Attached files
file | filename |
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EX-10.1 - NU HORIZONS ELECTRONICS CORP | v170737_ex10-1.htm |
EX-32.1 - NU HORIZONS ELECTRONICS CORP | v170737_ex32-1.htm |
EX-31.2 - NU HORIZONS ELECTRONICS CORP | v170737_ex31-2.htm |
EX-32.2 - NU HORIZONS ELECTRONICS CORP | v170737_ex32-2.htm |
EX-31.1 - NU HORIZONS ELECTRONICS CORP | v170737_ex31-1.htm |
FORM
10-Q
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
(Mark
One)
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended November 30, 2009
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ______________ to _______________.
Commission
File Number 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)
|
(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 check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ¨ No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated
filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):
Large
accelerated filer ¨
|
Accelerated
filer x
|
|
Non-accelerated
filer (Do not check
|
Smaller
reporting company ¨
|
|
if
a smaller reporting company) ¨
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No x
The
number of shares outstanding of registrant’s common stock, as of January 4,
2010:
Common
Stock – Par Value $.0066
|
18,552,092
|
|
Class
|
Outstanding
Shares
|
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
INDEX
Page(s)
|
|||
PART
I.
|
FINANCIAL
INFORMATION
|
||
Item
1.
|
Financial
Statements.
|
||
Condensed
Consolidated Statements of Operations (unaudited) -
|
|||
Three
and Nine Months Ended November 30, 2009 and 2008
|
3.
|
||
Condensed
Consolidated Balance Sheets -
|
|||
November
30, 2009 (unaudited) and February 28, 2009
|
4.
|
||
Condensed
Consolidated Statements of Cash Flows (unaudited) -
|
|||
Nine
Months Ended November 30, 2009 and 2008
|
5.
|
||
Notes
to Interim Condensed Consolidated Financial Statements
(unaudited)
|
6.-15.
|
||
Report
of Independent Registered Public Accounting Firm.
|
16.
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial
|
||
Condition
and Results of Operations.
|
17.-23.
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk.
|
24.
|
|
Item
4.
|
Controls
and Procedures.
|
25.
|
|
PART
II.
|
OTHER
INFORMATION
|
26.
|
|
Item
1.
|
Legal
Proceedings.
|
26.
|
|
Item
1A.
|
Risk
Factors.
|
26.
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
26.
|
|
Item
3.
|
Defaults
Upon Senior Securities.
|
26.
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
26.
|
|
Item
5.
|
Other
Information.
|
26.
|
|
Item
6.
|
Exhibits.
|
27.
|
|
SIGNATURES
|
28.
|
||
EXHIBIT
INDEX
|
29.
|
||
CERTIFICATIONS
|
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements.
NU
HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For
the Three Months Ended
|
For
the Nine Months Ended
|
|||||||||||||||
November
30,
2009
|
November
30,
2008
|
November
30,
2009
|
November
30,
2008
|
|||||||||||||
NET
SALES
|
$ | 179,446,000 | $ | 188,219,000 | $ | 483,805,000 | $ | 600,184,000 | ||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Cost
of sales
|
154,269,000 | 159,709,000 | 415,115,000 | 509,904,000 | ||||||||||||
Selling,
general and administrative expenses
|
22,821,000 | 28,653,000 | 67,366,000 | 86,077,000 | ||||||||||||
177,090,000 | 188,362,000 | 482,481,000 | 595,981,000 | |||||||||||||
OPERATING
INCOME (LOSS)
|
2,356,000 | (143,000 | ) | 1,324,000 | 4,203,000 | |||||||||||
OTHER
EXPENSE (INCOME)
|
||||||||||||||||
Interest
expense
|
454,000 | 747,000 | 1,146,000 | 2,563,000 | ||||||||||||
Interest
income
|
(2,000 | ) | (7,000 | ) | (12,000 | ) | (11,000 | ) | ||||||||
452,000 | 740,000 | 1,134,000 | 2,552,000 | |||||||||||||
INCOME
(LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES
|
1,904,000 | (883,000 | ) | 190,000 | 1,651,000 | |||||||||||
Provision
(benefit) for income taxes
|
1,174,000 | (1,127,000 | ) | (240,000 | ) | (151,000 | ) | |||||||||
CONSOLIDATED
NET INCOME
|
730,000 | 244,000 | 430,000 | 1,802,000 | ||||||||||||
Net
income attributable to noncontrolling interest
|
80,000 | 94,000 | 181,000 | 305,000 | ||||||||||||
NET
INCOME ATTRIBUTED TO SHAREHOLDERS
|
$ | 650,000 | $ | 150,000 | $ | 249,000 | $ | 1,497,000 | ||||||||
NET
INCOME PER SHARE
|
||||||||||||||||
Basic
|
$ | .04 | $ | .01 | $ | .01 | $ | .08 | ||||||||
Diluted
|
$ | .04 | $ | .01 | $ | .01 | $ | .08 | ||||||||
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING:
|
||||||||||||||||
Basic
|
18,115,544 | 18,067,795 | 18,102,269 | 18,035,460 | ||||||||||||
Diluted
|
18,189,426 | 18,067,795 | 18,162,352 | 18,137,584 |
See
accompanying notes
3
NU
HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
November
30,
2009
|
February
28,
2009
|
|||||||
(unaudited)
|
||||||||
-
ASSETS -
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
|
$ | 11,502,000 | $ | 4,793,000 | ||||
Accounts
receivable – net of allowance for doubtful accounts of $3,634,000
and $3,438,000 as of November 30, 2009 and February 28, 2009,
respectively
|
117,507,000 | 111,572,000 | ||||||
Inventories
|
107,768,000 | 107,877,000 | ||||||
Deferred
tax asset
|
4,494,000 | 3,323,000 | ||||||
Prepaid
expenses and other current assets
|
6,204,000 | 4,979,000 | ||||||
TOTAL
CURRENT ASSETS
|
247,475,000 | 232,544,000 | ||||||
PROPERTY,
PLANT AND EQUIPMENT – NET
|
4,655,000 | 4,827,000 | ||||||
OTHER
ASSETS:
|
||||||||
Cost
in excess of net assets acquired
|
5,022,000 | 5,020,000 | ||||||
Intangibles
– net
|
3,488,000 | 3,742,000 | ||||||
Other
assets
|
2,040,000 | 5,222,000 | ||||||
TOTAL
ASSETS
|
$ | 262,680,000 | $ | 251,355,000 | ||||
-
LIABILITIES AND SHAREHOLDERS’ EQUITY -
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 63,656,000 | $ | 67,133,000 | ||||
Accrued
expenses
|
9,844,000 | 8,498,000 | ||||||
Bank
debt
|
5,005,000 | 8,450,000 | ||||||
Income
taxes payable
|
1,580,000 | 1,322,000 | ||||||
TOTAL
CURRENT LIABILITIES
|
80,085,000 | 85,403,000 | ||||||
LONG
TERM LIABILITIES
|
||||||||
Bank
debt
|
30,100,000 | 14,950,000 | ||||||
Deferred
tax liability
|
1,902,000 | 1,903,000 | ||||||
Other
long term liabilities
|
3,115,000 | 2,590,000 | ||||||
TOTAL
LONG TERM LIABILITIES
|
35,117,000 | 19,443,000 | ||||||
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; 18,552,092 and
18,578,946 shares issued and outstanding as of November 30, 2009 and
February 28, 2009, respectively
|
122,000 | 122,000 | ||||||
Additional
paid-in capital
|
57,163,000 | 56,386,000 | ||||||
Retained
earnings
|
87,635,000 | 87,386,000 | ||||||
Other
accumulated comprehensive (loss) income
|
(19,000 | ) | 83,000 | |||||
Total
Shareholders’ Equity
|
144,901,000 | 143,977,000 | ||||||
Noncontrolling
interest
|
2,577,000 | 2,532,000 | ||||||
TOTAL
EQUITY
|
147,478,000 | 146,509,000 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 262,680,000 | $ | 251,355,000 |
See
accompanying notes
4
NU
HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For
The Nine Months Ended
|
||||||||
November
30,
2009
|
November
30,
2008
|
|||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS:
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Cash
received from customers
|
$ | 478,259,000 | $ | 606,357,000 | ||||
Cash
paid to suppliers and employees
|
(481,946,000 | ) | (585,095,000 | ) | ||||
Interest
received
|
12,000 | 12,000 | ||||||
Interest
paid
|
(1,202,000 | ) | (2,573,000 | ) | ||||
Income
tax refunds
|
2,474,000 | 1,650,000 | ||||||
Income
taxes paid
|
(1,181,000 | ) | (2,899,000 | ) | ||||
Net
cash (used) provided by operating activities
|
(3,584,000 | ) | 17,452,000 | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital
expenditures
|
(910,000 | ) | (1,730,000 | ) | ||||
Acquisition
payment Nu Horizons Electronics Limited
|
- | (3,410,000 | ) | |||||
Acquisition
payment Nu Horizons Electronics A/S
|
- | (3,814,000 | ) | |||||
Net
cash used in investing activities
|
(910,000 | ) | (8,954,000 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Borrowings
under revolving credit lines and bank credit lines
|
183,155,000 | 244,756,000 | ||||||
Repayments
under revolving credit lines and bank credit lines
|
(171,752,000 | ) | (252,339,000 | ) | ||||
Dividend
to noncontrolling interest
|
(135,000 | ) | - | |||||
Proceeds
from exercise of stock options
|
- | 356,000 | ||||||
Net
cash provided (used) by financing activities
|
