<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
August 31, 1999 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>
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets August 31, 1999
(unaudited) and February 28, 1999 3.
Consolidated Condensed Statements of Income (unaudited) -
Six Months and Three Months Ended August 31, 1999 and 1998 4.
Consolidated Condensed Statements of Cash Flows (unaudited) -
Six Months Ended August 31, 1999 and 1998 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.-12.
PART II. Other Information
ITEM 4. Submission of Matters to a Vote of Security Holders 13.
ITEM 6. Exhibits and Reports on Form 8-K 13.
SIGNATURES 14.
INDEX TO EXHIBITS 15.
Exhibit 11 - Schedule re: Computation of Per Share Earnings
(See Notes to Consolidated Financial Statements Note 5)
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>
AUGUST FEBRUARY
31, 1999 28, 1999
------------ -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 1,006,417 $ 504,320
Accounts receivable-net of allowance for doubtful
accounts of $3,020,030 and $2,630,984 for August 31, 1999
and February 28, 1999, respectively 46,996,541 41,920,403
Inventories 65,040,166 45,113,894
Prepaid expenses and other current assets 840,286 2,355,255
------------ ------------
TOTAL CURRENT ASSETS 113,883,410 89,893,872
PROPERTY, PLANT AND EQUIPMENT NET (Note 2) 6,953,881 7,130,794
OTHER ASSETS
Cost in excess of net assets acquired-net 1,516,946 1,595,408
Other assets 1,180,133 1,138,821
------------ -----------
$123,534,370 $ 99,758,895
============ ============
-LIABILITIES AND SHAREHOLDERS' EQUITY-
--------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 22,607,508 $14,369,712
Accrued expenses 2,751,776 6,674,263
Income taxes payable 333,217 -
------------ -----------
TOTAL CURRENT LIABILITIES 25,692,501 21,043,975
------------ -----------
LONG TERM LIABILITIES:
Deferred income taxes 538,974 418,852
Revolving credit line (Note 3) 30,000,000 14,900,000
Subordinated convertible notes (Note 4) 7,059,000 7,059,000
------------ -----------
37,597,974 22,377,852
------------ -----------
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 and shares issued and outstanding for
August 31, 1999 and February 28, 1999 57,770 57,770
Additional paid-in capital 19,042,230 19,042,230
Retained earnings 41,813,435 38,076,840
------------ -----------
60,913,435 57,176,840
Less: loan to ESOP 669,540 839,772
------------ -----------
60,243,895 56,337,068
------------ -----------
$123,534,370 $99,758,895
============ ===========
</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 SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
------------------------ --------------------------
AUGUST AUGUST AUGUST AUGUST
31, 1999 31, 1998 31, 1999 31, 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $163,013,007 $123,029,836 $88,871,395 $62,797,917
------------ ------------ ----------- -----------
COSTS AND EXPENSES:
Cost of sales 130,074,835 95,441,930 70,907,363 48,848,889
Operating expenses 25,617,773 22,441,520 13,628,989 11,232,302
Interest expense 1,007,780 1,166,395 589,707 637,040
------------ ------------ ----------- -----------
156,700,388 119,049,845 85,126,059 60,718,231
------------ ------------ ----------- -----------
INCOME BEFORE PROVISION FOR
INCOME TAXES
6,312,619 3,979,991 3,745,336 2,079,686
Provision for income taxes 2,576,023 1,627,816 1,535,587 848,862
------------ ------------ ----------- -----------
NET INCOME $ 3,736,596 $ 2,352,175 $ 2,209,749 $ 1,230,824
============ ============ =========== ===========
NET INCOME PER SHARE (Note 5):
Basic $ .42 $ .27 $ .25 $ .14
============ ============ =========== ===========
Fully diluted $ .34 $ .22 $ .20 $ .12
============ ============ =========== ===========
</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 SIX MONTHS ENDED
--------------------------
AUGUST AUGUST
31, 1999 31, 1998
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
Cash flows from operating activities:
Cash received from customers $ 157,494,369 $ 126,745,584
Cash paid to suppliers and employees (169,680,097) (125,931,758)
Interested received - -
Interest paid (1,007,780) (1,166,395)
Income taxes paid 922,363 (1,322,170)
------------- -------------
