and paint systems to flat rolled continuous coils of metal, including steel and aluminum. These processes give the coils a baked-on finish that both protects the metal and makes it more attractive. Initially, various metals in coil form are flattened, cleaned and pretreated. The metal is then coated, oven cured, cooled, recoiled and packaged for shipment. Slitting and embossing services can also be performed on the coated metal before shipping according to customer specifications. Hot roll steel coils typically are used in the production of secondary structural framing of metal buildings and other structural applications. Painted light gauge steel coils are used in the manufacture of products for building exteriors, metal doors, lighting fixtures and appliances. Engineered Building Systems. We operate eight facilities used for manufacturing engineered building systems. After we receive an order, our engineers design the engineered building system to meet the customer's requirements and to satisfy applicable building codes and zoning requirements. To expedite this process, we use computer-aided design and engineering systems to generate engineering and erection drawings and a bill of materials for the manufacture of the engineered building system. We employ approximately 294 engineers and draftsmen in this area. Once the specifications and designs of the customer's project have been finalized, the manufacturing of frames and other building systems begins at one of our five frame manufacturing facilities in Texas, Georgia or Tennessee or our joint venture facility in Mexico. The fabrication of the primary structural framing consists of a process in which rigid steel plates are punched and sheared and then routed through an automatic welding machine and sent through further fitting and welding processes. The secondary structural framing and the covering subsystem are roll-formed steel products that are manufactured at our full manufacturing facilities as well as our components plants. Once manufactured, structural framing members and covering systems are shipped to the job site for assembly. We generally are not responsible for any on-site construction. The time elapsed between our receipt of an order and shipment of a completed building system has typically ranged from four to eight weeks, although delivery can extend somewhat longer if engineering and drafting requirements are extensive. We own 51% of a joint venture, which operates a framing facility in Monterrey, Mexico. We purchase substantially all of the framing systems produced by the Mexico joint venture. RAW MATERIALS The principal raw material used in manufacturing of our metal building components and engineered building systems is steel. Our various products are fabricated from steel produced by mills including bars, plates, structural shapes, sheets, hot rolled coils and galvanized or galvalume-coated coils. During fiscal 2002, we purchased approximately 76% of our 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. We believe concentration of our steel purchases among a small group of suppliers that have mills and warehouse facilities close to our facilities enables us, as a large customer of those suppliers, to obtain better pricing, service and delivery. These suppliers generally maintain an inventory of the types of materials we require. We do not have any long-term contracts for the purchase of raw materials. A prolonged labor strike against one of our principal domestic suppliers, or financial or other difficulties of a principal supplier that affects its ability to produce steel, could have a material adverse effect on our operations. Alternative sources, however, including foreign steel, are currently believed to be sufficient to maintain required deliveries. BACKLOG At November 2, 2002, the total backlog of orders for our products believed by us to be firm was $162 million. This compares with a total backlog for our products of $152 million at October 31, 2001. Backlog primarily consists of engineered building systems. Job orders generally are cancelable by customers at any time for any reason. Occasionally, orders in the backlog are not completed and shipped for reasons that include changes in the requirements of the customers and the inability of customers to obtain necessary financing or zoning variances. None of the backlog at November 2, 2002 currently is scheduled to extend beyond fiscal 2003. 8 COMPETITION We and other manufacturers of metal building components and engineered building systems compete in the building industry with all other alternative methods of building construction such as tilt-wall, concrete and wood, all of which may be perceived as more traditional, more aesthetically pleasing or having other advantages over our products. We compete with all manufacturers of building products, from small local firms to large national firms. In addition, competition in the metal building components and engineered building systems market of the building industry is intense. It is based primarily on: o quality o service o delivery o ability to provide added value in the design and engineering of buildings o price o speed of construction We compete with a number of other manufacturers of metal building components and engineered building systems for the building industry, ranging from small local firms to large national firms. Most of these competitors operate on a regional basis, although we believe that at least four other manufacturers of engineered building systems and three manufacturers of metal building components have nationwide coverage. REGULATORY MATTERS We must comply with a wide variety of federal, state and local laws and regulations governing the protection of the environment. These laws and regulations cover air emissions, discharges to water, the generation, handling, storage, transportation, treatment and disposal of hazardous substances, the cleanup of contamination, the control of noise and odors and other materials and health and safety matters. Laws protecting the environment generally have become more stringent than in the past and are expected to continue to do so. Environmental laws and regulations generally impose strict liability. This means that in some situations we could be exposed to liability for cleanup costs, and toxic tort or other damages as a result of conduct that was lawful at the time it occurred or because of the conduct of or conditions caused by prior operators or other third parties. This strict liability is regardless of