10-Q

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, 2008

OR

o 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 o

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 o	Accelerated filer x
Non-accelerated filer (Do not check if a smaller reporting company) o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o      No x

The number of shares outstanding of registrant’s common stock, as of January 5, 2009:

Common Stock – Par Value $.0066	18,584,306
Class	Outstanding Shares

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

INDEX

PART I.  FINANCIAL INFORMATION		Page(s)
Item 1.	Financial Statements
	Consolidated Condensed Statements of Operations (unaudited) - Three and Nine Months Ended November 30, 2008 and 2007	3.
	Consolidated Condensed Balance Sheets - November 30, 2008 (unaudited) and February 29, 2008	4.
	Consolidated Condensed Statements of Cash Flows (unaudited) - Nine Months Ended November 30, 2008 and 2007	5.
	Notes to Interim Consolidated Condensed Financial Statements (unaudited)	6.-13.
	Report of Independent Registered Public Accounting Firm	14.
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15.-20.
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21.
Item 4.	Controls and Procedures	22.
PART II.  OTHER INFORMATION		23.
Item 1.	Legal Proceedings	23.
Item 1A.	Risk Factors	23.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23.
Item 3.	Defaults Upon Senior Securities	23.
Item 4.	Submission of Matters to a Vote of Security Holders	23.
Item 5.	Other Information	23.
Item 6.	Exhibits	24.
SIGNATURES		25.
EXHIBIT INDEX		26.
CERTIFICATIONS

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PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended						For the Nine Months Ended
	November 30, 2008			November 30, 2007			November 30, 2008			November 30, 2007
NET SALES	$	188,219,000		$	192,886,000		$	600,184,000		$	553,487,000
COSTS AND EXPENSES:
Cost of sales		159,709,000			161,049,000			509,904,000			460,951,000
Operating expenses		28,653,000			30,271,000			86,077,000			83,816,000
		188,362,000			191,320,000			595,981,000			544,767,000
OPERATING INCOME (LOSS)		(143,000	)		1,566,000			4,203,000			8,720,000
OTHER (INCOME) EXPENSE
Interest expense		747,000			1,175,000			2,563,000			3,150,000
Interest income		(7,000	)		(14,000	)		(11,000	)		(34,000	)
		740,000			1,161,000			2,552,000			3,116,000
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES AND MINORITY INTERESTS		(883,000	)		405,000			1,651,000			5,604,000
Provision (benefit) for income taxes		(1,127,000	)		653,000			(151,000	)		3,189,000
INCOME (LOSS) BEFORE MINORITY INTERESTS		244,000			(248,000	)		1,802,000			2,415,000
Minority interest in earnings of subsidiaries		94,000			125,000			305,000			317,000
NET INCOME (LOSS)	$	150,000		$	(373,000	)	$	1,497,000		$	2,098,000
NET INCOME (LOSS) PER COMMON SHARE:
Basic	$	.01		$	(.02	)	$	.08		$	.11
Diluted	$	.01		$	(.02	)	$	.08		$	.11
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		18,067,795			18,377,582			18,035,460			18,322,489
Diluted		18,067,795			18,377,582			18,137,584			19,047,418

See accompanying notes

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

	November 30, 2008		February 29, 2008
	(unaudited)
- ASSETS -
CURRENT ASSETS:
Cash	$	5,840,000	$	3,886,000
Accounts receivable - net of allowance for doubtful accounts of  $4,075,000 and $4,269,000 as of November 30, 2008 and February 29, 2008, respectively		141,406,000		150,270,000
Inventories		117,465,000		122,761,000
Deferred tax asset		3,135,000		3,135,000
Prepaid expenses and other current assets		4,053,000		4,306,000
TOTAL CURRENT ASSETS		271,899,000		284,358,000
PROPERTY, PLANT AND EQUIPMENT – NET		4,944,000		4,529,000
OTHER ASSETS:
Cost in excess of net assets acquired		13,967,000		9,925,000
Intangibles – net		2,347,000		2,500,000
Other assets		5,106,000		5,101,000
TOTAL ASSETS	$	298,263,000	$	306,413,000
- LIABILITIES AND SHAREHOLDERS’ EQUITY -
CURRENT LIABILITIES:
Accounts payable	$	66,559,000	$	67,306,000
Accrued expenses		8,388,000		8,615,000
Due to seller		293,000		3,245,000
Revolving credit line		5,000,000		—
Bank credit lines		4,453,000		603,000
Income taxes payable		—		133,000
TOTAL CURRENT LIABILITIES		84,693,000		79,902,000
LONG TERM LIABILITIES
Revolving credit lines		51,800,000		69,300,000
Executive retirement plan		2,221,000		1,684,000
Due to seller		188,000		—
Deferred tax liability		2,085,000		2,072,000
TOTAL LONG TERM LIABILITIES		56,294,000		73,056,000
MINORITY INTEREST IN SUBSIDIARIES		2,568,000		2,261,000
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; 18,584,306 and 18,392,457 shares issued and outstanding as of November 30, 2008 and February 29, 2008, respectively		122,000		121,000
Additional paid-in capital		56,091,000		54,979,000
Retained earnings		98,118,000		96,621,000
Other accumulated comprehensive income (loss)		377,000		(527,000	)
TOTAL SHAREHOLDERS’ EQUITY		154,708,000		151,194,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	298,263,000	$	306,413,000

