##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended January 31, 2010
 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
    
    (I.R.S. Employerincorporation or organization)
    
    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(Do not check if a smaller reporting company)
Smaller reporting company o o þ
 
 o o
   Common
Stock, $.01 par value18,086,160 shares as of March 8, 2010 (after giving effect to the reverse
stock split that became effective on March 5, 2010)




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##### 



TABLE OF CONTENTS
 PAGEPart I  Financial InformationItem 1.
    
    Unaudited Consolidated Financial StatementsConsolidated Balance SheetsJanuary 31, 2010 and November 1, 2009
    
    
    1Consolidated Statements of OperationsFiscal Three Months Ended January 31, 2010 and February 1, 2009
    
    
    2Consolidated Statements of Cash FlowsFiscal Three Months Ended January 31, 2010 and February 1, 2009
    
    
    3Notes to Consolidated Financial Statements
    
    
    4-24Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24-36Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    36-38Item 4.
    
    Controls and Procedures
    
    
    38-39
 PAGEPart II  Other InformationItem 1.
    
    Legal Proceedings
    
    
    40Item 1A.
    
    Risk Factors
    
    
    40-41Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    41Item 5.
    
    Other Information
    
    
    41Item 6.
    
    Exhibits
    
    
    41Signatures
    
    
    42EX-31.1EX-31.2EX-32.1EX-32.2
  -i-




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Unaudited Consolidated Financial Statements.
 
 NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(2009 As Adjusted (Note 2))
 January 31, 2010
    
    
    November 1, 2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    77,666
    
    
    $
    90,419Restricted cash, current
    
    
    4,207
    
    
    
    5,154Accounts receivable, net
    
    
    61,085
    
    
    
    82,889Inventories, net
    
    
    89,980
    
    
    
    71,537Deferred income taxes
    
    
    18,989
    
    
    
    18,787Income tax receivable
    
    
    33,592
    
    
    
    27,622Investments in debt and equity securities, at market
    
    
    3,529
    
    
    
    3,359Prepaid expenses and other
    
    
    13,081
    
    
    
    14,494Assets held for sale
    
    
    3,930
    
    
    
    4,963Total current assets
    
    
    306,059
    
    
    
    319,224Property, plant and equipment, net
    
    
    225,933
    
    
    
    232,510Goodwill
    
    
    5,200
    
    
    
    5,200Intangible assets, net
    
    
    27,856
    
    
    
    28,370Restricted cash, net of current portion
    
    
    
    
    
    
    7,825Other assets
    
    
    19,865
    
    
    
    21,389Total assets
    
    $
    584,913
    
    
    $
    614,518LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    14,434
    
    
    $
    14,164Note payable
    
    
    
    
    
    
    481Accounts payable
    
    
    71,313
    
    
    
    73,594Accrued compensation and benefits
    
    
    30,592
    
    
    
    37,215Accrued interest
    
    
    1,844
    
    
    
    776Other accrued expenses
    
    
    42,492
    
    
    
    52,455Total current liabilities
    
    
    160,675
    
    
    
    178,685Long-term debt
    
    
    135,569
    
    
    
    136,085Deferred income taxes
    
    
    18,891
    
    
    
    18,848Other long-term liabilities
    
    
    7,785
    
    
    
    8,007Total long-term liabilities
    
    
    162,245
    
    
    
    162,940Series B cumulative convertible participating preferred stock
    
    
    230,949
    
    
    
    222,815Stockholders equity:Common stock, $.01 par value, 100,000,000
shares authorized; 18,086,390 and 18,082,029 issued
and outstanding
    
    
    908
    
    
    
    904Additional paid-in capital
    
    
    279,344
    
    
    
    288,093Accumulated
deficit
    
    
    (240,546
    )
    
    
    (230,060
    )Accumulated other comprehensive loss
    
    
    (8,662
    )
    
    
    (8,859
    )Treasury stock, at cost
    
    
    
    
    
    
    Total stockholders equity
    
    
    31,044
    
    
    
    50,078Total liabilities and stockholders equity
    
    $
    584,913
    
    
    $
    614,518
 See accompanying notes to consolidated financial statements.
 -1-




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NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
(2009 As Adjusted (Note 2))
 Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009Sales
    
    $
    182,887
    
    
    $
    260,364Cost of sales
    
    
    149,669
    
    
    
    213,842Lower of cost or market adjustment
    
    
    
    
    
    
    29,378Asset impairments
    
    
    1,029
    
    
    
    623Gross profit
    
    
    32,189
    
    
    
    16,521Selling, general and administrative expenses
    
    
    44,408
    
    
    
    54,316Goodwill and other intangible asset impairment
    
    
    
    
    
    
    517,628Restructuring charge
    
    
    524
    
    
    
    2,479Loss from operations
    
    
    (12,743
    )
    
    
    (557,902
    )Interest income
    
    
    25
    
    
    
    195Interest expense
    
    
    (4,532
    )
    
    
    (6,818
    )Debt extinguishment and refinancing costs
    
    
    (174
    )
    
    
    Other income (expense), net
    
    
    1,159
    
    
    
    (317
    )Loss before income taxes
    
    
    (16,265
    )
    
    
    (564,842
    )Benefit for income taxes
    
    
    (5,779
    )
    
    
    (34,861
    )Net loss
    
    $
    (10,486
    )
    
    $
    (529,981
    )Convertible preferred stock dividends and accretion
    
    
    8,134
    
    
    
    Convertible preferred stock beneficial conversion feature
    
    
    187
    
    
    
    Net loss applicable to common shares
    
    $
    (18,807
    )
    
    $
    (529,981
    )Loss per share:Basic
    
    $
    (1.04
    )
    
    $
    (136.32
    )Diluted
    
    $
    (1.04
    )
    
    $
    (136.32
    )Weighted average number of common shares outstanding:Basic
    
    
    18,093
    
    
    
    3,888Diluted
    
    
    18,093
    
    
    
