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Table of Contents

 

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 November 30, 2004

 

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  ¨

 

Indicated the number of shares outstanding of each of the issuer’s classes of common stock, as of November 30, 2004.

 

Common Stock - Par Value $.0066   16,891,647
Class   Outstanding Shares

 

Table of Contents

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

INDEX

 

          Page(s)

Part I.

    Financial Information     

        Item 1.

    Financial Statements     
     Consolidated Condensed Balance Sheets - November 30, 2004 (unaudited) and February 29, 2004    3.
     Consolidated Condensed Statements of Operations (unaudited) - Nine and Three Months Ended November 30, 2004 and 2003    4.
     Consolidated Condensed Statements of Cash Flows (unaudited) - Nine Months Ended November 30, 2004 and 2003    5.
     Notes to Interim Consolidated Condensed Financial Statements (unaudited)    6.-9.

        Item 2.

    Management’s Discussion and Analysis of Financial Condition and Results of Operations    10 -16.

        Item 3.

    Quantitative and Qualitative Disclosures About Market Risk    16.

        Item 4.

    Controls and Procedures    16.

Part II.

    Other Information    17.
        SIGNATURES    18.

Exhibit Index

Table of Contents

PART 1. FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

 

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

 

     November 30,
2004
   

February 29,

2004

  
     (unaudited)       
ASSETS                

CURRENT ASSETS:

                

Cash and cash equivalents

    $ 16,790,466    $ 12,469,973  

Accounts receivable - net of allowance for doubtful accounts of $4,316,935 and $4,089,801 for November 30, 2004 and February 29, 2004, respectively

      73,970,426      68,230,405  

Inventories

      100,224,832      68,729,081  

Prepaid expenses and other current assets

      878,057      794,086  
    
  

TOTAL CURRENT ASSETS

      191,863,781      150,223,545  

PROPERTY, PLANT AND EQUIPMENT - NET

      4,103,726      4,401,898  

OTHER ASSETS:

                

Subordinated note receivable

      2,000,000      2,000,000  

Other assets

      1,622,813      1,552,728  
    
  
     $ 199,590,320    $ 158,178,171  
    
  
LIABILITIES AND SHAREHOLDERS’ EQUITY                

CURRENT LIABILITIES:

                

Accounts payable

    $ 21,687,445    $ 21,479,465  

Accrued expenses

      7,573,303      5,250,006  
    
  

TOTAL CURRENT LIABILITIES

      29,260,748      26,729,471  
    
  

LONG TERM LIABILITIES:

                

Revolving credit line

      40,200,000      5,300,000  

Deferred income taxes

      425,146      280,495  
    
  

TOTAL LONG-TERM LIABILITIES

      40,625,146      5,580,495  
    
  

MINORITY INTEREST IN SUBSIDIARIES

      1,833,013      1,465,662  
    
  

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; 16,891,647 and 16,859,766 shares issued and outstanding for November 30, 2004 and February 29, 2004, respectively

      111,485      111,275  

Additional paid-in capital

      44,076,058      43,934,877  

Retained earnings

      83,607,563      80,650,760  

Other accumulated comprehensive income (loss)

      76,307      (294,369 )
    
  

TOTAL SHAREHOLDERS’ EQUITY

      127,871,413      124,402,543  
    
  
     $ 199,590,320    $ 158,178,171  
    
  

 

See notes to interim consolidated condensed financial statements.

 

3

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

 

     For the Nine Months Ended
     For the Three Months Ended
  
    

November 30,

2004

    

November 30,

2003

    

November 30,

2004

    

November 30,

2003

  

NET SALES

    $ 353,626,883     $ 243,840,055     $ 116,218,925     $ 91,071,802  
    
 
 
 

COSTS AND EXPENSES

                                 

Cost of sales

      294,884,235       199,653,799       96,829,764       75,312,065  

Operating expenses

      52,122,045       46,315,653       17,687,355       15,560,035  
    
 
 
 
       347,006,280       245,969,452       114,517,119       90,872,100  
    
 
 
 

OPERATING INCOME (LOSS)

      6,620,603       (2,129,397 )     1,701,806       199,702  
    
 
 