11,268,000 | (7,227,000 | ) | |||||
EFFECT
OF EXCHANGE RATE CHANGE
|
(65,000 | ) | 683,000 | |||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
6,709,000 | 1,954,000 | ||||||
Cash
and cash equivalents, beginning of year
|
4,793,000 | 3,886,000 | ||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$ | 11,502,000 | $ | 5,840,000 | ||||
RECONCILIATION OF NET INCOME TO
NET CASH (USED) PROVIDED BY OPERATING
ACTIVITIES:
|
||||||||
CONSOLIDATED
NET INCOME
|
$ | 430,000 | $ | 1,802,000 | ||||
Adjustments:
|
||||||||
Depreciation
and amortization
|
1,389,000 | 1,445,000 | ||||||
Bad
debt reserve
|
248,000 | (463,000 | ) | |||||
Deferred
income tax
|
(1,171,000 | ) | 19,000 | |||||
Stock
based compensation
|
777,000 | 756,000 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
(5,545,000 | ) | 6,315,000 | |||||
Inventories
|
109,000 | 4,400,000 | ||||||
Prepaid
expenses and other current assets
|
(1,190,000 | ) | 693,000 | |||||
Other assets
|
3,171,000 | 127,000 | ||||||
Accounts
payable and accrued expenses
|
(1,145,000 | ) | 4,367,000 | |||||
Income
taxes
|
(1,181,000 | ) | (2,899,000 | ) | ||||
Other
long term liabilities
|
524,000 | 890,000 | ||||||
NET
CASH (USED) PROVIDED BY OPERATING ACTIVITIES
|
$ | (3,584,000 | ) | $ | 17,452,000 |
See
accompanying notes
5
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
1.
|
BASIS
OF PRESENTATION:
|
|
A.
|
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. ("NIC"),
Nu Horizons International Corp. ("International"), NUHC Inc. ("NUC"), Nu
Horizons Electronics Asia PTE LTD ("NUA"), Nu Horizons Electronics Pte Ltd
("NUZ"), Nu Horizons Electronics Asia Pte Ltd., Korea Branch ("NUK"), Nu
Horizons Electronics NZ Limited ("NUN"), Nu Horizons Electronics Hong Kong
Ltd. ("NUO"), Nu Horizons Electronics (Shanghai) Co. Ltd. ("NUS"), Nu
Horizons Electronics Limited ("NUE"), Nu Horizons Electronics GmbH
("NUD"), Titan Supply Chain Services Corp. ("Titan"), Titan Supply Chain
Services PTE LTD ("TSC"), Titan Supply Chain Services Limited ("TSE"),
Razor Electronics, Inc. ("RAZ"), NuXchange B2B Services, Inc. ("NUX"), Nu
Horizons Electronics A/S, formerly known as C-88 AS ("C-88"), and its
majority-owned subsidiaries, NIC Components Europe Limited ("NIE"), and
NIC Components Asia PTE LTD. ("NIA") contain all adjustments of a normal
and recurring nature, necessary to present fairly the Company’s financial
position as of November 30, 2009 and February 28, 2009 and the results of
its operations for the three- and nine-month periods ended November 30,
2009 and 2008, and its cash flows for the nine-month periods ended
November 30, 2009 and 2008. All references to the "Company," “Nu
Horizons,” "we," "us" and "our" refer to Nu Horizons Electronics Corp. and
its subsidiaries, unless the context indicates
otherwise.
|
The
accounting policies followed by the Company are set forth in Note 1 to the
Company’s consolidated financial statements included in its Annual Report on
Form 10-K for the year ended February 28, 2009. Specific reference is made
to that 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 ("U.S. GAAP").
The
results of operations for the three- and nine-month periods ended November 30,
2009 are not necessarily indicative of the results to be expected for the full
year.
In fiscal
2009 and the first and second quarters of fiscal 2010, the Company estimated its
quarterly income taxes by applying an estimated annual effective tax rate to
interim period pre-tax income to calculate the income tax provision or benefit
for each quarter. During the three months ended November 30, 2009, the Company
used an alternative method to calculate the effective tax rate since it is
unable to make a reliable estimate of pre-tax income for the remainder of the
fiscal year. Under this alternative method, interim period income taxes are
based on each discrete quarter's pre-tax income. Due to the recent
volatility and uncertainty in the current economic market, the Company applied
the alternative method to compute income taxes expense beginning in the third
quarter of 2009. The change in method resulted in a decrease of
approximately $255,000 to income tax expense for the three and nine months ended
November 30, 2009.
B.
|
Revenue
Recognition:
|
Nu
Horizons and its wholly- and majority-owned subsidiaries are engaged in the
distribution of high technology electronic components to a wide variety of
original equipment manufacturers of electronic products in the United States,
Asia and Europe. The Company also has certain business with a select
supplier where it acts as an agent.
The
Company recognizes revenue when there is persuasive evidence of an arrangement,
delivery has occurred or services are rendered, the sales price is determinable,
and collectability is reasonably assured. Revenue is recognized at time of
shipment.
A portion
of the Company's business involves shipments directly from its suppliers to its
customers. In these transactions, the Company is responsible for
negotiating price both with the supplier and customer, payment to the supplier,
establishing payment terms with the customer, product returns, and has risk of
loss if the customer does not make payment. As the principal with the
customer, the Company recognizes the sale and cost of sale of the product upon
receiving notification from the supplier that the product was
shipped.
In
addition, the Company has certain business with a supplier and customers that is
accounted for on an agency basis (that is, the Company recognizes the fees
associated with serving as an agent in sales with no associated cost of
sales). These transactions relate to the rendering of logistics services
for the delivery of inventory for which the Company does not assume the risks
and rewards of ownership.
6
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Sales are
recorded net of discounts, rebates, price adjustments, and returns. Prompt
payment discounts are recorded at the time payment is received from the
customer. Provisions are made for rebates which are primarily volume
driven, based on historical trends and anticipated customer buying
patterns. We record a reserve for potential sales returns when the right
of return exists. Historical sales returns and anticipated future buying
patterns are utilized to record provisions for sales returns.
2.
|
NEW
ACCOUNTING STANDARDS:
|
In June
2009, the Financial Accounting Standards Board (“FASB”) issued authoritative
guidance which establishes the FASB Accounting Standards CodificationTM (“ASC”)
as the single source of authoritative U.S. GAAP, organized by topic, and creates
a new referencing system to identify authoritative literature such that
references to SFAS, EITF, etc. will no longer be valid. The Codification does
not create any new U.S. GAAP standards. In addition, the Securities and
Exchange Commission ("SEC") rules and releases will remain as sources of
authoritative U.S. GAAP for SEC registrants. The standard is effective for
interim and annual periods ending after September 15, 2009. The Company
adopted the standard in the third quarter of fiscal 2010 and it did not have a
material impact on the Company’s consolidated financial position or results of
operations.
In May
2009, the FASB issued new accounting and disclosure guidance for subsequent
events that occur after the balance sheet date but before financial statements
are issued or available to be issued. The Company adopted this guidance in
the second quarter of fiscal 2010. The adoption did not impact the
Company’s consolidated financial position or results of operations.
In
December 2007, the FASB issued guidance that changes the requirements for
an acquirer’s recognition and measurement of the assets acquired and the
liabilities assumed in a business combination. It also requires that transaction
costs be expensed as incurred. This guidance is effective for annual periods
beginning after December 15, 2008 and should be applied prospectively for
all business combinations entered into after the date of adoption. The Company
adopted this guidance effective March 1, 2009. The adoption of the
guidance will impact the manner in which the Company accounts for future
acquisitions and the impact could be significant, depending on the terms of
future acquisitions.