Net cash (used in) operating activities (14,115,871) (1,674,739)
------------- -------------
Cash flows from investing activities:
Capital expenditures (482,031) (800,067)
------------- -------------
Net cash (used in) investing activities (482,031) (800,067)
------------- -------------
Cash flows from financing activities:
Borrowings under revolving credit line 64,805,000 37,300,000
Repayments under revolving credit line (49,709,000) (36,400,000)
------------- -------------
Net cash provided by financing activities 15,100,000 900,000
------------- -------------
Net increase (decrease) in cash and cash equivalents 502,098 (1,574,806)
Cash and cash equivalents, beginning of year 504,320 4,333,669
------------- -------------
Cash and cash equivalents, end of period $ 1,006,417 $ 2,758,863
============= =============
</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 SIX MONTHS ENDED
----------------------------------
AUGUST 31, 1999 AUGUST 31, 1998
---------------- ----------------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET
CASH (USED IN) OPERATING ACTIVITIES:
Net income $ 3,736,596 $ 2,352,175
------------ -----------
Adjustments to reconcile net income to net cash
(used in) operating activities:
Depreciation and amortization 737,406 488,983
Contribution to ESOP 170,232 87,482
Bad debt provision 442,500 177,500
Changes in assets and liabilities:
Decrease (increase) in accounts receivable (5,518,638) 3,715,748
(Increase) in inventories (19,926,272) (9,171,666)
Decrease in prepaid expenses and other
current assets 1,514,969 1,105,395
(Increase) in other assets (41,312) (61,606)
Increase (decrease) in accounts payable and
accrued expenses 4,315,309 (501,168)
Increase in income taxes 333,217 203,463
(Decrease) increase in deferred income taxes 120,122 (71,045)
------------ -----------
Total Adjustments 17,852,467 (4,026,914)
------------ -----------
Net cash (used in) operating activities $(14,115,871) $(1,674,739)
============ ===========
</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)
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, Titan Logistics Corp. and Nu Visions Manufacturing, Inc.) contain all
adjustments necessary to present fairly the Company's financial position at
August 31, 1999 and February 28, 1999 and the results of its operations for the
six and three month periods ended August 31, 1999 and 1997 and cash flows for
the six month periods ended August 31, 1999 and 1998.
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, 1999, 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 six and three month periods ended August 31,
1999 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>
AUGUST FEBRUARY
31, 1999 28, 1999
-------- --------
<S> <C> <C>
Furniture, fixtures and office equipment $ 8,076,473 $ 7,839,268
Computer equipment 3,725,891 3,499,524
Assets held under capitalized leases 919,834 919,834
Leasehold improvements 1,254,364 1,254,364
----------- -----------
13,976,562 13,512,990
Less: accumulated depreciation and amortization 7,022,681 6,382,196
----------- -----------
$ 6,953,881 $ 7,130,794
=========== ===========
</TABLE>
3. BANK LINE OF CREDIT
On May 23, 1997, the Company entered into a new 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 was amortized over three years. As of August 31, 1999,
$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 primary and fully
diluted earnings per share:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
August 31, August 31,
---------- ----------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic 8,753,076 8,753,076 8,753,076 8,753,076
Diluted 11,492,359 11,271,859 11,492,359 11,271,859
</TABLE>
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, NIC
Eurotech Limited and Titan Logistics Corp. 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 OEMs.
The financial information presented herein includes: (i) Consolidated Condensed
Balance Sheets as of August 31, 1999 and February 28, 1999; (ii) Consolidated
Condensed Statements of Income for the six and three month periods ended August
31, 1999 and 1998 and (iii) Consolidated Condensed Statements of Cash Flows for
the six month periods ended August 31, 1999 and 1998.
