UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended January 30, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 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 of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)10943 N. Sam Houston Parkway W.Houston, TX
    
    77064(Address of principal executive offices)
    
    (Zip Code)
 (281) 897-7788
(Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 PAGEPart I  Financial InformationItem 1. Unaudited Consolidated Financial StatementsConsolidated Balance Sheets January 30, 2011 and October 31, 2010Consolidated Statements of Operations Fiscal Three and Nine Month Periods Ended January 30, 2011
and January 31, 2010Consolidated Statements of Cash Flows Fiscal Nine Months Ended January 30, 2011 and January 31, 2010Notes to Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II  Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 6. Exhibits
 2




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##### 



PART I  FINANCIAL INFORMATION
 Item 1. Unaudited Consolidated Financial Statements.
 NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 January 30,
    
    
    October 31,2011
    
    
    2010(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    65,216
    
    
    $
    77,419Restricted cash
    
    
    2,841
    
    
    
    2,839Accounts receivable, net
    
    
    61,916
    
    
    
    81,896Inventories, net
    
    
    83,448
    
    
    
    81,386Deferred income taxes
    
    
    15,101
    
    
    
    15,101Income tax receivable
    
    
    15,553
    
    
    
    15,919Investments in debt and equity securities, at market
    
    
    4,006
    
    
    
    3,738Prepaid expenses and other
    
    
    14,326
    
    
    
    13,923Assets held for sale
    
    
    6,114
    
    
    
    6,114Total current assets
    
    
    268,521
    
    
    
    298,335Property, plant and equipment, net
    
    
    209,904
    
    
    
    214,453Goodwill
    
    
    5,200
    
    
    
    5,200Intangible assets, net
    
    
    25,797
    
    
    
    26,312Other assets
    
    
    15,062
    
    
    
    16,224Total assets
    
    $
    524,484
    
    
    $
    560,524LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Note payable
    
    $
    
    
    
    $
    289Accounts payable
    
    
    63,599
    
    
    
    70,589Accrued compensation and benefits
    
    
    31,162
    
    
    
    31,731Accrued interest
    
    
    1,481
    
    
    
    1,546Other accrued expenses
    
    
    44,440
    
    
    
    46,723Total current liabilities
    
    
    140,682
    
    
    
    150,878Long-term debt
    
    
    133,555
    
    
    
    136,305Deferred income taxes
    
    
    5,448
    
    
    
    10,947Other long-term liabilities
    
    
    4,813
    
    
    
    4,820Total long-term liabilities
    
    
    143,816
    
    
    
    152,072Series B cumulative convertible participating preferred stock
    
    
    257,550
    
    
    
    256,870Redeemable common stock
    
    
    2,464
    
    
    
    3,418Stockholders deficit:Common stock, $.01 par
value, 100,000,000 shares
authorized; 19,750,115 and 19,259,423 issued and
outstanding
    
    
    923
    
    
    
    921Additional paid-in capital
    
    
    250,667
    
    
    
    255,248Accumulated deficit
    
    
    (269,671
    )
    
    
    (256,946
    )Accumulated other comprehensive loss
    
    
    (1,947
    )
    
    
    (1,937
    )Total stockholders deficit
    
    
    (20,028
    )
    
    
    (2,714
    )Total liabilities and stockholders deficit
    
    $
    524,484
    
    
    $
    560,524
 See accompanying notes to consolidated financial statements.
 3




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##### 



NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Fiscal Three Months EndedJanuary 30,
    
    
    January 31,2011
    
    
    2010Sales
    
    $
    190,086
    
    
    $
    182,207Cost of sales, excluding asset impairments
    
    
    156,541
    
    
    
    148,740Asset impairments
    
    
    
    
    
    
    1,029Gross profit
    
    
    33,545
    
    
    
    32,438Selling, general and administrative expenses
    
    
    47,681
    
    
    
    44,646Restructuring charges
    
    
    
    
    
    
    524Loss from operations
    
    
    (14,136
    )
    
    
    (12,732
    )Interest income
    
    
    47
    
    
    
    25Interest expense
    
    
    (4,224
    )
    
    
    (4,532
    )Refinancing costs
    
    
    
    
    
    
    (174
    )Other income, net
    
    
    579
    
    
    
    1,148Loss before income taxes
    
    
    (17,734
    )
    
    
    (16,265
    )Benefit from income taxes
    
    
    (5,009
    )
    
    
    (5,779
    )Net loss
    
    $
    (12,725
    )
    
    $
    (10,486
    )Convertible preferred stock dividends and accretion
    
    
    6,230
    
    
    
    8,134Convertible preferred stock beneficial conversion feature
    
    
    1,786
    
    
    
    187Net loss applicable to common shares
    
    $
    (20,741
    )
    
    $
    (18,807
    )Loss per common share:Basic
    
    $
    (1.14
    )
    
    $
    (1.04
    )Diluted
    
    $
    (1.14
    )
    
    $
    (1.04
    )Weighted average number of common shares outstanding:Basic
    
    
    18,149
    
    
    