In
December 2007, the FASB issued new accounting and disclosure guidance related to
noncontrolling interest in subsidiaries. The guidance requires that
noncontrolling interests be reported as a component of shareholders’ equity; net
income attributable to the parent and the noncontrolling interest be separately
identified in the consolidated statement of operations; changes in the parent’s
ownership interest be treated as equity transactions if control is maintained;
and upon a loss of control, any gain or loss on the interest be recognized in
the statement of operations. The guidance also requires expanded
disclosures to clearly identify and distinguish between the interests of the
parent and the interests of the noncontrolling owners. The new guidance is being
applied prospectively, except for the presentation and disclosure requirements,
which have been applied retrospectively. The Company adopted this guidance
effective March 1, 2009 and it did not materially impact the Company’s
consolidated financial position or results of operations. Prior period
amounts were reclassified to conform to the current presentation.
3.
|
ACQUISITIONS:
|
On
September 9, 2008, the Company acquired all the outstanding shares of C-88, a
franchised distributor of electronic components based in Hoersholm,
Denmark. This acquisition will further expand the Company’s presence in
Europe. The operating results of C-88 are reflected in the accompanying
financial statements since the date of acquisition.
The C-88
acquisition has been accounted for using the purchase method of
accounting. Pursuant to the terms of the purchase agreement, the Company
paid $4,044,000 in cash as of the acquisition date, including transaction costs
of $544,000. The purchase price was first allocated to tangible and
identifiable intangible assets. The excess purchase price was allocated to
goodwill which amounted to $2,375,000 and is attributed to the active electronic
components segment. The goodwill is not tax deductible. The Company
allocated $1,600,000 to customer relationships and $20,000 to non-compete
agreements which will be amortized over 10 years and 2 years,
respectively. The purchase agreement also provides for potential
additional payments to the seller from a minimum of $500,000 up to a maximum
$3,500,000 (the “Deferred Purchase Price”). At November 30, 2009, the
present value of the minimum payment of $500,000 has been recorded as a short-
and long-term liability as accrued expenses and other long-term liabilities on
the Company's consolidated balance sheet as a payment of $300,000 is due to the
seller during the fourth quarter of fiscal 2010 and a payment of $200,000 is due
during the fourth quarter of fiscal 2011. The payment of any amounts in excess
of the $500,000 minimum is contingent upon the attainment of certain earnings
milestones by C-88 during the three-year period ending August 31,
2011.
7
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Contingent
consideration will be accounted for as compensation expense. The
compensation is contingent on continued employment of the directors of C-88 and
will be accrued over the period ending August 31, 2011 when it is deemed
probable that the earnings milestones will be attained. For the three- and
nine-month period ended November 30, 2009, no additional amount above the
$500,000 minimum has been recorded as C-88 did not attain the first earnings
milestone and is not currently projected to meet the second earnings milestone
established in the purchase agreement.
The
following table presents the allocations of the aggregate purchase price for the
C-88 acquisition based on the estimated fair values of assets acquired and
liabilities assumed.
Purchase
price
|
$ | 3,500,000 | ||
Direct
acquisition costs
|
544,000 | |||
Total
purchase price, net of cash acquired
|
$ | 4,044,000 | ||
Allocation
of purchase price:
|
||||
Cash
|
77,000 | |||
Accounts
receivable
|
3,396,000 | |||
Inventory
|
786,000 | |||
Other
current assets
|
105,000 | |||
Fixed
assets
|
22,000 | |||
Other
assets
|
6,000 | |||
Accounts
payable/accrued expenses
|
(3,030,000 | ) | ||
Bank
credit line
|
(900,000 | ) | ||
Taxes
payable
|
(413,000 | ) | ||
Customer
relationships
|
1,600,000 | |||
Non
compete agreement
|
20,000 | |||
Cost
in excess of net assets acquired
|
2,375,000 | |||
Total
purchase price, net of cash acquired
|
$ | 4,044,000 |
4.
|
PROPERTY,
PLANT AND EQUIPMENT:
|
Property,
plant and equipment, which are recorded at cost, consist of the
following:
November
30, 2009
|
February
28, 2009
|
|||||||
Furniture,
fixtures and equipment
|
$ | 11,548,000 | $ | 10,829,000 | ||||
Computer
equipment
|
9,615,000 | 9,478,000 | ||||||
Leasehold
improvements
|
670,000 | 1,106,000 | ||||||
21,833,000 | 21,413,000 | |||||||
Less:
Accumulated depreciation and amortization
|
17,178,000 | 16,586,000 | ||||||
$ | 4,655,000 | $ | 4,827,000 |
Depreciation
expense for the three months ended November 30, 2009 and 2008 was $274,000 and $571,000,
respectively. Depreciation expense for the nine months ended November 30,
2009 and 2008 aggregated $1,135,000 and $1,451,000
respectively.
8
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5.
|
DEBT:
|
Bank
Debt: Revolving Credit Lines
On
January 31, 2007, the Company entered into an amended and restated secured
revolving line of credit agreement with eight banks, which currently provides
for maximum borrowings of $120,000,000 (the "Revolving Credit Line"). The
Revolving Credit Line provides for borrowings utilizing an asset-based formula
predicated on a certain percentage of outstanding domestic accounts receivable
and inventory levels at any given month-end. Based on the asset-based
formula, the Company may not be able to borrow the maximum amount available
under its Revolving Credit Line at all times. At November 30, 2009,
borrowings under the Revolving Credit Line incurred interest at either (i) the
lead bank’s prime rate plus 1.75% or (ii) LIBOR plus 3.5%, at the option of the
Company, through September 30, 2011, the due date of the loan. The
interest rate at November 30, 2009 was 5.00%. Direct borrowings
under the Revolving Credit Line were $30,100,000 and $14,950,000 at November 30,
2009 and February 28, 2009, respectively. As of November 30, 2009, the
Company was in compliance with all of the required bank covenants.
On
November 20, 2006, the Company entered into a revolving credit agreement with a
Singapore bank to provide a $30,000,000 secured line of credit to the Company’s
Asian subsidiaries and thereby finance the Company’s Asian operations (the
"Singapore Credit Line"). On November 20, 2009, the Singapore Credit Line
expired and the Company repaid all of its direct borrowings then outstanding
under the Singapore Credit Line aggregating $5,000,000.
Bank
Debt: Bank Credit Lines
The
Company also has a receivable financing agreement with a bank in England (the
"U.K. Credit Line") which provides for maximum borrowings of £4,000,000
(approximately $6,654,000) at November 30, 2009, which bear interest at the
bank’s base rate plus 1.55%. The interest rate at November 30, 2009 was
2.28%. The Company owed $3,788,000 and $1,944,000 at November 30, 2009 and
February 28, 2009, respectively. The U.K. Credit Line renews annually in
July.
The
Company has a credit agreement with a bank in Denmark (the "Danish Credit Line")
which provides for maximum borrowings of 10,072,000 Danish Kroner (approximately
$2,033,000) as of November 30, 2009, at the current prevailing interest rate
(6.14% at November 30, 2009). Borrowings under the Danish Credit Line were
6,030,000 Danish Kroner ($1,217,000) and 8,953,000 Danish Kroner ($1,506,000) at
November 30, 2009 and February 28, 2009, respectively. The Danish Credit
Line has no expiration date and is reviewed quarterly by the bank in
Denmark.
At November 30, 2009, the Company had
approximately $39,850,000 in the aggregate available under all of its then
outstanding bank credit facilities.