See accompanying notes

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For The Nine Months Ended
	November 30, 2008			November 30, 2007
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers	$	606,357,000		$	580,992,000
Cash paid to suppliers and employees		(589,292,000	)		(600,681,000	)
Interest received		12,000			34,000
Interest paid		(2,573,000	)		(3,131,000	)
Income taxes paid		2,899,000			(7,559,000	)
Net cash provided (used) by operating activities		17,403,000			(30,345,000	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(1,735,000	)		(2,698,000	)
Acquisition payment DT Electronics		(3,410,000	)		(2,593,000	)
Acquisition payment C-88		(3,814,000	)		—
Net cash used by investing activities		(8,959,000	)		(5,291,000	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit lines and bank credit lines		244,485,000			227,947,000
Repayments under revolving credit lines and bank credit lines		(252,235,000	)		(195,542,000	)
Proceeds from exercise of stock options		356,000			125,000
Net cash provided (used) by financing activities		(7,394,000	)		32,530,000
EFFECT OF EXCHANGE RATE CHANGE		904,000			(99,000	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		1,954,000			(3,205,000	)
Cash and cash equivalents, beginning of year		3,886,000			4,747,000
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	5,840,000		$	1,542,000
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
NET INCOME	$	1,497,000		$	2,098,000
Adjustments:
Depreciation and amortization		1,451,000			1,408,000
Recovery of bad debts		(463,000	)		—
Deferred income tax		13,000			131,000
Increase in minority interest		305,000			317,000
Stock based compensation		756,000			925,000
Changes in assets and liabilities:
Accounts receivable		6,172,000			(25,735,000	)
Inventories		4,510,000			(23,286,000	)
Prepaid expenses and other current assets		548,000			276,000
Other assets		127,000			(1,978,000	)
Accounts payable and accrued expenses		5,386,000			22,426,000
Due to seller		—			(3,378,000	)
Income taxes		(2,899,000	)		(3,549,000	)
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	$	17,403,000		$	(30,345,000	)

See accompanying notes

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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"), NUHC Inc., Nu Horizons International Corp., Nu Horizons Electronics Asia PTE LTD, Nu Horizons Electronics Hong Kong Limited, Nu Horizons Electronics Europe Limited, Nu Horizons Electronics Limited, C-88 AS, Titan Supply Chain Services Corp., Titan Supply Chain Services PTE LTD, Titan Supply Chain Services Limited together with Titan Supply Chain Services Corp., and Titan Supply Chain Services PTE LTD, ("Titan"), Nu Horizons Electronics (Shanghai) Co. Ltd., Nu Horizons Electronics Asia Pte Ltd. Korea, Nu Horizons Electronics GmbH, Razor Electronics Inc. and Nu Exchange B2B, Inc. and its majority-owned subsidiaries, NIC Components Asia PTE LTD ("NIA") and NIC Components Europe Limited ("NIE"), contain all adjustments necessary to present fairly the Company’s financial position as of November 30, 2008 and February 29, 2008 and the results of its operations for the three- and nine-month periods ended November 30, 2008 and 2007, and its cash flows for the nine-month periods ended November 30, 2008 and 2007. All references to the "Company", "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 29, 2008.  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, 2008 are not necessarily indicative of the results to be expected for the full year.

In preparing our fiscal 2008 tax return, we determined that certain tax adjustments for permanent items to the Company’s tax provision were required.  Consequently, the Company recorded an additional tax benefit of $586,000 for the three- and-nine months ended November 30, 2008.  

B.  Revenue Recognition:

The Company recognizes revenue in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104").  Under SAB 104, revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable, and collectability is reasonably assured.  Revenue typically is recognized at time of shipment.  Sales are recorded net of discounts, rebates, and returns in accordance with EITF 01-09, "Accounting for Consideration Given By a Vendor to a Customer (Including a Reseller of the Vendor's Products)."

In the fourth quarter of fiscal 2008, the Company reevaluated its accounting policy for revenue reporting for its Titan division which provides primarily supply chain services.  In accordance with EITF 99-19, "Reporting Revenue Gross as a Principal vs. Net as an Agent," the Company has revised its revenue presentation to net as an agent and therefore reduced sales and cost of sales for the three- and nine-month periods ended November 30, 2007 by $18,114,000 and $53,853,000 respectively.  Titan revenue is now reported in sales as a fee for services for all periods presented.  There was no change to net income resulting from this change in classification.

2. NEW ACCOUNTING STANDARDS:

In June 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position No. EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities" (“FSP EITF -3-6-1”). FSP EITF – 3-6-1 was issued to clarify that instruments granted in share-based payment transactions can be participating securities prior to the requisite service having been rendered.  FSP EITF – 3-6-1 did not have a significant impact on the Company’s consolidated financial position or results of operations.

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“Statement No. 162"). Statement No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in preparation of the financial statements of non-governmental entities that are presented in conformity with U.S. GAAP (the GAAP hierarchy).  Statement No. 162 will become effective sixty days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.”  The adoption of Statement No. 162 is not expected to materially impact the Company’s consolidated financial position or results of operations.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“Statement No. 141(R)”). Statement No. 141(R) 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. Statement No. 141(R) 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 will adopt Statement No. 141(R) in the first quarter of fiscal 2010 but it is not expected to materially impact the Company’s consolidated financial position or results or operations.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“Statement No. 160”). Statement No. 160 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. Statement No. 160 also requires expanded disclosures to clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. Statement No. 160 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. The adoption of the provisions of Statement No. 160 is not expected to materially impact the Company’s consolidated financial position or results of operations.