    18,093Diluted
    
    
    18,149
    
    
    
    18,093
 See accompanying notes to consolidated financial statements.
 4




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##### 



NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Fiscal Three Months EndedJanuary 30,
    
    
    January 31,2011
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (12,725
    )
    
    $
    (10,486
    )Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    8,449
    
    
    
    8,701Share-based compensation expense
    
    
    1,685
    
    
    
    801Gain on embedded derivative
    
    
    (7
    )
    
    
    (919
    )(Gain) loss on sale of property, plant and equipment
    
    
    (18
    )
    
    
    103Provision for doubtful accounts
    
    
    457
    
    
    
    (416
    )Provision (benefit) for deferred income taxes
    
    
    (5,035
    )
    
    
    45Asset impairments, net
    
    
    
    
    
    
    1,029Changes in operating assets and liabilities, net of effect of acquisitions:Accounts receivable
    
    
    19,523
    
    
    
    22,231Inventories
    
    
    (2,062
    )
    
    
    (18,443
    )Income tax receivable
    
    
    366
    
    
    
    (4,253
    )Prepaid expenses and other
    
    
    (642
    )
    
    
    (233
    )Accounts payable
    
    
    (6,990
    )
    
    
    (1,468
    )Accrued expenses
    
    
    (2,892
    )
    
    
    (15,836
    )Other, net
    
    
    23
    
    
    
    (32
    )Net cash (used in) provided by operating activities
    
    
    132
    
    
    
    (19,176
    )Cash flows from investing activities:Capital expenditures
    
    
    (2,247
    )
    
    
    (1,287
    )Proceeds from sale of property, plant and equipment
    
    
    41
    
    
    
    52Net cash used in investing activities
    
    
    (2,206
    )
    
    
    (1,235
    )Cash flows from financing activities:Decrease (increase) of restricted cash
    
    
    (2
    )
    
    
    8,772Proceeds from ABL Facility
    
    
    
    
    
    
    3Payment on term loan
    
    
    (2,750
    )
    
    
    Payment of convertible notes
    
    
    
    
    
    
    (59
    )Payments on other long-term debt
    
    
    
    
    
    
    (190
    )Payments on note payable
    
    
    (289
    )
    
    
    (481
    )Payment of financing costs
    
    
    (50
    )
    
    
    Payment of cash dividends on Convertible Preferred Stock
    
    
    (5,550
    )
    
    
    Proceeds from stock options exercised
    
    
    
    
    
    
    3Purchase of treasury stock
    
    
    (1,478
    )
    
    
    (379
    )Net cash (used in) provided by financing activities
    
    
    (10,119
    )
    
    
    7,666Effect of exchange rate changes on cash and cash equivalents
    
    
    (10
    )
    
    
    (8
    )Net decrease in cash and cash equivalents
    
    
    (12,203
    )
    
    
    (12,753
    )Cash and cash equivalents at beginning of period
    
    
    77,419
    
    
    
    90,419Cash and cash equivalents at end of period
    
    $
    65,216
    
    
    $
    77,666
 See accompanying notes to consolidated financial statements.
 5




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##### 



NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 30, 2011
(Unaudited)
 NOTE 1  BASIS OF PRESENTATION
      NOTE 2  ACCOUNTING PRONOUNCEMENTS
 Adopted Accounting Pronouncements
 Fair Value Measurements and Disclosures Adoption
 Improving Disclosures about Fair Value
Measurements
 6




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##### 



Recent Accounting Pronouncements
  NOTE 3  PLANT RESTRUCTURING AND ASSET IMPAIRMENTS
   NOTE 4  RESTRICTED CASH
  NOTE 5  INVENTORIES
  January 30, 2011
    
    
    October 31, 2010Raw materials
    
    $
    58,479
    
    
    $
    56,834Work in process and finished goods
    
    
    24,969
    
    
    
    24,552$
    83,448
    
    
    $
    81,386
 NOTE 6  SHARE-BASED COMPENSATION
   7




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##### 



December 14, 2010
    
    
    December 11, 2009Expected volatility
    
    
    51.53
    %
    
    
    46.05
    %Expected term (in years)
    
    
    5.75
    
    
    
    5.75Risk-free interest rate
    
    
    1.21
    %
    
    
    2.44
    %
   March 5, 2010
    
    
    December 11, 2009Expected volatility
    
    
    47.01
    %
    
    
    46.05
    %Expected term (in years)
    
    
    5.52
    
    
    
    5.75Risk-free interest rate
    
    
    2.49
    %
    
    
    2.44
    %
    NOTE 7  LOSS PER COMMON SHARE
  8




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##### 



Fiscal Three Months EndedJanuary 30, 2011
    
    
    January 31, 2010Numerator for Basic and Diluted Loss Per Common ShareNet loss allocated to common shares (1)
    
    $
    (20,741
    )
    
    $
    (18,807
    )Denominator for Basic and Diluted Loss Per Common ShareWeighted average common shares outstanding for basic and
diluted loss per share
    