fault on our part. We believe we are in substantial compliance with all environmental standards applicable to our operations. We cannot assure you, however, that cleanup costs, natural resource damages, criminal sanctions, toxic tort or other damages arising as a result of environmental laws and costs associated with complying with changes in environmental laws and regulations will not be substantial and will not have a material adverse effect on our financial condition. From time to time, claims have been made against us under environmental laws. We have insurance coverage applicable to some environmental claims and to specified locations after payment of the applicable deductible. We do not anticipate material capital expenditures to meet current environmental quality control standards. We cannot assure you that more stringent regulatory standards will not be established that might require material capital expenditures. We also must comply with federal, state and local laws and regulations governing occupational safety and health, including review by the federal Occupational Health and Safety Administration and similar state agencies. We believe we are in substantial compliance with applicable laws and regulations. Compliance does not have a material adverse affect on our business. The engineered building systems and components we manufacture must meet zoning, building code and uplift requirements adopted by local governmental agencies. PATENTS, LICENSES AND PROPRIETARY RIGHTS We have a number of United States patents and pending patent applications, including patents and applications relating to metal roofing systems, metal overhead doors, our new pier and header system, our Long Bay System and Retro-R(R) panel. We do not, however, consider patent protection to be a material competitive factor in our industry. We also have several registered trademarks and pending registrations in the United States. 9 EMPLOYEES As of November 2, 2002, we had approximately 4,050 employees, of whom 3,099 were manufacturing and engineering personnel. We regard our employee relations as satisfactory. Our employees are not represented by a labor union or covered by a collective bargaining agreement. The United Steel Workers of America has periodically petitioned the National Labor Relations Board to be recognized as the collective bargaining representative of the production and maintenance employees at various facilities, but has lost the resulting union election each time. The last elections were at our Rancho Cucamonga, California facility in August 1998 and November 1999. RISK FACTORS OUR BUSINESSES ARE CYCLICAL. The nonresidential construction industry is highly sensitive to national and regional economic conditions. From time to time, it has been adversely affected in various parts of the country by unfavorable economic conditions, low use of manufacturing capacity, high vacancy rates, changes in tax laws affecting the real estate industry, high interest rates and the unavailability of financing. Sales of our products may be adversely affected by weakness in demand for our products within particular customer groups, or a recession in the general construction industry or particular geographic regions. We cannot predict the timing or severity of future economic or industry downturns. Any economic downturn, particularly in states where many of our sales are made, could have a material adverse effect on our results of operations and financial condition. OUR BUSINESSES ARE SEASONAL. The metal components and engineered building systems businesses, as well as the construction industry in general, are seasonal in nature. Sales normally are lower in the first calendar quarter of each year compared to the other three quarters because of unfavorable weather conditions for construction and typical business planning cycles affecting construction. This seasonality adversely affects our results of operations for the first two fiscal quarters. Prolonged severe winter weather conditions can delay construction projects and otherwise adversely affect our business. SUPPLY AND DEMAND FOR STEEL MAY AFFECT OUR BUSINESS. Our principal raw material is steel. We do not have any long-term contracts for the purchase of steel. During fiscal 2002, we purchased approximately 63% of our steel requirements from Bethlehem Steel Corporation and National Steel Corporation, each of which has filed for protection under federal bankruptcy laws. In addition, we purchased approximately 13% of our steel requirements from U.S. Steel during fiscal 2002. We believe that our other primary steel supplier can meet our demand for steel if our supply from Bethlehem Steel or National Steel is interrupted. We do not maintain an inventory of steel in excess of our current production requirements. We can give you no assurance that steel will remain available or that prices will remain stable. The steel industry is highly cyclical in nature, and steel prices are influenced by numerous factors beyond our control. These factors include general economic conditions, competition, labor costs, import duties and other trade restrictions. Furthermore, a prolonged labor strike against one or more of our principal domestic suppliers could have a material adverse effect on our operations. If the available supply of steel declines or if one or more of our current suppliers is unable for financial or any other any reason to continue in business or produce steel sufficient to meet our requirements, we could experience price increases, a deterioration of service from our suppliers or interruptions or delays that may cause us not to meet delivery schedules to our customers. Any of these problems could adversely affect our results of operations and financial condition. WE HAVE POTENTIAL EXPOSURE TO SHAREHOLDER LAWSUITS. As a result of our restatement of our 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 us and certain of our 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 our 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 we made materially false and misleading statements about the status and effectiveness of a management information and accounting system used by our 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 10 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 our 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, we filed our Motion to Dismiss Plaintiffs' Amended Consolidated Class Action Complaint and Memorandum in Support. The Motion to Dismiss is currently pending before the court. We