3. ACQUISITIONS:

On September 9, 2008, the Company acquired all the outstanding shares of C-88 AS (“C-88”), a franchised distributor of electronic components based in Hoersholm, Denmark.  This acquisition will further expand our 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 in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations."  Pursuant to the terms of the purchase agreement, the Company paid $3,814,000 in cash as of the acquisition date, including transaction costs of $391,000.  The purchase price allocated to cost in excess of net assets acquired was $3,877,000, which allocation is subject to change upon finalizing valuation.  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 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.

In accordance with EITF 95-8 "Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination", any contingent consideration based on earnings or other performance measures 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, no additional compensation above the $500,000 minimum has been recorded as C-88 is currently not projected to attain the first earnings milestone established in the purchase agreement.

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

The following table presents the preliminary allocations of the aggregate purchase price for the C-88 acquisition based on the estimated fair values of assets acquired and liabilities assumed.  Such amounts are subject to change upon finalizing valuations.

Purchase price	$	3,500,000
Less cash acquired		(77,000	)
Direct acquisition costs		391,000
Total purchase price, net of cash acquired	$	3,814,000
Allocation of purchase price:
Accounts receivable		3,155,000
Inventory		786,000
Other current assets		88,000
Fixed assets		22,000
Other assets		6,000
Accounts payable/accrued expenses		(2,832,000	)
Bank credit line		(900,000	)
Taxes payable		(388,000	)
Cost in excess of net assets acquired		3,877,000
Total purchase price, net of cash acquired	$	3,814,000

The following unaudited proforma information of the Company is provided to give effect to the C-88 acquisition assuming it occurred as of March 1, 2007, the beginning of the earliest period presented:

	For the Three Months Ended					For the Nine Months Ended
	November 30, 2008		November 30, 2007			November 30, 2008		November 30, 2007
Net sales	$	188,518,000	$	196,291,000		$	611,883,000	$	563,402,000
Net income (loss)		152,000		(343,000	)		1,551,000		2,210,000
Net income (loss) per share:
Basic	$	.01	$	(.02	)	$	.09	$	.12
Diluted	$	.01	$	(.02	)	$	.09	$	.12

The proforma amounts above reflect interest on the purchase price assuming the acquisition occurred as of March 1, 2007, with interest calculated at the Company's borrowing rate under its domestic credit facility (see Note 5) for the respective period.  The proforma net earnings above assume an incremental income tax provision at the Company's statutory consolidated tax rate for the respective fiscal period.  The information presented above is for illustrative purposes only and is not indicative of results that would have been achieved if the acquisition had occurred as of the beginning of the Company's 2008 fiscal year or of future operating performance.

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

4.  PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following:

	November 30, 2008		February 29, 2008
Furniture, fixtures and office equipment	$	11,902,000	$	10,685,000
Computer equipment		9,629,000		9,222,000
Leasehold improvements		1,255,000		1,255,000
		22,786,000		21,162,000
Less:  Accumulated depreciation and amortization		17,842,000		16,633,000
	$	4,944,000	$	4,529,000

Depreciation expense for the three months ended November 30, 2008 and 2007 was $571,000and $474,000, respectively. Depreciation expense for the nine months ended November 30, 2008 and 2007 aggregated $1,451,000 and $1,297,000, respectively.

5.  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 $150,000,000 (as amended to date, 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.  Borrowings under the Revolving Credit Line bear interest at either (i) the lead bank’s prime rate or (ii) LIBOR plus 175 basis points at the option of the Company, through September 30, 2011, the due date of the loan (3.17% at November 30, 2008).  Direct borrowings under the Revolving Credit Line were $51,800,000at November 30, 2008 and $64,300,000 at February 29, 2008.  As of the end of each of the fiscal periods, the Company was in compliance with all of the required bank covenants under the Revolving Credit Line.  On August 29, 2008, the Company entered into an amendment to the Revolving Credit Line which increased the interest rate on borrowings by 25 basis points to LIBOR plus 175 basis points and increased the commitment fee by 5 basis points.

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").  Borrowings under the Singapore Credit Line utilize an asset based formula based on a certain percentage of outstanding accounts receivable and inventory levels at any given month-end.  Borrowings under the Singapore Credit Line bear interest at SIBOR plus 1.5% (6.01% at November 30, 2008).  As part of this agreement, the Company must maintain a compensating balance of $2,250,000, which amount is included in other assets.  At November 30, 2008 and February 29, 2008, there was $5,000,000 outstanding under the Singapore Credit Line.  The Singapore Credit Line expires on November 20, 2009.

Bank Credit Lines

The Company also has a receivables financing agreement with a bank in England (the "Bank Credit Line"), which provides for maximum borrowings of £2,500,000 as of November 30, 2008 (approximately $3,778,000) with interest at the bank's base rate plus 1.55% (4.55% at November 30, 2008).  Borrowings under the Bank Credit Line were £2,150,000($3,249,000) at November 30, 2008 and £310,000($603,000)at February 29, 2008, respectively.  The Bank Credit Line renews annually in July.

The Company has a bank credit agreement with a bank in Denmark which provides for maximum borrowings of  10,072,000 Danish Kroner (approximately $1,700,000) as of November 30, 2008 at the current prevailing interest rate (9.31% at November 30, 2008).  Borrowings under the bank credit agreement were 7,094,000 Danish Kroner ($1,204,000) at November 30, 2008.

At November 30, 2008, the Company had approximately, $61,600,000 in the aggregate available under all of its bank facilities.

