70 Maxess Road ▪ Melville, NY 11747
631-396-5000 ▪ Fax: 631-396-3016
FOR IMMEDIATE RELEASE
NU HORIZONS REPORTS THIRD QUARTER FISCAL YEAR 2008 RESULTS
MELVILLE, NY, January 8, 2008 --- Nu Horizons Electronics Corp. (Nasdaq/NM: NUHC), a leading distributor of active and passive electronic components today reported financial and operating results for the third quarter and nine months ended November 30, 2007.
Net sales for the quarter ended November 30, 2007 increased 13.3% to $210,824,000 as compared to $186,080,000 for the comparable period last year. Net income (loss) for the quarter was ($373,000) or $(.02) loss per diluted share, as compared to net income of $1,933,000 or $.10 per diluted share for the third quarter of the prior year. Sales increased from the immediately preceding quarter by 3.6% or $7,248,000.
For the nine months ended November 30, 2007, net sales increased to $606,727,000 from $567,361,000 in the comparable period last year, an increase of 6.9%. Net income for the first nine months of fiscal 2007 was $2,098,000 or $.11 per diluted share, compared to net income of $7,191,000 or $.39 per diluted share in the same period last year.
A comparison of sales by geographic area and type is included as Exhibit A.
On a proforma basis, excluding unusual items such as professional fees related to our financial statement restatement and the ongoing SEC investigation of Vitesse Semiconductor Corp., as well as Germany start-up costs (see Exhibit B), diluted earnings per share would have been $.10 and $.31 for the three and nine months ended November 30, 2007, respectively, compared to $.10 and $.39 per diluted share in the comparable periods in the prior fiscal year.
Arthur Nadata, Chairman of the Board and Chief Executive Officer stated, "Earnings for the quarter were adversely affected by certain unusual items that were announced in our second quarter, such as expected incremental operating expenses for professional fees related to our financial statement restatement and the ongoing SEC inquiry of Vitesse, as well as start-up costs in Germany and severance related to our reduction in workforce. We expect $3,000,000 in annual cost savings from the reduction in our workforce to begin in the fourth quarter and a portion of these savings may be reinvested in the business. We are committed to increasing operating income through a variety of additional cost control strategies while growing our revenues and we are also encouraged by current booking and sales trends, as well as our continued growth in the Asian and European markets."
A conference call to further discuss earnings will be held today at 4:15 pm Eastern time. The call can be accessed by dialing 1-877-874-1563, (international, dial 1-719-325-4792). A rebroadcast of the call will be available beginning at 7:15 pm Eastern time at 1-888-203-1112 (international, dial 1-719-457-0820) Please refer to confirmation code 9138904. A webcast of the call will also be available, online (both live and after the call), at www.nuhorizons.com.
Nu Horizons Reports Third Quarter Fiscal Year 2008 Results | Page 2 |
About Nu Horizons Electronics Corp.
Nu Horizons Electronics Corp. is a leading global distributor of advanced technology semiconductor, display, illumination, power and system solutions to a wide variety of commercial original equipment manufacturers (OEMs) and Electronic Manufacturing Services providers (EMS). With sales facilities in 51 locations across North America, Europe and Asia and regional logistics centers throughout the globe, Nu Horizons partners with a limited number of best-in-class suppliers to provide in-depth product development, custom logistics and life-cycle support to its customers. Information on Nu Horizons and its services is available at http://www.nuhorizons.com
Cautionary Statement Regarding Forward-Looking Statements
Except for historical information contained herein, the matters set forth in this news release are forward looking statements. When used in this press release, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to Nu Horizons or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of Nu Horizons’ management, as well as assumptions made by and information currently available to its management. Forward-looking statements 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, the financial strength of the Company’s customers and suppliers and risks related to the pending Vitesse-related SEC investigation and class action litigation. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Such statements reflect our current view with respect to the future and are subject to these and other risks, uncertainties and assumptions relating to Nu Horizons’ financial condition, results of operations, growth strategy and liquidity. The Company does not undertake any obligation to update its forward-looking statements.