9
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
6.
|
ACCRUED
EXPENSES:
|
Accrued
expenses consist of the following:
November 30, 2009
|
February 28, 2009
|
|||||||
Commissions
|
$ | 2,002,000 | $ | 1,706,000 | ||||
Goods
and services tax
|
1,731,000 | 1,137,000 | ||||||
Compensation
and related benefits
|
1,646,000 | 1,350,000 | ||||||
Sales
returns
|
708,000 | 758,000 | ||||||
Professional
fees
|
346,000 | 461,000 | ||||||
Deferred
rent
|
427,000 | 343,000 | ||||||
Due
to seller
|
300,000 | 296,000 | ||||||
Other
|
2,684,000 | 2,447,000 | ||||||
Total
|
$ | 9,844,000 | $ | 8,498,000 |
7.
|
OTHER
LONG TERM LIABILITIES:
|
Other
long term liabilities consist of the following:
November 30, 2009
|
February 28, 2009
|
|||||||
Executive
retirement plan
|
$ | 2,920,000 | $ | 2,400,000 | ||||
Due
to seller
|
195,000 | 190,000 | ||||||
Total
|
$ | 3,115,000 | $ | 2,590,000 |
10
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
8.
|
NET
INCOME PER SHARE:
|
Basic
earnings per share is calculated by dividing net income by the weighted average
shares outstanding during the period. Diluted earnings per share is
calculated by dividing net income by the weighted average number of common
shares used in the basic earnings per share calculation, plus the number of
common shares that would be issued assuming conversion of all potentially
dilutive securities outstanding. Such securities shown below, presented on
a common share equivalent basis, have been included in the per-share
computations:
For
the Three Months Ended
|
For
the Nine Months Ended
|
|||||||||||||||
November
30, 2009
|
November
30, 2008
|
November
30, 2009
|
November
30, 2008
|
|||||||||||||
NUMERATOR:
|
||||||||||||||||
Net
income attributed to shareholders
|
$ | 650,000 | $ | 150,000 | $ | 249,000 | $ | 1,497,000 | ||||||||
DENOMINATOR:
|
||||||||||||||||
Basic
earnings per common share – weighted-average number of common shares
outstanding
|
18,115,544 | 18,067,795 | 18,102,269 | 18,035,460 | ||||||||||||
Effect
of dilutive stock options and restricted shares
|
73,882 | - | 60,083 | 102,124 | ||||||||||||
Diluted
earnings per common share – adjusted weighted-average number of common
shares outstanding
|
18,189,426 | 18,067,795 | 18,162,352 | 18,137,584 | ||||||||||||
Net
income per share:
Basic
|
$ | 0.04 | $ | 0.01 | $ | 0.01 | $ | 0.08 | ||||||||
Diluted
|
$ | 0.04 | $ | 0.01 | $ | 0.01 | $ | 0.08 |
For the
three months ended November 30, 2009 and 2008, the above calculation excludes
1,268,250 options and 296,359 restricted shares and 2,149,223 options and
514,730 restricted shares, respectively, as their effect was antidilutive.
For the nine months ended November 30, 2009 and 2008, the above calculation
excludes 1,383,000 options and 354,490 restricted shares, and 1,456,750 options
and 417,633 restricted shares, respectively, as their effect was
antidilutive.
11
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9.
|
STOCK
BASED COMPENSATION:
|
The
Company expenses the estimated fair value of these awards over the requisite
employee service period.
Stock
Options
Stock
options granted to date under each of the Company’s 1998 and 2000 Stock Option
Plans, 2000 Key Employee Stock Option Plan and 2002 Key Employee Stock Incentive
Plan generally expire ten years after the date of grant and become exercisable
in two equal annual installments commencing one year from date of grant.
Stock options granted under the Company’s Outside Director Stock Option Plan and
2000 and 2002 Outside Directors’ Stock Option Plans expire ten years after the
date of grant and become exercisable in three equal installments beginning on
the date of grant and on the succeeding two anniversaries thereof. The exercise
price for options cannot be less than the fair market value of the Company’s
common stock on the date of grant.
The
following information relates to the stock option activity for the nine months
ended November 30, 2009:
Options
|
Shares
|
Weighted
Average
Exercise Price
|
Weighted
Average
Remaining
Contractual
Life
|
Aggregate
Intrinsic Value
|
|||||||||
Outstanding
at March 1, 2009
|
2,176,723 | $ | 6.85 | ||||||||||
Granted
|
435,000 | $ | 3.84 | ||||||||||
Forfeited
|
(1,308,473 | ) | $ | 5.13 | |||||||||
Outstanding
at November 30, 2009
|
1,303,250 | $ | 7.57 |
4.3 years
|
$ | 99,200 | |||||||
Exercisable
at November 30, 2009
|
1,185,750 | $ | 8.00 |
3.8 years
|
$ | 6,000 |
The
aggregate intrinsic value in the table above represents the total pre-tax
intrinsic value (the difference between the Company’s closing stock price on the
last trading day of the third quarter of fiscal 2010 and the exercise price,
multiplied by the number of in-the-money options) that would have been received
by the option holders had all option holders exercised their options on November
30, 2009. This amount changes based on the fair market value of the
Company’s common stock. The total intrinsic value of options exercised for the
nine months ended November 30, 2009 and 2008 was $0 (no options exercised), and
$506,000, respectively. For the nine-month periods ended November 30, 2009
and 2008, the Company recorded compensation expense aggregating $173,000 and $231,000,
respectively, relating to stock options.
Cash
received from option exercises during the nine months ended November 30, 2009
and 2008 was $0 (no options exercised) and $356,000, respectively, and is
included within the financing activities section in the accompanying
consolidated statements of cash flows.
Restricted
Stock
Subject
to the terms and conditions of the 2002 Key Employee Stock Incentive Plan, as
amended, the compensation committee of the Company's board of directors may
grant shares of restricted stock. Shares of restricted stock awarded may
not be sold, transferred, pledged or assigned until the end of the applicable
period of restriction established by the compensation committee and specified in
the award agreement. Compensation expense is recognized on a straight-line
basis as shares become free of forfeiture restrictions (i.e., vest),
historically over a five- or seven-year period. In each of the nine-month
periods ended November 30, 2009 and 2008, the Company recorded compensation
expense aggregating $604,000 relating to restricted
stock.
12
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Summary of Non-Vested
Shares
The
following information summarizes the changes in non-vested restricted stock for
the nine months ended November 30, 2009:
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
|||||||
Non-vested
shares at March 1, 2009
|
509,620 | $ | 9.16 | |||||
Granted
|
41,000 | $ | 4.01 | |||||
Vested
|
(64,964 | ) | $ | 8.36 | ||||
Forfeited
|
(50,653 | ) | $ | 9.82 | ||||
Non-vested
shares at November 30, 2009
|
435,003 | $ | 8.72 |
As of
November 30, 2009, there was total unrecognized compensation cost of $2,910,000
related to non-vested shares and stock options which is expected to be
recognized over a weighted average period of 3.2 years.
10.
|
BUSINESS
SEGMENT AND GEOGRAPHIC INFORMATION:
|
Nu
Horizons Electronics Corp. and its subsidiaries, both wholly- and
majority-owned, are wholesale and export distributors of active electronic
components and passive components and systems products throughout the United
States, Asia, Australia and Europe. The Company has two operating segments
consisting of active electronic components and passive components.
The
active electronic components segment includes mainly commercial semiconductor
products such as memory chips, microprocessors, digital and linear circuits,
microwave, RF and fiber-optic components, transistors, diodes and systems
products. The passive components segment includes passive components
distributed by NIC and majority-owned subsidiaries NIA and NIE, principally to
OEMs, contract manufacturers and other distributors globally, that consist of a
high technology line of surface mount and leaded components including
capacitors, resistors, inductors and circuit protection components.
Each
operating segment has its own management team that manages certain functions
within the segment. Each segment also has discrete financial reporting that is
evaluated at the corporate level on which operating decisions and strategic
planning for the Company are made.
Sales and
operating income (loss), by segment, for the three and nine months ended
November 30, 2009 and 2008 are as follows:
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
Sales:
|
November 30,
2009
|
November 30,
2008
|
November 30,
2009
|
November 30,
2008
|
||||||||||||
Active
electronic components
|
$ | 166,315,000 | $ | 174,703,000 | $ | 451,659,000 | $ | 556,447,000 | ||||||||
Passive
components
|
13,131,000 | 13,516,000 | 32,146,000 | 43,737,000 | ||||||||||||
$ | 179,446,000 | $ | 188,219,000 | $ | 483,805,000 | $ | 600,184,000 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
Operating income (loss):
|
November 30,
2009
|
November 30,
2008
|
November 30,
2009
|
November 30,
2008
|
||||||||||||
Active
electronic components
|
$ | 1,879,000 | $ | 1,227,000 | $ | 2,856,000 | $ | 8,150,000 | ||||||||
Passive
components
|
956,000 | (318,000 | ) | 719,000 | 199,000 | |||||||||||
Corporate
|
(479,000 | ) | (1,052,000 | ) | (2,251,000 | ) | (4,146,000 | ) | ||||||||
$ | 2,356,000 | $ | (143,000 | ) | $ | 1,324,000 | $ | 4,203,000 |
13
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
Total
assets, by segment, as of November 30, 2009 and February 28, 2009 are as
follows:
November 30,
2009
|
February 28,
2009
|
|||||||
Total
assets:
|
||||||||
Active
electronic components
|
$ | 219,859,000 | $ | 208,057,000 | ||||
Passive
components
|
42,821,000 | 43,298,000 | ||||||
$ | 262,680,000 | $ | 251,355,000 |
The
Company’s business is conducted in the Americas, Europe and
Asia/Pacific.