Results of Operations:
- ----------------------
Sales for the six-month period ended August 31, 1999 were $163,013,007 as
compared to $123,029,836 for the comparable period of the prior year, an
increase of approximately $39,983,000 or 32%. Sales for the three-month period
ended August 31, 1999 were $88,871,395 as compared to $62,797,917 for the
comparable period of the prior year, an increase of approximately $26,073,000 or
42%. Management attributes this increase in sales entirely to the core
semiconductor distribution business which experienced substantially increased
unit sales. Management believes that the ability to generate greater market
penetration to a larger account base coupled with an increased focus on fewer
product lines, has contributed to the substantial increase in sales performance
for both the three month and six month year to year periods. While the company
believes it can continue to successfully implement this approach, no assurances
can be given in this regard.
The gross profit margins for both the three and six months ended August 31, 1999
were approximately 20.2 % as compared to 22.2% and 22.4% for the comparable
periods of the prior year. This overall decrease in gross margin compared to the
prior periods is due to a greater percentage of larger orders from larger
customers, which requires a lower gross margin marketing approach on that
business, thereby decreasing margins overall. The Company expects this type of
margin pressure to continue notwithstanding its aggressive incremental sales
approach.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS (Continued):
--------------------------
Results of Operations (Continued):
- ----------------------------------
Operating expenses have increased from approximately $22,442,000 for the six
months ended August 31, 1998 to approximately $25,618,000 for the six months
ended August 31, 1999, an increase of 14.2% or approximately $3,176,000. For the
three months ended August 31, 1999 as compared to the three months ended August
31, 1998 operating expenses increased from approximately $11,232,000 to
$13,629,000, an increase of 21.3%, or approximately $2,397,000. The dollar
increases in operating expenses were due to increases in the following expense
categories: Approximately $ 2,683,000, or 85%, of the increase for the six-month
period and approximately $1,785,000, or 75%, of the increase for the three-month
period, were for personnel related costs such as commissions, salaries, travel,
fringe benefits. The remaining increase of approximately $493,000, or 15%, for
the six- month period and approximately $612,000, or 25%, for the three-month
period were a result of increases in various other selling, general, and
administrative expenses. Management is encouraged by the fact that sales volume
is increasing at a greater rate than operating expenses which it believes is
beginning to provide the economies of scale required to produce an enhanced
bottom line performance. Management believes that this trend should continue
through the remainder of the fiscal year, although no assurances can be given in
this regard.
Interest expense decreased from approximately $1,166,000 for the six months
ended August 31, 1998 to approximately $1,008,000 for the six months ended
August 31, 1999 and from approximately $637,000 for the three-month period ended
August 31, 1998 to $589,000 for the three-month period ended August 31, 1999.
These slight decreases were primarily due to slightly lower average borrowings
during the periods as compared to the prior year.
<TABLE>
<CAPTION>
INTEREST EXPENSE
----------------
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
AUGUST AUGUST AUGUST AUGUST
31, 1999 31, 1998 31, 1999 31, 1998
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Revolving Bank Credit $ 444,115 $ 491,448 $ 716,596 875,211
Sub. Convert. Notes 145,592 145,592 291,184 291,184
--------- --------- ---------- ----------
Total Interest Expense $ 589,707 $ 637,040 $1,007,780 $1,166,395
========= ========= ========== ==========
</TABLE>
Net income for the six-month period ended August 31, 1999 was $3,736,596 or $.34
per share diluted as compared to $2,352,175 or $.22 per share diluted for the
six-month period ended August 31, 1998. Net income for the three-month period
ended August 31, 1999 was $2,209,749 or $.20 per share diluted as compared to
$1,230,824 or $.12 per share diluted for the corresponding period of the prior
year. Management attributes the increase in earnings to increased sales volume
net of higher operating expenses for the periods in 1999 as compared to 1998.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS (Continued):
--------------------------
Liquidity and Capital Resources:
- --------------------------------
At August 31, 1999, the Company's current ratio was 4.4:1 as compared to 4.3:1
at the fiscal year ended February 28, 1999. Working capital increased from
approximately $68,850,000 as of February 28, 1999 to approximately $88,190,000
at August 31, 1999 while cash increased from February 28, 1999 to August 31,
1999 by approximately $502,000. The primary reasons for the increase in working
capital was the increase in accounts receivable and inventories financed
primarily through long term debt during the current period. This increase was
required to support the increased sales activity over the six-month period.