    
    18,149
    
    
    
    18,093Basic and Diluted loss per common share
    
    $
    (1.14
    )
    
    $
    (1.04
    )
 
 (1)
    
    Participating securities consist of the holders of the Convertible Preferred Stock, as
defined below, and the unvested restricted Common Stock related to our Incentive Plan.
Participating securities do not have a contractual obligation to share in losses; therefore,
no losses were allocated in both periods presented above. These participating securities will
be allocated earnings when applicable.   NOTE 8  WARRANTY
   Fiscal Three Months EndedJanuary 30, 2011
    
    
    January 31, 2010Beginning balance
    
    $
    16,977
    
    
    $
    16,116Warranties sold
    
    
    643
    
    
    
    756Revenue recognized
    
    
    (393
    )
    
    
    (325
    )Costs incurred
    
    
    
    
    
    
    (309
    )Other
    
    
    (289
    )
    
    
    (28
    )Ending balance
    
    $
    16,938
    
    
    $
    16,210
 9




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##### 



NOTE 9  LONG-TERM DEBT
  January 30, 2011
    
    
    October 31, 2010Amended Credit Agreement (due April 2014, interest at 8.0%)
    
    $
    133,555
    
    
    $
    136,305
 Amended Credit Agreement
      10




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##### 




    
    the net cash proceeds of (1) certain asset sales, (2) certain debt offerings and (3) certain
insurance recovery and condemnation events; and
 
    
    50% of annual excess cash flow (as defined in the Amended Credit Agreement) for any fiscal
year ending on or after October 31, 2010, unless a specified leverage ratio target is met.
   ABL Facility
    11




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##### 



Deferred Financing Costs
  NOTE 10  SERIES B CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK
 The CD&R Equity Investment
  12




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##### 



Certain Terms of the Convertible Preferred Stock
  Liquidation Value.
 Rank.
 Dividends.
   13




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##### 



Convertibility and Anti-Dilution Adjustments.
  Milestone Redemption Right.
 Change of Control Redemption Right.
 14




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##### 



Vote.
   Restriction on Dividends on Junior Securities.
 Accounting for Convertible Preferred Stock
  15




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##### 



Dividends
    
    
    Convertibleand
    
    
    PreferredAccretion
    
    
    StockBalance as of October 31, 2010
    
    
    
    
    
    $
    256,870Accretion
    
    
    680Accrued paid-in-kind dividends(1)
    
    
    8,051Reversal of additional 4% accrued dividends(2)
    
    
    (2,501
    )Subtotal
    
    
    
    
    
    
    6,230Payment of cash dividend(3)
    
    
    
    
    
    
    (5,550
    )Balance as of January 30, 2011
    
    
    
    
    
    $
    257,550
 
 (1)
    
    Dividends are accrued at the 12% rate on a daily basis until the dividend declaration date.(2)
    
    The reversal of the additional 4% accrued dividends relates to the period from September
16, 2010 to December 15, 2010.(3)
    
    The payment of the December 15, 2010 cash dividend relates to the period from September
16, 2010 to December 15, 2010. Derivatives and Hedging Distinguishing
Liabilities from Equity,
   Debt with Conversion and Other Options
   16




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##### 



January 30,
    
    
    October 31,2011
    
    
    2010Liquidation preference
    
    $
    272,503
    
    
    $
    272,503Accrued cash and Preferred Stock dividends
    
    
    9,983
    
    
    
    9,983Total
    
    $
    282,486
    
    
    $
    282,486
  NOTE 11  REDEEMABLE COMMON STOCK
  NOTE 12  DERIVATIVE INSTRUMENTS AND HEDGING STRATEGY
 Interest Rate Risk
   Embedded Derivative Bifurcated From Convertible Preferred Stock (See Note 10)
  17




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##### 



Liability DerivativesBalance Sheet
    
    
    January 30, 2011
    
    
    October 31, 2010Location
    
    
    Fair Value
    
    
    Fair ValueDerivative not
designated as
hedging instruments
under ASC 815:Embedded derivative
    
    Other accrued expenses
    
    
    $
    97
    
    
    $
    104
  Amount of Income RecognizedDerivatives Not Designated as Hedging
    
    in Income (Loss) on Derivatives
    
    
    Location of Income Recognized in IncomeInstruments Under ASC 815
    
    January 30, 2011
    
    
    January 31, 2010
    
    
    (Loss) on  DerivativesInterest rate contract
    
    $
    
    
    
    $
    951
    
    
    Interest expenseEmbedded derivative
    
    $
    7
    
    
    $
    919
    
    
    Other income, net
 NOTE 13  FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
 Fair Value of Financial Instruments
  January 30, 2011
    
    
    October 31, 2010Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueAmended Credit Agreement
    
    $
    133,555
    
    
    $
    132,345
    
    
    $
    136,305
    
    
    $
    132,046
  18




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##### 



Fair Value Measurements
 Fair Value Measurements and Disclosures
     Money market:
 Mutual funds:
 Assets held for sale:
 Deferred compensation plan liability:
 Embedded derivative:
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Short-term investments in deferred compensation plan(1):Money market
    
