<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, 1998 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.)
70 Maxess Road, Melville, New York 11747
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 396-5000
- -------------------------------------------------------------------------------
(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
_ ___
Indicated 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 8,753,076
- ----------------------------------------- ------------------------------------
Class Outstanding Shares
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
PART I. Financial Information Page(s)
<S> <C> <C>
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets -
May 31, 1998 (unaudited) and February 28, 1998 3.
Consolidated Condensed Statements of Income (unaudited) -
Three Months Ended May 31, 1998 and 1997 4.
Consolidated Condensed Statements of Cash Flows (unaudited) -
Three Months Ended May 31, 1998 and 1997 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 14.
Exhibit 10.20 - First Amendment to Revolving Credit Agreement Dated May 23, 1997, between the
Company and two Banks, Mellon Bank, N.A. and KeyBank National Association
Exhibit 10.21 - Second Ammendment to Revolving Credit Agreement Dated May 23, 1997, between the
Company and two Banks, Mellon Bank, N.A. and KeyBank National Association
Exhibit 11 - Computation of Earnings per Common Share
Exhibit 27 - Financial Data Schedule
</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
-ASSETS-
--------
<TABLE>
<CAPTION>
MAY FEBRUARY
31, 1998 28, 1998
----------------- ------------------
(unaudited)
CURRENT ASSETS:
Cash (including time deposits) $ 3,887,340 $ 4,333,669
Accounts receivable-net of allowance for doubtful
accounts of $2,324,823 and $2,362,722 for May 31,
1998 and February 28, 1998, respectively 34,852,527 37,351,029
Inventories 49,781,673 44,004,890
Prepaid expenses and other current assets 3,387,712 4,837,007
----------------- ------------------
TOTAL CURRENT ASSETS 91,909,252 90,526,595
PROPERTY, PLANT AND EQUIPMENT NET (Note 2) 6,763,773 6,359,775
OTHER ASSETS:
Cost in excess of net assets acquired-net 1,713,101 1,752,332
Other assets 1,055,423 1,002,726
----------------- ------------------
$101,441,549 $99,641,428
================= ==================
<CAPTION>
-LIABILITIES AND SHAREHOLDERS' EQUITY-
--------------------------------------
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable $ 8,714,839 $12,112,365
Accrued expenses 3,656,471 3,196,623
Income taxes payable 167,025 -
----------------- ------------------
TOTAL CURRENT LIABILITIES 12,538,335 15,308,988
----------------- ------------------
LONG TERM LIABILITIES:
Deferred income taxes 345,835 431,395
Revolving credit line (Note 3) 28,800,000 25,300,000
Subordinated convertible notes (Note 4) 7,059,000 7,059,000
----------------- ------------------
36,204,835 32,790,395
----------------- ------------------
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;
8,753,076 shares issued and outstanding for
May 31, 1998 and February 28, 1998 57,770 57,770
Additional paid-in capital 19,042,230 19,042,230
Retained earnings 34,653,360 33,532,009
----------------- ------------------
53,753,360 52,632,009
Less: loan to ESOP 1,054,981 1,089,964
----------------- ------------------
52,698,379 51,542,045
----------------- ------------------
$101,441,549 $99,641,428
================= ==================
</TABLE>
See notes to interim consolidated condensed financial statements
3
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
-------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------------------
MAY 31, 1998 MAY 31, 1997
-------------------- ---------------------
<S> <C> <C>
NET SALES $60,231,919 $54,165,706
-------------------- ---------------------
COSTS AND EXPENSES:
Cost of sales 46,593,041 42,223,252
Operating expenses 11,209,218 9,097,921
Interest expense 529,355 326,893
-------------------- ---------------------
58,331,614 51,648,066
-------------------- ---------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,900,305 2,517,640
Provision for income taxes 778,954 1,015,252
-------------------- ---------------------
NET INCOME $ 1,121,351 $ 1,502,388
==================== =====================
NET INCOME PER SHARE (Note 5):
Basic $ .13 $ .17
=========== ===========
Diluted $ .11 $ .15
=========== ===========
</TABLE>
See notes to interim consolidated condensed financial statements
4
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------------------
MAY 31, 1998 MAY 31, 1997
-------------------- ---------------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
Cash flows from operating activities:
<S> <C> <C>
Cash received from customers $ 62,730,421 $ 53,878,746
Cash paid to suppliers and employees (65,446,008) (55,162,917)
Interest paid (529,355) (326,893)
Income taxes paid (92,000) (104,000)
-------------------- ---------------------
Net cash (used in) operating activities (3,336,942) (1,715,064)
-------------------- ---------------------
Cash flows from investing activities:
Capital expenditures (609,387) (261,205)
-------------------- ---------------------
Net cash (used in) investing activities (609,387) (261,205)
-------------------- ---------------------
Cash flows from financing activities:
Borrowings under revolving credit line 13,600,000 5,621,599
Repayments under revolving credit line (10,100,000) (2,500,000)
Principal payments of long-term debt - (55,399)
Proceeds from stock options - 14,832
-------------------- ---------------------
Net cash provided by financing activities 3,500,000 3,081,032
-------------------- ---------------------
Net (decrease) increase in cash and cash equivalents (446,329) 1,104,763
