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, 2001 1-8798
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Nu Horizons Electronics Corp.
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(Exact name of registrant as specified in its charter)
Delaware 11-2621097
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
70 Maxess Road, Melville, New York 11747
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(Address of principal executive offices) (Zip Code)
(631) 396-5000
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(Registrant's telephone number, including area code)
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(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 16,562,583
-------------------------------------------- -----------------------------
Class Outstanding Shares
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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INDEX
-----
Part I. Financial Information Page(s)
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
August 31, 2001 (unaudited) and February 28, 2001 3.
Consolidated Condensed Statements of Income (unaudited) -
Six and Three Months Ended August 31, 2001 and 2000 4.
Consolidated Condensed Statements of Cash Flows (unaudited) -
Six Months Ended August 31, 2001 and 2000 5.
Notes to Interim Consolidated Condensed Financial
Statements (unaudited) 6.-8.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11.
Part II. Other Information 12.
SIGNATURES 13.
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
August 31, February 28,
2001 2001
----------------- ---------------
(unaudited)
- ASSETS -
CURRENT ASSETS:
Cash and cash equivalents $ 19,015,101 $ 395,288
Accounts receivable - net of allowance of doubtful accounts of $5,658,689 and $5,590,675
for August 31, 2001 and February 28, 2001, respectively 37,681,018 87,250,544
Inventories 85,504,851 119,005,965
Prepaid expenses and other current assets 1,704,057 7,717,332
Net assets of discontinued subsidiary (Note 2) - 24,560,229
--------------- ---------------
TOTAL CURRENT ASSETS 143,905,027 238,929,358
PROPERTY, PLANT AND EQUIPMENT - NET (Note 3) 6,315,995 6,018,619
OTHER ASSETS:
Cost in excess of net assets acquired - net of amortization (Note 6) 1,203,098 1,281,560
Other assets 2,630,938 1,601,462
Subordinated debt receivable (Note 4) 2,000,000 -
--------------- ---------------
$ 156,055,058 $ 247,830,999
=============== ===============
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ 9,222,720 $ 29,418,411
Accrued expenses 6,551,166 7,778,210
--------------- ---------------
TOTAL CURRENT LIABILITIES 15,773,886 37,196,621
--------------- ---------------
LONG TERM LIABILITIES:
Deferred income taxes 516,438 181,496
Revolving credit line (Note 5) 10,000,000 85,000,000
--------------- ---------------
TOTAL LONG-TERM LIABILITIES 10,516,438 85,181,496
--------------- ---------------
MINORITY INTEREST 1,372,447 1,091,671
--------------- ---------------
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; 16,562,583 and 16,501,840
shares issued and outstanding for August 31, 2001 and February 28, 2001, respectively 109,313 108,912
Additional paid-in capital 42,091,993 41,798,615
Retained earnings 86,045,446 81,790,721
Other accumulated comprehensive income 145,535 821,807
--------------- ---------------
128,392,287 124,520,055
Less: loan to ESOP - 158,844
--------------- ---------------
128,392,287 124,361,211
--------------- ---------------
$ 156,055,058 $ 247,830,999
=============== ===============
See notes to interim consolidated condensed financial statements.