and the individual defendants deny the allegations in the complaint and intend to defend against them vigorously. Procedurally, the consolidated lawsuit is at a very early stage. Consequently, at this time we are not able to predict whether we will incur any liability in excess of insurance coverages or to estimate the damages, or the range of damages, if any, that we might incur in connection with the lawsuit, or whether an adverse outcome could have a material adverse impact on our business, consolidated financial condition or results of operations. WE HAVE POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES. We must comply with federal, state and local laws and regulations governing the protection of the environment. These laws and regulations cover air emissions, discharges to water, the management of wastes and hazardous substances, the cleanup of contamination and the control of noise and odors. We may incur significant fines or penalties if we fail to comply with these environmental requirements. In some circumstances, a current or previous owner or operator of real property, and parties that generate or transport hazardous substances that are disposed of at real property, may be held liable for the cost to investigate or clean up hazardous substances on or under the property. We may incur liability, including liability for cleanup costs, if contamination is discovered at one of our facilities or at a landfill or other location where we have disposed of wastes. Because environmental requirements are becoming increasingly stringent, our expenditures for environmental compliance may increase and we may incur material costs associated with environmental compliance in the future. From time to time, claims have been made against us under environmental laws or regulations. OUR BUSINESSES ARE HIGHLY COMPETITIVE. Competition in the metal components and metal buildings markets of the building industry is intense. It is based primarily on: o quality o service o delivery o ability to provide added value in the design and engineering of buildings o price o speed of construction We compete with a number of other manufacturers of metal components and engineered building systems ranging from small local firms to large national firms. In addition, we and other manufacturers of metal components and engineered building systems compete with alternative methods of building construction. These alternative building methods may be perceived as more traditional, more aesthetically pleasing or having other advantages. ACQUISITIONS MAY HAVE SHORT-TERM ADVERSE EFFECTS ON OUR OPERATIONS. One element of our growth strategy is to pursue strategic acquisitions that either expand or complement our business. We may not be able to integrate successfully an acquired business into our business or operate profitably any business we may acquire. Acquisitions involve a number of special risks. They divert management's attention to the integration of the operations and personnel of the acquired companies. They may also have adverse short-term effects on our operating results. We may have difficulty integrating our financial reporting and other management systems in connection with acquisitions. OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE. The trading price of our common stock has fluctuated in the past and is subject to significant fluctuations in response to the following factors, some of which are beyond our control: o variations in quarterly operating results; o changes in earnings estimates by analysts; o our announcements of significant contracts, acquisitions, strategic partnerships or joint ventures; 11 o general conditions in the metal components and engineered building systems industries; o fluctuations in stock market price and volume; and o other general economic conditions. In recent years, the stock market in general has experienced extreme price and volume fluctuations that have affected the market price for many companies in industries similar to ours. Some of these fluctuations have been unrelated to the operating performance of the affected companies. These market fluctuations may decrease the market price of our common stock in the future. WE MAY NOT BE ABLE TO SERVICE OUR DEBT. In connection with our acquisition activity, especially the MBCI acquisition, we have incurred debt. We may also incur additional debt from time to time to finance additional acquisitions, capital expenditures or for other purposes if we comply with the restrictions in our senior credit facility and the indenture governing our publicly-held notes. The debt that we carry may have important consequences to us, including the following: o Our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes may be impaired or additional financing may not be available on favorable terms. o We must use a portion of our cash flow to pay the principal and interest on our debt. These payments reduce the funds that would otherwise be available for our operations and future business opportunities. o A substantial decrease in our net operating cash flows could make it difficult for us to meet our debt service requirements and force us to modify our operations. o We may be more vulnerable to a downturn in our business or the economy generally. If we cannot service our debt, we will be forced to take actions such as reducing or delaying acquisitions and/or capital expenditures, selling assets, restructuring or refinancing our debt or seeking additional equity capital. We can give you no assurance that we can do any of these things on satisfactory terms or at all. WE MUST COMPLY WITH DEBT COVENANTS. We must comply with operating and financing restrictions in our senior credit facility and the indenture governing our publicly-held notes. We may also have similar restrictions with any future debt. These restrictions affect, and in many respects limit or prohibit our ability to: o incur additional indebtedness; o make restricted payments, including dividends or other distributions; o incur liens; o make investments, including joint venture investments; o sell assets; and o merge or consolidate with or into other companies or sell substantially all our assets. Our senior credit facility also requires us to achieve specified financial and operating results and satisfy set financial tests governing our consolidated net worth and our leverage, fixed charge coverage and senior debt ratios. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise could restrict corporate activities. These restrictions could also adversely affect our ability to finance our future operations or capital needs or to engage in other business activities that would be in our interest. 12 ITEM 2. PROPERTIES. We conduct manufacturing operations at the following facilities:

Square Owned Facility Products Feet or Leased -------- -------- ------- --------- Chandler, Arizona Doors and related metal components 35,000 Leased Tolleson, Arizona Metal components (1) 65,980 Owned Atwater, California Metal components (2) 112,200 Owned Rancho Cucamonga, California Metal coating and painting 98,000 Owned Adel, Georgia Metal components (1) 59,550 Owned Douglasville, Georgia Metal components (3) 110,536 Owned Douglasville, Georgia Doors and related metal components 60,000 Owned Marietta, Georgia Metal coating and painting 125,700 Owned Tallapoosa, Georgia Engineered building systems (4) 249,000 Leased Mattoon, Illinois Metal components (2) 115,480 Owned Shelbyville, Indiana Metal components (1) 66,450 Owned Oskaloosa, Iowa Metal components (5) 62,702 Owned Nicholasville, Kentucky Metal components (5) 41,280 Owned Monterrey, Mexico (6) Engineered building systems (4) 237,476 Owned Big Rapids, Michigan Metal components 54,640 Owned Jackson, Mississippi Metal components (5) 96,000 Owned Jackson, Mississippi Metal coating and painting 363,200 Owned Hernando, Mississippi Metal components (1) 71,720 Owned Omaha, Nebraska Metal components (5) 51,750 Owned Rome, New York Metal components (5) 57,700 Owned Oklahoma City, Oklahoma Metal components (1) 59,695 Owned Caryville, Tennessee Engineered building systems (4) 193,800 Owned Memphis, Tennessee Metal coating and painting 61,500 Owned Ennis, Texas Metal components (1) 33,000 Owned Houston, Texas Metal components (3) 209,355 Owned Houston, Texas Metal coating and painting 39,550 Owned Houston, Texas Engineered building systems (7) 410,980 Owned Houston, Texas Doors and related metal components 23,625 Owned Houston, Texas Engineered building systems (4) 148,500 Owned Lubbock, Texas Metal components (1) 64,320 Owned San Antonio, Texas Metal components (5) 52,360 Owned Southlake, Texas Engineered building systems (4) 123,000 Owned Stafford, Texas Metal components (8) 56,840 Leased Salt Lake City, Utah Metal components (3) 93,150 Owned Colonial Heights, Virginia Metal components (1) 37,000 Owned

---------- (1) Secondary structures and covering systems. (2) Endwalls, secondary structures and covering systems for components and engineered building systems. (3) Full components product range. (4) Primary structures, secondary structures and covering systems for engineered building systems. (5) Covering systems. (6) We own a 51% interest in a joint venture that owns this facility. (7) Structural steel. (8) Insulated Panel Systems. We also maintain several drafting office facilities and small retail locations in various states. We have short-term leases for these additional facilities. We believe that our present facilities are adequate for our current and projected operations. Additionally, we own approximately six acres of land in Houston, Texas and have a 60,000 square foot facility that is used as our principal executive and administrative offices. Approximately 14,000 square feet of this facility is leased to third parties for a term of five years with approximately two and one-half years remaining on the lease term. 13 During the fourth quarter of fiscal 2001 and the first quarter of fiscal 2002, we closed five of our manufacturing facilities, and sold three of the five facilities during fiscal 2002. During fiscal 2002, we bought four acres of real property outside of Houston, Texas. We intend to construct a metal depot on this real property. ITEM 3. LEGAL PROCEEDINGS. As a result of our restatement of our 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 us and certain of our 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 our 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 we made materially false and misleading statements about the status and effectiveness of a management information and accounting system used by our 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 our 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, we filed our Motion to Dismiss Plaintiffs' Amended Consolidated Class Action Complaint and Memorandum in Support. The Motion to Dismiss is currently pending before the court. We and the individual defendants deny the allegations in the complaint and intend to defend against them vigorously. Procedurally, the consolidated lawsuit is at a very early stage. Consequently, at this time we are not able to predict whether we will incur any liability in excess of insurance coverages or to estimate the damages, or the range of damages, if any, that we might incur in connection with the lawsuit, or whether an adverse outcome could have a material adverse impact on our business, consolidated financial condition or results of operations. We are involved in various other legal proceedings that we consider to be in the normal course of business. We believe that these proceedings will not have a material adverse effect on our business, consolidated financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS. The information required by this Item is incorporated by reference from our 2002 Annual Report to Shareholders, bottom of page 36, regarding the market for our common stock. The information required by this Item is incorporated by reference from our definitive proxy statement for our annual meeting of shareholders to be held on March 14, 2003, page 22, regarding securities authorized for issuance under equity compensation plans. ITEM 6. SELECTED FINANCIAL DATA. The information required by this Item is incorporated by reference from our 2002 Annual Report to Shareholders, bottom of the inside gatefold front cover. 14 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information required by this Item is incorporated by reference from the following portions of our 2002 Annual Report to Shareholders: Management's Discussion and Analysis of Results of Operations and Financial Condition, pages 29 through 35. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information required by this Item is incorporated by reference from our 2002 Annual Report to Shareholders, page 35. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The following consolidated financial statements and supplementary financial information are incorporated by reference from the indicated pages in our 2002 Annual Report to Shareholders.