    $
    366
    
    
    
    
    
    
    
    
    
    
    
    366Mutual funds  Growth
    
    
    463
    
    
    
    
    
    
    
    
    
    
    
    463Mutual funds  Blend
    
    
    1,729
    
    
    
    
    
    
    
    
    
    
    
    1,729Mutual funds  Foreign blend
    
    
    715
    
    
    
    
    
    
    
    
    
    
    
    715Mutual funds  Fixed income
    
    
    733
    
    
    
    
    
    
    
    
    
    
    
    733Total short-term investments in deferred compensation plan
    
    
    4,006
    
    
    
    
    
    
    
    
    
    
    
    4,006Assets held for sale
    
    
    
    
    
    
    6,114
    
    
    
    
    
    
    
    6,114Total assets
    
    $
    4,006
    
    
    
    6,114
    
    
    
    
    
    
    
    10,120Liabilities:Deferred compensation plan liability
    
    $
    (4,292
    )
    
    
    
    
    
    
    
    
    
    
    (4,292
    )Embedded derivative
    
    
    
    
    
    
    
    
    
    
    (97
    )
    
    
    (97
    )Total liabilities
    
    $
    (4,292
    )
    
    
    
    
    
    
    (97
    )
    
    
    (4,389
    )
 
 (1)
    
    Unrealized holding gains for the three months ended January 30, 2011 and January 31, 2010
were $0.1 million and $0.05 million, respectively. These unrealized holding gains are
primarily offset by changes in the deferred compensation plan liability.  19




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##### 



January 30,
    
    
    January 31,2011
    
    
    2010Beginning balance
    
    $
    (104
    )
    
    $
    (1,041
    )Unrealized gains (1)
    
    
    7
    
    
    
    919Ending balance
    
    $
    (97
    )
    
    $
    (122
    )
 
 (1)
    
    Unrealized gains on the embedded derivative are recorded in other income, net in the
Consolidated Statement of Operations during the three months ended January 30, 2011 and
January 31, 2010. NOTE 14  INCOME TAXES
  Fiscal Three Months EndedJanuary 30, 
2011
    
    
    January 31, 
2010Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %State income taxes
    
    
    (2.5
    )%
    
    
    3.4
    %Canada valuation allowance
    
    
    (1.1
    )%
    
    
    Non-deductible expenses
    
    
    (3.2
    )%
    
    
    (2.2
    )%Other
    
    
    
    
    
    
    (0.6
    )%Effective tax rate
    
    
    28.2
    %
    
    
    35.6
    %
    NOTE 15  COMPREHENSIVE LOSS
  Fiscal Three Months EndedJanuary 30, 
2011
    
    
    January 31, 
2010Net loss
    
    $
    (12,725
    )
    
    $
    (10,486
    )Foreign exchange translation gain (loss) and other, net of tax
    
    
    (10
    )
    
    
    197Comprehensive loss
    
    $
    (12,735
    )
    
    $
    (10,289
    )
  January 30, 
2011
    
    
    October 31, 
2010Foreign exchange translation adjustments
    
    $
    577
    
    
    $
    587Defined benefit pension plan actuarial losses
    
    
    (2,524
    )
    
    
    (2,524
    )Accumulated other comprehensive loss
    
    $
    (1,947
    )
    
    $
    (1,937
    )
  20




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##### 



Fiscal Three Months Ended January 30, 2011
    
    
    Fiscal Three Months Ended January 31, 2010Before-Tax
    
    
    Tax (Expense)
    
    
    Net-of-Tax
    
    
    Before-Tax
    
    
    Tax (Expense)
    
    
    Net-of-TaxAmount
    
    
    or Benefit
    
    
    Amount
    
    
    Amount
    
    
    or Benefit
    
    
    AmountForeign
exchange
translation gain
(loss) and other
    
    $
    (10
    )
    
    $
    
    
    
    $
    (10
    )
    
    $
    194
    
    
    $
    3
    
    
    $
    197Other Comprehensive
income (loss)
    
    $
    (10
    )
    
    $
    
    
    
    $
    (10
    )
    
    $
    194
    
    
    $
    3
    
    
    $
    197
 NOTE 16  BUSINESS SEGMENTS
 ®
    Fiscal Three Months EndedJanuary 30, 2011
    
    
    January 31, 2010Total sales:Metal coil coating
    
    $
    42,274
    
    
    $
    39,031Metal components
    
    
    90,305
    
    
    
    86,806Engineered building systems
    
    
    101,412
    
    
    
    101,938Intersegment sales
    
    
    (43,905
    )
    
    
    (45,568
    )Total sales
    
    $
    190,086
    
    
    $
    182,207External sales:Metal coil coating
    
    $
    17,193
    
    
    $
    12,808Metal components
    
    
    74,016
    
    
    
    70,138Engineered building systems
    
    
    98,877
    
    
    