Revenues,
by geographic area, for the three and nine months ended November 30, 2009 and
2008 are as follows:
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
Revenue:
|
November 30,
2009
|
November 30,
2008
|
November 30,
2009
|
November 30,
2008
|
||||||||||||
Americas
|
$ | 102,521,000 | $ | 118,813,000 | $ | 279,794,000 | $ | 388,097,000 | ||||||||
Europe
|
17,548,000 | 15,430,000 | 52,233,000 | 48,779,000 | ||||||||||||
Asia/Pacific
|
59,377,000 | 53,976,000 | 151,778,000 | 163,308,000 | ||||||||||||
$ | 179,446,000 | $ | 188,219,000 | $ | 483,805,000 | $ | 600,184,000 |
Total
assets, by geographic area, as of November 30, 2009 and February 28, 2009 are as
follows:
November
30,
2009
|
February
28,
2009
|
|||||||
Total
assets:
|
||||||||
Americas
|
$ | 168,688,000 | $ | 157,648,000 | ||||
Europe
|
16,943,000 | 18,092,000 | ||||||
Asia/Pacific
|
77,049,000 | 75,615,000 | ||||||
$ | 262,680,000 | $ | 251,355,000 |
The net
book value of long-lived assets, by geographic area, as of November 30, 2009 and
February 28, 2009 is as follows:
November
30,
2009
|
February
28,
2009
|
|||||||
Long
–lived assets:
|
||||||||
Americas
|
$ | 4,071,000 | $ | 4,176,000 | ||||
Europe
|
310,000 | 342,000 | ||||||
Asia/Pacific
|
274,000 | 309,000 | ||||||
$ | 4,655,000 | $ | 4,827,000 |
14
NU HORIZONS ELECTRONICS
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
11.
|
COMPREHENSIVE
INCOME:
|
Comprehensive
income (loss) includes certain gains and losses that, under U.S. GAAP, are
excluded from net income (loss), as these amounts are recorded directly as an
adjustment to shareholders' equity. Our comprehensive income (loss)
primarily includes net income (loss) and foreign currency translation
adjustments. Comprehensive income (loss) for the three and nine months
ended November 30, 2009 and 2008 is as follows:
For the Three Months Ended
|
For the Nine Months Ended
|
|||||||||||||||
November 30,
2009
|
November 30,
2008
|
November 30,
2009
|
November 30,
2008
|
|||||||||||||
Consolidated
net income
|
$ | 730,000 | $ | 244,000 | $ | 430,000 | $ | 1,802,000 | ||||||||
Other
comprehensive (loss) income (foreign currency translation
adjustments)
|
(189,000 | ) | 527,000 | (102,000 | ) | 904,000 | ||||||||||
Consolidated
comprehensive income
|
541,000 | 771,000 | 328,000 | 2,706,000 | ||||||||||||
Less:
Comprehensive income attributed to noncontrolling interest
|
80,000 | 94,000 | 181,000 | 305,000 | ||||||||||||
Comprehensive
income attributed to shareholders
|
$ | 461,000 | $ | 677,000 | $ | 147,000 | $ | 2,401,000 |
12.
|
SUBSEQUENT
EVENTS:
|
The
Company has evaluated events subsequent to the November 30, 2009 quarter end
through January 7, 2010, the date of filing of this Form 10-Q. During this
period, no material disclosable subsequent events were
identified.
15
/s/
Ernst & Young LLP
Jericho,
New York
January
7, 2010
16
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
As used
in this Report, "we," "us," "our," "Nu Horizons" or the “Company" means Nu
Horizons Electronics Corp. and its subsidiaries unless the context indicates a
different meaning.
Forward Looking
Statements:
Statements
in this Form 10-Q quarterly report may be "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, statements that
express the Company’s intentions, beliefs, expectations, strategies, predictions
or any other statements relating to its future activities or other future events
or conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual outcomes and results may differ materially from
what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those risks discussed under "Item 1A – Risk Factors"
in the Company's Annual Report on Form 10-K for the year ended February 28, 2009
and elsewhere in such Annual Report and from time to time in other documents
which the Company files with the Securities and Exchange Commission. In
addition, such statements could be affected by risks and uncertainties related
to product demand, market and customer acceptance, competition, government
regulations and requirements, pricing and development difficulties, as well as
general industry and market conditions and growth rates, and general economic
conditions. Any forward-looking statements speak only as of the date on
which they are made, and the Company does not undertake any obligation to update
any forward-looking statement to reflect events or circumstances after the date
of this Form 10-Q.
For a
description of the Company's critical accounting policies and an understanding
of the significant factors that influenced the Company's performance during the
three- and nine-month periods ended November 30, 2009 and 2008, this Management's Discussion and Analysis
of Financial Condition and Results of Operations ("MD&A") should be
read in conjunction with the consolidated condensed financial statements,
including the related notes, appearing in Item 1 of this Report, as well as the
Company's Annual Report on Form 10-K for the year ended February 28,
2009.
Overview:
Nu
Horizons and its wholly- and majority-owned subsidiaries 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
in the United States, Asia and Europe.
The
Company operates in two product segments, active electronic components and
passive components. The active electronic components segment includes
semiconductor products such as memory chips, microprocessors, digital and linear
circuits, microwave/RF and fiberoptic components, transistors and diodes. As
part of the active electronic components segment, the Company’s System business
distributes systems from IBM Corporation and Sun Microsystems Inc. The passive
components segment includes passive components distributed by NIC and
majority-owned subsidiaries NIA and NIE, principally to OEMs, contract
manufacturers and other distributors globally, that consist of a high technology
line of surface mount and leaded components including capacitors, resistors,
inductors and circuit protection components. NIC, NIA and NIE are a
primary source of qualified products to over 9,000 OEMs worldwide.
In
September 2008, we acquired C-88, a franchised electronic components distributor
based in Hoersholm, Denmark, near Copenhagen. The C-88 acquisition has
been accounted for using the purchase method of accounting. Pursuant to
the terms of the C-88 purchase agreement, the Company paid $4,044,000 in cash as
of the acquisition date, including transaction costs of $544,000. The
purchase agreement also provides for potential additional payments to the seller
from a minimum of $500,000 up to a maximum $3,500,000 (“the Deferred Purchase
Price”). At November 30, 2009, the present value of the minimum payment of
$500,000 has been recorded as a short- and long-term liability as accrued
expenses and other long-term liabilities on the Company's consolidated balance
sheet since a payment of $300,000 is due to the seller during the fourth quarter
of fiscal 2010 and a payment of $200,000 is due during the fourth quarter of
fiscal 2011. The payment of any amounts in excess of the $500,000
minimum is contingent upon the attainment of certain earnings milestones by C-88
during the three-year period ending August 31, 2011.
Contingent
consideration will be accounted for as compensation expense. The compensation is
contingent on continued employment of the directors of C-88 and will be accrued
over the period ending August 31, 2011 when it is deemed probable that the
earnings milestones will be attained. For the three- and nine-month
periods ended November 30, 2009, no additional amount above the $500,000 minimum
has been recorded as C-88 did not attain the first earnings milestone and is not
currently projected to meet the second earnings milestone established in the
purchase agreement.
17
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
In the
second quarter of fiscal 2010, the Company became a North American
Alcatel-Lucent Distributor which is expected to provide us the opportunity to
further grow our Systems business. This product line includes enterprise voice
solutions such as digital PBX’s, VOIP systems, and call center applications and
data solutions such as switches, routers and wireless LAN products. Systems
sales for the three- and nine-month periods ended November 30, 2009 decreased
17% and 51%, respectively from the three- and nine-month periods ended November
30, 2008. The decrease in the three-month period ended November 30,
2009 is primarily due to the global economic recession and the decrease in the
nine-month period ended November 30, 2009 is primarily due to a one-time sale in
the three-month period ended August 31, 2008, to a large customer at a low gross
margin on a product that was being discontinued.
It is
difficult for the Company, as a distributor, to forecast the material trends of
the electronic components industry because the Company does not typically have
material forward-looking information available from its customers and suppliers.
As such, management relies on the publicly-available information published by
certain industry groups and other related analyses to evaluate its longer term
prospects. The economic recession makes it difficult for management
to estimate the Company's overall sales volume and earnings for the remainder of
fiscal 2010. However, due to recent growth in sales, gross profit and
operating income, management has become cautiously optimistic.