Cash and cash equivalents, beginning of year 4,333,669 946,084
-------------------- ---------------------
Cash and cash equivalents, end of period $ 3,887,340 $ 2,050,847
==================== =====================
</TABLE>
See notes to interim consolidated condensed financial statements
5
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
-----------------------------------------------------------
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
-----------------------------------------------
MAY 31, 1998 MAY 31, 1997
------------------ ------------------
RECONCILIATION OF NET INCOME TO NET
CASH (USED IN) OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 1,121,351 $ 1,502,388
------------------ ------------------
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 244,620 305,828
Contribution to ESOP 34,983 34,988
Bad debt provision - 105,000
Changes in assets and liabilities
Decrease (increase) in accounts receivable 2,498,502 (286,960)
(Increase) in inventories (5,776,783) (3,690,933)
Decrease in prepaid expenses and other current assets 1,449,295 597,870
(Increase) in other assets (52,697) (24,653)
(Increase) in accounts payable and accrued expenses (2,937,678) (318,286)
Increase in income taxes 167,025 21,668
(Decrease) increase in deferred taxes (85,560) 38,026
------------------ ------------------
Total Adjustments (4,458,293) (3,217,452)
------------------ ------------------
Net cash (used in) operating activities $(3,336,942) $(1,715,064)
================== ==================
</TABLE>
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, Nu Horizons Eurotech
Limited, NIC Eurotech Limited and Nu Visions Manufacturing, Inc.) contain
all adjustments necessary to present fairly the Company's financial position
as of May 31, 1998 and February 28, 1998 and the results of its operations
and cash flows for the three month periods ended May 31, 1998 and 1997.
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 28, 1998, 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, 1998 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:
<TABLE>
<CAPTION>
May February
31, 1998 28, 1998
------------------ ------------------
<S> <C> <C>
Furniture, fixtures and office equipment $ 6,445,657 $ 6,290,449
Computer equipment 3,152,484 3,016,739
Assets held under capitalized leases 919,833 919,834
Leasehold improvements 1,639,109 1,254,364
------------------ ------------------
12,157,083 11,481,386
Less: accumulated depreciation and amortization 5,393,310 5,121,611
------------------ ------------------
$ 6,763,773 $ 6,359,775
================== ==================
</TABLE>
3. BANK LINE OF CREDIT:
On May 23, 1997, the Company entered into an unsecured revolving line of
credit with two banks, which as amended, provides for maximum borrowings of
$35,000,000 at either (i) the lead bank's prime rate or (ii) LIBOR plus 57.5
to 112.5 basis points depending on the ratio of the Company's debt to its
earnings before interest, taxes, depreciation and amortization, at the
option of the Company through May 23, 2001.
7
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Continued)
------------------------------------------------------------------------
(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, 1998, $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 and are due in
increments of $2,353,000 on August 31, 2000, 2001 and 2002.
5. NET INCOME PER SHARE:
Basic and diluted earnings per share have been computed in accordance with
the adoption of SFAS No. 128. In addition, prior period per share data has
been restated in accordance with SFAS No. 128.
The following average shares were used in the computation of basic and
diluted earnings per share:
May May
31, 1998 31, 1997
--------------- ---------------
Basic 8,753,076 8,739,326
Diluted 10,898,859 10,818,859
A detailed computation of earnings per common share appears in Exhibit 11 to
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"), Nu Horizons International Corp.
("International"), Nu Horizons Eurotech Limited and NIC Eurotech
Limited , 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, consists 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, 1998 and February 28, 1998; (ii)
Consolidated Condensed Statements of Income for the three month periods
ended May 31, 1998 and 1997 and (iii) Consolidated Condensed Statements
of Cash Flows for the three month periods ended May 31, 1998 and 1997.
Results of Operations:
----------------------
Sales for the three-month period ended May 31, 1998 were $60,231,919 as
compared to $54,165,706 for the comparable period of the prior year,
for what management considers to be a moderate increase of
approximately 11%. Sales for the current quarter compared to the
immediately preceding quarter, however, reflected no significant
increase. Management attributes this moderate increase to the core
semiconductor distribution business. This portion of the business
experienced increased unit sales but at reduced unit pricing which was
caused by excess inventory levels at the semiconductor manufacturer
(supplier) level. Management believes that this situation is temporary
and is in the process of correction; however, no assurance can be given
in this regard.
The gross profit margin for the quarter ended May 31, 1998 was 22.6% as
compared to 22.0% for the quarter ended May 31, 1997. Gross profit
percentages for the past several quarters have remained relatively
stable due to substantial inventory oversupplies at the supplier level
as mentioned above. No assurance can be given that either the .6%
increase experienced in the current quarter or gross profit
stabilization will continue into future periods.