Company Contact:
Kurt Freudenberg, Chief Financial Officer
Nu Horizons Electronics Corp.
kurt.freudenberg@nuhorizons.com
631-396-5000
(Tables Follow)
Nu Horizons Reports Third Quarter Fiscal Year 2008 Results | Page 3 |
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended | For the Nine Months Ended | ||||||||||||
November 30, 2007 | November 30, 2006 | November 30, 2007 | November 30, 2006 | ||||||||||
(As Restated) | (As Restated) | ||||||||||||
NET SALES | $ | 210,824,000 | $ | 186,080,000 | $ | 606,727,000 | $ | 567,361,000 | |||||
COSTS AND EXPENSES: | |||||||||||||
Cost of sales | 178,999,000 | 157,025,000 | 514,274,000 | 480,913,000 | |||||||||
Operating expenses | 30,259,000 | 23,994,000 | 83,733,000 | 68,991,000 | |||||||||
209,258,000 | 181,019,000 | 598,007,000 | 549,904,000 | ||||||||||
OPERATING INCOME | 1,566,000 | 5,061,000 | 8,720,000 | 17,457,000 | |||||||||
OTHER (INCOME) EXPENSE | |||||||||||||
Interest expense | 1,175,000 | 1,036,000 | 3,150,000 | 2,928,000 | |||||||||
Interest income | (14,000 | ) | (24,000 | ) | (34,000 | ) | (536,000 | ) | |||||
1,161,000 | 1,012,000 | 3,116,000 | 2,392,000 | ||||||||||
INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTERESTS | 405,000 | 4,049,000 | 5,604,000 | 15,065,000 | |||||||||
Provision for income taxes | 653,000 | 2,002,000 | 3,189,000 | 7,449,000 | |||||||||
INCOME (LOSS) BEFORE MINORITY INTERESTS | (248,000 | ) | 2,047,000 | 2,415,000 | 7,616,000 | ||||||||
Minority interest in earnings of subsidiaries | 125,000 | 114,000 | 317,000 | 425,000 | |||||||||
NET INCOME (LOSS) | $ | (373,000 | ) | $ | 1,933,000 | $ | 2,098,000 | $ | 7,191,000 | ||||
NET INCOME (LOSS) PER COMMON SHARE: | |||||||||||||
Basic | $ | (.02 | ) | $ | .11 | $ | .11 | $ | .40 | ||||
Diluted | $ | (.02 | ) | $ | .10 | $ | .11 | $ | .39 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||
Basic | 18,377,582 | 18,059,849 | 18,322,489 | 17,777,952 | |||||||||
Diluted | 18,377,582 | 19,018,687 | 19,047,418 | 18,558,163 |
Nu Horizons Reports Third Quarter Fiscal Year 2008 Results | Page 4 |
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
November 30, 2007 | February 28, 2007 | ||||||
(unaudited) | (As Restated) | ||||||
- ASSETS - | |||||||
CURRENT ASSETS: | |||||||
Cash | $ | 1,542,000 | $ | 4,747,000 | |||
Accounts receivable - net of allowance for doubtful accounts of $4,782,000 and $4,985,000 as of November 30, 2007 and February 28, 2007, respectively | 145,988,000 | 119,946,000 | |||||
Inventories | 143,247,000 | 119,311,000 | |||||
Prepaid expenses and other current assets | 4,437,000 | 4,625,000 | |||||
TOTAL CURRENT ASSETS | 295,214,000 | 248,629,000 | |||||
PROPERTY, PLANT AND EQUIPMENT - NET | 4,788,000 | 3,381,000 | |||||
OTHER ASSETS: | |||||||
Cost in excess of net assets acquired | 8,079,000 | 8,332,000 | |||||
Intangibles - net | 3,654,000 | - | |||||
Deferred tax asset | 3,082,000 | 3,082,000 | |||||
Other assets | 6,035,000 | 4,055,000 | |||||
TOTAL ASSETS | $ | 320,852,000 | $ | 267,479,000 | |||
- LIABILITIES AND SHAREHOLDERS’ EQUITY - | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable | $ | 81,682,000 | $ | 62,410,000 | |||
Accrued expenses | 12,751,000 | 8,765,000 | |||||
Bank credit line | 770,000 | 2,327,000 | |||||
Income taxes payable | 4,709,000 | 8,179,000 | |||||
TOTAL CURRENT LIABILITIES | 99,912,000 | 81,681,000 | |||||
LONG TERM LIABILITIES | |||||||
Revolving credit line | 64,000,000 | 30,000,000 | |||||
Due to seller | - | 3,378,000 | |||||
Deferred tax liability | 3,878,000 | 2,725,000 | |||||
TOTAL LONG TERM LIABILITIES | 67,878,000 | 36,103,000 | |||||
MINORITY INTEREST IN SUBSIDIARIES | 2,266,000 | 1,948,000 | |||||
COMMITMENTS AND CONTINGENCIES | |||||||
SHAREHOLDERS’ EQUITY: | |||||||
