NUHC NU Horizons (MM)

Nu Horizons Electronics Corp. (Nasdaq/NM: NUHC), a leading distributor of active and passive electronic components, today reported financial results for the second quarter and six months of fiscal 2011 ended August 31, 2010.

Net sales for the quarter ended August 31, 2010 were $164,130,000 as compared to $156,600,000 for the comparable period last year, an increase of 4.8%. For the six months ended August 31, 2010, net sales increased to $374,892,000 or 23.2% from $304,360,000 in the comparable period last year.

Excluding Xilinx product sales (i) net sales for the quarter ended August 31, 2010 were $162,461,000 as compared to $107,011,000 for the comparable period last year, an increase of 51.8%; (ii) for the six months ended August 31, 2010, net sales increased to $312,474,000 or 52.2% from $205,262,000 in the comparable period last year; (iii) sequentially, net sales for the quarter ended August 31, 2010 increased $12,448,000 or 8.3%, from $150,013,000 in the first quarter of fiscal 2011; and (iv) sequentially, for the current quarter ended August 31, 2010, revenues grew in all regions: North America was up $7,135,000 (9.1%); Asia was up $3,448,000 (6.1%); and Europe was up $1,865,000 (13.0%).

Net income for the quarter was $1,156,000 or $0.06 per diluted share as compared to net income of $543,000 or $0.03 per diluted share for the second quarter of the prior year. The net income for the six-month period was $4,530,000 or $0.25 per diluted share compared to a net loss of $401,000 or $(0.02) per share in the prior year.

"In the six months ended August 31, 2010, the Company generated over $21 million of cash from operations and approximately $6.8 million of debt was repaid. Reflecting our strong balance sheet, at August 31, 2010, the Company had nearly $175 million in working capital, including $20.5 million of cash on hand," added Kurt Freudenberg, Executive Vice President and Chief Financial Officer.

Commenting on the second quarter results and recent developments, Martin Kent, President and Chief Executive Officer of Nu Horizons, stated, "We are pleased to report meaningful progress made in the second fiscal quarter toward our goal of improving profitability. The Company’s gross margin increased by 10% while our earnings per share improved by 100% in the second quarter as compared with the same period in the prior fiscal year. However, the most important development occurred after the end of the quarter. On September 20th, we announced the signing of a definitive agreement for Nu Horizons to be acquired by Arrow Electronics, Inc. in an-all cash transaction for $7.00 per common share. We believe the acquisition, subject to various approvals and closing conditions, is in the best interest of our shareholders, particularly given the significant premium to be paid for their stock. Furthermore, we believe the acquisition enhances our competitive position that, in turn, provides benefits to our customers, suppliers and international workforce. We expect the transaction to close in the fourth quarter of fiscal 2011."

Conference Call/Webcast

A conference call to further discuss the second quarter and six months earnings as well as the acquisition of the Company by Arrow Electronics will be held today at 4:30 pm ET. The conference call may be accessed by dialing 877-407-4019 (international, dial 201-689-8337) and providing the passcode “Nu Horizons”. Listeners can also access the webcast live through the company's website at www.nuhorizons.com. The webcast will be archived on the Company’s website for 60 days following the call. An audio replay of the conference call will be available for seven days beginning at 7:30 p.m. Eastern time on October 7, 2010. The audio replay dial-in number for North America is 877-660-6853 and 201-612-7415 for international callers. The replay passcodes are Account #374 and Conference ID #356784 (both are required for playback). A transcript of the call will remain available on the Company's website.

Certain Non-GAAP Financial Information

This press release contains non-GAAP net sales. Exhibit A includes a reconciliation of each non-GAAP net sales presented in this press release to the most directly comparable GAAP net sales. Non-GAAP net sales should not be considered in isolation or as a substitute for comparable GAAP net sales. The non-GAAP net sales we present have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and these non-GAAP net sales should only be used to evaluate our results of operations in conjunction with the corresponding GAAP net sales.

We believe that the non-GAAP net sales we present provide meaningful supplemental information regarding our operating results primarily because items that we do not believe are reflective of our ongoing operating results when budgeting, planning and forecasting, and when assessing the performance of our business with our individual operating segments or our senior management. We believe that the non-GAAP net sales also facilitate the comparison by management and investors of results between periods and among our peer companies. However, those companies may calculate similar non-GAAP net sales differently than we do, limiting their usefulness as comparative measures.

About Nu Horizons Electronics Corp.

Nu Horizons Electronics Corp. is a leading global distributor of advanced technology semiconductor, display, illumination, power and system solutions to a wide variety of commercial original equipment manufacturers (OEMs) and electronic manufacturing services providers (EMS). With sales facilities in 54 locations across North America, Europe and Asia and regional logistics centers throughout the globe, Nu Horizons partners with a limited number of best-in-class suppliers to provide in-depth product development, custom logistics and life-cycle support to its customers. Information on Nu Horizons and its services is available at www.nuhorizons.com.

Cautionary Statement Regarding Forward-Looking Statements

Except for historical information contained herein, the matters set forth in this news release are forward-looking statements. When used in this press release, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to Nu Horizons or its management, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of Nu Horizons’ management, as well as assumptions made by and information currently available to its management. Forward-looking statements involve certain risks and uncertainties that could cause actual results to differ from those in the forward looking-statements. Potential risks and uncertainties include such factors as the risk that the acquisition of the Company by Arrow Electronics, Inc. does not close, including the risk that the requisite stockholder and regulatory approvals may not be obtained; the level of business and consumer spending for electronic products; the competitive environment within the electronics industry; the ability of the Company to expand its operations; the financial strength of the Company's customers and suppliers; the cyclical nature of the distributor industry; pricing and gross margin pressures; loss of key customers; the ability to control costs and expenses; the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally; risks and costs associated with increased and new regulation of corporate governance and disclosure standards (including pursuant to Section 404 of the Sarbanes-Oxley Act of 2002); and risks involving governmental regulation. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Such statements reflect our current view with respect to the future and are subject to these and other risks, uncertainties and assumptions relating to Nu Horizons’ financial condition, results of operations, growth strategy and liquidity. The Company does not undertake any obligation to update its forward-looking statements.