    99,261Total sales
    
    $
    190,086
    
    
    $
    182,207Operating income (loss):Metal coil coating
    
    $
    3,444
    
    
    $
    3,119Metal components
    
    
    353
    
    
    
    1,791Engineered building systems
    
    
    (5,410
    )
    
    
    (5,818
    )Corporate
    
    
    (12,523
    )
    
    
    (11,824
    )Total operating income (loss)
    
    $
    (14,136
    )
    
    $
    (12,732
    )Unallocated other expense
    
    
    (3,598
    )
    
    
    (3,533
    )Income (loss) before income taxes
    
    $
    (17,734
    )
    
    $
    (16,265
    )
 21




---



##### 



January 30, 2011
    
    
    October 31, 2010Total assets:Metal coil coating
    
    $
    56,999
    
    
    $
    57,137Metal components
    
    
    156,661
    
    
    
    167,542Engineered building systems
    
    
    196,050
    
    
    
    208,232Corporate
    
    
    114,774
    
    
    
    127,613Total assets
    
    $
    524,484
    
    
    $
    560,524
 NOTE 17  CONTINGENCIES
  NOTE 18  SUBSEQUENT EVENT
  22




---



##### 



NCI BUILDING SYSTEMS, INC.
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 The following information should be read in conjunction with the unaudited consolidated financial
statements included herein under Item 1. Financial Statements and the audited consolidated
financial statements and the notes thereto and Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the
fiscal year ended October 31, 2010.
 FORWARD LOOKING STATEMENTS
  
    
    industry cyclicality and seasonality and adverse weather conditions;
    
    challenging economic conditions affecting the nonresidential construction industry;
    
    volatility in the U.S. economy, generally, and in the credit markets;
    
    ability to service or refinance our debt and obtain future financing;
    
    the Companys ability to comply with the financial tests and covenants in its existing
and future debt obligations;
    
    operational restrictions imposed by our debt covenants;
    
    recognition of asset impairment charges;
    
    commodity price increases and/or limited availability of raw materials, including steel;
    
    the ability to make strategic acquisitions accretive to earnings;
 23




---



##### 




    
    retention and replacement of personnel;
    
    enforcement and obsolescence of intellectual property rights;
    
    the fluctuations in customer demand;
    
    costs related to environmental clean-ups and liabilities;
    
    competitive activity and pricing pressure;
    
    the volatility of the Companys stock price;
    
    the substantial rights, seniority and dilutive effect on our common stockholders of the
Convertible Preferred Stock issued to the CD&R Funds;
    
    breaches of our information security system security measures;
    
    hazards that may cause personal injury or property damage, thereby subjecting us to
liabilities and possible losses, which may not be covered by insurance;
    
    changes in laws or regulations;
    
    the cost and other effects, if any, of our offering for sale under our 401(k) Profit
Sharing Plan unregistered shares of our Common Stock between March 6, 2006 and February 15,
2011;
    
    costs and other effects of other legal and administrative proceedings, settlements,
investigations, claims and other matters; and
    
    other risks detailed under the caption Risk Factors in Part II, Item 1A of this report
and in our Annual Report on Form 10-K as filed with the SEC.
  OVERVIEW
    24




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##### 



First Fiscal Quarter
     Industry Conditions
   25




---



##### 



26




---



##### 



RESULTS OF OPERATIONS
  ®
    Fiscal Three Months EndedJanuary 30, 2011
    
    
    January 31, 2010%
    
    
    
    
    
    
    %Sales:Metal coil coating
    
    $
    42,274
    
    
    
    22
    
    
    $
    39,031
    
    
    
    21Metal components
    
    
    90,305
    
    
    
    48
    
    
    
    86,806
    
    
    
    48Engineered building systems
    
    
    101,412
    
    
    
    53
    
    
    
    101,938
    
    
    
    56Intersegment sales
    
    
    (43,905
    )
    
    
    (23
    )
    
    
    (45,568
    )
    
    
    (25
    )Total sales
    
    $
    190,086
    
    
    
    100
    
    
    $
    182,207
    
    
    
    100Operating income (loss):
 27




---



##### 



Fiscal Three Months EndedJanuary 30, 2011
    
    
    January 31, 2010%
    
    
    
    
    
    
    %Metal coil coating
    
    $
    3,444
    
    
    
    
    
    
    $
    3,119Metal components
    
    
    353
    
    
    
    
    
    
    
    1,791Engineered building systems
    
    
    (5,410
    )
    
    
    
    
    
    
    (5,818
    )Corporate
    
    
    (12,523
    )
    
    
    
    
    
    
    (11,824
    )Total operating income (loss)
    
    $
    (14,136
    )
    
    
    
    
    
    $
    (12,732
    )Unallocated other expense
    
    
    (3,598
    )
    
    
    
    
    
    
    (3,533
    )Income (loss) before income taxes
    
    $
    (17,734
    )
    
    
    
    
    
