<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT
Under Section 13 or 15(d) of the Securities Exchange Act of 1934
For Quarter Ended Commission file number
May 31, 1996 1-8798
------------------ ----------------------------
Nu Horizons Electronics Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2621097
- ------------------------------------ ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6000 New Horizons Blvd., Amityville, New York 11701
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 226-6000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
Common Stock - Par Value $.0066 8,727,299
------------------------------- -------------------
Class Outstanding Shares
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
INDEX
-----
Page(s)
PART I. Financial Information:
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets -
May 31, 1996 (unaudited) and February 29, 1996 3.
Consolidated Condensed Statements of Income (unaudited) -
Three Months Ended May 31, 1996 and 1995 4.
Consolidated Condensed Statements of Cash Flows (unaudited) -
Three Months Ended May 31, 1996 and 1995 5. - 6.
Notes to Interim Consolidated Condensed Financial
Statements (unaudited) 7. - 8.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9. - 11.
PART II. Other Information 12.
SIGNATURES 13.
INDEX TO EXHIBITS
Exhibit 10.14 - Amendment No. 5 to Amended and Restated Revolving Credit
Agreement and Thirteenth Amendment to Revolving Credit and Term
Loan Agreement Dated as of June 10, 1996 Between the Company and
Fleet Bank, N.A., Formerly Known as NatWest Bank N.A., Formerly
Known as National Westminster Bank USA.
Exhibit 11 - Computation of Earnings per Common Share
Exhibit 27 - Financial Data Schedule
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
-ASSETS-
--------
MAY FEBRUARY
31, 1996 29, 1996
----------- -----------
(unaudited)
CURRENT ASSETS:
Cash (including time deposits) $ 1,353,780 $ 874,267
Accounts receivable-net of allowance for doubt-
ful accounts of $1,583,429 and $1,509,802 for May
31, 1996 and February 29, 1996, respectively 31,801,196 30,005,182
Inventories 37,178,825 36,808,915
Prepaid expenses and other current assets 918,955 1,013,923
----------- -----------
TOTAL CURRENT ASSETS 71,252,756 68,702,287
PROPERTY, PLANT AND EQUIPMENT - NET (Note 2) 3,342,199 3,439,804
OTHER ASSETS
Cost in excess of net assets acquired-net 2,026,949 2,066,180
Other assets 1,383,991 1,251,315
----------- -----------
$78,005,895 $75,459,586
=========== ===========
-LIABILITIES AND SHAREHOLDERS' EQUITY-
--------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 7,961,847 $ 7,898,757
Accrued expenses 4,085,779 2,254,878
Current portion of long-term debt 327,799 373,930
Income taxes 362,054 220,288
Other current liabilities 6,080 -
----------- -----------
TOTAL CURRENT LIABILITIES 12,743,559 10,747,853
----------- -----------
LONG TERM LIABILITIES:
Deferred income taxes 382,071 115,577
Revolving credit line (Note 3) 15,000,000 17,300,000
Long-term debt 626,708 678,453
Subordinated convertible notes (Note 4) 7,059,000 9,000,000
----------- -----------
23,067,779 27,094,030
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 1,000,000 shares
authorized; none issued or outstanding - -
Common stock, $.0066 par value, 20,000,000 shares
authorized; 8,727,299 and 8,423,137 shares issued
and outstanding for May 31, 1996 and
February 29, 1996, respectively 62,035 55,593
Additional paid-in capital (Note 4) 18,901,989 16,821,502
Retained earnings 23,615,395 21,160,458
----------- -----------
42,579,419 38,037,553
Less: loan to ESOP 384,862 419,850
----------- -----------
42,194,557 37,617,703
----------- -----------
$78,005,895 $75,459,586
=========== ===========
See notes to interim consolidated condensed financial statements
3
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
-------------------------------------------
(unaudited)
FOR THE THREE MONTHS ENDED
-----------------------------
MAY 31, 1996 MAY 31, 1995
------------- ------------
NET SALES $57,672,540 $44,716,053
----------- -----------
COSTS AND EXPENSES:
Cost of sales 44,746,424 34,407,272
Operating expenses 8,373,949 7,126,748
Interest expense 433,128 453,384
Interest income - (2,110)
----------- -----------
53,553,501 41,985,294
----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 4,119,039 2,730,759
Provision for income taxes 1,664,102 1,099,662
----------- -----------
NET INCOME $ 2,454,937 $ 1,631,097
=========== ===========
NET INCOME PER SHARE (Note 5):
Primary $.27 $.21
==== ====
Fully diluted $.25 $.18
==== ====
See notes to interim consolidated condensed financial statements
4
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(unaudited)