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 $11,209,000 for the three months
ended May 31, 1998 as compared to $9,098,000 for the three months ended
May 31, 1997, an increase of approximately $2,111,000 or 23%. The
dollar increase in operating expenses was due to increases in the
following expense categories: Approximately $1,450,000 or 69% of the
increase was for personnel related costs new sales people, commissions,
salaries, travel and fringe benefits. The Company has decided to pursue
a policy of upgrading and enlarging its sales and sales support staff
to support anticipated growth in the near as well as more distant
future. Increased sales levels in fiscal 1998 and first quarter fiscal
1999 have not met expectations. The Company continues to believe in
this strategy for long-term growth and expects market conditions to
undergo a correction in the near future although no assurances can be
given in this regard. The remaining increase of approximately $661,000
or approximately 31% of the total increment is a result of increases in
various other operating expenses, the bulk of which are related to
incremental occupancy costs for the new corporate headquarters
facility. The Company relocated to this facility in June 1997.
Interest expense increased from $326,893 for the three months ended May
31, 1997 to $529,355 for the three months ended May 31, 1998 as a
result of higher levels of bank debt as compared to the prior
comparable period. The increase in bank debt was primarily due to an
increase in borrowings to increase the Company's inventory levels,
commensurate with increasing sales volume and management's opinion that
increased inventory levels are required to support anticipated sales
growth.
INTEREST EXPENSE
FOR THE THREE MONTHS ENDED
----------------------------------------------
May May
31, 1998 31, 1997
------------------- -------------------
Revolving Bank Credit $ 383,763 $ 181,301
Sub. Convert. Notes 145,592 145,592
------------------- -------------------
Total Interest Expense $ 529,355 $ 326,893
=================== ===================
Net income for the three month period ended May 31, 1998 was $1,121,351
or $ .13 per share as compared to $1,502,388 or $ .17 per share for the
three month period ended May 31, 1997. Management attributes the
decrease in earnings to higher operating expense net of increased sales
volume for the May 1998 period as compared to the May 1997 period.
Liquidity and Capital Resources:
--------------------------------
At May 31, 1998, the Company's current ratio was 7.3:1 as compared to
5.9:1 at February 28, 1998. Working capital increased from
approximately $75,218,000 at February 28, 1998 to approximately
$79,371,000 at May 31, 1998, while cash decreased from February 28,
1998 to May 31, 1998 by approximately $446,000. The primary reasons for
the increase in working capital was an increase in inventories financed
primarily through long term debt during the current period.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS (Continued):
---------------------------------
Liquidity and Capital Resources (Continued):
--------------------------------------------
On May 23, 1997, the Company entered into an unsecured revolving line
of credit with two banks, which as amended, currently provides for
maximum borrowings of $35,000,000 at either (i) the lead bank's prime
rate or (ii) LIBOR plus 57.5 to 112.5 basis points depending on the
ratio of the Company's debt to its earnings before interest, taxes,
depreciation and amortization, at the option of the Company through May
23, 2001.
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 bear interest at 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, 1998, $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
and are due in increments of $2,353,000 on August 31, 2000, 2001 and
2002. No assurance can be given that the notes will be converted or
that the shares of common stock underlying the notes will be sold by
the holders thereof.
The Company anticipates that its resources provided by its cash flow
from operations and its bank lines of credit will be sufficient to meet
its financing requirements for at least the next twelve-month 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.
Other:
------
Except for historical information contained herein, the matters set
forth above may be forward-looking statements that involve certain
risks and uncertainties that could cause actual results to differ from
those in the forward-looking statements. Potential risks and
uncertainties include such factors as the level of business and
consumer spending for electronic products, the amount of sales of the
Company's products, the competitive environment within the electronics
industry, the ability of the Company to continue to expand its
operations, the level of costs incurred in connection with the
Company's expansion efforts, economic conditions in the semiconductor
industry, the ability of the Company to continue to expand its
operations, the level of costs incurred in connection with the
Company's expansion efforts, economic conditions in the semiconductor
industry and the financial strength of the Company's customers and
suppliers. Investors are also directed to consider other risks and
uncertainties discussed in documents filed by the Company with the
Securities and Exchange Commission.
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:
10.20 First Amendment to Revolving Credit Agreement dated May
23, 1997, between the Company and two Banks, Mellon Bank,
N.A. and KeyBank National Association
10.21 Second Amendment to Revolving Credit Agreement dated May
23, 1997, between the Company and two Banks, Mellon Bank,
N.A. and KeyBank National Association
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 10, 1998 Arthur Nadata, President and
Chief Executive Officer
/s/ Paul Durando
-------------------------------------------------
Date: July 10, 1998 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, 1998
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT 1934
-------------------------------
NU HORIZONS ELECTRONICS CORP.
(Exact Name of Registrant as Specified in Its Charter)
EXHIBIT
NUMBER DESCRIPTION
- --------------------------------------------------------------------------------
10.20 First Amendment to Revolving Credit Agreement dated
May 23, 1997, between the Company and two Banks,
Mellon Bank, N.A. and KeyBank National Association
10.21 Second Amendment to Revolving Credit Agreement dated
May 23, 1997, between the Company and two Banks,
Mellon Bank, N.A. and KeyBank National Association
11 Computation of Per Share Earnings
27 Financial Data Schedule
14
<PAGE>
EXHIBIT 10.20
FIRST AMENDMENT TO LOAN AGREEMENT
---------------------------------
FIRST AMENDMENT TO LOAN AGREEMENT dated as of May 23, 1997, by and between
NU HORIZONS ELECTRONICS CORP., a Delaware corporation having its executive
offices at 70 Maxess Road, Melville, New York (the "Company") and MELLON BANK,
N.A., a national banking association, having offices at 701 Market Street,
Philadelphia, Pennsylvania 19103 ("Mellon") and KEYBANK NATIONAL ASSOCIATION, a
national banking association, having offices at 127 Public Square, Cleveland,
Ohio 44114 ("Key"; Mellon and Key, collectively, the "Banks")).