    $
    (16,265
    )
 FISCAL THREE MONTHS ENDED JANUARY 30, 2011 COMPARED TO FISCAL THREE MONTHS ENDED JANUARY 31,
2010
 Consolidated sales
 Consolidated cost of sales
 Metal coil coating sales
  Metal components sales
 28




---



##### 



Engineered building systems sales
  Consolidated selling, general and administrative expenses,
 Consolidated restructuring charges
 Consolidated interest expense
 Other income, net
 Consolidated benefit for income taxes
 29




---



##### 



Consolidated Convertible Preferred Stock dividends and accretion
 Consolidated Convertible Preferred Stock beneficial conversion feature
 Diluted loss per share
 LIQUIDITY AND CAPITAL RESOURCES
 General
     30




---



##### 



Convertible Preferred Stock
   Debt
   Amended Credit Agreement.
  31




---



##### 




    
    the net cash proceeds of (1) certain asset sales, (2) certain debt offerings and (3)
certain insurance recovery and condemnation events; and
    
    50% of annual excess cash flow (as defined in the Amended Credit Agreement) for any
fiscal year ending on or after October 31, 2010, unless a specified leverage ratio target is
met.
  (1)Base Rate loans at the Base Rate plus a margin, which for term loans is 5% until October 30,
2011. After that date, the margin fluctuates based on our leverage ratio and shall be either 5%
or 3.5%. As of the first fiscal quarter commencing January 30, 2012, the margin in each case
increases by 0.25% per annum on the first day of each fiscal quarter unless the aggregate
principal amount of term loans outstanding under the Amended Credit Agreement in the immediately
preceding fiscal quarter of the Company has been reduced by $3,750,000 (excluding scheduled
principal amortization payments), less any prior reductions not previously applied to prevent an
increase in the applicable margin, and(2)LIBOR loans at LIBOR (having a minimum rate of 2%) plus a margin, which for term loans is 6%
until October 30, 2011. After that date, the LIBOR-linked margin fluctuates based on our leverage
ratio and shall be either 6% or 4.5%. As of the first fiscal quarter commencing January 30, 2012,
the margin in each case increases by 0.25% per annum on the first day of each fiscal quarter
unless the aggregate principal amount of term loans outstanding under the Amended Credit
Agreement in the immediately preceding fiscal quarter of the Company has been reduced by
$3,750,000 (excluding scheduled principal amortization payments), less any prior reductions not
previously applied to prevent an increase in the applicable margin. At January 30, 2011 and
October 31, 2010, the interest rate on our Amended Credit Agreement was 8.0%.
  ABL Facility.
  32




---



##### 



33




---



##### 



Convertible Preferred Stock Dividends
  Cash Flow
      NON-GAAP MEASURES
   34




---



##### 



For the Three Months Ended January 30, 2011EngineeredMetal Coil
    
    
    Metal
    
    
    BuildingCoating
    
    
    Components
    
    
    Systems
    
    
    Corporate
    
    
    ConsolidatedOperating income (loss), GAAP basis
    
    $
    3,444
    
    
    $
    353
    
    
    $
    (5,410
    )
    
    $
    (12,523
    )
    
    $
    (14,136
    )Pre-acquisition contingency adjustment
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    
    
    
    
    252Increase in actuarial determined
general liability self-insurance
reserve
    
    
    
    
    
    
    1,101
    
    
    
    
    
    
    
    
    
    
    
    1,101Adjusted operating income (loss)
    
    $
    3,444
    
    
    $
    1,454
    
    
    $
    (5,158
    )
    
    $
    (12,523
    )
    
    $
    (12,783
    )
 For the Three Months Ended January 31, 2010EngineeredMetal Coil
    
    
    Metal
    
    
    BuildingCoating
    
    
    Components
    
    
    Systems
    
    
    Corporate
    
    
    ConsolidatedOperating income (loss), GAAP basis
    
    $
    3,119
    
    
    $
    1,791
    
    
    $
    (5,818
    )
    
    $
    (11,824
    )
    
    $
    (12,732
    )Restructuring charges
    
    
    
    
    
    
    109
    
    
    
    415
    
    
    
    
    
    
    
    524Asset impairments
    
    
    
    
    
    
    
    
    
    
    1,029
    
    
    
    
    
    
    
    1,029Adjusted operating income (loss)
    
    $
    3,119
    
    
    $
    1,900
    
    
    $
    (4,374
    )
    
    $
    (11,824
    )
    
    $
    (11,179
    )
  Fiscal Three Months EndedJanuary 30,
    
    
    January 31,2011
    
    
    2010Loss per diluted common share, GAAP basis
    
    $
    (1.14
    )
    
    $
    (1.04
    )Refinancing costs
    
    
    
    
    
    
    0.01Convertible preferred stock beneficial conversion feature
    
    
    0.10
    
    
    
    0.01Restructuring charges
    
    
    
    
    
    
    0.02Asset impairments
    
    
    
    
    
    
    0.04Gain on embedded derivative
    
    
    (0.00
    )
    