(Tables Follow)

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

  For the Three Months Ended For the Six Months Ended

August 31,

2010

  August 31,

2009

August 31,

2010

  August 31,

2009

  NET SALES $ 164,130,000   $ 156,600,000   $ 374,892,000   $ 304,360,000     COSTS AND EXPENSES: Cost of sales 138,189,000 134,125,000 318,859,000 260,846,000 Selling, general and administrative expenses   23,239,000     22,852,000     48,156,000     44,545,000     161,428,000     156,977,000     367,015,000     305,391,000     OPERATING INCOME (LOSS)   2,702,000     (377,000 )   7,877,000     (1,031,000 )   OTHER EXPENSE (INCOME) Interest expense 853,000 270,000 1,513,000 693,000 Interest income   (71,000 )   (7,000 )   (83,000 )   (10,000 )   782,000     263,000     1,430,000     683,000    

INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES AND NONCONTROLLING INTEREST

1,920,000 (640,000 ) 6,447,000 (1,714,000 )   Provision (benefit) for income taxes   611,000     (1,253,000 )   1,597,000     (1,414,000 )   CONSOLIDATED NET INCOME (LOSS) 1,309,000 613,000 4,850,000 (300,000 )   Net income attributable to noncontrolling interest   153,000     70,000     320,000     101,000    

NET INCOME (LOSS) ATTRIBUTED TO NU HORIZONS ELECTRONICS CORP.

$ 1,156,000   $ 543,000   $ 4,530,000   $ (401,000 )  

NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO NU HORIZONS ELECTRONICS CORP.

  Basic $ .06   $ .03   $ .25   $ (.02 )   Diluted $ .06   $ .03   $ .25   $ (.02 )  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic 18,147,113 18,103,244 18,139,793 18,095,668 Diluted 18,299,469 18,156,640 18,283,177 18,095,668  

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

 

August 31,2010

February 28,2010

(unaudited) - ASSETS - CURRENT ASSETS: Cash $ 20,508,000 $ 6,632,000

Accounts receivable – net of allowance for doubtful accounts of$3,133,000 and $3,659,000 as of August 31, 2010 and February 28,2010, respectively

112,774,000 131,883,000 Inventories 105,880,000 117,377,000 Deferred tax asset 375,000 434,000 Prepaid expenses and other current assets   3,986,000   7,095,000 TOTAL CURRENT ASSETS 243,523,000 263,421,000   PROPERTY, PLANT AND EQUIPMENT – NET 4,510,000 4,924,000   OTHER ASSETS: Goodwill 2,308,000 2,308,000 Intangibles – net 3,235,000 3,404,000 Other assets   2,126,000   2,087,000   TOTAL ASSETS $ 255,702,000 $ 276,144,000   - LIABILITIES AND EQUITY - CURRENT LIABILITIES: Accounts payable $ 57,494,000 $ 78,791,000 Accrued expenses 9,102,000 7,696,000 Bank debt 135,000 4,192,000 Income taxes payable   2,328,000   1,746,000 TOTAL CURRENT LIABILITIES   69,059,000   92,425,000   LONG TERM LIABILITIES Bank debt 32,218,000 35,000,000 Other long term liabilities   3,514,000   3,355,000 TOTAL LONG TERM LIABILITIES   35,732,000   38,355,000   COMMITMENTS AND CONTINGENCIES   EQUITY:

Preferred stock, $1 par value, 1,000,000 shares authorized; noneissued or outstanding

- -

Common stock, $.0066 par value, 50,000,000 shares authorized;18,512,982 and 18,549,305 shares issued and outstanding as ofAugust 31, 2010 and February 28, 2010, respectively

122,000 122,000 Additional paid-in capital 58,085,000 57,227,000 Retained earnings 89,619,000 85,089,000 Other accumulated comprehensive income   80,000   240,000 Total Nu Horizons stockholders' equity 147,906,000 142,678,000 Noncontrolling interest   3,005,000   2,686,000 TOTAL EQUITY   150,911,000   145,364,000   TOTAL LIABILITIES AND EQUITY $ 255,702,000 $ 276,144,000  

EXHIBIT A

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

Reconciliation of Non-GAAP to GAAP Sales

 

Quarterly Sales Analysis (Excluding Xilinx Product Sales)

($ in Thousands)

      FY 2011 YTD         % of

Total

        Q2       % of

Total

        Q1         % of

Total

North America $ 164,763 52.7 $ 85,949 52.9 $ 78,814 52.5 Asia 117,178 37.5 60,313 37.1 56,865 37.9 Europe   30,533 9.8   16,199 10.0   14,334 9.6

Total sales excluding

  Xilinx products

312,474 100.0 162,461 100.0 150,013 100.0 Xilinx product sales   62,418   1,669   60,749 Total GAAP sales $ 374,892 $ 164,130 $ 210,762     FY 2010 YTD % of

Total

Q2 % of

Total

Q1 % of

Total

North America $ 119,727 58.3 $ 62,380 58.3 $ 57,347 58.3 Asia 64,609 31.5 34,471 32.2 30,138 30.7 Europe   20,926 10.2   10,160 9.5   10,766 11.0

Total sales excluding

  Xilinx products

205,262 100.0 107,011 100.0 98,251 100.0 Xilinx product sales   99,098   49,589   49,509 Total GAAP sales $ 304,360 $ 156,600 $ 147,760