3
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF INCOME
-------------------------------------------
(unaudited)
For the Six Months Ended For the Three Months Ended
---------------------------------- ----------------------------------
August 31, 2001 August 31, 2000 August 31, 2001 August 31, 2000
--------------- --------------- --------------- ---------------
NET SALES $ 159,691,937 $ 311,103,254 $ 69,947,370 $ 170,080,695
-------------- --------------- --------------- ---------------
COSTS AND EXPENSES:
Cost of sales 124,547,470 243,231,209 53,895,457 133,234,715
Operating expenses 32,040,903 37,483,379 14,798,207 18,858,865
Interest expense 1,145,804 1,572,837 190,980 870,409
-------------- --------------- --------------- ---------------
157,734,177 282,287,425 68,884,644 152,963,989
-------------- --------------- --------------- ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
MINORITY INTERESTS 1,957,760 28,815,829 1,062,726 17,116,706
Provision for income taxes 798,227 11,913,558 432,836 7,661,796
-------------- --------------- --------------- ---------------
INCOME BEFORE MINORITY INTERESTS 1,159,533 16,902,271 629,890 9,454,910
Minority interest in earnings of subsidiaries 280,776 246,996 193,249 93,100
-------------- --------------- --------------- ---------------
INCOME FROM CONTINUING OPERATIONS 878,757 16,655,275 436,641 9,361,810
-------------- --------------- --------------- ---------------
DISCONTINUED OPERATIONS (Note 2):
Income from operations of contract
manufacturing subsidiary disposed of - net of
income taxes 798,736 806,207 256,801 674,865
Gain on sale of contract manufacturing
subsidiary - net of income taxes 2,577,232 - 2,577,232 -
-------------- --------------- --------------- ---------------
3,375,968 806,207 2,834,033 674,865
-------------- --------------- --------------- ---------------
NET INCOME $ 4,254,725 $ 17,461,482 $ 3,270,674 $ 10,036,675
============== =============== =============== ===============
NET INCOME PER COMMON SHARE - BASIC:
Continuing operations $ .05 $ 1.02 $ .03 $ .59
Discontinued operations .21 .05 .17 .04
-------------- --------------- --------------- ---------------
$ .26 $ 1.07 $ .20 $ .63
============== =============== =============== ===============
NET INCOME PER COMMON SHARE - DILUTED:
Continuing operations $ .05 $ .90 $ .03 $ .50
Discontinued operations .19 .04 .16 .04
-------------- --------------- --------------- ---------------
$ .24 $ .94 $ .19 $ .54
============== =============== =============== ===============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 16,554,857 16,279,734 16,562,583 15,924,308
Diluted 17,459,186 18,567,543 17,476,420 18,567,543
See notes to interim consolidated condensed financial statements.
4
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
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(unaudited)
For The Six Months Ended
------------------------
August 31, 2001 August 31, 2000
--------------- ---------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 238,616,124 $ 291,597,195
Cash paid to suppliers and employees (140,831,891) (302,185,040)
Interest paid (1,145,804) (1,890,837)
Income taxes paid (5,666,028) (11,421,163)
-------------- -------------
Net cash provided by (used in) operating activities 90,972,401 (23,899,845)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,377,162) (1,999,274)
Proceeds from sale of subsidiary 29,563,000 -
Net assets of subsidiary sold (21,549,811) -
Expenses related to sale of subsidiary (3,606,122) -
-------------- -------------
Net cash provided by (used in) investing activities 3,029,905 (1,999,274)
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit line 27,500,000 91,350,000
Repayments under revolving credit line (102,500,000) (67,450,000)
Proceeds from stock options 293,779 6,230,969
-------------- -------------
Net cash (used in) provided by financing activities (74,706,221) 30,130,969
-------------- -------------
EFFECT OF EXCHANGE RATE CHANGE (676,272) -
-------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 18,619,813 4,231,850
Cash and cash equivalents, beginning of year 395,288 1,496,805
-------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,015,101 $ 5,728,655
============== =============
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
NET INCOME $ 4,254,725 $ 17,461,482
Adjustments:
Gain on sale of subsidiary (2,577,232) -
Depreciation and amortization 1,151,233 833,074
Contribution to ESOP 158,844 170,557
Bad debt provision 86,982 1,408,724
Increase in deferred taxes 334,942 780,705
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 57,187,532 (35,087,281)
Decrease (increase) in inventories 49,618,818 (35,817,535)
Decrease (increase) in prepaid expenses and other current assets 6,141,557 (1,569,841)
(Increase) in other assets (1,014,908) (117,773)
(Decrease) increase in accounts payable and accrued expenses (24,650,868) 22,405,530
Increase in income taxes - 5,385,517
Increase in minority interest 280,776 246,996
-------------- -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 90,972,401 $ (23,899,845)
============== =============
See notes to interim consolidated condensed financial statements.
5
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of Nu Horizons Electronics
Corp. (the "Company"), its wholly owned subsidiaries NIC Components
Corp., Nu Horizons International Corp., Nu Horizons Eurotech Limited
and Titan Logistics Corp. and its majority owned subsidiaries, NIC
Components Asia PTE. LTD., NIC Eurotech Limited and Nu Horizons Asia
PTE. LTD., contain all adjustments necessary to present fairly the
Company's financial position as of August 31, 2001 and February 28,
2001 and the results of its operations for the six and three month
periods ended August 31, 2001 and 2000, and its cash flows for the six
month periods ended August 31, 2001 and 2000.