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

6.  ACCRUED EXPENSES:

Accrued expenses consist of the following:

	November 30, 2008		February 29, 2008
Commissions	$	2,081,000	$	2,131,000
Goods and services tax		962,000		860,000
Compensation and related benefits		1,188,000		674,000
Sales returns		857,000		891,000
Professional fees		329,000		670,000
Deferred rent		170,000		347,000
Other		2,801,000		3,042,000
Total	$	8,388,000	$	8,615,000

7.  NET INCOME (LOSS) PER SHARE:

Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average shares outstanding during the period.  Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares used in the basic earnings (loss) 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, 2008		November 30, 2007			November 30, 2008		November 30, 2007
NUMERATOR:
Net income (loss)	$	150,000	$	(373,000	)	$	1,497,000	$	2,098,000
DENOMINATOR
Basic earnings per common share – weighted-average number of common shares outstanding		18,067,795		18,377,582			18,035,460		18,322,489
Effect of dilutive stock options and restricted shares		—		—			102,124		724,929
Diluted earnings per common share – adjusted weighted-average number of common shares outstanding		18,067,795		18,377,582			18,137,584		19,047,418

The above calculation for the three months ended November 30, 2008 and November 30, 2007 excludes 2,664,203 and 835,500 options and restricted shares, respectively, as their effect was antidilutive. For the nine months ended November 30, 2008 and November 30, 2007 the above calculation excludes 1,784,863 and 258,250 options and restricted shares, respectively, as their effect was antidilutive.

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NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

8.  STOCK BASED COMPENSATION:

The Company follows the provisions of FASB Statement No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”), which established the accounting for share-based compensation awards exchanged for employee services and requires companies to expense 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 annual installments on the date of grant and 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, 2008:

Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at March 1, 2008		2,159,818		$	6.90
Granted		85,000		$	4.69
Exercised		(91,582	)	$	3.88
Forfeited		(4,013	)	$	3.17
Outstanding at November 30, 2008		2,149,223		$	6.95		3.3 years	$	-
Exercisable at November 30, 2008		2,064,223		$	7.00		3.0 years	$	-

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 2009 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, 2008.  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, 2008 and 2007 was $506,000 and $132,000, respectively.

Cash received from option exercises during the nine months ended November 30, 2008 and 2007 was $356,000 and $125,000, 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.  For the nine-month periods ended November 30, 2008 and 2007, the Company recorded compensation expense aggregating $604,000and $525,000, respectively, relating to the issuance of restricted stock.

- 11 - -

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO 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, 2008:

	Shares			Weighted Average Grant Date Fair Value
Non-vested shares at March 1, 2008		453,284		$	10.63
Granted		136,500		$	4.80
Vested		(53,513	)	$	10.01
Forfeited		(21,291	)	$	9.80
Non-vested shares at November 30, 2008		514,980		$	9.18

As of November 30, 2008, there was total unrecognized compensation cost of $4,049,000 related to non-vested shares and stock options which is expected to be recognized over a weighted average period of 3.6 years.

9.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION:

Management believes that the Company is operating in a single business segment, distribution of electronic components, in accordance with the rules of SFAS No. 131 (“Disclosure About Segments of an Enterprise and Related Information”).

For the nine months ended November 30, 2008 and 2007, approximately 65%and 70%, respectively, of the Company’s business was conducted in the Americas, while the remaining operations were conducted overseas through foreign subsidiaries.

The following table presents sales by geographic area:

	Three Months Ended				Nine Months Ended
	November 30, 2008		November 30, 2007		November 30, 2008		November 30, 2007
Americas	$	118,813,000	$	126,941,000	$	388,097,000	$	387,542,000
Europe		15,430,000		17,435,000		48,779,000		44,986,000
Asia/Pacific		53,976,000		48,510,000		163,308,000		120,959,000
	$	188,219,000	$	192,886,000	$	600,184,000	$	553,487,000

Total assets, by geographic area, as of November 30, 2008 and February 29, 2008 are as follows:

	November 30, 2008		February 29, 2008
Americas	$	202,261,000	$	219,120,000
Europe		20,474,000		16,149,000
Asia/Pacific		75,528,000		71,144,000
	$	298,263,000	$	306,413,000

Long lived assets (net), by geographic area, as of November 30, 2008 and February 29, 2008 are as follows:

	November 30, 2008		February 29, 2008
Americas	$	4,249,000	$	3,903,000
Europe		353,000		187,000
Asia/Pacific		342,000		439,000
	$	4,944,000	$	4,529,000

- 12 - -

NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(CONTINUED)

10.  COMPREHENSIVE INCOME (LOSS):

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, 2008 and 2007 is as follows:

	For the Three Months Ended					For the Nine Months Ended
	November 30, 2008		November 30, 2007			November 30, 2008		November 30, 2007
Net income (loss)	$	150,000	$	(373,000	)	$	1,497,000	$	2,098,000
Other comprehensive income (loss)		527,000		(91,000	)		904,000		(99,000	)
Total comprehensive income (loss)	$	677,000	$	(464,000	)	$	2,401,000	$	1,999,000

- 13 - -

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Shareholders

Nu Horizons Electronics Corp.