Preferred stock, $1 par value, 1,000,000 shares authorized; none issued or outstanding | - | - | |||||
Common stock, $.0066 par value, 50,000,000 shares authorized; 18,393,314 and 18,158,034 shares issued and outstanding as of November 30, 2007 and February 28, 2007, respectively | 121,000 | 120,000 | |||||
Additional paid-in capital | 54,561,000 | 53,512,000 | |||||
Retained earnings | 96,200,000 | 94,102,000 | |||||
Other accumulated comprehensive (loss) income | (86,000 | ) | 13,000 | ||||
TOTAL SHAREHOLDERS’ EQUITY | 150,796,000 | 147,747,000 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 320,852,000 | $ | 267,479,000 |
Nu Horizons Reports Third Quarter Fiscal Year 2008 Results | Page 5 |
EXHIBIT A
Quarterly Analysis of Sales
($ in Thousands)
FY 2008 | FY2007 | ||||||||||||
% of | % of | ||||||||||||
Q3 | Total | Q3 | Total | ||||||||||
Sales by Geographic Area: | |||||||||||||
North America | $ | 132,544 | 62 | % | $ | 136,402 | 73 | % | |||||
Asia | 58,121 | 28 | % | 36,954 | 20 | % | |||||||
Europe | 20,159 | 10 | % | 12,724 | 7 | % | |||||||
$ | 210,824 | 100 | % | $ | 186,080 | 100 | % |
FY 2008 | FY 2007 | ||||||||||||
% of | % of | ||||||||||||
YTD | Total | YTD | Total | ||||||||||
North America | $ | 403,664 | 66 | % | $ | 434,332 | 76 | % | |||||
Asia | 150,044 | 25 | % | 110,781 | 20 | % | |||||||
Europe | 53,019 | 9 | % | 22,248 | 4 | % | |||||||
$ | 606,727 | 100 | % | $ | 567,361 | 100 | % |
FY 2008 | FY 2007 | ||||||||||||
% of | % of | ||||||||||||
Q3 | Total | Q3 | Total | ||||||||||
Nu Horizons Core Distribution | $ | 197,680 | 94 | % | $ | 171,861 | 92 | % | |||||
Systems | 13,144 | 6 | % | 14,219 | 8 | % | |||||||
$ | 210,824 | 100 | % | $ | 186,080 | 100 | % |
FY 2008 | FY 2007 | ||||||||||||
% of | % of | ||||||||||||
YTD | Total | YTD | Total | ||||||||||
Nu Horizons Core Distribution | $ | 568,639 | 94 | % | $ | 493,302 | 87 | % | |||||
Systems | 38,088 | 6 | % | 74,059 | 13 | % | |||||||
$ | 606,727 | 100 | % | $ | 567,361 | 100 | % |
Nu Horizons Reports Third Quarter Fiscal Year 2008 Results | Page 6 |
EXHIBIT B
Proforma Effect of Unusual Items:
The table below presents proforma net income and proforma diluted earnings per share which gives effect to the core operating results, excluding material unusual items:
Effect of Unusual Items on Net Income And Diluted Earnings Per Share |
Quarter Ended November 30, 2007 | Nine Months Ended November 30, 2007 | ||||||
(Unaudited) | (Unaudited) | ||||||
Reported actual net income (loss) | $ | (373,000 | ) | $ | 2,098,000 | ||
Add: Unusual items net of tax: | |||||||
Professional fees(1) | 1,369,000 | 1,505,000 | |||||
Germany Start-Up: net losses(2) | 528,000 | 1,031,000 | |||||
Interest and penalties related to tax restatement(3) | 238,000 | 1,035,000 | |||||
Severance(4) | 158,000 | 158,000 | |||||
Proforma net income | $ | 1,920,000 | $ | 5,827,000 | |||
Proforma diluted earnings per share | $ | .10 | $ | .31 | |||
Diluted shares outstanding | 18,896,611 | 19,047,418 |
Notes:
(1) | Professional fees related to the SEC inquiry related to "In the matter of Vitesse Semiconductor" and the restatement of our financial statements previously reported. |
(2) | The Company commenced operations in Germany in fiscal 2008. This investment in Germany is expected to have net losses due to it being a "Start-Up". Net losses are being deducted to arrive at proforma core earnings, excluding our Start-Up investment. |
(3) | Interest and penalties related to income taxes associated with the previously announced restatement of our financial statements. |
(4) | Severance cost associated with the domestic reduction in workforce previously announced November 29, 2007. |
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