See Note 2 regarding the sale of the net assets of the Company's
majority-owned subsidiary, Nu Visions Manufacturing, Inc.
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, 2001, 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 accompanying
unaudited interim financial statements have been prepared in accordance
with instructions to Form 10-Q and therefore do not include all
information and footnotes required by accounting principles generally
accepted in the United States of America
The results of operations for the six-month period ended August 31,
2001 are not necessarily indicative of the results to be expected for
the full year.
2. SALE OF SUBSIDIARY:
On August 23, 2001, the Company completed the sale of the assets of its
contract-manufacturing subsidiary, Nu Visions Manufacturing, Inc., ("Nu
Visions"). The selling price of $31,563,000 was paid with $2,000,000 in
subordinated debt (see Note 4) and $29,563,000 in cash.
Following is summary financial information for the Company's
discontinued contract-manufacturing subsidiary:
For the Six Months Ended For the Three Months Ended
----------------------------------- ----------------------------------
August 31, 2001 August 31, 2000 August 31, 2001 August 31, 2000
--------------- --------------- --------------- ---------------
Income from discontinued operations:
Before income taxes $ 1,365,839 $ 1,378,614 $ 439,130 $ 1,154,019
Income tax provision 567,103 572,407 182,329 479,154
-------------- --------------- -------------- ------------
Net income from discontinued operations 798,736 806,207 256,801 674,865
-------------- --------------- -------------- ------------
Estimated gain on disposal:
Before income taxes 4,407,067 - 4,407,067 -
Income tax provision 1,829,835 - 1,829,835 -
-------------- --------------- -------------- ------------
Net estimated gain on disposal 2,577,232 - 2,577,232 -
-------------- --------------- -------------- ------------
Net income and gain on disposal $ 3,375,968 $ 806,207 $ 2,834,033 $ 674,865
============== =============== ============== ============
6
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following:
August 31, 2001 February 28, 2001
---------------- ------------------
Furniture, fixtures and office equipment $ 7,623,433 $ 7,410,574
Computer equipment 5,032,468 4,712,094
Leasehold improvements 1,254,364 906,742
---------------- ------------------
13,910,265 13,029,410
Less: accumulated depreciation and amortization 7,594,270 7,010,791
---------------- ------------------
$ 6,315,995 $ 6,018,619
================ ==================
4. SUBORDINATED DEBT RECEIVABLE:
Pursuant to the sale of its subsidiary (see Note 2), the Company
received a $2,000,000 Junior Subordinated Note and dated August 23,
2001 issued by the buyer as a part of the purchase price. The note has
a maturity date of May 14, 2007 and is subordinate in right of payment
to all existing and future indebtedness of the issuer. The note bears
interest from the issue date, on the principal amount, to and including
the maturity date, at a rate per annum equal to 8%. Interest shall be
payable on the maturity date and shall compound quarterly as of each
anniversary of the issue date. Prepayment of the note and interest
accrued is permitted if and when certain conditions in the
subordination agreement have been met.
5. BANK LINE OF CREDIT:
On October 18, 2000, the Company entered into a new unsecured revolving
line of credit with six banks, which currently provides for maximum
borrowings of $120,000,000 at either (i) the lead bank's prime rate or
(ii) LIBOR plus 87.5 to 147.5 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 October 18,
2004.
6. NEW ACCOUNTING PRONOUNCEMENTS:
In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the
new rules, business combinations can no longer be reflected by using
the pooling of interests method of accounting and goodwill (and
intangible assets deemed to have indefinite lives) will no longer be
amortized but will be subject to annual impairment tests in accordance
with the Statements. Other intangible assets will continue to be
amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter in the year
beginning March 1, 2002 (fiscal 2003). Application of the
nonamortization provisions of the Statement is expected to result in an
increase in net income of $82,621 ($.005 per share) per year. During
fiscal 2003, the Company will perform the first of the required
impairment tests of goodwill and indefinite lived intangible assets as
of March 1, 2002 and has not yet determined what the effect of these
tests will be on the earnings and financial position of the Company.