 

OTHER (INCOME) EXPENSE:

                                 

Interest expense

      1,355,191       112,172       569,502       25,361  

Interest income

      (41,951 )     (343,218 )     (12,031 )     (232,238 )
    
 
 
 
       1,313,240       (231,046 )     557,471       (206,877 )
    
 
 
 

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTERESTS

      5,307,363       (1,898,351 )     1,144,335       406,579  

Provision (credit) for income taxes

      1,983,209       (880,674 )     405,028       136,931  
    
 
 
 

INCOME (LOSS) BEFORE MINORITY INTERESTS

      3,324,154       (1,017,677 )     739,307       269,648  

Minority interest in earnings of subsidiaries

      367,351       239,577       154,459       72,682  
    
 
 
 

NET INCOME (LOSS)

    $ 2,956,803     $ (1,257,254 )   $ 584,848     $ 196,966  
    
 
 
 

NET INCOME (LOSS) PER COMMON SHARE:

                                 

Basic

    $ .18     $ (.08 )   $ .03     $ .01  
    
 
 
 

Diluted

    $ .17     $ (.08 )   $ .03     $ .01  
    
 
 
 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

                                 

Basic

      16,886,647       16,685,628       16,891,647       16,700,700  

Diluted

      17,816,056       16,685,628       17,506,975       17,641,150  

 

See notes to interim consolidated condensed financial statements.

 

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

 

     For The Nine Months Ended
  
    

November 30,

2004

    

November 30,

2003

  

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:

                 

CASH FLOWS FROM OPERATING ACTIVITIES:

                 

Cash received from customers

    $ 347,748,461     $ 227,389,220  

Cash paid to suppliers and employees

      (376,725,193 )     (241,320,235 )

Interest received

      41,951       343,218  

Interest paid

      (1,355,191 )     (112,172 )

Income taxes paid

      (150,513 )     (68,881 )
    
 

Net cash (used in) operating activities

      (30,440,485 )     (13,768,850 )
    
 

CASH FLOWS FROM INVESTING ACTIVITIES:

                 

Capital expenditures

      (651,089 )     (406,338 )
    
 

Net cash (used in) investing activities

      (651,089 )     (406,338 )
    
 

CASH FLOWS FROM FINANCING ACTIVITIES:

                 

Net borrowings under revolving credit line

      34,900,000       —    

Proceeds from exercise of stock options

      141,391       140,661  
    
 

Net cash provided by financing activities

      35,041,391       140,661  
    
 

EFFECT OF EXCHANGE RATE CHANGE

      370,676       321,469  
    
 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

      4,320,493       (13,713,058 )

Cash and cash equivalents, beginning of year

      12,469,973       31,345,616  
    
 

CASH AND CASH EQUIVALENTS, END OF PERIOD

    $ 16,790,466     $ 17,632,558  
    
 

RECONCILIATION OF NET INCOME (LOSS) TO NET CASH (USED IN) OPERATING ACTIVITIES:

                 

NET INCOME (LOSS)

    $ 2,956,803     $ (1,257,254 )

Adjustments:

                 

Depreciation and amortization

      949,261       1,034,149  

Bad debt reserve

      138,401       —    

Contribution to ESOP

      —         (40,433 )

Increase in deferred taxes

      144,651       23,814  

Changes in assets and liabilities:

                 

(Increase) in accounts receivable

      (5,878,422 )     (16,450,835 )

(Increase) in inventories

      (31,495,751 )     (895,837 )

(Increase) decrease in prepaid expenses and other current assets

      (83,971 )     1,162,070  

(Increase) in other assets

      (70,085 )     (29,571 )

Increase in accounts payable and accrued expenses

      2,531,277       2,445,470  

Increase in minority interest

      367,351       239,577  
    
 

NET CASH (USED) BY OPERATING ACTIVITIES

    $ (30,440,485 )   $ (13,768,850 )
    
 

 

See notes to interim consolidated condensed financial statements.

 

5

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(unaudited)

 

1. BASIS OF PRESENTATION:

 

In the opinion of management, the accompanying unaudited in