FOR THE THREE MONTHS ENDED
----------------------------
MAY 31, 1996 MAY 31, 1995
------------- -------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
Cash flows from operating activities:
Cash received from customers $ 55,876,526 $ 40,666,743
Cash paid to suppliers and employees (51,446,177) (42,306,713)
Interest received - 2,110
Interest paid (433,128) (453,384)
Income taxes paid (1,170,298) (139,232)
------------ ------------
Net cash provided by (used in)
operating activities 2,826,923 (2,230,476)
------------ ------------
Cash flows from investing activities:
Capital expenditures (95,463) (404,906)
Purchase of stock for ESOP - (559,800)
------------ ------------
Net cash (used in) investing activities (95,463) (964,706)
------------ ------------
Cash flows from financing activities:
Borrowings under revolving credit line 11,000,000 11,350,000
Repayments under revolving credit line (13,300,000) (7,000,000)
Principal payments of long-term debt (97,876) (92,530)
Proceeds from stock options 145,929 14,138
------------ ------------
Net cash (used in) provided by
financing activities (2,251,947) 4,271,608
------------ ------------
Net increase in cash and cash equivalents 479,513 1,076,426
Cash and cash equivalents, beginning
of year 874,267 498,919
------------ ------------
Cash and cash equivalents, end of period $ 1,353,780 $ 1,575,345
============ ============
See notes to interim consolidated condensed financial statements
5
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
-----------------------------------------------------------
(unaudited)
FOR THE THREE MONTHS ENDED
----------------------------
MAY 31, 1996 MAY 31, 1995
------------ ------------
RECONCILIATION OF NET INCOME TO NET
CASH (USED IN) OPERATING ACTIVITIES:
Net income $ 2,454,937 $ 1,631,097
----------- -------------
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 296,320 273,289
Contribution to ESOP 34,988 25,550
Bad debt provision - 417,500
Changes in assets and liabilities:
(Increase) in accounts receivable (1,796,014) (4,049,310)
(Increase) in inventories (369,910) (2,913,719)
Decrease in prepaid expenses
and other current assets 94,968 520,255
(Increase) in other assets (196,697) (16,408)
Increase in accounts payable
and accrued expenses 1,893,991 1,672,480
Increase in income taxes 141,766 117,052
Increase (decrease) in other current
liabilities 6,080 (37,460)
Increase in deferred taxes 266,494 129,198
----------- -------------
Total adjustments 371,986 (3,861,573)
----------- -------------
Net cash provided by (used in) operating
activities $ 2,826,923 ($ 2,230,476)
=========== =============
See notes to interim consolidated condensed financial statements
6
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
1. In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of Nu Horizons Electronics
Corp. (the "Company") and its subsidiaries (Nu Horizons/Merit Electronics
Corp., NIC Components Corp., Nu Horizons International Corp. and Nu Visions
Manufacturing, Inc.) contain all adjustments necessary to present fairly
the Company's financial position as of May 31, 1996 and February 29, 1996
and the results of its operations and cash flows for the three month
periods ended May 31, 1996 and 1995.
The accounting policies followed by the Company are set forth in Note 2 to
the Company's consolidated financial statements included in its Annual
Report on Form 10-K for the year ended February 29, 1996, which is
incorporated herein by reference. Specific reference is made to this
report for a description of the Company's securities and the notes to
consolidated financial statements included therein.
The results of operations for the three month period ended May 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
2. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following:
MAY FEBRUARY
31, 1996 29, 1996
---------- ----------
Land $ 266,301 $ 266,301
Building and improvements 1,752,845 1,747,930
Furniture, fixtures and office
equipment 2,074,050 2,037,183
Computer equipment 2,332,263 2,278,582
Assets held under capitalized
leases 919,834 919,834
---------- ----------
7,345,293 7,249,830
Less: accumulated depreciation
and amortization 4,003,094 3,810,026
---------- ----------
$3,342,199 $3,439,804
========== ==========
3. BANK LINE OF CREDIT:
In February, 1988 the Company entered into a revolving credit agreement, as
amended, with its bank which provides for a $25,000,000 unsecured revolving
line of credit at the bank's prime rate with payments of interest only through
April 8, 2000. Direct borrowings under the line of credit were $15,000,000 at
May 31, 1996 and $17,300,000 at February 29, 1996.