Pages of Annual Report to Shareholders ---------------------- Selected quarterly financial data 36 Consolidated statements of income for each of the three fiscal years in the period ended November 2, 2002 14 Consolidated balance sheets at November 2, 2002 and October 31, 2001 15 Consolidated statements of shareholders' equity for each of the three fiscal years in the period ended November 2, 2002 16 Consolidated statements of cash flows for each of the three fiscal years in the period ended November 2, 2002 17 Notes to consolidated financial statements 18 - 27 Report of independent auditors 28

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The information required by this Item is incorporated by reference from our definitive proxy statement for our annual meeting of shareholders to be held on March 14, 2003, pages 3 through 6. ITEM 11. EXECUTIVE COMPENSATION. The information required by this Item is incorporated by reference from our definitive proxy statement for our annual meeting of shareholders to be held on March 14, 2003, pages 7 through 11. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS The information required by this Item is incorporated by reference from our definitive proxy statement for our annual meeting of shareholders to be held on March 14, 2003, pages 1 through 3. 15 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by this Item is incorporated by reference from our definitive proxy statement for our annual meeting of shareholders to be held on March 14, 2003, top of page 25. ITEM 14. CONTROLS AND PROCEDURES. Within 90 days before the date of this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure. In addition, we reviewed our internal controls, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their last evaluation. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a) The following documents are filed as a part of this report: 1. Consolidated financial statements (see Item 8). 2. Consolidated financial statement schedules. Schedule II--Valuation and Qualifying Accounts All other schedules are omitted because they are inapplicable or the requested information is shown in the financial statements or noted therein. 3. Exhibits *3.1 Restated Certificate of Incorporation, as amended through September 30, 1998 *3.2 Amended and Restated By-Laws, as amended through May 30, 2002 4.1 Form of certificate representing shares of NCI's common stock (filed as Exhibit 1 to NCI's registration statement on Form 8-A filed with the SEC on July 20, 1998 and incorporated by reference herein) 4.2 Credit Agreement, dated September 13, 2002 (the "Credit Agreement"), by and among NCI, Bank of America, N.A., as administrative agent ("BOA"), Wachovia Bank, N.A., as syndication agent, and the several lenders named therein (filed as Exhibit 4.1 to NCI's Quarterly Report on Form 10-Q for the quarter ended August 3, 2002 and incorporated by reference herein) 16 4.3 Guaranty, dated September 13, 2002, by and among BOA and all of NCI's domestic subsidiaries and operating limited partnerships (filed as Exhibit 4.2 to NCI's Quarterly Report on Form 10-Q for the quarter ended August 3, 2002 and incorporated by reference herein) 4.4 Promissory Note, dated May 5, 1998, of NCI Holding Corp. in favor of NCI (filed as Exhibit 4.26 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 1998 and incorporated by reference herein) 4.5 Note Pledge Agreement, dated May 5, 1998, between NCI and BOA (filed as Exhibit 4.27 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 1998 and incorporated by reference herein) 4.6 Rights Agreement, dated June 24, 1998, between NCI and Harris Trust and Savings Bank (filed as Exhibit 2 to NCI's registration statement on Form 8-A (filed with the SEC on July 9, 1998 and incorporated by reference herein) 4.7 First Amendment to Rights Agreement, dated June 24, 1999, between NCI and Harris Trust and Savings Bank (filed as Exhibit 3 to NCI's registration statement on Form 8-A, Amendment No. 1 filed with the SEC on June 25, 1999 and incorporated by reference herein) *10.1 Amended and Restated Employment Agreement, dated January 29, 2003, between NCI and Johnie Schulte, Jr. 10.2 Amended and Restated Bonus Program, as amended and restated on December 11, 1998, September 9, 