    3,888
 See accompanying notes to consolidated financial statements.
 -2-




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NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
(2009 As Adjusted (Note 2))
 Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009Cash flows from operating activities:Net loss
    
    $
    (10,486
    )
    
    $
    (529,981
    )Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:Depreciation and amortization
    
    
    8,701
    
    
    
    8,649Non-cash interest expense on
Convertible Notes
    
    
    
    
    
    
    2,099Share-based compensation expense
    
    
    801
    
    
    
    1,372Loss on sale of property, plant and equipment
    
    
    103
    
    
    
    11Lower of cost or market reserve
    
    
    
    
    
    
    29,378Provision for doubtful accounts
    
    
    (416
    )
    
    
    975Gain on embedded derivative
    
    
    (919
    )
    
    
    Provision (benefit) for deferred income taxes
    
    
    45
    
    
    
    (17,380
    )Asset impairments
    
    
    1,029
    
    
    
    623Impairment of goodwill and intangible assets
    
    
    
    
    
    
    517,628Changes in operating assets and liabilities, net of effect of acquisitions:Accounts receivable
    
    
    22,231
    
    
    
    76,865Inventories
    
    
    (18,443
    )
    
    
    19,725Income tax receivable
    
    
    (4,253
    )
    
    
    (1,608
    )Prepaid expenses and other
    
    
    (233
    )
    
    
    (376
    )Accounts payable
    
    
    (1,468
    )
    
    
    (21,028
    )Accrued expenses
    
    
    (15,836
    )
    
    
    (55,778
    )Other, net
    
    
    (32
    )
    
    
    (1,002
    )Net cash (used in) provided by operating activities:
    
    
    (19,176
    )
    
    
    30,172Cash flows from investing activities:Capital expenditures
    
    
    (1,287
    )
    
    
    (7,016
    )Proceeds from sale of property, plant and equipment
    
    
    52
    
    
    
    51Other, net
    
    
    
    
    
    
    67Net cash used in investing activities:
    
    
    (1,235
    )
    
    
    (6,898
    )Cash flows from financing activities:Proceeds from stock options exercised
    
    
    
    
    
    
    12Decrease in restricted cash
    
    
    8,772
    
    
    
    Payments on long-term debt
    
    
    (190
    )
    
    
    (230
    )Payments on note payable
    
    
    (481
    )
    
    
    Payment of convertible notes
    
    
    (59
    )
    
    
    Proceeds from ABL Facility
    
    
    3
    
    
    
    Payment of refinancing costs
    
    
    
    
    
    
    (18
    )Purchase of treasury stock
    
    
    (379
    )
    
    
    (413
    )Net cash (used in) provided by financing activities:
    
    
    7,666
    
    
    
    (649
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (8
    )
    
    
    16Net (decrease) increase in cash and cash equivalents
    
    
    (12,753
    )
    
    
    22,641Cash and cash equivalents at beginning of period
    
    
    90,419
    
    
    
    68,201Cash and cash equivalents at end of period
    
    $
    77,666
    
    
    $
    90,842
 See accompanying notes to consolidated financial statements.
 -3-




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NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2010
(Unaudited)
(2009 As Adjusted (Note 2))
 NOTE 1  BASIS OF PRESENTATION
      NOTE 2 ACCOUNTING PRONOUNCEMENTS
 Adopted Accounting Pronouncements
 Debt with Conversion and Other Options and Earnings per Share Adoption
 Debt with Conversion and Other Options
  -4-




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Interest
  Earnings
per Share
   February 1, 2009Originally
    
    AsReported
    
    AdjustedCost of sales
    
    $
    213,836
    
    
    $
    213,842Gross profit
    
    
    16,527
    
    
    
    16,521Selling, general and administrative expenses
    
    
    54,307
    
    
    
    54,316Loss from operations
    
    
    (557,887
    )
    
    
    (557,902
    )Interest expense
    
    
    4,608
    
    
    
    6,818Loss before income taxes
    
    
    (562,617
    )
    
    
    (564,842
    )Benefit for income taxes
    
    
    (34,007
    )
    
    
    (34,861
    )Net loss
    
    
    (528,610
    )
    
    
    (529,981
    )Net loss applicable to common shares
    
    $
    (528,610
    )
    
    $
    (529,981
    )Loss per share:Basic
    
    
    (135.98
    )
    
    
    (136.32
    )Diluted
    
    
    (135.98
    )
    
    
    (136.32
    )Weighted average number of common shares
outstanding:Basic
    
    
    3,888
    
    
    
    3,888Diluted
    
    
    3,888
    
    
    
    3,888
  November 1, 2009Originally
    
    AsReported
    
    AdjustedProperty, plant and equipment
    
    $
    231,840
    
    
    $
    232,510Total assets
    
    
    613,848
    
    
    
    614,518Deferred income tax liability
    
    
    18,591
    
    
    
    18,848Total long-term liabilities
    
    
    162,683
    
    
    
    162,940Additional paid-in capital
    
    
    263,620
    
    
    
    288,093Retained earnings
    
    
    (206,000
    )
    
    
    (230,060
    )Total stockholders equity
    
    
    49,665
    
    
    
    50,078Total liabilities and stockholders equity
    
    
    613,848
    
    
    
    614,518
 Fair Value Measurements and Disclosures Adoption
 Fair
Value Measurements and Disclosures
 -5-




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Multiple-Deliverable Revenue Arrangements Adoption
 Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangementsa consensus of the FASB Emerging Issues Task Force
 Recent Accounting Pronouncements
 Defined Benefit Plans  General
 Improving Disclosures about Fair Value
Measurements
 NOTE 3  PLANT RESTRUCTURING AND ASSET IMPAIRMENT
    -6-




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##### Table of Contents



Fiscal Three
    
    
    
    
    
    
    
    
    
    
    Cost
    
    
    Remaining
    
    
    TotalMonths Ended
    
    
    
    
    
    
    
    
    