Net sales
for the three-month period ended November 30, 2009 were $179,446,000 as compared
to $188,219,000 for the comparable period last year, a decrease of
4.7%. For the nine-month period ended November 30, 2009 net sales
were $483,805,000 as compared to $600,184,000 or a decrease of
19.4%. The sales decrease for the three- and nine month periods is
due to the recent global economic recession and a one-time sale in the
three-month period ended August 31, 2008, to a large customer on a product that
was being discontinued. Sequentially, net sales for the three months
ended November 30, 2009 improved by $22,846,000 or 14.6% from $156,600,000 in
the second quarter of fiscal 2010. For the three months ended
November 30, 2009 as compared to the same period last year, net sales in North
America decreased 13.7%, net sales in Asia increased 10.0% and net sales in
Europe increased 13.7%. Sequentially, net sales for the three months
ended November 30, 2009 in North America, Asia and Europe grew 9.5%, 25.8% and
11.0%, respectively, as compared to the second quarter of fiscal
2010.
Due to
the recent economic recession and related decreased product demand during prior
recent fiscal periods, the Company took several cost-reduction
actions. In the third quarter of fiscal 2009, the Company eliminated
its employer contribution match to the employee 401K plan and announced a
reduction in its workforce. Additionally, in the fourth quarter of
fiscal 2009, the Company announced a further reduction in its workforce and
implemented a salary reduction program. Also, the Company invoked a
mandatory two-week furlough program during the Company’s first six months of
fiscal 2010, with one week to be taken in each of the first and second quarters
of fiscal 2010. Finally, the Company adjusted its commission plans to
reduce commission rates in fiscal 2010. The Company will continue to
evaluate these cost-reduction actions in future periods.
The
Company is continuing to fully cooperate with the investigation by the SEC in
the action captioned "In the Matter of Vitesse Semiconductor Corp." The SEC
investigation and the related internal investigation are collectively referred
to herein as the "Vitesse Matter". On April 9, 2009, the Audit
Committee announced the completion of its related internal investigation and
provided a summary of its conclusions. The Company’s cooperation with
the SEC investigation and its own internal investigation has required the
Company to incur significant expenses for professional fees and related
expenses. For the three- and nine-month periods ended November 30, 2009, the
Company has incurred approximately $113,000, and $798,000, compared to $752,000
and $3,086,000 respectively, for the three- and nine-month periods ended
November 30, 2008. Cumulatively, $7,052,000 of expense for professional fees has
been incurred to date since fiscal 2007 related to the Vitesse
Matter. Management believes that as a result of the completion of the
internal investigation, the Company’s expenditures for professional fees will
continue to decline in future fiscal periods when compared to the prior
comparable periods. However, management is presently unable to
predict the outcome of the SEC investigation and related cost to be incurred by
the Company. In addition, although the internal investigation is
completed, if any new or additional evidence becomes available, the Audit
Committee will consider such additional evidence to determine whether any
further investigation or action is warranted.
18
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
(continued):
The
tables below provide a summary of sales by operating segment for active
electronic components and passive components for the Company for the three and
nine months ended November 30, 2009 and 2008:
Analysis
of Sales by Segment
Quarters Ended November 30,
|
Percentage
Change
|
|||||||||||||||||||
2009
|
% of Total
|
2008
|
% of Total
|
2009 to 2008
|
||||||||||||||||
Sales
by Segment:
|
||||||||||||||||||||
Active
electronic components
|
$ | 166,315,000 | 92.7 | % | $ | 174,703,000 | 92.8 | % | (4.8 | )% | ||||||||||
Passive
components
|
13,131,000 | 7.3 | % | 13,516,000 | 7.2 | % | (2.8 | )% | ||||||||||||
$ | 179,446,000 | 100 | % | $ | 188,219,000 | 100 | % | (4.7 | )% |
Analysis
of Sales by Segment
Nine Months Ended November 30,
|
Percentage
Change
|
|||||||||||||||||||
2009
|
% of Total
|
2008
|
% of Total
|
2009 to 2008
|
||||||||||||||||
Sales
by Segment:
|
||||||||||||||||||||
Active
electronic components
|
$ | 451,659,000 | 93.4 | % | $ | 556,447,000 | 92.7 | % | (18.8 | )% | ||||||||||
Passive
components
|
32,146,000 | 6.6 | % | 43,737,000 | 7.3 | % | (26.5 | )% | ||||||||||||
$ | 483,805,000 | 100 | % | $ | 600,184,000 | 100 | % | (19.4 | )% |
19
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
The
tables below provide a summary of sales by geographic area for the Company for
the three and nine months ended November 30, 2009 and 2008:
Analysis
of Sales by Geography
Quarters Ended November 30,
|
Percentage
Change
|
|||||||||||||||||||
2009
|
% of Total
|
2008
|
% of Total
|
2009 to 2008
|
||||||||||||||||
Sales
by Geography:
|
||||||||||||||||||||
North
America
|
$ | 102,521,000 | 57.1 | % | $ | 118,813,000 | 63.1 | % | (13.7 | )% | ||||||||||
Asia
|
59,377,000 | 33.1 | % | 53,976,000 | 28.7 | % | 10.0 | % | ||||||||||||
Europe
|
17,548,000 | 9.8 | % | 15,430,000 | 8.2 | % | 13.7 | % | ||||||||||||
$ | 179,446,000 | 100 | % | $ | 188,219,000 | 100 | % | (4.7 | )% |
Analysis
of Sales by Geography
Nine Months Ended November 30,
|
Percentage
Change
|
|||||||||||||||||||
2009
|
% of Total
|
2008
|
% of Total
|
2009 to 2008
|
||||||||||||||||
Sales
by Geography:
|
||||||||||||||||||||
North
America
|
$ | 279,794,000 | 57.8 | % | $ | 388,097,000 | 64.7 | % | (27.9 | )% | ||||||||||
Asia
|
151,778,000 | 31.4 | % | 163,308,000 | 27.2 | % | (7.1 | )% | ||||||||||||
Europe
|
52,233,000 | 10.8 | % | 48,779,000 | 8.1 | % | 7.1 | % | ||||||||||||
$ | 483,805,000 | 100 | % | $ | 600,184,000 | 100 | % | (19.4 | )% |
The
following table sets forth, for the three- and nine-month periods ended November
30, 2009 and 2008, certain items in the Company’s consolidated statements of
operations expressed as a percentage of net sales.
Three Months Ended November 30
|
Nine Months Ended November 30
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
86.0 | 84.9 | 85.8 | 85.0 | ||||||||||||
Gross
profit
|
14.0 | 15.1 | 14.2 | 15.0 | ||||||||||||
Selling,
general and administrative expenses
|
12.7 | 15.2 | 13.9 | 14.3 | ||||||||||||
Interest
expense
|
0.3 | 0.4 | 0.2 | 0.4 | ||||||||||||
Income
(loss) before taxes
|
1.1 | (0.5 | ) | - | 0.3 | |||||||||||
Income
tax provision (benefit)
|
0.7 | (0.6 | ) | - | - | |||||||||||
Consolidated
net income
|
0.4 | 0.1 | 0.1 | 0.3 | ||||||||||||
Noncontrolling
interest
|
- | - | - | 0.1 | ||||||||||||
Net
income attributed to shareholders
|
0.4 | 0.1 | 0.1 | 0.2 |
20
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Results of
Operations:
Three
Months Ended November 30, 2009 compared to Three Months Ended November 30,
2008
Consolidated
net sales for the three months ended November 30, 2009 were $179,446,000 as
compared to $188,219,000 for the comparable period of the prior year, a decrease
of $8,773,000 or 4.7%.
Sales of
active electronic components for the three months ended November 30, 2009 were
$166,315,000 as
compared to $174,703,000 for the comparable period of the prior year, a decrease
of approximately $8,388,000 or 4.8%. Passive components sales for the
three months ended November 30, 2009 were $13,131,000 compared to $13,516,000
for the three months ended November 30, 2008, a decrease of $385,000 or
2.8%. The sales decrease in both segments is primarily due to the
global economic recession.
Consolidated
gross margin was 14.0% for the three months ended November 30, 2009 as compared
to 15.1% for the comparable period of the prior year. The decline in
gross margin for the three months ended November 30, 2009 is primarily
attributed to a change in product mix to include a higher amount of low margin
business in Asia/Pacific and North America. For the three-month
period ended November 30, 2009 Asia/Pacific sales were 33.1% of total sales as
compared to 28.7% of total sales in the comparable period due to both an
increase in sales in Asia/Pacific and a decrease in North America
sales.