7
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
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NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
7. NET INCOME PER SHARE:
Earnings per share has been computed in accordance with the provisions
of SFAS No. 128. The following table sets forth the components of basic
and diluted earnings per share
For the Six Months Ended For the Three Months Ended
--------------------------------- ---------------------------------
August 31, 2001 August 31, 2000 August 31, 2001 August 31, 2000
--------------- --------------- --------------- ---------------
NUMERATOR:
----------
Net income from continuing
operations $ 878,757 $ 16,655,275 $ 436,641 $ 9,361,810
Net income from discontinued
operations 3,375,968 806,207 2,834,033 674,865
------------- ------------- ------------- -------------
Net income $ 4,254,725 $ 17,461,482 $ 3,270,674 $ 10,036,675
============= ============= ============= =============
Denominator for basic
earnings per common share
- weighted-average number
of common shares
outstanding 16,554,857 16,279,734 16,562,583 15,924,308
Effect of dilutive stock
options 904,329 2,287,809 913,837 2,643,235
------------- ------------- ------------- -------------
Denominator for diluted
earnings per common share
- adjusted weighted-average
number of common shares
outstanding 17,459,186 18,567,543 17,476,420 18,567,543
============= ============= ============= =============
8
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, NIC Components Corp. ("NIC"), Nu Horizons International
Corp. ("International"), Nu Horizons Eurotech Limited, and Titan
Logistics Corp., and its majority owned subsidiaries NIC Components
ASIA PTE LTD, NIC Eurotech Asia Limited and Nu Horizons Asia PTE LTD,
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 majority-owned subsidiary of the Company, was a
contract assembler of circuit boards and related electromechanical
devices for various OEM's. The Company sold the assets of this
subsidiary as of August 23, 2001.
The financial information presented herein includes: (i) Consolidated
Condensed Balance Sheets as of August 31, 2001 and February 28, 2001;
(ii) Consolidated Condensed Statements of Income for the six and three
month periods ended August 31, 2001 and 2000 and (iii) Consolidated
Condensed Statements of Cash Flows for the six month periods ended
August 31, 2001 and 2000.
Results of Continuing Operations:
---------------------------------
Sales for the six-month period ended August 31, 2001 were $159,692,000
as compared to $311,103,000 for the comparable period of the prior
year, a decrease of $151,411,000 or 48.7%. Sales for the three-month
period ended August 31, 2001 were $69,947,000 as compared to
$170,081,000 for the comparable period of the prior year, a decrease of
approximately $100,134,000 or 58.9%. Management attributes these
decreases to the core semiconductor and passive component distribution
business. The Company and the industry as a whole are experiencing a
significant decline in demand for electronic components which is
responsible for the significant decline in sales volume. Management
believes that the current slow down has stabilized but that it will
probably continue through the first quarter of calendar 2002. As a
result, management expects revenues to be flat to the second quarter
for the balance of fiscal 2002.
The gross profit margin for the six month periods ended August 31, 2001
and 2000 was approximately 22%. The gross profit margin for the quarter
ended August 31, 2001 was 22.9% as compared to 21.7% for the quarter
ended August 31, 2000. The Company believes that the quarter over
quarter increase in gross margins can be attributed to a larger
percentage of sales to smaller accounts (which command higher margins)
net of a reduction of sales to larger end users.
Operating expenses decreased from $37,483,000 for the six month period
ended August 31, 2000 to $32,041,000 for the six months ended August
31, 2001, a decrease of $5,442,000 or 14.5%. Operating expenses
decreased from $18,859,000 for the three month period ended August 31,
2000 to $14,798,000 for the three months ended August 31, 2001, a
decrease of $4,061,000 or 21.5%. The dollar decrease in operating
expenses was due to decreases in the following expense categories:
Approximately $4,867,000 or 89% of the decrease for the six-month
period and approximately $3,500,000 or 86% of the decrease for the
three month period, were for personnel related costs such as bonuses,
commissions, salaries, travel and fringe benefits resulting from the
substantial reduction in sales volume for the periods. The remaining
decreases were a result of decreases in various other general and
administrative expenses. Operating expenses as a percentage of sales,
however, increased to 21% for the quarter ended August 31, 2001 as
compared to 11% for the quarter ended August 31, 2000. Operating
expenses for the six month period also increased to 20% from 12% for
the six month period last year. The sharp reduction in sales has
resulted in this return to higher operating expenses as a percent of
sales and a loss of the economies of scale the Company enjoyed in its
last fiscal year. Management has decided to endure this higher rate of
operating expenses in order to be prepared to take advantage of what it
believes will be an inevitable rebound for the industry, although no
assurances can be given in this regard.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS:
--------------
Results of Continuing Operations (Continued):
---------------------------------------------
Interest expense decreased from $1,573,000 for the six months ended
August 31, 2000 to $1,146,000 for the six months ended August 31, 2001
and from $870,000 for the three month period ended August 31, 2000 to
$191,000 for the three months ended August 31, 2001. These decreases
were primarily due to decreasing interest rates and borrowing levels
resulting from the continuing decrease in the Company's accounts
receivable and inventory levels as a result of the substantially
reduced sales activity during the 2001 periods.