    
    Incurred
    
    
    Anticipated
    
    
    AnticipatedJanuary 31, 2010
    
    
    Fiscal 2009
    
    
    Fiscal 2008
    
    
    to Date
    
    
    Cost
    
    
    CostGeneralSeverance
    
    $
    2
    
    
    $
    2,987
    
    
    $
    87
    
    
    $
    3,076
    
    
    $
    
    
    
    $
    3,076Asset Relocation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Cash Costs
    
    
    23
    
    
    
    57
    
    
    
    
    
    
    
    80
    
    
    
    
    
    
    
    80Asset Impairment
    
    
    
    
    
    
    1,234
    
    
    
    
    
    
    
    1,234
    
    
    
    
    
    
    
    1,234Total General Program
    
    
    25
    
    
    
    4,278
    
    
    
    87
    
    
    
    4,390
    
    
    
    
    
    
    
    4,390Repurposing and Phase ISeverance
    
    $
    58
    
    
    $
    1,016
    
    
    $
    106
    
    
    $
    1,180
    
    
    $
    
    
    
    $
    1,180Asset Relocation
    
    
    
    
    
    
    303
    
    
    
    
    
    
    
    303
    
    
    
    
    
    
    
    303Other Cash Costs
    
    
    122
    
    
    
    199
    
    
    
    
    
    
    
    321
    
    
    
    135
    
    
    
    456Asset Impairment
    
    
    1,029
    
    
    
    1,634
    
    
    
    157
    
    
    
    2,820
    
    
    
    
    
    
    
    2,820Total Plant Closing Phase I
    
    
    1,209
    
    
    
    3,152
    
    
    
    263
    
    
    
    4,624
    
    
    
    135
    
    
    
    4,759Plant Closing Phase IISeverance
    
    $
    
    
    
    $
    399
    
    
    $
    
    
    
    $
    399
    
    
    $
    
    
    
    $
    399Asset Relocation
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    22Other Cash Costs
    
    
    
    
    
    
    442
    
    
    
    
    
    
    
    442
    
    
    
    
    
    
    
    442Asset Impairment
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30Total Plant Closing Phase II
    
    
    
    
    
    
    893
    
    
    
    
    
    
    
    893
    
    
    
    
    
    
    
    893Plant Closing Phase IIISeverance
    
    $
    10
    
    
    $
    2,349
    
    
    $
    
    
    
    $
    2,359
    
    
    $
    10
    
    
    $
    2,369Asset Relocation
    
    
    
    
    
    
    219
    
    
    
    
    
    
    
    219
    
    
    
    122
    
    
    
    341Other Cash Costs
    
    
    309
    
    
    
    1,060
    
    
    
    
    
    
    
    1,369
    
    
    
    802
    
    
    
    2,171Asset Impairment
    
    
    
    
    
    
    3,393
    
    
    
    
    
    
    
    3,393
    
    
    
    
    
    
    
    3,393Total Plant Closing Phase III
    
    
    319
    
    
    
    7,021
    
    
    
    
    
    
    
    7,340
    
    
    
    934
    
    
    
    8,274Total All Programs
    
    $
    1,553
    
    
    $
    15,344
    
    
    $
    350
    
    
    $
    17,247
    
    
    $
    1,069
    
    
    $
    18,316Restructuring by SegmentBuildings
    
    
    415
    
    
    
    7,522
    
    
    
    61
    
    
    
    7,998
    
    
    
    855
    
    
    
    8,853Components
    
    
    109
    
    
    
    1,216
    
    
    
    106
    
    
    
    1,431
    
    
    
    214
    
    
    
    1,645Coaters
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    103Corporate
    
    
    
    
    
    
    211
    
    
    
    27
    
    
    
    238
    
    
    
    
    
    
    
    238Total
    
    $
    524
    
    
    $
    9,052
    
    
    $
    194
    
    
    $
    9,770
    
    
    $
    1,069
    
    
    $
    10,839Asset Impairments by Segment(1)Buildings
    
    
    1,029
    
    
    
    4,316
    
    
    
    157
    
    
    
    5,502
    
    
    
    
    
    
    
    5,502Components
    
    
    
    
    
    
    766
    
    
    
    
    
    
    
    766
    
    
    
    
    
    
    
    766Coaters
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate
    
    
    
    
    
    
    1,209
    
    
    
    
    
    
    
    1,209
    
    
    
    
    
    
    
    1,209Total
    
    $
    1,029
    
    
    $
    6,291
    
    
    $
    157
    
    
    $
    7,477
    
    
    $
    
    
    
    $
    7,477
 
 (1)
    
    The fair value of assets was determined based on prices of similar assets adjusted for their remaining useful life.  Employee orseverancecosts
    
    
    Other costs
    
    
    TotalBalance at November 1, 2009
    
    $
    1,387
    
    
    $
    
    
    
    $
    1,387Costs incurred
    
    
    70
    
    
    
    454
    
    
    
    524Cash payments
    
    
    (781
    )
    
    
    (454
    )
    
    
    (1,235
    )Other adjustments (1)
    
    
    10
    
    
    
    
    
    
    
    10Balance at January 31, 2010
    
    $
    685
    
    
    $
    
    
    
    $
    685
 
 (1)
    
    Relates to the foreign currency translation.  -7-




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NOTE 4  RESTRICTED CASH
  NOTE 5  INVENTORIES
  January 31, 2010
    
    
    November 1, 2009Raw materials
    
    $
    65,072
    
    
    $
    48,081Work in process and finished goods
    
    
    24,908
    
    
    
    23,456$
    89,980
    
    
    $
    71,537
  NOTE 6  GOODWILL AND OTHER INTANGIBLE ASSETS
  Metal
    
    
    
    
    
    
    EngineeredCoil
    
    
    Metal
    
    
    BuildingCoating
    
    
    Components
    
    
    Systems
    
    
    TotalBalance as of November 2, 2008
    
    $
    98,959
    
    
    $
    147,240
    
    
    $
    370,427
    
    
    $
    616,626Impairments
    
    
    (59,854
    )
    