7
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
4. SUBORDINATED CONVERTIBLE NOTES:
In a private placement completed on August 31, 1994, the Company issued $15
million principal amount of Subordinated Convertible Notes, which are due
in $5,000,000 increments on August 31, 2000, 2001 and 2002. The notes are
subordinate in right of payment to all existing and future senior
indebtedness of the Company. The notes bear interest at 8.25%, payable
quarterly on November 15, February 15, May 15 and August 15. The notes are
convertible into shares of common stock at a conversion price of $9.00 per
share. The cost of issuing these notes was $521,565 and is being amortized
over the life of the notes. As of May 31, 1996, $7,941,000 of the notes
have been converted into 882,333 shares of common stock and $7,059,000
principal amount of subordinated convertible notes remained outstanding.
5. NET INCOME PER SHARE:
Net income per share has been computed on the basis of the weighted
average number of common shares and common equivalent shares outstanding
during each period presented. Fully diluted earnings per share has been
computed assuming conversion of all dilutive stock options.
The following average shares were used in the computation of primary and
fully diluted earnings per share:
May May
31, 1996 31, 1995
---------- ----------
Primary 9,130,000 7,852,309
Fully diluted 10,409,109 10,309,609
All per share amounts have been retroactively restated as a result of stock
dividends and a three for two stock split.
A detailed computation of earnings per common share appears in Exhibit 11
of this Form 10-Q.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS:
--------------------------
Introduction:
-------------
Nu Horizons Electronics Corp. (the "Company") and its wholly-owned
subsidiaries, Nu Horizons/Merit Electronics Corp. ("Merit"), NIC Components
Corp. ("NIC") and Nu Horizons International Corp. ("International"), are
engaged in the distribution of high technology active and passive electronic
components to a wide variety of original equipment manufacturers ("OEMs") of
electronic products. Active components distributed by the Company include
semiconductor products such as memory chips, microprocessors, digital and
linear circuits, microwave/RF and fiberoptic components, transistors and
diodes. Passive components distributed by NIC, principally to OEMs and other
distributors nationally, consist of a high technology line of chip and leaded
components including capacitors, resistors and related networks.
Nu Visions Manufacturing, Inc. ("NUV") located in Springfield, Massachusetts,
another wholly-owned subsidiary of the Company, is a contract assembler of
circuit boards and related electromechanical devices for various OEM's.
The financial information presented herein includes: (i) Consolidated
Condensed Balance Sheets as of May 31, 1996 and February 29, 1996; (ii)
Consolidated Condensed Statements of Income for the three month periods ended
May 31, 1996 and 1995 and (iii) Consolidated Condensed Statements of Cash
Flows for the three month periods ended May 31, 1996 and 1995.
Results of Operations:
----------------------
Sales for the three month period ended May 31, 1996 were $57,672,540 as
compared to $44,716,053 for the comparable period of the prior year, an
increase of approximately 29%. Management attributes the increase in sales to
the following sales categories: Approximately $2,006,000 or 16% of the
overall increase resulted from incremental sales generated by the West Coast
distribution group which consists of the San Jose, Irvine, Los Angeles and San
Diego branches. Approximately $934,000 or 7% of the increase was generated by
the Nu Visions Manufacturing subsidiary. The balance of the increase,
approximately $10,016,000 or 77% resulted from incremental sales generated by
the core distribution business through greater market penetration and
continuing economic strength in the electronic industry.
The gross profit margin for the quarter ended May 31, 1996 was 22.4% as
compared to 23.1% for the quarter ended May 31, 1995. Management attributes
this lower profit margin primarily to a general downward correction of selling
prices in the marketplace, for both semiconductors and passive components,
during the period ended May 31, 1996 and a greater volume of larger orders at
lower gross profit margins.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (Continued):
--------------------------------------
Results of Operations (Continued):
----------------------------------
Operating expenses were approximately $8,374,000 for the three months ended
May 31, 1996 as compared to $7,127,000 for the three months ended May 31,
1995, an increase of approximately $1,247,000 or 17%. As a percentage of net
sales, operating expenses declined from 15.9 % to 14.5% for the comparable
period of the prior year. The dollar increase in operating expenses was due
to increases in the following expense categories: Approximately $1,481,000 or
119% of the increase was for personnel related costs - new sales people,
commissions, salaries, travel and fringe benefits. Various other operating
costs increased by approximately $183,500, or 14% of the net increase,
primarily to support the increase in sales for the period. The total increase
in operating costs of $1,664,500 was offset by a decrease of $417,500, 33% of
the net increase, which represented a decrease in accounts receivable
reserves, since the current reserve level was considered to be adequate.