On May 23, 1997, the Company entered into a new 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 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 was amortized
over three years. As of August 31, 1999, $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 capital resources provided by its bank line of
credit will be sufficient to meet its financing requirements for at least the
next twelve-month period.
Impact of Year 2000 Issue:
- --------------------------
The year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could potentially result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in other similar normal business activities.
Assessment. The Year 2000 problem could affect computers, software and other
equipment which the Company uses, operates or maintains. Accordingly, the
Company reviewed its internal computer programs and systems to ensure that the
programs and systems will be Year 2000 compliant. The Company has ensured that
its software is already year 2000 compliant.
Vendors. The Company has initiated communications, including surveys, with its
vendors (and customers) to identify and, to the extent possible, to resolve
issues involving the Year 2000 problem. However, the Company has limited or no
control over responses to its inquiries and the actions of these third parties.
Approximately 95% of the Company's vendors have responded indicating that they
are or will be Year 2000 compliant in a timely fashion. Thus, while the Company
does not anticipate any significant Year 2000 problems with its vendors, there
can be no assurance that these vendors in fact have no Year 2000 problems. To
the extent that these vendors may have unrecognized Year 2000 problems, there
can be no assurance that they will resolve any and all of such problems before
the occurrence of a disruption to their business or that of their customers.
Since there are many suppliers of alternative products, the Company does not
anticipate that the failure of its vendors to resolve Year 2000 problems with
their systems in a timely manner will have a material adverse effect on the
Company's business, financial condition, and results of operation; however no
assurances can be given in this regard.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS (Continued):
--------------------------
Impact of Year 2000 Issue (continued):
- --------------------------------------
Most Likely Consequences of Year 2000 Problems. The Company believes it has
identified and resolved all potential internal Year 2000 problems that could
materially adversely affect its business operations. However, the Company does
not believe that it is possible to determine with complete certainty that all
Year 2000 problems which affect it have been identified or corrected. The
number of devices that could be affected and the interactions among these
devices are simply too numerous. In addition, one cannot accurately predict how
many Year 2000 problem-related failures will occur or the severity, duration or
financial consequences of these perhaps inevitable failures. In addition, the
Company is unable to determine with any degree of certainty, the changes in
buying habits of its current and potential customers due to their concerns over
Year 2000 issues and whether its vendors will be Year 2000 compliant. As a
result, the Company expects that it could likely experience a significant number
of operational inconveniences and inefficiencies for it and its customers that
may divert management's time and attention and financial and human resources
from its ordinary business activities.
Contingency Plans. Since the Company has ensured that its software is Year 2000
compliant, it does not believe that it needs to develop contingency plans to
identify and correct Year 2000 problems affecting its internal systems. The
Company expects to develop contingency plans to deal with any Year 2000 problems
identified by its vendors by December 1, 1999. If the Company is required to
implement any of these contingency plans, it could have a material adverse
effect on the Company's financial condition and results of operations.
Disclaimer. The discussion of the Company's efforts, and management's
expectations , relating to Year 2000 compliance are forward-looking statements.
The Company's ability to achieve Year 2000 compliance and the level of
incremental costs associated with such compliance, could be adversely impacted
by, among other things, the availability and cost of programming and testing
resources, vendors' ability to modify proprietary software, and unanticipated
problems identified in our ongoing compliance review.
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.
Forward Looking Information
- ---------------------------
Except for historical information contained herein, the matters set forth above
are 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 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.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. Legal Proceedings
There are no material legal proceedings against the Company to which
any its 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
(a) The Registrant held its Annual Meeting of Stockholders on
September 23, 1999. The following proposals were adopted
by the votes indicated.