    
    (116,132
    )
    
    
    (332,904
    )
    
    
    (508,890
    )Balance as of February 1, 2009
    
    $
    39,105
    
    
    $
    31,108
    
    
    $
    37,523
    
    
    $
    107,736Impairments
    
    
    (39,105
    )
    
    
    (31,108
    )
    
    
    (32,323
    )
    
    
    (102,536
    )Balance as of January 31,
2010, November 1, 2009 and May 3,
2009
    
    $
    
    
    
    $
    
    
    
    $
    5,200
    
    
    $
    5,200
    -8-




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##### Table of Contents



NOTE 7  SHARE-BASED COMPENSATION
      -9-




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##### Table of Contents



Fiscal Three Months EndedJanuary 31, 2010Expected volatility
    
    
    46.05
    %Expected term (in years)
    
    
    5.75Risk-free interest rate
    
    
    2.44
    %
  Weighted
    
    
    WeightedAverage
    
    
    Average
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Remaining
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueBalance November 1, 2009
    
    
    130
    
    
    $
    140.65Granted
    
    
    1,782
    
    
    
    8.85Cancelled
    
    
    (8
    )
    
    
    (111.62
    )Exercised
    
    
    
    
    
    
    Balance January 31, 2010
    
    
    1.904
    
    
    $
    17.43
    
    
    4.1 years
    
    
    Exercisable at January 31, 2010
    
    
    122
    
    
    $
    142.54
    
    
    9.5 years
    
    
    
  Options OutstandingWeighted Average
    
    Weighted AverageNumber of Options
    
    Remaining Life
    
    Exercise Price1,805
    
    
    9.8 years
    
    $
    9.8043
    
    
    4.1 years
    
    $
    136.3148
    
    
    4.6 years
    
    $
    161.778
    
    
    5.9 years
    
    $
    225.141,904
    
    
    9.5 years
    
    $
    17.43
 Options ExercisableWeighted AverageNumber of Options
    
    Exercise Price23
    
    
    $
    84.3143
    
    
    
    136.3148
    
    
    
    161.778
    
    
    
    225.15122
    
    
    $
    142.54
  Weighted AverageNumber of Shares
    
    Grant PriceBalance November 1, 2009
    
    
    204
    
    
    $
    80.57Granted
    
    
    1,500
    
    
    
    8.80Distributed
    
    
    
    
    
    
    Balance January 31, 2010
    
    
    1,704
    
    
    $
    17.40
  -10-




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##### Table of Contents



NOTE 8  EARNINGS PER COMMON SHARE
  Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009Numerator for Basic and Diluted Loss Per ShareNet loss applicable to common shares
    
    $
    (18,807
    )
    
    $
    (529,981
    )Less net loss allocated to participating securities(1)
    
    
    
    
    
    
    Net loss allocated to common shares
    
    $
    (18,807
    )
    
    $
    (529,981
    )Denominator for Diluted Loss Per ShareWeighted average common shares outstanding for basic loss per
share
    
    
    18,093
    
    
    
    3,888Common stock equivalents:Employee stock options
    
    
    
    
    
    
    Unvested restricted stock awards
    
    
    
    
    
    
    Adjusted weighted average shares and assumed conversions
for diluted loss per share assuming dilution
    
    
    18,093
    
    
    
    3,888Loss per share:Basic
    
    $
    (1.04
    )
    
    $
    (136.32
    )Diluted
    
    $
    (1.04
    )
    
    $
    (136.32
    )
 
 (1)
    
    The holders of the Convertible Preferred Stock and the unvested restricted
Common Stock related to our Incentive Plan 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. Earnings Per Share
   -11-




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##### Table of Contents



NOTE 9  WARRANTY
   Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009Beginning balance
    
    $
    16,116
    
    
    $
    16,485Warranties sold
    
    
    756
    
    
    
    614Revenue recognized
    
    
    (325
    )
    
    
    (310
    )Costs incurred
    
    
    (309
    )
    
    
    (13
    )Adjustment (1)
    
    
    
    
    
    
    (1,313
    )Other
    
    
    (28
    )
    
    
    (128
    )Ending balance
    
    $
    16,210
    
    
    $
    15,335
 
 (1)
    
    This adjustment relates to certain of the RCC warranty claims liabilities
that were updated based on a change in our claims processing procedures and revised analysis.
This change was recorded as a reduction of cost of sales in our Consolidated Statement of
Operations during the first quarter of fiscal 2009. NOTE 10  DEBT AND NOTE PAYABLE
  January 31, 2010
    
    
    November 1, 2009Amended and Restated Term Loan Credit Agreement (due
April 2014, interest at 8.0% at both January 31, 2010 and
November 1, 2009)
    
    $
    150,000
    
    
    $
    150,000Asset-Based Lending Facility (due April 2014, interest at
6.75% at January 31, 2010)
    
    
    3
    
    
    
    2.125% Convertible Senior Subordinated Notes, due November 2024
    
    
    
    
    
    
    59Industrial Revenue Bond
    
    
    
    
    
    
    190150,003
    
    
    
    150,249Current portion of long-term debt
    
    
    (14,434
    )
    
    
    (14,164
    )Long-term debt, less current portion
    
    $
    135,569
    
    
    $
    $136,085
 -12-




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##### Table of Contents



January 31, 2010 to October 31, 2010
    
    $
    14,0942010
    
    
    1,3542011
    
    
    1,3402012
    
    
    1,3272013 and thereafter
    
    
    131,888$
    150,003
 Amended Credit Agreement
       
    
    the net cash proceeds of (1) certain asset sales, (2) certain debt offerings and (3)
certain insurance recovery and condemnation events;
 -13-




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##### Table of Contents




    
    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; and
    
    the greater of $10.0 million and 50% of certain tax refunds received by the Company
resulting from the carry back of the 2009 net operating loss received by the Company.
   ABL Facility
       -14-