Interest expense decreased from $453,384 for the three months ended May 31,
1995 to $433,128 for the three months ended May 31, 1996 as the interest on
higher levels of bank debt was more than offset by the lower amount of
outstanding subordinated convertible debt (see Note 4 of the Consolidated
Financial Statements). The increase in bank debt was primarily due to an
increase in borrowings, resulting from an increase in the Company's accounts
receivable and inventory levels, required to support the increased sales
volume in the current period.
INTEREST EXPENSE
FOR THE THREE MONTHS ENDED
--------------------------
MAY MAY
31, 1996 31, 1995
--------- ---------
Revolving Bank Credit $ 260,942 $ 144,009
Sub. Convert. Notes 172,186 309,375
--------- ---------
Total Interest Expense $ 433,128 $ 453,384
========= =========
Net income for the three month period ended May 31, 1996 was $2,454,937 or
$.27 per share as compared to $1,631,097 or $.21 per share for the three
month period ended May 31, 1995. Management attributes the increased earnings
to the increase in sales and gross profit dollars net of higher operating
expenses.
Liquidity and Capital Resources:
--------------------------------
At May 31, 1996 the Company's current ratio was 5.6:1 as compared to 6.4:1 at
February 29, 1996. Working capital increased from approximately $57,954,000
at February 29, 1996 to approximately $58,509,000 at May 31, 1996 while cash
increased from February 29, 1996 to May 31, 1996 by approximately $480,000.
The primary reasons for the increase in working capital was an increase in
accounts receivable and inventories financed primarily through long term debt
during the current period. These increases were required to support increased
sales activity.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (Continued):
--------------------------------------
Liquidity and Capital Resources (Continued):
--------------------------------------------
In February 1988, the Company entered into an unsecured revolving line of
credit agreement, as amended, which provides for maximum borrowings of
$25,000,000 at the bank's prime rate with payments of interest only through
April 8, 2000. At May 31, 1996 $15,000,000 was outstanding under this line of
credit as compared to $17,300,000 at February 29, 1996.
In a private placement completed on August 31, 1994, the Company issued $15
million principal amount of Subordinated Convertible Notes, which are due in
$5,000,000 increments on August 31, 2000, 2001 and 2002. The notes are
subordinate in right of payment to all existing and future senior indebtedness
of the Company. The notes bear interest at 8.25%, payable quarterly on
November 15, February 15, May 15 and August 15. The notes are convertible
into shares of common stock at a conversion price $9.00 per share. The cost
of issuing these notes was $521,565 and is being amortized over the life of
the notes. As of May 31, 1996, $7,941,000 of the notes have been converted
into 882,333 shares of common stock and $7,059,000 principal amount of
subordinated convertible notes remained outstanding.
The Company has experienced an overall shortfall in operating cash flow in
seven of its last eight fiscal quarters primarily due to the approximately
twenty-nine percent increase in sales for this first quarter of fiscal 1997,
the fifty-six percent increase in sales for the last fiscal year and the
forty-one percent increase in sales in fiscal 1995. As a result of this sales
growth the Company has been required to finance increased levels of accounts
receivable and inventory which exceed the amounts that can be supported by
operating cash flows. The short fall in operating cash flow has been
supplemented through the issuance of the subordinated convertible notes and
the utilization of the unsecured bank credit line as described above.
While the Company cannot predict that growth will continue at the same rate
experienced over the last two fiscal years, management is planning for
substantial growth over the ensuing twelve month period which more than likely
will result in a continued shortfall in operating cash flow. The Company
anticipates that its capital resources provided by its bank line of credit
will be sufficient to meet its financing requirements during that period.
Inflationary Impact:
--------------------
Since the inception of operations, inflation has not significantly affected
the operating results of the Company. However, inflation and changing
interest rates have had a significant effect on the economy in general and
therefore could affect the operating results of the Company in the future.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no material legal proceedings against the Company or in which
any of their property is subject.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports:
(a) Exhibits:
10.14. Amendment No. 5 to Amended and Restated Revolving
Credit Agreement and Thirteenth Amendment to Revolving
Credit and Term Loan Agreement Dated as of June 10, 1996
Between the Company and Fleet Bank, N.A., Formerly Known
as NatWest Bank N.A., Formerly Known as National
Westminster Bank USA.
11. Statement re: Computation of Per Share Earnings (See Notes
to Consolidated Financial Statements - Note 5)
27. Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Nu Horizons Electronics Corp.