RECITALS
--------
The Company and the Banks entered into a Loan Agreement dated as of May 23,
1997 (the "Loan Agreement"), pursuant to which certain financial accommodations
were made available by the Banks to the Company. Unless otherwise expressly
provided herein, all capitalized terms used in this First Amendment shall have
the respective meanings ascribed to such terms in the Loan Agreement.
The Company has requested that the Banks modify certain of the terms set
forth in the Loan Agreement and the Banks are 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 7.1 of the Agreement is hereby deleted and the following is
substituted therefor:
"7.1 Indebtedness for Borrowed Money. Incur, or permit to
-------------------------------
exist, any indebtedness for borrowed money except (i) indebtedness incurred
pursuant to borrowings hereunder, (ii) purchase money indebtedness secured
by Liens described in Section 7.2(iv) hereof, (iii) indebtedness existing
on the date hereof and reflected in the financial statements referred to in
Section 3.1 hereof and extensions, renewals and refinancings thereof
(without increase in principal amount) other than amounts owing to Fleet
Bank, N.A. under a revolving credit facility which shall be repaid in full
and terminated prior to or on the date hereof, (iv) indebtedness incurred
in the ordinary course of business exclusive of that incurred in the
borrowing of money, (v) the Subordinated Indebtedness, (vi) indebtedness
owing to Mellon in a principal amount not to exceed $3,000,000 pursuant to
that certain loan agreement dated October 10, 1997 between Mellon and the
Company (the
<PAGE>
"ESOP Loan Agreement") and (vii) other indebtedness which shall not exceed
in the aggregate, for the Borrower and all Subsidiaries, at any time
outstanding, the sum of $500,000."
2. Section 7.3 of the Agreement is hereby deleted and the following is
substituted therefor:
"7.3 Loans and Investments. Lend or advance money, credit or
---------------------
property to or invest in (by capital contribution, loan, purchase or
otherwise) any firm, corporation, or other Person except (i) investments in
United States Government obligations, certificates of deposit of any
banking institution with combined capital and surplus of at least
$200,000,000 and commercial paper of the highest credit rating given by
Moody's Investors Service, Inc. or Standard and Poors Corporation, (ii)
each Borrower may make loans provided that the aggregate thereof at any
time outstanding and owing by any one Person shall not exceed $100,000,
(iii) investments in stocks, securities and assets of other corporations in
connection with any transaction not otherwise qualifying as a Permitted
Acquisition, the result of which will constitute an investment by the
Borrower in a new Subsidiary or a merger in which the Borrower is the
surviving corporation; provided, however, that the aggregate of such
investments shall not exceed $1,000,000, and provided, further, that the
Borrower shall cause any new Subsidiary which is so acquired to guarantee
payment to the Banks of all of the Borrower's obligations arising
hereunder, (iv) Permitted Acquisitions and (v) the ESOP Loans as defined in
and in accordance with the ESOP Loan Agreement."
3. 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
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.
4. In order to induce the Banks to enter into this First Amendment to Loan
Agreement, the Company represents and warrants to the Banks that each of its
representations and warranties made in the Loan Agreement is true and correct as
of the date hereof except
-2-
<PAGE>
as otherwise set forth in writing(s) to which the
Banks are parties.
5. 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 Banks
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.
6. The Company agrees to pay on demand, and the Banks may charge any
deposit or loan account(s) of the Company, for all expenses incurred by the
Banks 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 Banks) of this First Amendment to Loan Agreement.
7. 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 Banks 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.
8. This First Amendment to Loan Agreement is dated for convenience of as
October 1, 1997 and shall be effective on the delivery of an executed
counterpart to the Company. This First 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.
-3-
<PAGE>
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.
Borrower:
---------
NU HORIZONS ELECTRONICS CORP.
By:__________________________
Paul Durando
Vice President/Finance
Agent:
------
MELLON BANK, N.A., as Agent
By:___________________________
Morris Danon
Senior Vice President
Banks:
------
MELLON BANK, N.A.
By:___________________________
Morris Danon
Senior Vice President
KEYBANK NATIONAL ASSOCIATION
By:___________________________
Marianne Meil
Vice President
-4-
<PAGE>
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the ____ day of October, 1997, 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 70 Maxess Road, Melville, 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.
---------------------------
Notary Public
-5-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the ____ day of October, 1997, before me personally came Morris
Danon, to me known, who, being by me duly sworn, did depose and say that he
resides at c/o 176 EAB Plaza, West Tower, 11th Floor, Uniondale, NY 11556-0176;
that he is a Senior Vice President of MELLON BANK, N.A., the banking institution
described in and which executed the foregoing document and that he signed his
name thereto by authority of such banking institution.