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##### Table of Contents



Convertible Notes
  January 31, 2010
    
    November 1, 2009Principal amount of Convertible Notes
    
    $
    
    
    
    $
    59Unamortized discount
    
    
    
    
    
    
    Net carrying amount
    
    
    
    
    
    
    59Additional paid-in capital
    
    
    24,473
    
    
    
    24,473
   Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009Contractual coupon interest
    
    $
    0.2
    
    
    $
    1,116Amortization of discount on Convertible Notes
    
    
    
    
    
    
    2,099Interest expense
    
    $
    0.2
    
    
    $
    3,215Effective interest rate
    
    
    7.5
    %
    
    
    7.5
    %
 Embedded Derivatives Debt with Conversion and Other Options
 -15-




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##### Table of Contents



Insurance Note payable
  NOTE 11  SERIES B CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK
 The CD&R Equity Investment
  Certain Terms of the Convertible Preferred Stock
  Liquidation Value.
 Rank.
 Dividends.
 -16-




---



##### Table of Contents



Convertibility and Anti-Dilution Adjustments.
  Milestone Redemption Right.
 Change of Control Redemption Right.
  -17-




---



##### Table of Contents



Vote.
   Restriction on Dividends on Junior Securities.
 Accounting for Convertible Preferred Stock
 Derivatives and Hedging Distinguishing Liabilities from Equity,
    -18-




---



##### Table of Contents



Debt with Conversion
and Other Options
  NOTE 12  DERIVATIVE INSTRUMENTS AND HEDGING STRATEGY
 Interest Rate Risk
   Embedded Derivative Bifurcated From Convertible Preferred Stock (See Note 11)
  -19-




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##### Table of Contents



Liability DerivativesJanuary 31, 2010
    
    
    November 1, 2009Balance Sheet Location
    
    
    Fair Value
    
    
    Fair ValueDerivatives not
designated as hedging
instruments under ASC 815:Interest rate contract
    
    Other accrued expenses
    
    $
    1,257
    
    
    $
    2,208Embedded derivative
    
    Other accrued expenses
    
    
    122
    
    
    
    1,041Total derivatives
    
    
    
    
    
    $
    1,379
    
    
    $
    3,249
  Amount of Loss Recognizedin OCI on Derivative(Effective Portion)January 31,
    
    February 1,Derivative
in ASC 815 Cash Flow Hedging Relationship
    
    2010
    
    2009Interest rate contract
    
    $
    
    
    
    $
    (554
    )
 Amount of Income RecognizedDerivatives Not Designated as Hedging
    
    in Income (Loss) on Derivatives
    
    Location of Income Recognized in IncomeInstruments Under ASC 815
    
    January 31, 2010
    
    February 1, 2009
    
    (Loss) on DerivativesInterest rate contract
    
    $
    951
    
    
    $
    
    
    
    Interest expenseEmbedded derivative
    
    $
    919
    
    
    $
    
    
    
    Other income, net
 NOTE 13  FAIR VALUE OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
 Fair Value of Financial Instruments
  January 31, 2010
    
    
    November 1, 2009Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(in thousands)
    
    
    (in thousands)2.125% Convertible Senior Subordinated Notes
    
    $
    
    
    
    $
    
    
    
    $
    59
    
    
    $
    97Amended Credit Agreement
    
    $
    150,000
    
    
    $
    147,375
    
    
    $
    150,000
    
    
    $
    138,000
 -20-




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##### Table of Contents



Fair Value Measurements
       Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Short-term investments in deferred compensation plan(1)
    
    $
    3,529
    
    
    $
    
    
    
    $
    
    
    
    $
    3,529Assets held for sale
    
    
    
    
    
    
    3,930
    
    
    
    
    
    
    
    3,930Total assets
    
    $
    3,529
    
    
    $
    3,930
    
    
    $
    
    
    
    $
    7,459Liabilities:Deferred compensation plan liability
    
    $
    (3,642
    )
    
    $
    
    
    
    $
    
    
    
    $
    (3,642
    )Interest rate contract
    
    
    
    
    
    
    (1,257
    )
    
    
    
    
    
    
    (1,257
    )Embedded derivative
    
    
    
    
    
    
    
    
    
    
    (122
    )
    
    
    (122
    )Total liabilities
    
    $
    (3,642
    )
    
    $
    (1,257
    )
    
    $
    (122
    )
    
    $
    (5,021
    )
 
 (1)
    
    Unrealized holding gains (losses) for the three months ended January 31,
2010 and February 1, 2009 were $0.05 million and $(0.4) million, respectively. These
unrealized holding gains (losses) are primarily offset by changes in the deferred compensation
plan liability.  January 31,2010Beginning balance
    
    $
    (1,041
    )Realized gains (losses) (1)
    
    
    919Ending balance
    
    $
    (122
    )
 -21-




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##### Table of Contents



(1)
    
    Realized gains (losses) on the embedded derivative are recorded in other income
(expense), net in the Consolidated Statement of Operations during the three months ended January
31, 2010. NOTE 14  INCOME TAXES
  Fiscal Three Months EndedJanuary 31, 2010
    
    February 1, 2009Statutory federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %State income taxes
    
    
    3.4
    %
    
    
    3.4
    %Production activities deduction
    
    
    
    
    
    
    Non-deductible goodwill impairment
    
    
    
    
    
    
    (32.2
    )%Canada valuation allowance
    
    
    
    
    
    
    (0.1
    )%Non-deductible expenses
    
    
    (2.2
    )%
    
    
    Other
    
    
    (0.6
    )%
    
    
    0.1
    %Effective tax rate
    
    
    35.6
    %
    
    
    6.2
    %
   NOTE 15  COMPREHENSIVE LOSS
  Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009Net loss
    
    $
    (10,486
    )
    
    $
    (529,981
    )Foreign exchange translation
gain (loss) and other, net of tax
    
    
    197
    
    
    