    
    (0.03
    )Increase in actuarial determined general liability self-insurance reserve
    
    
    0.04
    
    
    
    Pre-acquisition contingency adjustment
    
    
    0.01
    
    
    
    Adjusted diluted loss per common share
    
    $
    (0.99
    )
    
    $
    (0.99
    )
 Fiscal Three Months EndedJanuary 30,
    
    
    January 31,2011
    
    
    2010Net loss applicable to common shares, GAAP basis
    
    $
    (20,741
    )
    
    $
    (18,807
    )Refinancing costs
    
    
    
    
    
    
    113Convertible preferred stock beneficial conversion feature
    
    
    1,786
    
    
    
    187Restructuring charges
    
    
    
    
    
    
    340Asset impairments
    
    
    
    
    
    
    669Gain on embedded derivative
    
    
    (5
    )
    
    
    (597
    )Increase in actuarial determined general liability self-insurance reserve
    
    
    790
    
    
    
    Pre-acquisition contingency adjustment
    
    
    181
    
    
    
    Adjusted net loss applicable to common shares
    
    $
    (17,989
    )
    
    $
    (18,095
    )
  Trailing 122nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    1st Quarter
    
    
    MonthsMay 2, 2010
    
    
    August 1, 2010
    
    
    October 31, 2010
    
    
    January 30, 2011
    
    
    January 30, 2011Net Loss
    
    $
    (7,656
    )
    
    $
    (3,299
    )
    
    $
    (5,436
    )
    
    $
    (12,725
    )
    
    $
    (29,116
    )Add:Depreciation and amortization
    
    
    7,480
    
    
    
    7,457
    
    
    
    7,309
    
    
    
    7,236
    
    
    
    29,482Consolidated interest expense, net
    
    
    4,670
    
    
    
    4,392
    
    
    
    4,258
    
    
    
    4,177
    
    
    
    17,497Provision for taxes
    
    
    (5,536
    )
    
    
    (221
    )
    
    
    (1,794
    )
    
    
    (5,009
    )
    
    
    (12,560
    )
 35




---



##### 



Trailing 122nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    1st Quarter
    
    
    MonthsMay 2, 2010
    
    
    August 1, 2010
    
    
    October 31, 2010
    
    
    January 30, 2011
    
    
    January 30, 2011Noncash charges:Stockbased compensation
    
    
    1,403
    
    
    
    1,374
    
    
    
    1,375
    
    
    
    1,685
    
    
    
    5,837Asset impairments (recoveries)
    
    
    (116
    )
    
    
    (64
    )
    
    
    221
    
    
    
    
    
    
    
    41Embedded derivative
    
    
    (4
    )
    
    
    (7
    )
    
    
    (7
    )
    
    
    (7
    )
    
    
    (25
    )Pre-acquisition contingency adjustment
    
    
    
    
    
    
    
    
    
    
    178
    
    
    
    252
    
    
    
    430Cash restructuring charges
    
    
    829
    
    
    
    551
    
    
    
    1,628
    
    
    
    
    
    
    
    3,008Transaction costs
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    
    
    
    
    (250
    )Adjusted EBITDA
    
    $
    1,070
    
    
    $
    10,183
    
    
    $
    7,482
    
    
    $
    (4,391
    )
    
    $
    14,344
 Trailing 122nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    1st Quarter
    
    
    MonthsMay 3, 2009
    
    
    August 2, 2009
    
    
    November 1, 2009
    
    
    January 31, 2010
    
    
    January 31, 2010Net Income (Loss)
    
    $
    (121,571
    )
    
    $
    2,607
    
    
    $
    (101,851
    )
    
    $
    (10,486
    )
    
    $
    (231,301
    )Add:Depreciation and amortization
    
    
    8,436
    
    
    
    7,586
    
    
    
    7,640
    
    
    
    7,521
    
    
    
    31,183Consolidated interest expense, net
    
    
    6,168
    
    
    
    6,487
    
    
    
    9,578
    
    
    
    4,507
    
    
    
    26,740Provision for taxes
    
    
    (16,382
    )
    
    
    1,825
    
    
    
    (7,495
    )
    
    
    (5,779
    )
    
    
    (27,831
    )Noncash charges:Stockbased compensation
    
    
    1,177
    
    
    
    1,241
    
    
    
    1,045
    
    
    
    801
    
    
    
    4,264Goodwill and intangible impairment
    
    
    104,936
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,936Asset impairments
    
    
    5,295
    
    
    
    26
    
    
    
    347
    
    
    
    1,029
    
    
    
    6,697Lower of cost or market charges
    
    
    10,608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,608Embedded derivative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (919
    )
    
    
    (919
    )Cash restructuring charges
    
    
    3,796
    
    
    
    1,213
    
    
    
    1,564
    
    
    
    524
    
    
    
    7,097Transaction costs
    
    
    629
    
    
    
    401
    
    
    
    107,718
    
    
    
    174
    
    
    