-----------------------------
Registrant
/s/ Arthur Nadata
----------------------------------------
Date: July 12, 1996 Arthur Nadata, President and
Chief Executive Officer
/s/ Paul Durando
----------------------------------------
Date: July 12, 1996 Paul Durando, Vice President-Finance
and Chief Financial Officer
13
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
EXHIBIT INDEX
to
FORM 10-Q
FOR THE FISCAL QUARTER ENDED MAY 31, 1996
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
NU HORIZONS ELECTRONICS CORP.
(Exact Name of Registrant as Specified in Its Charter)
EXHIBIT
NUMBER DESCRIPTION
----------------------------------------------------------------------
10.14 Amendment No. 5 to Amended and Restated Revolving
Credit Agreement and Thirteenth Amendment to
Revolving Credit and Term Loan Agreement dated as
of June 10, 1996 between the Company and Fleet
Bank, N.A., Formerly Known as NatWest Bank N.A.,
Formerly Known as National Westminster Bank USA.
11 Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.14
FIFTH AMENDMENT
TO
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT dated as of June 10,
1996, by and among NU HORIZONS ELECTRONICS CORP., a Delaware corporation, NIC
COMPONENTS CORP. and NU HORIZONS INTERNATIONAL CORP., each a New York
corporation, NU VISIONS MANUFACTURING, INC., a Massachusetts corporation, and NU
HORIZONS/MERIT ELECTRONICS CORP., a Delaware corporation, having their
respective principal offices at 6000 New Horizons Boulevard, North Amityville,
New York (collectively, the "Borrowers") and FLEET BANK, N.A., formerly known as
NatWest Bank N.A., formerly known as National Westminster Bank USA, a national
banking association, having offices at 100 Jericho Quadrangle, Jericho, New York
(the "Bank").
RECITALS
The Borrowers and the Bank entered into an Amended and Restated Loan
Agreement dated as of April 29, 1994 as amended by a First Amendment dated as of
August 24, 1994, a Second Amendment dated as of November 29, 1995, a Third
Amendment dated as of January 10, 1996 and a Fourth Amendment dated as of April
8, 1996 (collectively, the "Loan Agreement"), under which certain financial
accommodations were made available by the Bank to the Borrowers. Unless
otherwise expressly provided herein, all capitalized terms used in this Fifth
Amendment to Amended and Restated Loan Agreement shall have the respective
meanings ascribed to such terms in the Loan Agreement.
The Borrowers have requested that the Bank modify certain of the terms set
forth in the Loan Agreement and the Bank is willing to comply with such request
but only upon and subject to the following terms and conditions.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and promises exchanged herein, the parties hereto mutually agree as follows:
1. Section 7.8 of the Amended and Restated Loan Agreement is hereby
amended to delete "$750,000" appearing therein and to substitute "$2,000,000"
therefor.
2. It is expressly understood and agreed that all collateral security for
the Revolving Credit Loans and other extensions of credit set forth in the
Amended and Restated Loan Agreement prior to the amendment provided for herein
is and shall continue to be collateral security for the Revolving Credit Loans
and other extensions of credit provided in the Amended and Restated Loan
Agreement as herein amended. Without limiting the generality of
<PAGE>
the foregoing, the Borrowers hereby absolutely and unconditionally confirm that
(i) each document and instrument executed by the Borrowers pursuant to the
Amended and Restated Loan Agreement continues in full force and effect, is
ratified and confirmed and is and shall continue to be applicable to the Amended
and Restated Loan Agreement (as herein amended), and (ii) the Amended and
Restated Note is hereby ratified and confirmed and shall remain in full force
and effect in accordance with its terms. The terms "Revolving Credit Note" and
"Note" shall include any Amended and Restated Revolving Credit Note.
3. In order to induce the Bank to enter into this Fifth Amendment to
Amended and Restated Loan Agreement, the Borrowers represent and warrant to the
Bank that each of their representations and warranties made in the Amended and
Restated Loan Agreement is true and correct as of the date hereof except as
otherwise set forth in writing(s) to which the Bank is a party.
4. No modification or waiver of any provisions of the Amended and
Restated Loan Agreement or any other agreement or instrument made or issued
pursuant thereto or contemplated thereby, nor consent to any departure by the
Borrowers therefrom shall, in any event, be effective unless made in writing and
signed by the Bank and the Borrowers, and then any such modification or waiver
shall be effective only in the specific instance and for the purpose for which
given unless otherwise specified therein. No notice to, or demand on, the
Borrowers in any case shall, of itself, entitle them to any further notice or
demand in similar or other circumstances.