We have reviewed the condensed consolidated balance sheet of Nu Horizons Electronics Corp. (the "Company") as of November 30, 2008, and the related condensed consolidated statements of operations for the three-month and nine-month periods ended November 30, 2008 and the condensed consolidated statement of cash flows for the nine-month period ended November 30, 2008.  These financial statements are the responsibility of the Company’s management.  The condensed consolidated statements of operations and cash flows of Nu Horizons Electronics Corp. for the three-month and nine-month periods ended November 30, 2007 were reviewed by other accountants whose report (dated January 4, 2008) stated that they were not aware of any material modifications that should be made to those statements for them to be in conformity with U.S. generally accepted accounting principles.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States).  A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Nu Horizons Electronics Corp. as of February 29, 2008, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated May 12, 2008, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph for the Company's adoption of FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109," effective March 1, 2007, and the Company's adoption of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment," as Revised, effective March 1, 2006.  In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 29, 2008 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ ERNST & YOUNG LLP

Melville, New York

January 6, 2009

- 14 - -

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 this Form 10-Q and in the Company's Annual Report on Form 10-K for the year ended February 29, 2008 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, 2008 and 2007, 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 29, 2008.

Overview:

Nu Horizons and its wholly-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.  Active components distributed by the Company include semiconductor products such as memory chips, microprocessors, digital and linear circuits, microwave/RF and fiberoptic components, transistors and diodes.  Passive components distributed by NIC, and majority-owned subsidiaries NIA and NIE, principally to OEMs and other distributors nationally, consist of a high technology line of chip and leaded components including capacitors, resistors, inductors and circuit protection components.  NIC, NIA and NIE are a prime source of qualified products to over 9,000 OEMs in the United States.  In addition, the Company distributes IBM and Sun Microsystems boards, servers, storage and software to OEMs (referred to herein as "Systems").

In recent years, there has been a shift in production of electronic components to Asia due to lower cost.  The Company recognized the industry shift to overseas production and the need to serve its suppliers and customers on a global basis.  As a result, the Company adopted a strategy of expanding its Asian and European operations by investing in human resources and expanding its sales force and engineering personnel.  In prior years, we invested in Asia and currently we have 19 offices, with a warehouse in Singapore and Hong Kong.  Sales in Asia for the nine months ended November 30, 2008 are 35% higher than the same period of the prior fiscal year.  However, due to the current economic downturn, we expect sales in North America and Asia to decline in the balance of fiscal 2009.  In fiscal 2007, we continued our growth strategy of expanding our European presence by acquiring DT Electronics Limited on August 29, 2006, with 50 employees and a warehouse in Coventry, England. In fiscal 2008, we opened our first office in Munich, Germany and on June 6, 2007, the Company acquired Dacom Süd Electronics Vertriebs GmbH ("Dacom"), a franchised electronic component distributor, based in Munich, Germany.  Our Germany operations are currently considered a "start-up" investment and are not expected to attain profitable operations until fiscal 2010.

 In addition, to further expand our European presence, 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 in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations."  Pursuant to the terms of the purchase agreement, the Company paid $3,814,000 in cash as of the acquisition date, including transaction costs of $391,000.  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 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.

- 15 - -

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview (continued):

In accordance with EITF 95-8 "Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination", any contingent consideration based on earnings or other performance measures 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 ended August 31, 2011 when it is deemed probable that the earnings milestones will be attained.  For the three-and nine-month periods ended no additional compensation above the $500,000 minimum has been recorded as C-88 is currently not projected to attain the first earnings milestone established in the purchase agreement.

During fiscal 2008, we modified our Systems business by focusing the business on higher margin value-added engagements with mid-tier customers and creating a new selling organization.  Systems sales for the nine months ended November 30, 2008 increased 33.8% over the same period of the prior year due to a one-time sale to a large customer on a product that was being discontinued.  Systems gross profit increased by $1,875,000 and gross profit margin increased from 8.8% in the fiscal 2008 nine-month period to 10.3% for the fiscal 2009 nine-month period.

It is difficult for the Company, as a distributor, to forecast the material trends of the electronic component and computer products 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.

Due to the current economic downturn and related decreased product demand, the Company recently has taken 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. Finally, the Company is adjusting its commission plans to reduce commission rates in fiscal 2010.  Collectively, the Company expects these actions to result in approximately $6,500,000 to $7,500,000 in savings annually, excluding approximately $300,000 of severance cost.

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142 (“SFAS 142”) “Goodwill and Other Intangible Assets,” the Company is required to evaluate the carrying value of its goodwill for potential impairment on an annual basis or an interim basis if there are indicators of potential impairment.  Due to the recent deterioration in the global economic environment and resulting significant decrease in the Company’s market capitalization, the Company is currently conducting an evaluation of its goodwill for potential impairment which may result in non-cash charges in the fourth quarter of fiscal 2009.

The Company is continuing to cooperate with the inquiry by the Securities and Exchange Commission ("SEC") and to conduct its own related internal investigation under the direction of the Audit Committee in the action captioned "In the Matter of Vitesse Semiconductor Corp." (referred to herein as the "Vitesse Matter").  The cost related to the SEC investigation and the 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, 2008, the Company has incurred approximately $752,000 and $3,086,000 for professional fees compared to $1,162,000 and $1,581,000 respectively, for the three- and nine-month periods ended November 30, 2007.  Cumulatively, $5,800,000 of expense for professional fees has been incurred to date since fiscal 2007 related to the Vitesse Matter.  Management is presently unable to determine the duration of the SEC inquiry and related cost to be incurred by the Company.  However, management believes that the Audit Committee's internal investigation is nearing completion and, consequently, expects total monthly costs to decline by the end of fiscal 2009.