____________________________
Notary Public
-6-
<PAGE>
STATE OF OHIO )
:ss.:
COUNTY OF )
On the ____ day of October, 1997, before me personally came Marianne
Meil, to me known, who, being by me duly sworn, did depose and say that she
resides at c/o 127 Public Square, Cleveland, Ohio; that she is a Vice President
of KEYBANK NATIONAL ASSOCIATION , the banking institution described in and which
executed the foregoing document and that she signed her name thereto by
authority of such banking institution.
____________________________
Notary Public
-7-
<PAGE>
EXHIBIT 10.21
SECOND AMENDMENT TO LOAN AGREEMENT
----------------------------------
SECOND AMENDMENT TO LOAN AGREEMENT dated as of July 1, 1998, by and between
NU HORIZONS ELECTRONICS CORP., a Delaware corporation having its executive
offices at 70 Maxess Road, Melville, New York (the "Company") and MELLON BANK,
N.A., a national banking association, having offices at 701 Market Street,
Philadelphia, Pennsylvania 19103 ("Mellon") and KEYBANK NATIONAL ASSOCIATION, a
national banking association, having offices at 127 Public Square, Cleveland,
Ohio 44114 ("Key"; Mellon and Key, collectively, the "Banks").
RECITALS
--------
The Company and the Banks entered into a Loan Agreement dated as of May 23,
1997, as amended by a First Amendment dated as of May 23, 1997 (the "Loan
Agreement"), pursuant to which certain financial accommodations were made
available by the Banks to the Company. Unless otherwise expressly provided
herein, all capitalized terms used in this Second Amendment shall have the
respective meanings ascribed to such terms in the Loan Agreement.
The Company has requested that the Banks modify certain of the terms set
forth in the Loan Agreement and the Banks are 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 1.1 of the Agreement is hereby amended to (a) add a new
definition to be called "Liabilities to Tangible Net Worth Ratio" to read as
follows, (b) delete the definition of "Margin" and to substitute the following
therefor and (c) add a definition of "Tangible Net Worth" to read as follows:
"'Liabilities to Tangible Net Worth Ratio' shall mean with
---------------------------------------
respect to the Borrower and its Subsidiaries on a consolidated basis the
ratio of total senior liabilities to the sum of Tangible Net Worth plus
long term portion of Subordinated Indebtedness."
"'Margin' means the number of basis points per annum as
------
determined by reference to the grid set forth below. For purposes of such
calculation the Leverage Ratio and Liabilities to Tangible Net Worth Ratio
shall be as reflected in the financial statements delivered pursuant to
Section 5.1 hereof, provided, however, if the Borrower fails to provide the
relevant financial statements by the beginning of the
<PAGE>
corresponding Margin periods set forth in Section 2.8 hereof, the Margin
shall be deemed to be 112.5 basis points per annum until the delivery of
the relevant financial statements:
<TABLE>
<CAPTION>
Liabilities to Tangible Net Worth Ratio
Equal to or greater than Equal to or greater
Leverage Ratio Less than .55 .55 but less than .90 than .90
================================================================================================
<S> <C> <C> <C>
equal to or greater
than 2.50 75.0 87.5 112.5
- ------------------------------------------------------------------------------------------------
equal to or greater
than 1.85 but less 57.5 75.0 100.0
than 2.50
- ------------------------------------------------------------------------------------------------
less than 1.85 57.5 62.5 75.0
================================================================================================
</TABLE>
"
"'Tangible Net Worth' shall mean, at any date, the excess of
------------------
total assets over total liabilities, total assets and total liabilities
each to be determined in accordance with generally accepted accounting
principles consistently applied, excluding, however, from the determination
of total assets all assets which would be classified as intangible assets
under generally accepted accounting principles, including, without
limitation, goodwill, patents, trademarks, trade names, copyrights and
franchises."
2. Section 2.9 of the Agreement is hereby deleted and the following is
substituted therefor:
"2.9 Commitment Fee. As additional compensation for the
--------------
Revolving Credit Commitment, the Borrower agrees to pay the Agent for the
pro rata benefit of the Banks a commitment fee for the Commitment Period
based on the average daily unused portion of the Total Revolving Credit
Commitments and the applicable Leverage Ratio and Liabilities to Tangible
Net Worth Ratio as reflected in the financial statements delivered pursuant
to Section 5.1 hereof in the percentage per annum as determined by
reference to the grid set forth below:
<TABLE>
<CAPTION>
Liabilities to Tangible Net Worth Ratio
Equal to or greater than Equal to or greater
Leverage Ratio Less than .55 .55 but less than .90 than .90
======================================================================================
<S> <C> <C> <C>
equal to or greater
than 2.50 .10 .125 .15
- --------------------------------------------------------------------------------------
equal to or greater .075 .075 .125
than 1.85 but less
than 2.50
======================================================================================
</TABLE>
<PAGE>
<TABLE>
========================================================================================
<S> <C> <C> <C>
less than 1.85 .075 .075 .10
========================================================================================
</TABLE>
Any fee payable under this Section 2.9 which is not paid when due shall
bear interest at a rate per annum equal to 2% above the Prime Rate until
paid, payable on demand. Such fee shall be computed on the basis of a 360
day year for the actual days elapsed and shall be payable monthly on the
first day of each month during the Commitment Period and on the Termination
Date. The "unused portion of the Total Revolving Credit Commitments"
means, at any time, the Total Revolving Credit Commitments less the sum of
(a) the unpaid principal balance of all Revolving Credit Loans, (b) Letter
of Credit Exposure and (c) Acceptance Draft Exposure. Upon termination or
reduction of the Revolving Credit Commitments, the Borrower will pay to the
Agent, for the pro rata account of the Banks, accrued unused fees on the
portion of the Revolving Credit Commitment terminated or reduced to the
date of termination or reduction."