5. The Borrowers agree to pay on demand, and the Bank may charge any
deposit or loan accounts(s) of the Borrowers, for all expenses incurred by the
Bank in connection with the negotiation, preparation and administration
(including any future waiver or modification and legal counsel as to the rights
and duties of the Bank) of this Fifth Amendment to Amended and Restated Loan
Agreement.
6. The amendments set forth herein are limited precisely as written
and shall not be deemed to (a) be a consent to or waiver of any other term or
condition of the Amended and Restated Loan Agreement or of any of the documents
referred to therein or (b) prejudice any right or rights which the Bank may now
have or may have in the future under or in connection with the Amended and
Restated Loan Agreement or any of the documents referred to therein.
7. This Fifth Amendment to Amended and Restated Loan Agreement is
dated for convenience as of June 10, 1996 and shall be effective on the delivery
of an executed counterpart hereof to the Borrowers. This Fifth Amendment to
Amended and Restated Loan Agreement may be executed in counterparts, each of
which shall
-2-
<PAGE>
constitute an original, and each of which taken together shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to
Amended and Restated Loan Agreement to be duly executed and delivered by their
duly authorized officers, all as of the day and year first above written.
NU HORIZONS ELECTRONICS CORP. NIC COMPONENTS CORP.
By: /s/ Paul Durando By: /s/ Paul Durando
______________________ ______________________
Paul Durando Paul Durando
Vice President-Finance Vice President-Finance
NU HORIZONS INTERNATIONAL CORP. NU VISIONS MANUFACTURING, INC.
By: /s/ Paul Durando By: /s/ Paul Durando
______________________ ______________________
Paul Durando Paul Durando
Vice President-Finance Vice President-Finance
NU HORIZONS/ FLEET BANK, N.A.,
MERIT ELECTRONICS CORP. formerly known as NatWest Bank N.A.,
formerly known as
National Westminster Bank USA
By: /s/ Paul Durando By: /s/ Jeffrey B. Carstens
________________________ ______________________
Paul Durando Jeffrey B. Carstens
Vice President-Finance Vice President
-3-
<PAGE>
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU HORIZONS ELECTRONICS CORP., the corporation described in
and which executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NIC COMPONENTS CORP., the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU HORIZONS INTERNATIONAL CORP., the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
-4-
<PAGE>
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU VISIONS MANUFACTURING, INC., the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU HORIZONS/MERIT ELECTRONICS CORP., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came JEFFREY B.
CARSTENS, to me known, who, being by me duly sworn, did depose and say that he
resides at c/o 100 Jericho Quadrangle, Jericho, New York; that he is a Vice
President of FLEET BANK, N.A., the banking institution described in and which
executed the foregoing instrument; and that he signed his name thereto by
authority of such banking institution.
/s/ Patricia S. Murphy
---------------------------
Notary Public
PATRICIA S. MURPHY
NOTARY PUBLIC, State of New York
No. 30-4994230
Qualified in Nassau County
Commission Expires March 30, 1998
-5-
<PAGE>
THIRTEENTH AMENDMENT TO REVOLVING CREDIT
AND TERM LOAN AGREEMENT
-----------------------
THIRTEENTH AMENDMENT TO REVOLVING CREDIT AND TERM LOAN AGREEMENT dated as
of June 10, 1996, by and between NU HORIZONS ELECTRONICS CORP., a Delaware
corporation having its executive offices at 6000 New Horizons Boulevard, North
Amityville, New York (the "Company") and FLEET BANK, N.A., formerly known as
NatWest Bank N.A., formerly known as National Westminster Bank USA, a national
banking association, having offices at 100 Jericho Quadrangle, Jericho, New York
(the "Bank").
RECITALS
--------
The Company and the Bank entered into a Revolving Credit and Term Loan
Agreement dated as of May 26, 1988 (as amended by the First Amendment dated as
of March 19, 1990, the Second Amendment dated as of February 28, 1991, the Third
Amendment dated as of April 1, 1992, the Fourth Amendment dated as of April 8,
1992, a Fifth Amendment dated as of August 1, 1992, a Sixth Amendment dated as
of October 1, 1992, a Seventh Amendment dated as of May 20, 1993, an Eighth
Amendment dated as of January 14, 1994, a Ninth Amendment dated as of April 29,
1994, a Tenth Amendment dated as of November 29, 1995, an Eleventh Amendment
dated as of January 10, 1996 and a Twelfth Amendment dated as of April 8, 1996
and as may be further amended, the "Loan Agreement"), pursuant to which certain
financial accommodations were made available by the Bank to the Company. Unless
otherwise expressly provided herein, all capitalized terms used in this
Thirteenth Amendment shall have the respective meanings ascribed to such terms
in the Loan Agreement.