- 16 - -

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview (continued):

The tables below provide a summary of sales for the Company for the three and nine months ended November 30, 2008 and 2007:

Analysis of Sales

	Quarters Ended November 30,										Percentage Change
	2008		% of Total			2007		% of Total			2008 to 2007
Sales by Type:
Electronic Components	$	177,813,000		94	%	$	179,742,000		93	%		(1.1	)%
Systems		10,406,000		6	%		13,144,000		7	%		(20.8	)%
	$	188,219 000		100	%	$	192,886,000		100	%		(2.4	)%

	Nine Months Ended November 30,										Percentage Change
	2008		% of Total			2007		% of Total			2008 to 2007
Sales by Type:
Electronic Components	$	549,237,000		92	%	$	515,399,000		93	%		6.6	%
Systems		50,947,000		8	%		38,088,000		7	%		33.8	%
	$	600,184,000		100	%	$	553,487,000		100	%		8.4	%

The following table sets forth, for the three- and nine-month periods ended November 30, 2008 and 2007, 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
	2008			2007			2008			2007
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		84.9			83.5			85.0			83.3
Gross profit		15.1			16.5			15.0			16.7
Operating expenses		15.2			15.7			14.3			15.1
Interest expense		.4			.6			.4			.6
Interest (income)		—			—			—			—
Income (loss) before taxes  and  minority interest		(.5	)		.2			.3			1.0
Income tax provision (benefit)		(.6	)		.3			.0			.6
Minority interests		—			.1			.1			.1
Net income (loss)		.1			(.2	)		.2			.4

- 17 - -

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations:

Three Months Ended November 30, 2008 compared to Three Months Ended November 30, 2007

Sales for the three-month period ended November 30, 2008 were $188,219,000 as compared to $192,886,000 for the comparable period of the prior year, a decrease of $4,667,000 or 2.4%.  Organic sales, excluding the impact of the acquisition of C-88, decreased by $8,072,000 or 4.1% for the three months ended November 30, 2008 as compared to the three-month period ended November 30, 2007.

Sales of electronic components, excluding Systems, for the three-month period ended November 30, 2008 were $177,813,000 as compared to $179,742,000 for the comparable period of the prior year, a decrease of approximately $1,929,000 or 1.1%.   Management believes that this sales decrease is primarily due to decreased market share in the Americas and Europe caused by an overall market contraction in the electronics distribution industry due to the global economic slow-down.  The decrease was, in part, offset by increased market share in Asia/Pacific.  The recent economic and credit crisis makes it difficult for management to estimate the Company’s overall sales volume and earnings for the balance of the Company’s current fiscal year. Management believes, however, that in the near term the industry will experience a global decline in overall sales volume as compared to recent prior periods. System sales for the quarter ended November 30, 2008 were $10,406,000 compared to $13,144,000 in the quarter ended November 30, 2007, a decrease of approximately $2,738,000 or 20.8%, due to lower volume sales at a higher gross margin.

The gross profit margin for the three months ended November 30, 2008 was 15.1% as compared to 16.5% in the prior year.  The decline in gross margin for the three-month period ended November 30, 2008 is attributed to an increase in lower margin sales in the Asia/Pacific markets in order to secure high volume business from large Asian contract manufacturers and a change in product mix to include a higher amount of lower margin business in North America and Europe. Reduced supplier discounts aggregating $835,000 and higher freight costs of $495,000 also contributed to the decrease in gross profit margin during the third quarter.

As a percentage of sales, operating expenses decreased to 15.2% from 15.7% in the comparable period of the prior year.  Operating expenses decreased $1,617,000 or 5.3% over the prior period primarily due to: (i) a decrease of $1,347,000 in  selling and administrative expenses primarily due to lower sales volume;(ii) a decrease of $591,000 in non-Vitesse-Matter related professional fees, primarily for audit fees associated with the 2007 restatement of the Company’s financial statements; (iii) a decrease of $410,000 in professional fees related to the Vitesse Matter; and (iv) a decrease of $69,000 in other selling and administrative expenses.  These decreases in operating expenses were partially offset by a $295,000 increase in warehouse costs for severance and accelerated depreciation related to the consolidation of the Company’s Melville, New York warehouse into the expanded Mississippi warehouse and an increase of $505,000 for operating expenses attributed to our newly acquired C-88 operation.

Interest expense decreased 36.4% to $747,000 for the three months ended November 30, 2008 from $1,174,000 in the prior period, primarily due to lower average borrowings and lower average interest rates compared to the prior year period.

Our effective tax rate was a benefit of 127.6% and a provision of 160.7% for the three months ended November 30, 2008 and November 30, 2007, respectively.  The effective tax rate differs significantly from the statutory rate of 35% for the three months ended November 30, 2008, primarily due to domestic tax benefits derived as a result of a domestic loss before tax, which was partially offset by foreign income tax. Also, in preparing our fiscal 2008 tax return, we determined that certain tax adjustments for permanent items to the Company’s tax provision were required resulting in the recording of an additional tax benefit of $586,000 for the three months ended November 30, 2008.  The effective tax rate differs from the statutory rate of 35% for the three months ended November 30, 2007, primarily due to penalties and interest associated with the correction of errors in our United States federal and state tax returns.

Net income for the three-month period ended November 30, 2008 was $150,000or $.01 per basic and diluted share as compared to net loss of $(373,000) or $.(02) per basic and diluted share for the three-month period ended November 30, 2007.