    7Gain (loss) in fair value of interest rate swap, net of tax
    
    
    
    
    
    
    (554
    )Comprehensive loss
    
    $
    (10,289
    )
    
    $
    (530,528
    )
  January 31, 2010
    
    
    November 1, 2009Foreign exchange translation adjustments
    
    $
    588
    
    
    $
    391Defined benefit pension plan
    
    
    (9,250
    )
    
    
    (9,250
    )Accumulated other comprehensive loss
    
    $
    (8,662
    )
    
    $
    (8,859
    )
  -22-




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##### Table of Contents



Fiscal Three Months Ended January 31, 2010
    
    
    Fiscal Three Months Ended February 1, 2009Before-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
    
    $
    194
    
    
    $
    3
    
    
    $
    197
    
    
    $
    11
    
    
    $
    (4
    )
    
    $
    7Loss in fair value of interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (899
    )
    
    
    345
    
    
    
    (554
    )Other Comprehensive income (loss)
    
    $
    194
    
    
    $
    3
    
    
    $
    197
    
    
    $
    (888
    )
    
    $
    341
    
    
    $
    (547
    )
 NOTE 16  BUSINESS SEGMENTS
 ®
    Fiscal Three Months EndedJanuary 31, 2010
    
    

February 1, 2009Total sales:Metal coil coating
    
    $
    39,031
    
    
    $
    41,501Metal components
    
    
    86,806
    
    
    
    121,480Engineered building systems
    
    
    102,618
    
    
    
    152,409Intersegment sales
    
    
    (45,568
    )
    
    
    (55,026
    )Total sales
    
    $
    182,887
    
    
    $
    260,364External sales:Metal coil coating
    
    $
    12,808
    
    
    $
    11,424Metal components
    
    
    70,138
    
    
    
    101,042Engineered building systems
    
    
    99,941
    
    
    
    147,898Total sales
    
    $
    182,887
    
    
    $
    260,364Operating income (loss):Metal coil coating
    
    $
    3,119
    
    
    $
    (63,760
    )Metal components
    
    
    1,791
    
    
    
    (128,607
    )Engineered building systems
    
    
    (5,829
    )
    
    
    (352,283
    )Corporate
    
    
    (11,824
    )
    
    
    (13,252
    )Total operating loss
    
    $
    (12,743
    )
    
    $
    (557,902
    )Unallocated other expense
    
    
    (3,522
    )
    
    
    (6,940
    )Loss before income taxes
    
    $
    (16,265
    )
    
    $
    (564,842
    )
 -23-




---



##### Table of Contents



Fiscal Three Months EndedJanuary 31, 2010
    
    
    November 1, 2009Total assets:Metal coil coating
    
    $
    59,033
    
    
    $
    57,254Metal components
    
    
    163,864
    
    
    
    160,123Engineered building systems
    
    
    230,276
    
    
    
    241,396Corporate
    
    
    131,740
    
    
    
    155,745Total assets
    
    $
    584,913
    
    
    $
    614,518
 NOTE 17  CONTINGENCIES
  NOTE 18  SUBSEQUENT EVENTS
   NCI BUILDING SYSTEMS, INC.
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  OVERVIEW
    -24-




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##### Table of Contents



First Fiscal Quarter
    Industry Conditions
      -25-




---



##### Table of Contents



RESULTS OF OPERATIONS
 Debt with Conversion and Other Options
  ®
   Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009%
    
    
    
    
    
    
    %Sales:Metal coil coating
    
    $
    39,031
    
    
    
    21
    
    
    $
    41,501
    
    
    
    16Metal components
    
    
    86,806
    
    
    
    48
    
    
    
    121,480
    
    
    
    47Engineered building systems
    
    
    102,618
    
    
    
    56
    
    
    
    152,409
    
    
    
    58Intersegment sales
    
    
    (45,568
    )
    
    
    (25
    )
    
    
    (55,026
    )
    
    
    (21
    )Total sales
    
    $
    182,887
    
    
    
    100
    
    
    $
    260,364
    
    
    
    100Operating income (loss):Metal coil coating
    
    $
    3,119
    
    
    
    
    
    
    $
    (63,760
    )Metal components
    
    
    1,791
    
    
    
    
    
    
    
    (128,607
    )
 -26-




---



##### Table of Contents



Fiscal Three Months EndedJanuary 31, 2010
    
    
    February 1, 2009%
    
    
    
    
    
    
    %Engineered building systems
    
    
    (5,829
    )
    
    
    
    
    
    
    (352,283
    )Corporate
    
    
    (11,824
    )
    
    
    
    
    
    
    (13,252
    )Total operating loss
    
    $
    (12,743
    )
    
    
    
    
    
    $
    (557,902
    )Unallocated other expense
    
    
    (3,522
    )
    
    
    
    
    
    
    (6,940
    )Loss before income taxes
    
    $
    (16,265
    )
    
    
    
    
    
    $
    (564,842
    )
 FISCAL THREE MONTHS ENDED JANUARY 31, 2010 COMPARED TO FISCAL THREE MONTHS ENDED FEBRUARY
1, 2009
 Consolidated sales
 Consolidated cost of sales
 Metal coil coating sales
  Metal components sales
  -27-




---



##### Table of Contents



Engineered building systems sales
  Consolidated selling, general and administrative expenses,
 Consolidated goodwill and other intangible asset impairment
 Consolidated restructuring charge
 Consolidated interest expense
 Consolidated benefit for income taxes
 Consolidated Convertible Preferred Stock dividends and accretion
 -28-




---



##### Table of Contents



Consolidated Convertible Preferred Stock beneficial conversion feature
 Diluted loss per share
 LIQUIDITY AND CAPITAL RESOURCES
 General
   Convertible Preferred Stock
   -29-