The Company has requested that the Bank modify certain of the terms set
forth in the Loan Agreement and the Bank is willing to comply with such request
but only upon and subject to the following terms and conditions.
NOW THEREFORE, in consideration of the premises and mutual covenants and
promises exchanged herein, the parties hereto mutually agree as follows:
1. Section 6.17 of the Loan Agreement is hereby amended to delete
"750,000" appearing therein and to substitute "$2,000,000" therefor.
2. It is expressly understood and agreed that all collateral security
for the Loans and other extensions of credit set forth in the Loan Agreement
prior to the amendments provided for herein is and shall continue to be
collateral security for the Loans and other extensions of credit provided in the
Loan Agreement as herein amended. Without limiting the generality of the
<PAGE>
foregoing, the Company hereby absolutely and unconditionally confirms that (i)
each document and instrument executed by the Company pursuant to the Loan
Agreement continues in full force and effect, is ratified and confirmed and is
and shall continue to be applicable to the Loan Agreement (as herein amended)
and (ii) the Notes are hereby ratified and confirmed and shall remain in full
force and effect in accordance with their respective terms. Nonetheless, at the
request of the Bank, the Company shall promptly execute and deliver replacement
notes to evidence all indebtedness outstanding under the Loan Agreement as
hereby amended. The term "Notes" shall include any such replacement notes.
3. In order to induce the Bank to enter into this Thirteenth Amendment to
Loan Agreement, the Company represents and warrants to the Bank that each of its
representations and warranties made in the Loan Agreement is true and correct as
of the date hereof except as otherwise set forth in writing(s) to which the Bank
is a party. Notwithstanding the foregoing, to the extent that the
representations and warranties contained in the Loan Agreement and in that
certain amended and restated loan agreement dated as of April 29, 1994 among the
Company, certain related corporations and the Bank (as previously amended and as
may be amended from time to time, the "Restated Loan Agreement") differ, the
representations and warranties contained in the Restated Loan Agreement shall
control.
4. No modifications or waiver or any provisions of the Loan Agreement or
any other agreement or instrument made or issued pursuant thereto or
contemplated thereby, nor consent to any departure by the Company therefore
shall, in any event, be effective unless made in writing and signed by the Bank
and the Company, and then any such modification or waiver shall be effective
only in the specific instance and for the purpose for which given unless
otherwise specified therein. No notice to, or demand on, the Company in any
case shall, of itself, entitle it to any further notice or demand in similar or
other circumstances.
5. The Company agrees to pay on demand, and the Bank may charge any
deposit or loan account(s) of the Company, for all expenses incurred by the Bank
in connection with the negotiation, preparation and administration (including
any future waiver or modification and legal counsel as to the rights and duties
of the Bank) of this Thirteenth Amendment to Loan Agreement.
6. This amendment is limited precisely as written and shall not be deemed
to (a) be a consent or waiver of any other term or condition of the Loan
Agreement or of any of the documents referred to therein or (b) prejudice any
right or rights which the Bank may now have or may have in the future under or
in connection with the Loan Agreement or any of the documents referred to
therein.
-2-
<PAGE>
7. This Thirteenth Amendment to Loan Agreement is dated for convenience
of as June 10, 1996 and shall be effective on the delivery of an executed
counterpart to the Company. This Thirteenth Amendment to Loan Agreement may be
executed in counterparts, each of which shall constitute an original, and each
of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Loan
Agreement to be duly executed and delivered by their duly authorized officers,
all as of the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By: /s/ Paul Durando
______________________
Paul Durando
Vice President - Finance
FLEET BANK, N.A.,
formerly known as NatWest Bank N.A.,
formerly known as
National Westminster Bank USA
By: /s/ Jeffrey B. Carstens
________________________
Jeffrey B. Carstens
Vice President
-3-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU HORIZONS ELECTRONICS CORP., the corporation described in
and which executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On this 11th day of June, 1996, before me personally came JEFFREY B.