1999, December 7, 2000, May 24, 2001 and December 6, 2001 10.3 Stock Option Plan, as amended and restated on December 14, 2000 (filed as Exhibit 10.4 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein) 10.4 Form of Nonqualified Stock Option Agreement (filed as Exhibit 10.5 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein) 10.5 Form of Incentive Stock Option Agreement (filed as Exhibit 10.6 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein) *10.6 2003 Long-Term Stock Incentive Plan 10.7 401(k) Profit Sharing Plan (filed as Exhibit 4.1 to NCI's registration statement no. 33-52078 and incorporated by reference herein) *10.8 Amended and Restated Supplemental Benefit Plan (as amended and restated on December 12, 2002 *10.9 Supplemental Benefit Agreement, dated December 13, 2002, between NCI and A.R. Ginn, Jr. *10.10 Supplemental Benefit Agreement, dated December 13, 2002, between NCI and Johnie Schulte *10.11 Split-Dollar Life Insurance Agreement, dated February 1, 1996, between NCI and Fredrick D. Koetting *10.12 Split-Dollar Life Insurance Agreement, dated October 13, 1998, between NCI and Karen Rene Rosales, trustee of the Schulte Investment Trust 17 *10.13 Form of Metal Building Components, L.P. (formerly, MBCI Operating, L.P.) ("MBC") and NCI Group, L.P. (formerly, Metal Coaters Operating, L.P.) ("NCI Group") Management Incentive Trust Agreement (as amended through December 12, 2002) in effect for A.R. Ginn, Jr. and Kenneth W. Maddox *10.14 Form of MBC and NCI Group Long-Term Management Incentive Plan (as amended through December 12, 2002) in effect for A.R. Ginn, Jr. and Kenneth W. Maddox 10.15 Form of Metallic Builder Agreement (filed as Exhibit 10.10 to NCI's registration statement no. 33-45612 and incorporated by reference herein) 10.16 Form of A&S Builder Agreement (filed as Exhibit 10.17 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 1992 and incorporated by reference herein) 10.17 Stock Purchase Agreement, dated March 25, 1998, by and among BTR Australia Limited and NCI, and joined therein for certain purposes by BTR plc (filed as Exhibit 2.1 to NCI's Current Report on Form 8-K dated May 19, 1998 and incorporated by reference herein) 10.18 Letter Agreement, dated May 4, 1998, by and among NCI, BTR Australia Limited and BTR plc, amending the Stock Purchase Agreement (filed as Exhibit 2.2 to NCI's Current Report on Form 8-K dated May 19, 1998 and incorporated by reference herein) 10.19 Note Purchase Agreement, dated April 30, 1999, by and among NCI, the guarantors named therein, Warburg Dillon Read LLC, Montgomery NationsBanc Securities LLC, First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. (filed as Exhibit 10.18 to NCI's registration statement no. 333-80029 and incorporated by reference herein) 10.20 Registration Rights Agreement, dated May 5, 1999, by and among NCI, the guarantors named therein, Warburg Dillon Read LLC, Montgomery NationsBanc Securities LLC, First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. (filed as Exhibit 10.19 to NCI's registration statement no. 333-80029 and incorporated by reference herein) 10.21 Indenture, dated May 5, 1999, by and among NCI, the guarantors named therein and Harris Trust Company of New York (filed as Exhibit 10.20 to NCI's registration statement no. 333-80029 and incorporated by reference herein) 10.22 Agreement Regarding Retirement, dated July 31, 2000, between NCI and C.A. Rundell, Jr. (filed as Exhibit 10.15 to NCI's Annual Report on Form 10-K/A for the fiscal year ended October 31, 2000 and incorporated by reference herein) *13 2002 Annual Report to Shareholders. With the exception of the information incorporated by reference into Items 5, 6, 7, 7A and 8 of this Form 10-K, the 2002 Annual Report to Shareholders is not to be deemed filed as part of this Form 10-K. *21 List of Subsidiaries *23.1 Consent of Independent Auditors *23.2 Report of Independent Auditors ---------- * Filed herewith (b) Reports on Form 8-K. None 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 31st day of January, 2003. NCI BUILDING SYSTEMS, INC. By: /s/ Johnie Schulte, Jr. -------------------------------- Johnie Schulte, Jr., President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of the 31st day of January, 2003.