- 18 - -

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Results of Operations:

Nine Months Ended November 30, 2008 compared to Nine Months Ended November 30, 2007

Sales for the nine-month period ended November 30, 2008 were $600,184,000 as compared to $553,487,000 for the comparable period of the prior year, an increase of $46,697,000 or 8.4%.

Sales of electronic components, excluding Systems, for the nine-month period ended November 30, 2008 were $549,237,000as compared to $515,399,000 for the comparable period of the prior year, an increase of approximately $33,838,000 or 6.6%.  Management believes that this sales increase is primarily due to increased market share in Asia/Pacific, the expansion of its line card and customer base and the acquisition of C-88.  The recent economic and credit crisis, makes it difficult for management to estimate the Company’s overall sales volume and earnings for the balance of the Company’s current fiscal year. Management believes, however, that in the near term the industry will experience a global decline in overall sales volume as compared to recent prior periods.  System sales for the nine months ended November 30, 2008 were $50,947,000 compared to $38,088,000 in the nine months ended November 30, 2007, an increase of $12,859,000 or 33.8%, primarily due to a sale of $13,841,000 to a large supplier of a product that was being discontinued.

The gross profit margin for the nine months ended November 30, 2008 was 15.0% as compared to 16.7% in the prior year.  The decline in gross margin for the nine-month period ended November 30, 2008 is atributed to an increase in lower margin sales in the Asia/Pacific markets in order to secure high volume business from large Asian contract manufacturers and a change in product mix to include a higher amount of lower margin business in North America and Europe. Reduced supplier discounts aggregating $2,163,000, higher freight costs of $1,210,000 and the Systems sale of $13,841,000 at a low margin to a large customer of an end-of-life product, also contributed to the decline in gross profit margin during the nine-month period ended November 30, 2008.

As a percentage of sales, operating expenses decreased to 14.3% from 15.1% in the comparable period of the prior year.  Operating expenses increased $2,261,000 or 2.7% over the prior period primarily due to: (i) $1,505,000 increase in professional fees related to the Vitesse Matter; (ii) $590,000 of increased warehouse costs for severance and accelerated depreciation related to the consolidation of the Company’s Melville, New York warehouse into the expanded Mississippi warehouse; (iii) an increase of $505,000 for operating expenses attributed to our newly acquired C-88 operation and (iv) an increase of $33,000 in other selling and administrative expenses.  These increases were partially offset by a decrease of $372,000 in selling and administrative expenses primarily due to a reduction in workforce at the end of the third quarter of fiscal 2008.

Interest expense decreased 18.6% to$2,563,000 for the nine months ended November 30, 2008 from $3,149,000 from the prior period primarily due to lower average borrowing and lower average interest rates compared to the prior year period.

Our effective tax rate was a benefit of 9.1% and a provision of 56.9% for the nine months ended November 30, 2008 and November 30, 2007, respectively.  The effective tax rate is lower than the statutory rate of 35% for the nine months ended November 30, 2008, primarily due to domestic tax benefits derived as a result of a domestic loss before tax, which was partially offset by foreign income tax.  Also, in preparing our fiscal 2008 tax return, we determined that certain tax adjustments for permanent items to the Company’s tax provision were required resulting in the recording of an additional tax benefit of $586,000 for the nine months ended November 30, 2008. The effective tax rate is higher than the statutory rate of 35% for the nine months ended November 30, 2007, primarily due to penalties and interest associated with the correction of errors in our United States federal and state tax returns.

Net income for the nine-month period ended November 30, 2008 was $1,497,000 or $.08 per basic and diluted share as compared to net income of $2,098,000 or $0.11 per basic and per diluted share for the nine-month period ended November 30, 2007.

- 19 - -

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity and Capital Resources:

The Company's current ratio was 3.2:1 at November 30, 2008. Working capital was $187,206,000 at November 30, 2008 as compared to $204,456,000 at February 29, 2008.

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 $150,000,000 (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.  Borrowings under the Revolving Credit Line bear interest at either (i) the lead bank’s prime rate or (ii) LIBOR plus 175 basis points, at the option of the Company, through September 30, 2011, the due date of the loan. The interest rate at November 30, 2008 was 3.17%. Direct borrowings under the Revolving Credit Line were $51,800,000 at November 30, 2008 and $64,300,000 at February 29, 2008.  As of the end of each of the fiscal periods, the Company was in compliance with all of the required bank covenants.  On August 29, 2008, the Company entered into an amendment to the Revolving Credit Line which increased the interest rate on borrowings by 25 basis points to LIBOR plus 175 basis points and increased the commitment fee by 5 basis points.

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").  Borrowings under the Singapore Credit Line utilize an asset-based formula based on a certain percentage of outstanding accounts receivable and inventory levels at any given month end.  Borrowings under the Singapore Credit Line bear interest at SIBOR plus 1.5 percent.  The interest rate at November 30, 2008 was 6.01%. Direct borrowings under the Singapore Credit Line were $5,000,000 at November 30, 2008 and February 29, 2008. The Singapore Credit Line expires on November 20, 2009.

The Company also has a receivable financing agreement (the "Bank Credit Line") with a bank in England which provides for maximum borrowings of £2,500,000 (approximately $3,778,000) at November 30, 2008, which bear interest at the bank's base rate plus 1.55%.  The interest rate at November 30, 2008 was 4.55%.  The Company owed $3,249,000 and $603,000 at November 30, 2008 and February 29, 2008, respectively.  The Bank Credit Line renews annually in July.