---



##### Table of Contents



Debt
  
    
    we entered into the Amended Credit Agreement, an amendment to our credit agreement as in
effect prior to such date (the Credit Agreement), which was due to mature on June 18,
2010, by repaying approximately $143 million in principal amount of the approximately $293
million in principal amount of the term loans then outstanding and amending the terms and
extending the maturity of the remaining $150 million balance of the term loans. The Amended
Credit Agreement, our amended term loan, requires quarterly principal payments in an amount
equal to 0.25% of the principal amount of the term loan outstanding as of the last day of
each calendar quarter and a final payment of approximately $131.1 million in principal at
maturity on April 20, 2014.
    
    we entered into the ABL Facility pursuant to a loan and security agreement, with a
maximum available amount of up to $125 million which has an additional $50 million
incremental credit facility. The ABL Facility replaces the revolving credit facility and
letters of credit sub-facility under our Credit Agreement, which expired on June 18, 2009.
The ABL Facility has a maturity of April 20, 2014 and includes borrowing capacity of up to
$25 million for letters of credit and up to $10 million for swingline borrowings.
    
    we completed the Exchange Offer to acquire the $180 million of our then-outstanding
Convertible Notes for an aggregate combination of $90.0 million in cash and 14.0 million
shares of Common Stock.
 Amended Credit Agreement.
  -30-




---



##### Table of Contents




    
    the net cash proceeds of (1) certain asset sales, (2) certain debt offerings and (3)
certain insurance recovery and condemnation events;
    
    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; and
    
    the greater of $10.0 million and 50% of certain 2009 tax refunds received by the Company
resulting from the carry back of the 2009 net operating loss received by the Company.
      ABL Facility.
  -31-




---



##### Table of Contents



Cash Flow
    -32-




---



##### Table of Contents



NON-GAAP MEASURES
   For the Three Months Ended January 31, 2010EngineeredMetal Coil
    
    Metal
    
    BuildingCoating
    
    Components
    
    Systems
    
    Corporate
    
    ConsolidatedOperating income (loss), GAAP basis
    
    $
    3,119
    
    
    $
    1,791
    
    
    $
    (5,829
    )
    
    $
    (11,824
    )
    
    $
    (12,743
    )Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lower of cost or market charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Asset impairment
    
    
    
    
    
    
    
    
    
    
    1,029
    
    
    
    
    
    
    
    1,029Restructuring charges
    
    
    
    
    
    
    109
    
    
    
    415
    
    
    
    
    
    
    
    524Adjusted operating income (loss)
    
    $
    3,119
    
    
    $
    1,900
    
    
    $
    (4,385
    )
    
    $
    (11,824
    )
    
    $
    (11,190
    )
 For the Three Months Ended February 1, 2009EngineeredMetal Coil
    
    Metal
    
    BuildingCoating
    
    Components
    
    Systems
    
    Corporate
    
    ConsolidatedOperating income (loss), GAAP basis
    
    $
    (63,760
    )
    
    $
    (128,607
    )
    
    $
    (352,283
    )
    
    $
    (13,252
    )
    
    $
    (557,902
    )Goodwill impairment
    
    
    59,854
    
    
    
    116,131
    
    
    
    341,643
    
    
    
    
    
    
    
    517,628Lower of cost or market charge
    
    
    5,657
    
    
    
    14,484
    
    
    
    9,237
    
    
    
    
    
    
    
    29,378Asset impairment
    
    
    
    
    
    
    
    
    
    
    623
    
    
    
    
    
    
    
    623Restructuring charges
    
    
    44
    
    
    
    582
    
    
    
    1,835
    
    
    
    18
    
    
    
    2,479Adjusted operating income (loss)
    
    $
    1,795
    
    
    $
    2,590
    
    
    $
    1,055
    
    
    $
    (13,234
    )
    
    $
    (7,794
    )
  Fiscal Three Months EndedJanuary 31, 2010
    
    February 1, 2009Loss per diluted common share, GAAP basis
    
    $
    (1.04
    )
    
    $
    (136.32
    )Goodwill and other intangible asset impairment
    
    
    
    
    
    
    128.57Debt extinguishment and refinancing costs
    
    
    0.01
    
    
    
    Lower of cost or market adjustment
    
    
    
    
    
    
    4.82Convertible
preferred stock beneficial conversion feature
    
    
    0.01
    
    
    
    Restructuring charge
    
    
    0.02
    
    
    
    0.41Asset impairment
    
    
    0.04
    
    
    
    0.10Gain on embedded derivative
    
    
    (0.03
    )
    
    
    Adjusted diluted earnings (loss) per common share
    
    $
    (0.99
    )
    
    $
    (2.42
    )
 -33-




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Fiscal Three Months EndedJanuary 31, 2010
    
    February 1, 2009Net loss applicable to common shares, GAAP basis
    
    $
    (18,807
    )
    
    $
    (529,981
    )Goodwill and other intangible asset impairment
    
    
    
    
    
    
    499,883Debt extinguishment and refinancing costs
    
    
    113
    
    
    
    Lower of cost or market adjustment
    
    
    
    
    
    
    18,740Convertible
preferred stock beneficial conversion feature
    
    
    187
    
    
    
    Restructuring charge
    
    
    340
    
    
    
    1,581Asset impairment
    
    
    669
    
    
    
    397Gain on embedded derivative
    
    
    (597
    )
    
    
    Adjusted net income (loss) applicable to common shares
    
    $
    (18,095
    )
    
    $
    (9,380
    )
  Three Months Ended

    
    
    
    
    
    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
    
    
    
    7,522
    
    
    
    31,184Consolidated 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 impairment
    
    
    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
    
    
    $
    (2,627
    )
    
    $
    40,397
 Trailing 122nd Quarter
    
    3rd Quarter
    
    4th Quarter
    
    1st Quarter
    
    MonthsApril 27, 2008
    
    July 27, 2008
    
    November 2, 2008
    
    February 1, 2009
    
    February 1, 2009Net Income (Loss)
    
    $
    13,466
    
    
    $
    30,494
    
    
    $
    23,218
    
    
    $
    (529,981
    )
    
