SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Under Section 13 or 15(d) of the Securities Exchange Act of 1934
For Quarter Ended November 30, 2003
Commission file number 1-8798
Nu Horizons Electronics Corp.
(Exact name of registrant as specified in its charter)
| Delaware | 11-2621097 | |
| (State of other jurisdiction of incorporation or organization |
(I.R.S. Employer Identification No.) | |
| 70 Maxess Road, Melville, New York | 11747 | |
| (Address of principal executive offices) | (Zip Code) | |
(631) 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 ¨
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of January 6, 2004.
| Common Stock - Par Value $.0066 |
16,712,094 | |
| Class | Outstanding Shares |
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
| Page(s) | ||||
| Part I. |
Financial Information |
|||
| Item 1. |
Financial Statements |
|||
| Consolidated Condensed Balance Sheets - November 30, 2003 (unaudited) and February 28, 2003 |
3. | |||
| 4. | ||||
| 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. | ||
| Item 3. |
12. | |||
| Item 4. |
12. | |||
| Part II. |
13. | |||
| 14. | ||||
| Exhibit Index |
||||
PART 1. FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
| November 30, 2003 |
February 28, 2003 |
|||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 17,632,558 | $ | 31,345,616 | ||||
| Accounts receivable - net of allowance of doubtful accounts of $4,133,129 and $4,083,590 for November 30, 2003 and February 28, 2003, respectively |
55,543,178 | 39,092,343 | ||||||
| Inventories |
66,968,859 | 66,073,022 | ||||||
| Prepaid expenses and other current assets |
1,790,595 | 2,952,665 | ||||||
| TOTAL CURRENT ASSETS |
141,935,190 | 139,463,646 | ||||||
| PROPERTY, PLANT AND EQUIPMENT - NET (Note 2) |
4,522,688 | 5,150,499 | ||||||
| OTHER ASSETS: |
||||||||
| Subordinated note receivable (Note 3) |
2,000,000 | 2,000,000 | ||||||
| Other assets |
1,514,615 | 1,485,044 | ||||||
| $ | 149,972,493 | $ | 148,099,189 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: |
||||||||
| Accounts payable |
$ | 21,547,667 | $ | 16,732,172 | ||||
| Accrued expenses |
3,569,370 | 5,939,395 | ||||||
| TOTAL CURRENT LIABILITIES |
25,117,037 | 22,671,567 | ||||||
| LONG-TERM LIABILITIES: |
||||||||
| Deferred income taxes |
276,646 | 252,832 | ||||||
| TOTAL LONG-TERM LIABILITIES |
276,646 | 252,832 | ||||||
| MINORITY INTEREST IN SUBSIDIARIES |
1,422,026 | 1,182,449 | ||||||
| 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; 16,700,700 and 16,663,817 shares issued and outstanding for November 30, 2003 and February 28, 2003, respectively |
110,224 | 109,981 | ||||||
| Additional paid-in capital |
43,065,963 | 42,925,545 | ||||||
| Retained earnings |
80,241,505 | 81,498,759 | ||||||
| Other accumulated comprehensive (loss) |
(220,475 | ) | (541,944 | ) | ||||
| 123,197,217 | 123,992,341 | |||||||
| Less: Loan to ESOP |
(40,433 | ) | — | |||||
| TOTAL SHAREHOLDERS’ EQUITY |
123,156,784 | 123,992,341 | ||||||
| $ | 149,972,493 | $ | 148,099,189 | |||||
See notes to interim consolidated condensed financial statements.