Net income from continuing operations for the six-month period ended
August 31, 2001 was $879,000 or $.05 per share diluted as compared to
$16,655,000 or $.90 per share diluted for the six-month period ended
August 31, 2000. Net income for the three-month period ended August 31,
2001 was $437,000 or $.03 per share diluted as compared to $9,362,000
or $.50 per share diluted for the three-month period ended August 31,
2000. Management attributes the decrease in earnings for the 2001
periods to reduced sales volumes, resulting in a greater decrease in
gross profit margin dollars than in operating expenses.
Discontinued Operations:
------------------------
On August 23, 2001, the Company completed the sale of the assets of its
contract manufacturing subsidiary, Nu Visions Manufacturing, Inc. The
selling price of $31,563,000 was paid for with $2,000,000 in
subordinated debt and $29,563,000 of cash proceeds.
Net income from discontinued operations for the six-month period ended
August 31, 2001 was $798,000 or $.05 per share diluted as compared to
$806,000 or $.04 per diluted share for the six-month period ended
August 31, 2000. Net income for the three-month period ended August
31,2001 was $257,000 or $.01 per share diluted as compared to $675,000
or $.04 per share diluted for the three month period ended August 31,
2000. The net estimated gain on the sale of the subsidiary resulted in
an additional after tax profit of $2,577,000 for both the three and six
month periods ended August 31,2001. There were no equivalent items to
report for these periods in the prior year.
Liquidity and Capital Resources:
--------------------------------
At August 31, 2001, the Company's current ratio was 9.1:1 as compared
to 6.4:1 at February 28, 2001. Working capital decreased from
approximately $201,732,000 at February 28, 2001 to approximately
$128,131,000 at August 31, 2001, while cash increased from February 28,
2001 to August 31, 2001 by approximately $18,620,000. The primary
reasons for the decrease in working capital were decreases in
inventories, accounts receivable and the net assets of the Company's
discontinued operations. Cash increased primarily as a result of the
aforementioned sale of the Company's Nu Visions subsidiary.
On October 18, 2000, the Company entered into a new unsecured revolving
line of credit with six banks, which currently provides for maximum
borrowings of $120,000,000 at either (i) the lead bank's prime rate or
(ii) LIBOR plus 87.5 to 147.5 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 October 18,
2004. Borrowings under this line of credit decreased from $85,000,000
at February 28, 2001 to $10,000,000 at August 31, 2001. The primary
reason for the decrease was lower borrowings needed due to reductions
in inventories and receivables as a result of the significant decline
in sales and repayments from the proceeds of the Nu Visions sale. The
Company anticipates that 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.
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.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS:
--------------
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 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
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
(a) The Registrant held its Annual Meeting of
Stockholders on September 26, 2001. The following
proposals were adopted by the votes indicated.
(b)(c)(1) Three directors were elected at the Annual
Meeting to serve until the Annual Meeting of
Stockholders in 2004, in addition to the five other
Directors, Arthur Nadata, Irving Lubman, Paul
Durando, Herbert Gardner and David Siegel, 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
------------------------------- ------------------ --------------------
Harvey R. Blau 15,257,523 138,220
Dominic Polimeni 15,287,181 108,562
Richard S. Schuster 14,857,636 538,107
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports:
(a) Exhibits:
None
(b) Reports on Form 8-K
Item 2 - August 23, 2001 - Sale of Subsidiary of the
Registrant
12
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
Date: October 12, 2001 /s/ Richard Schuster
-------------------------------------
Richard Schuster Vice President and
Secretary
Date: October 12, 2001 /s/ Paul Durando
-------------------------------------
Paul Durando, Vice President-Finance
and Chief Financial Officer
13