    $
    (462,803
    )Add:Depreciation and amortization
    
    
    8,645
    
    
    
    8,665
    
    
    
    8,334
    
    
    
    8,324
    
    
    
    33,968Consolidated interest expense, net
    
    
    7,748
    
    
    
    7,463
    
    
    
    7,761
    
    
    
    6,623
    
    
    
    29,595Provision for taxes
    
    
    8,537
    
    
    
    18,554
    
    
    
    17,092
    
    
    
    (34,861
    )
    
    
    9,322Non-cash charges:Stock-based compensation
    
    
    3,442
    
    
    
    1,563
    
    
    
    1,628
    
    
    
    1,372
    
    
    
    8,005Goodwill and intangible impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    517,628
    
    
    
    517,628Asset impairment
    
    
    
    
    
    
    
    
    
    
    157
    
    
    
    623
    
    
    
    780Lower of cost or market charges
    
    
    
    
    
    
    
    
    
    
    2,739
    
    
    
    29,378
    
    
    
    32,117Embedded derivative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash restructuring charges
    
    
    640
    
    
    
    43
    
    
    
    150
    
    
    
    2,479
    
    
    
    3,312Transaction costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDA
    
    $
    42,478
    
    
    $
    66,782
    
    
    $
    61,079
    
    
    $
    1,585
    
    
    $
    171,924
 OFF-BALANCE SHEET ARRANGEMENTS
  -34-




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CONTRACTUAL OBLIGATIONS
   CRITICAL ACCOUNTING POLICIES
  Property, plant and equipment valuation
  RECENT ACCOUNTING PRONOUNCEMENTS
 Defined Benefit Plans  General
 Improving Disclosures about Fair Value
Measurements
 FORWARD LOOKING STATEMENTS
  -35-




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
    
    industry cyclicality and seasonality and adverse weather conditions;
    
    general economic conditions affecting the construction industry;
    
    the current financial crisis and U.S. recession;
    
    the current challenges in the credit market;
    
    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 limitations in connection with our debt;
    
    the current economic and credit conditions severely affecting the Companys
operations;
    
    recognition of asset impairment charges;
    
    raw material pricing and supply;
    
    the ability to make strategic acquisitions accretive to earnings;
    
    the fluctuations in customer demand and other patterns;
    
    environmental cleanups, investigations, claims and liabilities;
    
    competitive activity and pricing pressure;
    
    the volatility of the Companys stock price;
    
    the substantial rights, seniority and potentially dilutive effect on our common
stockholders of the Convertible Preferred Stock issued to the CD&R Funds;
    
    increases in energy costs;
    
    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;
    
    costs and other effects of 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.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 Steel Prices
  -36-




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-37-




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Interest Rates
    Foreign Currency Exchange Rates
   
 Item 4. Controls and Procedures.
 Disclosure Controls and Procedures.
  -38-




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Internal Control over Financial Reporting
  -39-




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NCI BUILDING SYSTEMS, INC.
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  The Convertible Preferred Stock will be dilutive to our stockholders. The Convertible Preferred
Stock accrues dividends, which may be paid in cash or in-kind. To the extent that dividends on the
Convertible Preferred Stock are paid in-kind, they will dilute the ownership interest of our
stockholders. In addition, the dividend rate of the Convertible Preferred Stock will increase upon
the occurrence of certain events which constitute defaults under the terms of the Convertible
Preferred Stock, which may cause further dilution. Furthermore, the Convertible Preferred Stock
also provides for anti-dilution rights, which may dilute the ownership interest of stockholders in
the future.
   
    
    6.00% per annum, if the default is the result of a failure
by us after June 30, 2011 to reserve and keep available for
issuance a number of shares of Common Stock equal to 110%
of the number of shares of Common Stock issuable upon
conversion of all outstanding shares of Convertible
Preferred Stock; or
    
    3.00% per annum for any other specified default.
    -40-




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  ISSUER PURCHASES OF EQUITY SECURITIES
 (d) MaximumNumber (or(c) Total
    
    
    ApproximateNumber of Shares
    
    
    Dollar Value) 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 2, 2009 to November 29, 2009
    
    
    29,106
    
    
    $
    12.55
    
    
    
    
    
    
    
    129,218November 30, 2009 to December 27, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,218December 28, 2009 to January 31, 2010
    
    
    127
    
    
    
    36.25
    
    
    
    
    
    
    
    129,218Total
    
    
    29,233
    
    
    $
    12.65
    
    
    
    
    
    
    
    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, such purchases occur at times and in amounts that we
deem appropriate. Shares repurchased are used primarily for later re-issuance in connection
with our equity incentive and 401(k) profit sharing plans. 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 2010, we did not repurchase any shares of Common Stock. At
January 31, 2010, there were 0.1 million shares of Common Stock remaining authorized for
repurchase under the program. Item 4. (Removed and Reserved)
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
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SIGNATURES
  NCI BUILDING SYSTEMS, INC.
(Registrant)Date: March 10, 2010
    By:
    /s/ Mark E. JohnsonMark E. JohnsonExecutive Vice President,
Chief Financial Officer and Treasurer -42-




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Index to Exhibits
 2.2
    
    Lock-Up and Voting Agreement, dated as of August 31, 2009, by and among NCI
Building Systems, Inc. and the signatories thereto (incorporated by
reference to exhibit 2.2 to Form 8-K filed with the SEC on September 1, 2009)2.3
    
    Amendment No. 1 to Lock-Up and Voting Agreement, dated as of October 8, 2009, by and
among NCI Building Systems, Inc. and the signatories thereto (incorporated
by reference to exhibit 2.3 to Form 8K filed with the SEC on October 8, 2009)2.4
    
    Lock-Up and Voting Agreement, dated as of October 8, 2009, by and among NCI
Building Systems, Inc. and the signatories thereto (incorporated by
reference to exhibit 2.2 to Form 8K filed with the SEC on October 8, 2009)*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