(b) (c) (1) Two directors were elected at the Annual Meeting to serve
until the Annual Meeting of Stockholders in 2002, in
addition to the five other Directors, Richard Schuster,
Paul Durando, Harvey Blau, Herbert Gardner and Dominic
Polimeni, whose term of office continued after the
meeting. The names of these Directors and votes cast in
favor of their election and shares withheld are as
follows:
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
Irving Lubman 6,980,982 53,228
Arthur Nadata 6,980,982 53,228
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports:
(a) Exhibits:
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
13
<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: October 4, 1999 Arthur Nadata, President and
Chief Executive Officer
/s/ Paul Durando
---------------------------------------
Date: October 4, 1999 Paul Durando, Vice President-Finance
and Chief Financial Officer
14
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
EXHIBIT INDEX
To
FORM 10-Q
FOR THE FISCAL QUARTER ENDED AUGUST 31, 1999
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
- -------------------------------------------------------------------------------
11 Computation of Per Share Earnings
27 Financial Data Schedule
15
<PAGE>
Exhibit 11
NU HORIZONS ELECTRONICS CORP.
EXHIBIT 11
__________
COMPUTATION OF EARNINGS PER COMMON SHARE
----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
------------ ------------
August August August August
31, 1999 31, 1998 31, 1999 31, 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
BASIC EARNINGS:
- ---------------
Net Income $ 2,209,749 $ 1,230,824 $ 3,736,596 $ 2,352,175
=========== =========== =========== ===========
Weighted average number
of common shares outstanding 8,753,076 8,753,076 8,753,076 8,753,076
=========== =========== =========== ===========
Basic earnings per common share $ .25 $ .14 $ .42 $ .27
=========== =========== =========== ===========
DILUTED EARNINGS:
- -----------------
Net income $ 2,209,749 $ 1,230,824 $ 3,736,596 $ 2,352,175
Net (after tax) interest expense
related to convertible debt 85,000 85,000 170,000 170,000
----------- ----------- ----------- -----------
Net income as adjusted $ 2,294,749 $ 1,315,824 $ 3,906,596 $ 2,522,175
=========== =========== =========== ===========
SHARES:
Weighted average number of
common shares outstanding 8,753,076 8,753,076 8,753,076 8,753,076
Stock options 1,954,950 1,734,450 1,954,950 1,734,450
Assuming conversion of
convertible debt 784,333 784,333 784,333 784,333
----------- ----------- ----------- -----------
Weighted average number
of common shares outstanding
as adjusted 11,492,359 11,271,859 11,492,359 11,271,859
=========== =========== =========== ===========
DILUTED EARNINGS PER
COMMON SHARE $ .20 $ .12 $ .34 $ .22
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SECOND QUARTER ENDED AUGUST 31, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> AUG-31-1999
<CASH> 1,006,417
<SECURITIES> 0
<RECEIVABLES> 50,016,571
<ALLOWANCES> 3,020,030
<INVENTORY> 65,040,166
<CURRENT-ASSETS> 113,883,410
<PP&E> 13,976,562
<DEPRECIATION> 7,022,681
<TOTAL-ASSETS> 123,534,370
<CURRENT-LIABILITIES> 25,692,501
<BONDS> 37,597,974
0
0
<COMMON> 57,770
<OTHER-SE> 60,186,125
<TOTAL-LIABILITY-AND-EQUITY> 123,534,370
<SALES> 163,013,007
<TOTAL-REVENUES> 163,013,007
<CGS> 130,074,835
<TOTAL-COSTS> 130,074,835
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 442,500
<INTEREST-EXPENSE> 1,007,780
<INCOME-PRETAX> 6,312,619
<INCOME-TAX> 2,576,023
<INCOME-CONTINUING> 3,736,596
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,736,596
<EPS-BASIC> .42
<EPS-DILUTED> .34
</TABLE>