3. Effective as of May 31, 1998, Section 6.2 of the Agreement is hereby
deleted and the following is substituted therefor:
"6.2 Leverage Ratio. Maintain at all times through 2/28/99 a
--------------
Leverage Ratio not to exceed 3.50:1 and 3.00:1 at all times thereafter."
4. Section 6.4 of the Agreement is hereby deleted and the following is
substituted therefor:
"6.4 Liabilities to Tangible Net Worth. Maintain at all times
---------------------------------
a Liabilities to Tangible Net Worth Ratio not to exceed 1.25:1."
5. 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
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.
-3-
<PAGE>
6. In order to induce the Banks to enter into this Second Amendment to
Loan Agreement, the Company represents and warrants to the Banks 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 Banks are parties.
7. 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 Banks
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.
8. The Company agrees to pay on demand, and the Banks may charge any
deposit or loan account(s) of the Company, for all reasonable expenses incurred
by the Banks 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 Banks) of this Second Amendment to Loan Agreement.
9. 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 Banks 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.
10. This Second Amendment to Loan Agreement is dated for convenience of as
July 1, 1998 and shall be retroactively effective as of such date, with the
exception of paragraph 3 hereof which shall be retroactively effective as of May
31, 1998, on the delivery of an executed counterpart to the Company. This Second
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.
-4-
<PAGE>
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.
Borrower:
---------
NU HORIZONS ELECTRONICS CORP.
By:__________________________
Paul Durando
Vice President/Finance
Agent:
------
MELLON BANK, N.A., as Agent
By:___________________________
Jeffrey B. Carstens
Vice President
Mellon Financial Services Corporation,
Attorney-in-fact for Mellon Bank, N.A.
Banks:
------
MELLON BANK, N.A.
By:___________________________
Jeffrey B. Carstens
Vice President
Mellon Financial Services Corporation,
Attorney-in-fact for Mellon Bank, N.A.
KEYBANK NATIONAL ASSOCIATION
By:___________________________
Marianne Meil
Vice President
-5-
<PAGE>
STATE OF NEW YORK)
:ss.:
COUNTY OF NASSAU )
On the ____ day of ________________, 1998, 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 70 Maxess Road, Melville, 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.
---------------------------
Notary Public
-6-
<PAGE>
STATE OF NEW YORK )
:ss.:
COUNTY OF NASSAU )
On the ____ day of ______________, 1998, 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 176 EAB Plaza, West Tower, 11th Floor, Uniondale, NY
11556-0176; that he is a Vice President of MELLON BANK, N.A., the banking
institution described in and which executed the foregoing document and that he
signed his name thereto by authority of such banking institution.
____________________________
Notary Public
-7-
<PAGE>
STATE OF OHIO )
:ss.:
COUNTY OF )
On the ____ day of _____________, 1998, before me personally came
Marianne Meil, to me known, who, being by me duly sworn, did depose and say that
she resides at c/o 127 Public Square, Cleveland, Ohio; that she is a Vice
President of KEYBANK NATIONAL ASSOCIATION, the banking institution described in
and which executed the foregoing document and that she signed her name thereto
by authority of such banking institution.
____________________________
Notary Public
-8-
<PAGE>
NIC EUROTECH LIMITED
Joint Written Consent in Lieu
of Meeting of the Directors and Sole Shareholder
------------------------------------------------
THE UNDERSIGNED, being all the directors and the sole shareholder of
NIC EUROTECH LIMITED (the "Corporation"), a corporation organized under the laws
of the Commonwealth of the United Kingdom, do hereby consent to the adoption of
the following resolutions without a meeting and to the taking of the actions
authorized thereby, said resolutions to be and read as follows:
RESOLVED, that the form, terms and conditions of a Guaranty pursuant
to which this Corporation is guaranteeing the obligations of Nu
Horizons Electronics Corp. under a Loan Agreement by and among Nu
Horizons Electronics Corp. and Mellon Bank, N.A. (as "Agent" and as a
"Bank") and KeyBank National Association (a "Bank"), dated as of May
23, 1997, as proposed to be amended by a Second Amendment thereto,
which provides for the borrowing by Nu Horizons Electronics Corp. of
up to $35,000,000 from the Banks, is hereby authorized and approved;
and the President, any Vice President, the Secretary or the Chief
Financial Officer of this Corporation, and each of them acting alone,
is hereby authorized and directed to deliver to the Banks the Guaranty
in such form and with such terms, conditions and covenants as the
officer executing the same in behalf of this Corporation may approve,
with such changes, modifications and amendments in the Guarantee as
the officer executing the same in behalf of this Corporation may
approve, such approval to be conclusively evidenced by his or her
execution and delivery thereof; and further
RESOLVED, that the President, any Vice President, the Secretary or the
Chief Financial Officer of this Corporation is hereby authorized to
pay any and all fees and take any and all further action which such
officer deems necessary or advisable in order to consummate the
matters authorized in this and the preceding resolutions, or in order
for this Corporation to comply with and carry out the terms and
provisions of the Guaranty to be executed and delivered by this
Corporation pursuant thereto, the taking of any action by any such
officer in any such regard to be conclusive evidence that he or she
deemed such action necessary or advisable as aforesaid.