Name Title ---- ----- /s/ Johnie Schulte, Jr. President and Chief Executive Officer and Director ---------------------------- (principal executive officer) Johnie Schulte, Jr. /s/ Robert J. Medlock Executive Vice President and Chief Financial Officer ---------------------------- (principal accounting and financial officer) Robert J. Medlock Director ---------------------------- William D. Breedlove /s/ Sheldon R. Erikson Director ---------------------------- Sheldon R. Erikson /s/ Gary L. Forbes Director ---------------------------- Gary L. Forbes /s/ A.R. Ginn Director ---------------------------- A.R. Ginn /s/ W.B. Pieper Director ---------------------------- W.B. Pieper

CERTIFICATION PURSUANT TO RULE 13a-14(b) I, A. R. Ginn, certify that: 1. I have reviewed this annual report on Form 10-K of NCI Building Systems, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 19 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 31, 2003 /s/ A.R. Ginn ------------------------------------- A. R. Ginn Chairman of the Board CERTIFICATION PURSUANT TO RULE 13a-14(b) I, Johnie Schulte, Jr., certify that: 1. I have reviewed this annual report on Form 10-K of NCI Building Systems, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 20 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 31, 2003 /s/ Johnie Schulte, Jr. ----------------------------------------- Johnie Schulte, Jr. President and Chief Executive Officer CERTIFICATION PURSUANT TO RULE 13a-14(b) I, Robert J. Medlock, certify that: 1. I have reviewed this annual report on Form 10-K of NCI Building Systems, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: 21 (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: January 31, 2003 /s/ Robert J. Medlock -------------------------------------- Robert J. Medlock Executive Vice President and Chief Financial Officer CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT I, A. R. Ginn, certify that: 1. I have reviewed this periodic report on Form 10-K of NCI Building Systems, Inc.; 2. This annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 3. The information contained in this annual report fairly presents, in all material respects, the financial condition and results of operations of NCI Building Systems, Inc. Date: January 31, 2003 /s/ A.R. Ginn --------------------------------------- A. R. Ginn Chairman of the Board 22 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT I, Johnie Schulte, Jr., certify that: 1. I have reviewed this periodic report on Form 10-K of NCI Building Systems, Inc.; 2. This annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 3. The information contained in this annual report fairly presents, in all material respects, the financial condition and results of operations of NCI Building Systems, Inc. Date: January 31, 2003 /s/ Johnie Schulte, Jr. ---------------------------------------- Johnie Schulte, Jr. President and Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT I, Robert J. Medlock, certify that: 1. I have reviewed this periodic report on Form 10-K of NCI Building Systems, Inc.; 2. This annual report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 3 The information contained in this annual report fairly presents, in all material respects, the financial condition and results of operations of NCI Building Systems, Inc. Date: January 31, 2003 /s/ Robert J. Medlock ---------------------------------------- Robert J. Medlock Executive Vice President and Chief Financial Officer 23 NCI BUILDING SYSTEMS, INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (in thousands)

ADDITIONS BALANCE AT CHARGED BALANCE BEGINNING TO COSTS AND AT END DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS (1) OF PERIOD -------------------------------------- --------------- --------------- --------------- --------------- Year ended November 2, 2002: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts and backcharges .......... $ 3,862 $ 3,300 $ 1,502 $ 5,660 Year ended October 31, 2001: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts and backcharges .......... $ 3,656 $ 2,396 $ 2,190 $ 3,862 Year ended October 31, 2000: Reserves and allowances deducted from asset accounts: Allowance for uncollectible accounts and backcharges .......... $ 3,309 $ 2,645 $ 2,298 $ 3,656

---------- (1) Uncollectible accounts, net of recoveries. 24 INDEX TO EXHIBITS

EXHIBIT NUMBER DESCRIPTION *3.1 Restated Certificate of Incorporation, as amended through September 30, 1998 *3.2 Amended and Restated By-Laws, as amended through May 30, 2002 4.1 Form of certificate representing shares of NCI's common stock (filed as Exhibit 1 to NCI's registration statement on Form 8-A filed with the SEC on July 20, 1998 and incorporated by reference herein) 4.2 Credit Agreement, dated September 13, 2002 (the "Credit Agreement"), by and among NCI, Bank of America, N.A., as administrative agent ("BOA"), Wachovia Bank, N.A., as syndication agent, and the several lenders named therein (filed as Exhibit 4.1 to NCI's Quarterly Report on Form 10-Q for the quarter ended August 3, 2002 and incorporated by reference herein) 4.3 Guaranty, dated September 13, 2002, by and among BOA and all of NCI's domestic subsidiaries and operating limited partnerships (filed as Exhibit 4.2 to NCI's Quarterly Report on Form 10-Q for the quarter ended August 3, 2002 and incorporated by reference herein) 4.4 Promissory Note, dated May 5, 1998, of NCI Holding Corp. in favor of NCI (filed as Exhibit 4.26 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 1998 and incorporated by reference herein) 4.5 Note Pledge Agreement, dated May 5, 1998, between NCI and BOA (filed as Exhibit 4.27 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 1998 and incorporated by reference herein) 4.6 Rights Agreement, dated June 24, 1998, between NCI and Harris Trust and Savings Bank (filed as Exhibit 2 to NCI's registration statement on Form 8-A (filed with the SEC on July 9, 1998 and incorporated by reference herein) 4.7 First Amendment to Rights Agreement, dated June 24, 1999, between NCI and Harris Trust and Savings Bank (filed as Exhibit 3 to NCI's registration statement on Form 8-A, Amendment No. 1 filed with the SEC on June 25, 1999 and incorporated by reference herein) *10.1 Amended and Restated Employment Agreement, dated January 29, 2003, between NCI and Johnie Schulte, Jr. 10.2 Amended and Restated Bonus Program, as amended and restated on December 11, 1998, September 9, 1999, December 7, 2000, May 24, 2001 and December 6, 2001 10.3 Stock Option Plan, as amended and restated on December 14, 2000 (filed as Exhibit 10.4 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein) 10.4 Form of Nonqualified Stock Option Agreement (filed as Exhibit 10.5 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein) 10.5 Form of Incentive Stock Option Agreement (filed as Exhibit 10.6 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 2000 and incorporated by reference herein) *10.6 2003 Long-Term Stock Incentive Plan 10.7 401(k) Profit Sharing Plan (filed as Exhibit 4.1 to NCI's registration statement no. 33-52078 and incorporated by reference herein)

*10.8 Amended and Restated Supplemental Benefit Plan (as amended and restated on December 12, 2002 *10.9 Supplemental Benefit Agreement, dated December 13, 2002, between NCI and A.R. Ginn, Jr. *10.10 Supplemental Benefit Agreement, dated December 13, 2002, between NCI and Johnie Schulte *10.11 Split-Dollar Life Insurance Agreement, dated February 1, 1996, between NCI and Fredrick D. Koetting *10.12 Split-Dollar Life Insurance Agreement, dated October 13, 1998, between NCI and Karen Rene Rosales, trustee of the Schulte Investment Trust *10.13 Form of Metal Building Components, L.P. (formerly, MBCI Operating, L.P.) ("MBC") and NCI Group, L.P. (formerly, Metal Coaters Operating, L.P.) ("NCI Group") Management Incentive Trust Agreement (as amended through December 12, 2002) in effect for A.R. Ginn, Jr. and Kenneth W. Maddox *10.14 Form of MBC and NCI Group Long-Term Management Incentive Plan (as amended through December 12, 2002) in effect for A.R. Ginn, Jr. and Kenneth W. Maddox 10.15 Form of Metallic Builder Agreement (filed as Exhibit 10.10 to NCI's registration statement no. 33-45612 and incorporated by reference herein) 10.16 Form of A&S Builder Agreement (filed as Exhibit 10.17 to NCI's Annual Report on Form 10-K for the fiscal year ended October 31, 1992 and incorporated by reference herein) 10.17 Stock Purchase Agreement, dated March 25, 1998, by and among BTR Australia Limited and NCI, and joined therein for certain purposes by BTR plc (filed as Exhibit 2.1 to NCI's Current Report on Form 8-K dated May 19, 1998 and incorporated by reference herein) 10.18 Letter Agreement, dated May 4, 1998, by and among NCI, BTR Australia Limited and BTR plc, amending the Stock Purchase Agreement (filed as Exhibit 2.2 to NCI's Current Report on Form 8-K dated May 19, 1998 and incorporated by reference herein) 10.19 Note Purchase Agreement, dated April 30, 1999, by and among NCI, the guarantors named therein, Warburg Dillon Read LLC, Montgomery NationsBanc Securities LLC, First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. (filed as Exhibit 10.18 to NCI's registration statement no. 333-80029 and incorporated by reference herein) 10.20 Registration Rights Agreement, dated May 5, 1999, by and among NCI, the guarantors named therein, Warburg Dillon Read LLC, Montgomery NationsBanc Securities LLC, First Union Capital Markets Corp. and Bear, Stearns & Co. Inc. (filed as Exhibit 10.19 to NCI's registration statement no. 333-80029 and incorporated by reference herein) 10.21 Indenture, dated May 5, 1999, by and among NCI, the guarantors named therein and Harris Trust Company of New York (filed as Exhibit 10.20 to NCI's registration statement no. 333-80029 and incorporated by reference herein) 10.22 Agreement Regarding Retirement, dated July 31, 2000, between NCI and C.A. Rundell, Jr. (filed as Exhibit 10.15 to NCI's Annual Report on Form 10-K/A for the fiscal year ended October 31, 2000 and incorporated by reference herein) *13 2002 Annual Report to Shareholders. With the exception of the information incorporated by reference into Items 5, 6, 7, 7A and 8 of this Form 10-K, the 2002 Annual Report to Shareholders is not to be deemed filed as part of this Form 10-K. *21 List of Subsidiaries *23.1 Consent of Independent Auditors *23.2 Report of Independent Auditors ---------- * Filed herewith