    108,922Adjusted EBITDA
    
    $
    3,092
    
    
    $
    21,386
    
    
    $
    18,546
    
    
    $
    (2,628
    )
    
    $
    40,396
 OFF-BALANCE SHEET ARRANGEMENTS
  CONTRACTUAL OBLIGATIONS
   CRITICAL ACCOUNTING POLICIES
  36




---



##### 



RECENT ACCOUNTING PRONOUNCEMENTS
  RECENT DEVELOPMENTS
  Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Steel Prices
   37




---



##### 



Interest Rates
  38




---



##### 



Foreign Currency Exchange Rates
   Item 4. Controls and Procedures.
 Disclosure Controls and Procedures.
  Internal Control over Financial Reporting
  39




---



##### 



NCI BUILDING SYSTEMS, INC.
 PART II  OTHER INFORMATION
 Item 1. Legal Proceedings.
  Item 1A. Risk Factors.
  We may face liability as a result of the sale of unregistered shares of our common stock to
participants in the Companys 401(k) Profit Sharing Plan.
  The adoption of climate change legislation or regulations restricting emissions of greenhouse gases
could increase our operating costs or reduce demand for our products.
   40




---



##### 



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 (c) Total
    
    
    (d) MaximumNumber of Shares
    
    
    Number ofPurchased as Part
    
    
    Shares that May(b) Average
    
    
    of Publicly
    
    
    Yet be Purchased(a) Total Number of
    
    
    Price Paid per
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Shares Purchased(1)
    
    
    Share (or Unit)
    
    
    or Programs
    
    
    Programs(2)November 1, 2010 to November 28, 2010
    
    
    991
    
    
    $
    9.89
    
    
    
    
    
    
    
    129,218November 29, 2010 to December 26, 2010
    
    
    815
    
    
    
    12.00
    
    
    
    
    
    
    
    129,218December 27, 2010 to January 30, 2011
    
    
    121,498
    
    
    
    12.00
    
    
    
    
    
    
    
    129,218Total
    
    
    123,304
    
    
    $
    11.98
    
    
    
    
    
    
    
    129,218
 
 (1)
    
    These shares were shares of restricted stock that were withheld to satisfy tax-withholding
obligations arising in connection with the vesting of awards of restricted stock. The required
withholding is calculated using the closing sales price reported by the NYSE as of the vesting
date.(2)
    
    Our board of directors has authorized a stock repurchase program. Subject to applicable
federal securities law and the Certificate of Designations of our Series B Preferred Stock,
such purchases may occur, if at all, at times and in amounts that we deem appropriate. Shares
repurchased are usually retired. On February 28, 2007, we publicly announced that our board of
directors authorized the repurchase of an additional 0.2 million shares of our Common Stock.
There is no time limit on the duration of the program. During the first three months of fiscal
2011, we did not repurchase any shares of Common Stock. At January 30, 2011, there were 0.1
million shares of Common Stock remaining authorized for repurchase under the program. Item 6. Exhibits.
  Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Index to
Exhibits immediately preceding the exhibits filed herewith and such listing is incorporated
herein by reference.
 41




---



##### 



SIGNATURES
  NCI BUILDING SYSTEMS, INC.
(Registrant)Date: March 9, 2011
    By:
    /s/ Mark E. JohnsonMark E. JohnsonExecutive Vice President,
Chief Financial Officer and Treasurer 42




---



##### 



Index to Exhibits
 3.1
    
    Restated Certificate of Incorporation, as amended through September 30, 1998 (filed as
Exhibit 3.1 to NCIs Annual Report on Form 10-K for the fiscal year ended November 2,
2002 and incorporated by reference herein)3.2
    
    Certificate of Amendment to Restated Certificate of Incorporation, effective as of
March 12, 2007 (filed as Exhibit 3.2 to NCIs Quarterly Report on Form 10-Q for the
quarter ended April 29, 2007 and incorporated by reference herein)3.3
    
    Second Amended and Restated By-Laws, effective as of October 20, 2009 (filed as
Exhibit 3.4 to NCIs Current Report on Form 8-K dated October 26, 2009 and
incorporated by reference herein)3.4
    
    Third Amended and Restated By-laws, effective as of February 19, 2010 (filed as
Exhibit 3.1 to NCIs Current Report on Form 8-K dated February 24, 2010 and
incorporated by reference herein)4.1
    
    Certificate of Amendment to the Restated Certificate of Incorporation, effective as of March 4, 2010
(filed as Exhibit 4.3 to NCIs registration statement on Form S-8 filed with the SEC on April 23, 2010 and incorporated by reference herein)*31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications (Section 302 of the Sarbanes-Oxley Act of 2002)*31.2
    
    Rule 13a-14(a)/15d-14(a) Certifications (Section 302 of the Sarbanes-Oxley Act of 2002)**32.1
    
    Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code (Section 906 of the Sarbanes-Oxley Act of 2002)**32.2
    
    Certifications pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code (Section 906 of the Sarbanes-Oxley Act of 2002)
 
 *
    
    Filed herewith**
    
    Furnished herewith 43