-9-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Consent this
_____ day of July 1998.
The Directors:
------------------------------------------------
Arthur Nadata
------------------------------------------------
Richard Schuster
------------------------------------------------
Paul Durando
The Sole Shareholder
NU HORIZONS ELECTRONICS CORP.
By: _____________________________
Name:
Title:
-10-
<PAGE>
NIC EUROTECH LIMITED
OFFICERS' CERTIFICATE
---------------------
I, the undersigned, Richard Schuster, Secretary of NIC Eurotech
Limited, a corporation incorporated under the laws of the United Kingdom (the
"Guarantor"), does hereby certify, on behalf of the Guarantor and not
individually, that:
1. This Certificate is furnished pursuant to that a Second Amendment dated
as of July 1, 1998 to a certain Loan Agreement (the "Agreement") dated as of May
23, 1997 by and among Nu Horizons Electronics Corp. (the "Company"), Mellon
Bank, N.A. and KeyBank National Association (collectively, the "Banks") and the
guaranty of the Guarantor of even date herewith (the "Guaranty"). Unless
otherwise defined herein, defined terms used in this Certificate have the
meanings assigned to such terms in the Agreement.
2. Attached hereto as Exhibit "A" is a true and complete copy of the
Memorandum and Articles of Association of the Guarantor and all amendments
thereto in effect as of the date hereof.
3. Attached hereto as Exhibit "B" is a true and complete copy of the joint
resolutions duly adopted by the Board of Directors and the sole stockholder of
the Guarantor on July ____, 1998, which resolutions have not been revoked,
modified, amended or rescinded, are still in full force and effect, and
authorize the execution, delivery and performance of the Guaranty of the
Guarantor of the obligations of the Company, to be delivered in connection with
the Agreement and authorize certain officers of the Guarantor to execute and
deliver such Guaranty and related documents.
4. The below named persons are the duly elected and qualified officers of
the Guarantor holding the respective offices set opposite their names, and the
signatures below set opposite their names are their genuine signatures:
-11-
<PAGE>
Name Office Signature
- ---- ------ ---------
Richard Schuster President ______________
Arthur Nadata Vice President ______________
Paul Durando Vice President-
Finance, Treasurer,
Secretary ______________
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this day of July, 1998.
-----------------------
Paul Durando
Secretary
The undersigned, Richard Schuster, President of the Guarantor, does
hereby certify that Paul Durando is duly elected and qualified and serving as
Secretary of the Guarantor, and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
day of July, 1998.
-----------------------
Richard Schuster
President
-12-
<PAGE>
NU HORIZONS EUROTECH LIMITED
Joint Written Consent in Lieu
of Meeting of the Directors and Sole Shareholder
------------------------------------------------
THE UNDERSIGNED, being all the directors and the sole shareholder of
NU HORIZONS EUROTECH LIMITED (the "Corporation"), a corporation organized under
the laws of the Commonwealth of the United Kingdom, do hereby consent to the
adoption of the following resolutions without a meeting and to the taking of the
actions authorized thereby, said resolutions to be and read as follows:
RESOLVED, that the form, terms and conditions of a Guaranty pursuant
to which this Corporation is guaranteeing the obligations of Nu
Horizons Electronics Corp. under a Loan Agreement by and among Nu
Horizons Electronics Corp. and Mellon Bank, N.A. (as "Agent" and as a
"Bank") and KeyBank National Association (a "Bank"), dated as of May
23, 1997, as proposed to be amended by a Second Amendment thereto,
which provides for the borrowing by Nu Horizons Electronics Corp. of
up to $35,000,000 from the Banks, is hereby authorized and approved;
and the President, any Vice President, the Secretary or the Chief
Financial Officer of this Corporation, and each of them acting alone,
is hereby authorized and directed to deliver to the Banks the Guaranty
in such form and with such terms, conditions and covenants as the
officer executing the same in behalf of this Corporation may approve,
with such changes, modifications and amendments in the Guarantee as
the officer executing the same in behalf of this Corporation may
approve, such approval to be conclusively evidenced by his or her
execution and delivery thereof; and further
RESOLVED, that the President, any Vice President, the Secretary or the
Chief Financial Officer of this Corporation is hereby authorized to
pay any and all fees and take any and all further action which such
officer deems necessary or advisable in order to consummate the
matters authorized in this and the preceding resolutions, or in order
for this Corporation to comply with and carry out the terms and
provisions of the Guaranty to be executed and delivered by this
Corporation pursuant thereto, the taking of any action by any such
officer in any such regard to be conclusive evidence that he or she
deemed such action necessary or advisable as aforesaid.