CARSTENS, to me known, who, being by me duly sworn, did depose and say that he
resides at c/o 100 Jericho Quadrangle, Jericho, New York; that he is a Vice
President of FLEET BANK, N.A., the banking institution described in and which
executed the foregoing instrument; that he signed his name thereto by authority
of such banking institution.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
-4-
<PAGE>
The undersigned Guarantors acknowledge that there are no defenses or
offsets to their respective Guaranties of the obligations under the Loan
Agreement as amended by this Thirteenth Amendment and hereby agree and consent
to the foregoing Thirteenth Amendment.
NIC COMPONENTS CORP.
Dated: June 11, 1996 By: /s/ Paul Durando
______________________
Paul Durando
Vice President-Finance
NU HORIZONS INTERNATIONAL CORP.
Dated: June 11, 1996 By: /s/ Paul Durando
______________________
Paul Durando
Vice President-Finance
NU VISIONS MANUFACTURING, INC.
Dated: June 11, 1996 By: /s/ Paul Durando
______________________
Paul Durando
Vice President-Finance
NU HORIZONS/MERIT
ELECTRONICS CORP.
Dated: June 11, 1996 By: /s/ Paul Durando
______________________
Paul Durando
Vice President-Finance
-5-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NIC COMPONENTS CORP., the corporation described in and
which executed the foregoing instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU HORIZONS INTERNATIONAL CORP., the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
-6-
<PAGE>
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU VISIONS MANUFACTURING, INC., the corporation described
in and which executed the foregoing instrument; and that he signed his name
thereto by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the 11th day of June, 1996, before me personally came PAUL DURANDO, to
me known, who, being by me duly sworn, did depose and say that he resides at c/o
6000 New Horizons Boulevard, North Amityville, New York; that he is the Vice
President-Finance of NU HORIZONS/MERIT ELECTRONICS CORP., the corporation
described in and which executed the foregoing instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
/s/ Theresa Mady-Grove
---------------------------
Notary Public
THERESA MADY-GROVE
NOTARY PUBLIC, State of New York
No. 24-4943584
Qualified in Nassau County
Commission Expires Oct. 31, 1996
-7-
<PAGE>
NU HORIZONS ELECTRONICS CORP.
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
----------------------------------------
(Unaudited)
FOR THE THREE MONTHS ENDED
--------------------------
MAY MAY
31, 1996 31, 1995
----------- -----------
PRIMARY EARNINGS:
- ----------------
NET INCOME $ 2,454,937 $ 1,631,097
=========== ===========
WEIGHTED AVERAGE SHARES:
Common shares outstanding 8,423,137 7,732,051
Common share equivalents 706,863 120,258
----------- -----------
Weighted average number of
common shares and common share
equivalents outstanding 9,130,000 7,852,309
=========== ===========
PRIMARY EARNINGS PER
COMMON SHARE:
Net Income $.27 $.21
===== ====
FULLY DILUTED EARNINGS:
- ----------------------
Net Income $ 2,454,937 $ 1,631,097
Net (after tax) interest expense
related to convertible debt 101,589 182,457
----------- -----------
NET INCOME AS ADJUSTED $ 2,556,526 $ 1,813,554
=========== ===========
SHARES:
Weighted average number of common
common shares and common share
equivalents outstanding 9,130,000 7,852,309
Additional options
not included above 494,776 790,634
Assuming conversion
of convertible debt 784,333 1,666,666
----------- -----------
Weighted average number of common
shares outstanding as adjusted 10,409,109 10,309,609
=========== ===========
FULLY DILUTED EARNINGS
PER COMMON SHARE $.25 $.18
==== ====
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MAY 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> MAY-31-1996
<CASH> 1,353,780
<SECURITIES> 0
<RECEIVABLES> 33,384,625
<ALLOWANCES> 1,583,429
<INVENTORY> 37,178,825
<CURRENT-ASSETS> 71,252,756
<PP&E> 7,345,293
<DEPRECIATION> 4,003,094
<TOTAL-ASSETS> 78,005,895
<CURRENT-LIABILITIES> 12,743,559
<BONDS> 0
0
0
<COMMON> 62,035
<OTHER-SE> 42,132,522
<TOTAL-LIABILITY-AND-EQUITY> 78,005,895
<SALES> 57,672,540
<TOTAL-REVENUES> 57,672,540
<CGS> 44,746,424
<TOTAL-COSTS> 8,373,949
<OTHER-EXPENSES> 433,128
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,119,039
<INCOME-TAX> 1,664,102
<INCOME-CONTINUING> 2,454,937
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,454,937
<EPS-PRIMARY> .27
<EPS-DILUTED> .25
</TABLE>