3
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
| For the Nine Months Ended |
For the Three Months Ended |
|||||||||||||||
| November 30, 2003 |
November 30, 2002 |
November 30, 2003 |
November 30, 2002 |
|||||||||||||
| NET SALES |
$ | 243,840,055 | $ | 231,152,869 | $ | 91,071,802 | $ | 75,830,874 | ||||||||
| COSTS AND EXPENSES: |
||||||||||||||||
| Cost of sales |
199,653,799 | 188,788,612 | 75,312,065 | 62,492,563 | ||||||||||||
| Operating expenses |
46,315,653 | 42,837,236 | 15,560,035 | 14,501,397 | ||||||||||||
| Interest expense |
112,172 | 107,762 | 25,361 | 38,269 | ||||||||||||
| Interest income |
(343,218 | ) | — | (232,238 | ) | — | ||||||||||
| 245,738,406 | 231,733,610 | 90,665,223 | 77,032,229 | |||||||||||||
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTERESTS |
(1,898,351 | ) | (580,741 | ) | 406,579 | (1,201,355 | ) | |||||||||
| Provision (credit) for income taxes |
(880,674 | ) | (25,806 | ) | 136,931 | (238,897 | ) | |||||||||
| INCOME (LOSS) BEFORE MINORITY INTERESTS |
(1,017,677 | ) | (554,935 | ) | 269,648 | (962,458 | ) | |||||||||
| Minority interest in earnings of subsidiaries |
239,577 | 181,085 | 72,682 | 35,592 | ||||||||||||
| NET INCOME (LOSS) |
$ | (1,257,254 | ) | $ | (736,020 | ) | $ | 196,966 | $ | (998,050 | ) | |||||
| NET INCOME (LOSS) PER COMMON SHARE: |
||||||||||||||||
| Basic |
$ | (.08 | ) | $ | (.04 | ) | $ | .01 | $ | (.06 | ) | |||||
| Diluted |
$ | (.08 | ) | $ | (.04 | ) | $ | .01 | $ | (.06 | ) | |||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||||||||||
| Basic |
16,685,628 | 16,649,037 | 16,700,700 | 16,663,817 | ||||||||||||
| Diluted |
16,685,628 | 16,649,037 | 17,641,150 | 16,663,817 | ||||||||||||
See notes to interim consolidated condensed financial statements.
4
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
| For The Nine Months Ended |
||||||||
| November 30, 2003 |
November 30, 2002 |
|||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: |
||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Cash received from customers |
$ | 227,389,220 | $ | 228,875,115 | ||||
| Cash paid to suppliers and employees |
(241,320,235 | ) | (201,085,364 | ) | ||||
| Interest received |
343,218 | — | ||||||
| Interest paid |
(112,172 | ) | (107,762 | ) | ||||
| Income taxes paid |
(68,881 | ) | (64,573 | ) | ||||
| Net cash (used in) provided by operating activities |
(13,768,850 | ) | 27,617,416 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Capital expenditures |
(406,338 | ) | (170,517 | ) | ||||
| Dividend to minority shareholders |
— | (169,875 | ) | |||||
| Net cash (used in) investing activities |
(406,338 | ) | (340,392 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Borrowings under revolving credit line |
— | 6,700,000 | ||||||
| Repayments under revolving credit line |
— | (9,200,000 | ) | |||||
| Proceeds from exercise of stock options |
140,661 | 246,801 | ||||||
| Net cash provided by (used in) financing activities |
140,661 | (2,253,199 | ) | |||||
| EFFECT OF EXCHANGE RATE CHANGE |
321,469 | (660,392 | ) | |||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(13,713,058 | ) | 24,363,433 | |||||
| Cash and cash equivalents, beginning of year |
31,345,616 | 2,689,978 | ||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 17,632,558 | $ | 27,053,411 | ||||
| RECONCILIATION OF NET LOSS TO NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES: |
||||||||
| NET LOSS |
$ | (1,257,254 | ) | $ | (736,020 | ) | ||
| Adjustments: |
||||||||
| Depreciation and amortization |
1,034,149 | 1,027,820 | ||||||
| Contribution to ESOP |
(40,433 | ) | — | |||||
| Increase in deferred taxes |
23,814 | — | ||||||
| Changes in assets and liabilities: |
||||||||
| (Increase) in accounts receivable |
(16,450,835 | ) | (2,277,754 | ) | ||||
| (Increase) decrease in inventories |
(895,837 | ) | 26,100,912 | |||||
| Decrease (increase) in prepaid expenses and other current assets |
1,162,070 | (4,922,317 | ) | |||||
| (Increase) decrease in other assets |
(29,571 | ) | 128,478 | |||||
| Increase in accounts payable and accrued expenses |
2,445,470 | |||||||