-13-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Consent this
_____ day of July 1998.
The Directors:
------------------------------------
Arthur Nadata
------------------------------------
Richard Schuster
------------------------------------
Paul Durando
The Sole Shareholder
NU HORIZONS ELECTRONICS CORP.
By: _____________________________
Name:
Title:
-14-
<PAGE>
NU HORIZONS EUROTECH LIMITED
OFFICERS' CERTIFICATE
---------------------
I, the undersigned, Richard Schuster, Secretary of Nu Horizons
Eurotech Limited, a corporation incorporated under the laws of the United
Kingdom (the "Guarantor"), does hereby certify, on behalf of the Guarantor and
not individually, that:
1. This Certificate is furnished pursuant to that a Second Amendment dated
as of July 1, 1998 to a certain Loan Agreement (the "Agreement") dated as of May
23, 1997 by and among Nu Horizons Electronics Corp. (the "Company"), Mellon
Bank, N.A. and KeyBank National Association (collectively, the "Banks") and the
guaranty of the Guarantor of even date herewith (the "Guaranty"). Unless
otherwise defined herein, defined terms used in this Certificate have the
meanings assigned to such terms in the Agreement.
2. Attached hereto as Exhibit "A" is a true and complete copy of the
Memorandum and Articles of Association of the Guarantor and all amendments
thereto in effect as of the date hereof.
3. Attached hereto as Exhibit "B" is a true and complete copy of the joint
resolutions duly adopted by the Board of Directors and the sole stockholder of
the Guarantor on July ____, 1998, which resolutions have not been revoked,
modified, amended or rescinded, are still in full force and effect, and
authorize the execution, delivery and performance of the Guaranty of the
Guarantor of the obligations of the Company, to be delivered in connection with
the Agreement and authorize certain officers of the Guarantor to execute and
deliver such Guaranty and related documents.
4. The below named persons are the duly elected and qualified officers of
the Guarantor holding the respective offices set opposite their names, and the
signatures below set opposite their names are their genuine signatures:
-15-
<PAGE>
Name Office Signature
- ---- ------ ---------
Arthur Nadata President ________________
Richard Schuster Vice President ________________
Paul Durando Vice President-
Finance, Treasurer,
Secretary ________________
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this day of July, 1998.
---------------------------------------
Paul Durando
Secretary
The undersigned, Arthur Nadata, President of the Guarantor, does
hereby certify that Paul Durando is duly elected and qualified and serving as
Secretary of the Guarantor, and that the signature appearing above is his
genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this day of July, 1998.
---------------------------------------
Arthur Nadata
President
-16-
<PAGE>
NU HORIZONS ELECTRONICS CORP.
EXHIBIT 11
COMPUTATION OF EARNINGS PER COMMON SHARE
----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
----------------------------------------------
<S> <C> <C>
May May
31, 1998 31, 1997
--------------- ----------------
BASIC EARNINGS:
- ---------------
NET INCOME $ 1,121,351 $ 1,502,388
=============== ================
Weighted average number of common shares outstanding 8,753,076 8,739,326
--------------- ----------------
BASIC EARNINGS PER COMMON SHARE $ .13 $ .17
=========== ===========
DILUTED EARNINGS:
- -----------------
Net income $ 1,121,351 $ 1,502,388
Net (after tax) interest expense related to convertible
debt 85,000 85,000
--------------- ----------------
NET INCOME AS ADJUSTED $ 1,206,351 $ 1,587,388
=============== ================
SHARES:
Weighted average number of common shares outstanding 8,753,076 8,739,326
Stock options 1,361,450 1,295,200
Assuming conversion of convertible debt 784,333 784,333
--------------- ----------------
Weighted average number of common shares outstanding
as adjusted 10,898,859 10,818,859
=============== ================
DILUTED EARNINGS PER COMMON SHARE $ .11 $ .15
=========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MAY 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<CASH> 3,887,340
<SECURITIES> 0
<RECEIVABLES> 37,177,350
<ALLOWANCES> 2,324,823
<INVENTORY> 49,781,673
<CURRENT-ASSETS> 91,909,252
<PP&E> 12,157,083
<DEPRECIATION> 5,393,310
<TOTAL-ASSETS> 101,441,549
<CURRENT-LIABILITIES> 12,538,335
<BONDS> 36,204,835
0
0
<COMMON> 57,770
<OTHER-SE> 52,640,609
<TOTAL-LIABILITY-AND-EQUITY> 101,441,549
<SALES> 60,231,919
<TOTAL-REVENUES> 60,231,919
<CGS> 46,593,041
<TOTAL-COSTS> 46,593,041
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 529,355
<INCOME-PRETAX> 1,900,305
<INCOME-TAX> 778,954
<INCOME-CONTINUING> 1,121,351
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,121,351
<EPS-PRIMARY> .13
<EPS-DILUTED> .11
</TABLE>