Selling,
general and administrative expenses decreased $5,832,000 or 20.4% over the prior
period primarily due to (i) a decrease of $3,090,000 in selling and
administrative expenses due to a reduction in workforce during the third and
fourth quarters of fiscal 2009, a salary reduction program implemented in the
fourth quarter of fiscal 2009 and lower commission expense as a result of lower
sales; (ii) a $2,060,000 decrease in other selling and general administrative
expenses primarily due to decreases in freight out, repair, maintenance and
supplies, non-Vitesse professional fees, bank charges, foreign exchange expense
and travel and entertainment; (iii) a $639,000 decrease in professional fees
related to the Vitesse Matter; and (iv) a $295,000 decrease in
severance. These deceases were partially offset by an increase of
$252,000 of salary expenses primarily associated with our new business with
Alcatel-Lucent.
Interest
expense decreased 39.2% to $454,000 for the three
months ended November 30, 2009 from $747,000 from the prior period primarily due
to lower average borrowings primarily due to lower sales compared to the prior
year period.
In fiscal
2009 and the first and second quarters of fiscal 2010, the Company estimated its
quarterly income taxes by applying an estimated annual effective tax rate to
interim period pre-tax income to calculate the income tax provision or benefit
for each quarter. During the three months ended November 30, 2009, the Company
used an alternative method to calculate the effective tax rate since it is
unable to make a reliable estimate of pre-tax income for the remainder of the
fiscal year. Under this alternative method, interim period federal income taxes
are based on each discrete quarter's pre-tax income. Due to the
recent volatility and uncertainty in the current economic market, the Company
applied the alternative method to compute the income tax expense beginning in
the third quarter of 2009. The change in method resulted in a decrease of
approximately $255,000 to income tax expense for the three months ended November
30, 2009.
Income
tax provision as a percentage of income (loss) before provision for income tax
and non-controlling interest (“effective tax rate”) was a provision of 61.7% for
the three months ended November 30, 2009. Our effective tax rate was a benefit
of 127.6% for the three months ended November 30, 2008. The effective tax
rate differs significantly from the statutory rate of 35% for the three months
ended November 30, 2009, primarily due to reversal of estimated tax benefits
taken in prior quarters, an increase in the valuation allowance for certain
foreign net operating losses, partially offset by tax benefits generated as a
result of a U.S. net operating loss, foreign income earned at tax rates lower
than the U.S. tax rate, lower state taxes, foreign tax credit and tax benefits
derived from research and development activities.
The
comparison of the effective tax provision rate between periods is significantly
influenced by the level and mix of earnings and losses by taxing jurisdictions.
Each quarter a cumulative adjustment is recorded for any fluctuation
in the estimated effective tax rate as compared to the prior quarter.
Furthermore, the effective tax rate may fluctuate as a result of positive
or negative changes to the valuation allowance for net deferred tax assets.
As a result of these factors, and due to potential changes in the
Company’s period to period results, fluctuation in the Company’s effective tax
provision (benefit) may occur.
Net
income for the three months ended November 30, 2009 was $650,000 or $.04 per
basic and diluted share as compared to net income of $150,000 or $0.01 per basic
and per diluted share for the three months ended November 30,
2008.
21
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Nine
Months Ended November 30, 2009 compared to Nine Months Ended November 30,
2008
Consolidated
net sales for the nine months ended November 30, 2009 were $483,805,000 as
compared to $600,184,000 for the comparable period of the prior year, a decrease
of $116,379,000 or 19.4%.
Sales of
active electronic components for the nine months ended November 30, 2009 were
$451,659,000 as
compared to $556,447,000 for the comparable period of the prior year, a decrease
of approximately $104,788,000 or 18.8%. Passive components sales for
the nine months ended November 30, 2009 were $32,146,000 compared to $43,737,000
for the nine months ended November 30, 2008, a decrease of $11,591,000 or 26.5%.
The sales decrease in both segments is primarily due the global economic
recession and a one-time sale in the nine-month period ended November 30, 2008,
to a large customer on a product that was being discontinued.
Consolidated
gross margin was 14.2% for the nine months ended November 30, 2009 as compared
to 15.0% for the comparable period of the prior year. The decline in
gross margin for the nine months ended November 30, 2009 is primarily attributed
to a change in product mix to include a higher amount of low margin business in
Asia/Pacific and North America. For the nine-month period ended
November 30, 2009, Asia/Pacific sales were 31.4% of total sales as compared to
27.2% of total sales in the comparable period.
Selling,
general and administrative expenses decreased $18,711,000 or 21.7% over the
prior period primarily due to (i) a decrease of $13,637,000 in selling and
administrative expenses due to a reduction in workforce during the third and
fourth quarters of fiscal 2009, a salary reduction program implemented in the
fourth quarter of fiscal 2009, lower commission expense as a result of lower
sales and a mandatory two-week furlough program invoked during each of the first
and second quarters of 2010; (ii) a $2,288,000 decrease in professional fees
related to the Vitesse Matter; (iii) a $1,458,000 decrease in travel and
entertainment expense primarily attributed to the decrease in sales force as
compared to the prior period; (iv) a decrease of $1,283,000 in freight out
expense primarily attributed to a decrease in sales; (v) a decrease of $654,000
in other selling and general administrative expenses consisting primarily of
repair, maintenance and supplies and other non-Vitesse professional fees; and
(vi) a $590,000 decrease in severance. These decreases were partially
offset by an increase of $1,199,000 for operating expenses attributed to our
acquisition of C-88 in the third quarter of fiscal 2009 and an increase of
$252,000 of salary expenses primarily associated with our new business with
Alcatel-Lucent.
Interest
expense decreased 55.3% to $1,146,000 for the nine
months ended November 30, 2009 from $2,563,000 from the prior period primarily
due to lower average borrowings primarily due to lower sales compared to the
prior year period.
In fiscal
2009 and the first and second quarters of fiscal 2010, the Company estimated its
quarterly income taxes by applying an estimated annual effective tax rate to
interim period pre-tax income to calculate the income tax provision or benefit
for each quarter. During the nine months ended November 30, 2009, the Company
used an alternative method to calculate the effective tax rate since it is
unable to make a reliable estimate of pre-tax income for the remainder of the
fiscal year. Under this alternative method, interim period federal income taxes
are based on each discrete quarter's pre-tax income. Due to the
recent volatility and uncertainty in the current economic market, the Company
applied the alternative method to compute the income tax expense beginning in
the third quarter of 2009. The change in method resulted in a decrease of
approximately $255,000 to income tax expense for the nine months ended November
30, 2009.
Income
tax provision (benefit) as a percentage of income (loss) before provision for
income tax and non-controlling interest (“effective tax rate”) was a benefit of
126.3% for the nine months ended November 30, 2009. Our effective tax rate
was a benefit of 9.1% for the nine months ended November 30, 2008. The
effective tax rate differs significantly from the statutory rate of 35% for the
nine months ended November 30, 2009, primarily due to tax benefits generated as
a result of a U.S. net operating loss, foreign income earned at tax rates lower
than the U.S. tax rate, lower state taxes, foreign tax credit and tax benefits
derived from research and development activities, partially offset by reversal
of estimated tax benefits taken in prior quarters and an increase in the
valuation allowance for certain foreign net operating losses.
The
comparison of the effective tax provision (benefit) rate between periods is
significantly influenced by the level and mix of earnings and losses by taxing
jurisdictions. Each quarter a cumulative adjustment is recorded for
any fluctuation in the estimated effective tax rate as compared to the prior
quarter. Furthermore, the effective tax rate may fluctuate as a result of
positive or negative changes to the valuation allowance for net deferred tax
assets. As a result of these factors, and due to potential changes in the
Company’s period to period results, fluctuation in the Company’s effective tax
provision (benefit) may occur.
Net
income for the nine months ended November 30, 2009 was $249,000 or $.01 per
basic and diluted share as compared to net income of $1,497,000 or $0.08 per
basic and per diluted share for the nine months ended November 30,
2008.
22
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital
Resources:
The
Company's current ratio (current assets divided by current liabilities) was
3.1:1 at November 30, 2009. Working capital was $167,390,000 at November 30,
2009 as compared to $147,141,000 at February 28, 2009. As of November 30, 2009
the Company had approximately $11,502,000 of cash and total bank debt of
$35,105,000.
On
January 31, 2007, the Company entered into an amended and restated secured
revolving line of credit agreement with eight banks, which currently provides
for maximum borrowings of $120,000,000 (the "Revolving Credit
Line"). The Revolving Credit Line provides for borrowings utilizing
an asset-based formula predicated on a certain percentage of outstanding
domestic accounts receivable and inventory levels at any given
month-end. Based on the asset-based formula, the Company may not be
able to borrow the maximum amount available under its Revolving Credit Line at
all times. At November 30, 2009, borrowings under the Revolving
Credit Line incurred interest at either (i) the lead bank’s prime rate plus
1.75% or (ii) LIBOR plus 3.5%, at the option of the Company, through September
30, 2011, the due date of the loan. The interest rate at November 30,
2009 was 5.00%. Direct borrowings under the Revolving Credit Line
were $30,100,000 and $14,950,000 at November 30, 2009 and February 28, 2009,
respectively. As of November 30, 2009, the Company was in compliance
with all of the required bank covenants.
On
November 20, 2006, the Company entered into a revolving credit agreement with a
Singapore bank to provide a $30,000,000 secured line of credit to the Company’s
Asian subsidiaries and thereby finance the Company’s Asian operations (the
"Singapore Credit Line"). On November 20, 2009, the Singapore Credit
Line expired and the Company repaid all of its direct borrowings outstanding
under the Singapore Credit Line aggregating $5,000,000.
The
Company also has a receivable financing agreement with a bank in England (the
"U.K. Credit Line") which provides for maximum borrowings of £4,000,000
(approximately $6,654,000) at November 30, 2009, which bear interest at the
bank's base rate plus 1.55%. The interest rate at November 30, 2009
was 2.28%. The Company owed $3,788,000 and $1,944,000 at November 30,
2009 and February 28, 2009, respectively. The U.K. Credit Line renews
annually in July.
The
Company has a credit agreement with a bank in Denmark (the “Danish Credit Line")
which provides for maximum borrowings of 10,072,000 Danish Kroner (approximately
$2,033,000) as of November 30, 2009, at the current prevailing interest rate
(6.14% at November 30, 2009). Borrowings under the Danish Credit Line
were 6,030,000 Danish Kroner ($1,217,000) and 8,953,000 Danish Kroner
($1,506,000) at November 30, 2009 and February 28, 2009,
respectively. The Danish Credit Line has no expiration date and is
reviewed quarterly by the bank in Denmark.
At November 30, 2009, the Company had
approximately $39,850,000 in the aggregate available under all of its bank
credit facilities.
The
Company anticipates that its resources provided by its cash flow from operations
and its currently-outstanding bank agreements will be sufficient to finance its
operations for at least the next twelve-month period.
Off-Balance Sheet
Arrangements:
As of
November 30, 2009, the Company had no off-balance sheet
arrangements.
Critical Accounting Policies
and Estimates:
There
have been no changes in our critical accounting policies from those disclosed in
Item 8 of our Annual Report on Form 10-K for the year ended February 28,
2009.
23
Item 3. Quantitative and
Qualitative Disclosures About Market Risk.
Interest
Rate Risk:
All of
the Company’s bank debt and the associated interest expense are sensitive to
changes in the level of interest rates. The Company’s credit
facilities bear interest based on fluctuating interest rates. The
interest rate under its Revolving Credit Line is tied to the prime or LIBOR rate
and the interest rate under its UK Credit Line is tied to the Bank of England's
base rate; each of these interest rates may fluctuate over time based on
economic conditions. A hypothetical 100 basis point (one percentage
point) increase in interest rates would have resulted in incremental interest
expense of approximately $53,000 for the three months ended November 30, 2009
and $179,000 for the nine months ended November 30, 2009. As a
result, the Company is subject to market risk for changes in interest rates and
could be subjected to increased or decreased interest payments if market rates
fluctuate and the Company is in a borrowing mode. The Company has not
entered into any instruments, such as interest rate swaps, in an effort to
manage its interest rate risk.
Foreign
Currency Exchange Rate Risk:
The
Company has several foreign subsidiaries in Asia, the United Kingdom, Germany,
Denmark and Canada. The Company does business in more than one dozen
countries and currently generates approximately 43% of its revenues from outside
North America. The Company’s ability to sell its products in foreign
markets may be affected by changes in economic, political or market conditions
in the foreign markets in which the Company does business.
The
Company’s total assets in its foreign subsidiaries were $93,992,000 and
$93,707,000 at November 30, 2009 and February 28, 2009, respectively, translated
into U.S. dollars at the closing exchange rates on such dates. The Company also
acquires certain inventory from foreign suppliers at prices denominated in
foreign currencies and, as such, faces risk due to adverse movements in foreign
currency exchange rates. These risks are not expected to have a
material impact on the Company’s results in future periods as the Company
purchases most of its inventory in U.S. dollars. The potential gain or loss
based on end-of-period balances and prevailing exchange rates resulting from a
hypothetical 10% change (either stronger or weaker) in the value of the dollar
against foreign currencies was not material in the nine-month period ended
November 30, 2009 or 2008. The Company does not currently employ any
currency derivative instruments, futures contracts or other currency hedging
techniques to mitigate its risks in this regard.
Industry
Risk:
The
electronic component industry is cyclical which can cause significant
fluctuations in sales, gross profit margins and profits, from year to
year. For example, during calendar 2001, the industry experienced a
severe decline in the demand for electronic components, which caused sales to
decrease by 56%. The prior year reflected a 74% increase in net
sales. It is difficult to predict the timing of the changing cycles
in the electronic component industry.
24
Item
4. Controls and Procedures.
Evaluation
of Disclosure Controls and Procedures
Under the
supervision and with the participation of management, including our Executive
Chairman and Interim Chief Executive Officer ("CEO") and our Executive Vice
President-Finance and Chief Financial Officer ("CFO"), we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated
under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"),
as of the end of the period covered by this quarterly report. Based
on this evaluation, our CEO and CFO concluded that as of November 30, 2009 our
disclosure controls and procedures were effective in ensuring that the
information required to be disclosed in the reports the Company files or submits
under the Exchange Act has been recorded, processed, summarized and reported
within the time periods specified in the Commission's rules and forms and that
information is accumulated and communicated to our management, including our CEO
and CFO, as appropriate, to allow timely decisions regarding required
disclosure.
Changes
in Internal Control Over Financial Reporting
There
have been no changes in our internal control over financial reporting that
occurred during the quarter ended November 30, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Limitations
of the Effectiveness of Internal Control
A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of an internal control system are
met. Because of the inherent limitations of any internal control
system, no evaluation of controls can provide absolute assurance that all
control issues, if any, within a company have been detected.
25
PART
II - OTHER INFORMATION
Item
1.
|
Legal
Proceedings.
|
None.
|
|
Item
1A.
|
Risk
Factors.
|
Refer
to the Company’s Annual Report on Form 10-K for the year ended February
28, 2009.
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
None.
|
|
Item
3.
|
Defaults
Upon Senior Securities.
|
None.
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
None.
|
|
Item
5.
|
Other
Information.
|
None.
|
26
PART II - OTHER
INFORMATION
Item
6. Exhibits.
3.1
|
Certificate
of Incorporation, as amended (Incorporated by Reference to Exhibit 10.14
to the Company’s Quarterly Report on Form 10-Q for the quarter ended
November 30, 2000).
|
|
3.2
|
Amended
and Restated By-Laws, (Incorporated by Reference to Exhibit 3.2 to Form
8-K dated May 11, 2009).
|
|
4.1
|
Specimen
Common Stock Certificate (Incorporated by Reference to Exhibit 4.1 to the
Company’s Registration Statement on Form S-1, Registration No.
2-89176).
|
|
*10.1
|
Compensation
of Chief Financial Officer.
|
|
*31.1
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
*31.2
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
*32.1
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
*32.2
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
*
Included herewith.
27
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:
January 7, 2010
|
/s/ Arthur Nadata
|
Arthur
Nadata
|
|
Executive
Chairman
|
|
and
Interim Chief Executive Officer
|
|
Date:
January 7, 2010
|
/s/ Kurt Freudenberg
|
Kurt
Freudenberg
|
|
Executive
Vice President
|
|
and
Chief Financial Officer
|
28
EXHIBIT
INDEX
Exhibits:
3.1
|
Certificate
of Incorporation, as amended (Incorporated by Reference to Exhibit 10.14
to the Company’s Quarterly Report on Form 10-Q for the quarter ended
November 30, 2000).
|
|
3.2
|
Amended
and Restated By-Laws, (Incorporated by Reference to Form 8-K dated May 11,
2009).
|
|
4.1
|
Specimen
Common Stock Certificate (Incorporated by Reference to Exhibit 4.1 to the
Company’s Registration Statement on Form S-1, Registration No.
2-89176).
|
|
*10.1
|
Compensation
of Chief Financial Officer
|
|
*31.1
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
*31.2
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
|
|
*32.1
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
*32.2
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of
2002.
|
*
Included herewith.
29