The Company has a bank credit agreement with a bank in Denmark which provides for maximum borrowings of 10,072,000 Danish Kroner (approximately $1,700,000) as of November 30, 2008, at the current prevailing interest rate (9.31% at November 30, 2008).  Borrowings under this bank credit agreement were 7,094,000 Danish Kroner ($1,204,000) at November 30, 2008.

At November 30, 2008, the Company had approximately $61,600,000 in the aggregate available under all of its bank credit facilities.

In September 2008, we acquired C-88, a franchised electronic components distributor based in Hoersholm, Denmark. Pursuant to the terms of the purchase agreement, the Company paid $3,814,000 in cash including acquisition costs.  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 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.

The Company anticipates that its resources provided by its cash flow from operations and the aforementioned 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, 2008, 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 29, 2008.

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Item 3.  Quantitative and Qualitative Disclosures About Market 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 interest rates tied to the prime lending rate, LIBOR or SIBOR rate, any of which 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 $190,000 for the three-month period ended November 30, 2008 and $570,000 for the nine-month period ended November 30, 2008.  As a borrower, the Company is subject to the risk associated with fluctuating interest rates and therefore could incur increased interest expense.

The Company has foreign subsidiaries in Asia, the United Kingdom, Germany, Denmark and Canada.  The Company does business in more than one dozen countries and for the three and nine months ended November 30, 2008 generated approximately 36.9% and 35.3%, respectively, of its revenue 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 $96,002,000 and $87,293,000 at November 30, 2008 and February 29, 2008, respectively, translated into U.S. dollars at the closing exchange rates.  The Company also acquires certain inventory from foreign suppliers and as such, faces risk due to adverse movements in foreign currency exchange rates.  These risks could have an adverse impact on the Company’s results in future periods.  The potential loss based on end-of-period balances and prevailing exchange rates resulting from a hypothetical 10% strengthening of the U.S. dollar against foreign currencies was not material for the nine-month period ended November 30, 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.

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.

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Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our Chairman and 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, 2008 our disclosure controls and procedures were effective in ensuring that the information required to be filed in this report 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, 2008 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.

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PART II

OTHER INFORMATION

Item 1.	Legal Proceedings.
	None.
Item 1A.	Risk Factors.
	In addition to the other information set forth in this report, you should carefully consider the factor described below, as well as those discussed in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended February 29, 2008, which could materially affect our business, financial condition and/or future results. The risks described below and in our Annual Report on Form 10-K are not the only risks facing Nu Horizons. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, also may materially adversely affect our business, financial condition and/or operating results. Recent turmoil in the credit markets and the financial services industry may negatively impact the Company’s business, results of operations, financial condition or liquidity. Recently, the credit markets and the financial services industry have been experiencing a period of unprecedented turmoil and upheaval characterized by the bankruptcy, failure, collapse or sale of various financial institutions and an unprecedented level of intervention from the United States federal government. While the ultimate outcome of these events cannot be predicted, they may have a material adverse effect on the Company’s liquidity and financial condition if its ability to borrow money to finance its operations from its existing lenders under its bank credit agreements or obtain credit from trade creditors were to be impaired. In addition, the recent economic crisis could also adversely impact our customers’ ability to finance the purchase of electronic components from us or our suppliers’ ability to provide us with product, either of which may negatively impact the Company’s business and results of operations.
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.

Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
	Due to the overall sales decline in the semiconductor market, the Company has determined to effect a reduction in the salaries payable to [a majority] of its employees, including its executive officers. Accordingly, the annual base salaries payable to such executive officers have been reduced by 10% effective January 19, 2009, as follows:

Name	Title	Salary (effective January 19, 2009)
Arthur Nadata	Chairman and Chief Executive Officer	$284,476
Richard Schuster	President and Chief Operating Officer	$300,047
Kurt Freudenberg	Executive Vice President and Chief Financial Officer	$256,500

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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	By-laws, as amended (Incorporated by Reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended February 29, 1988).
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	Separation Agreement between C. David Bowers and Nu Horizons Electronics Corp. dated as of December 5, 2008.
*10.2	Compensation of Outside Directors
*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.

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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 9, 2009

/s/ Arthur Nadata

Arthur Nadata

Chairman and Chief Executive Officer

Date:  January 9, 2009

/s/ Kurt Freudenberg

Kurt Freudenberg

Executive Vice President and Chief Financial Officer

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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	By-laws, as amended (Incorporated by Reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended February 29, 1988).
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	Separation Agreement between C. David Bowers and Nu Horizons Electronics Corp. dated as of December 5, 2008.
*10.2	Compensation of Outside Directors
*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.

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EX-10.1

EXHIBIT 10.1

Separation Agreement between C. David Bowers and Nu Horizons Electronics Corp.

dated as of December 5, 2008.

December 5, 2008

Charles David Bowers

1760 Dean Street

Brooklyn, NY  11233

Dear David:

This will confirm our discussion about your separation from employment with Nu Horizons Electronic Corp. (the "Company") on mutually agreeable terms as set forth below. You and the Company agree that this Agreement represents the full and complete agreement concerning your separation from employment with the Company.

1.      Last Day of Work.  You hereby resign as an executive officer of the Company effective as of the date you sign this Agreement. You will continue to serve as an employee of the Company through and including your last day of work  on April 3, 2009.  At that time, you must return any and all Company property including, but not limited to, documents, electronic files, cell phones, blackberries, credit cards, keys, etc.   You agree that you will not keep copies of the Company's property, its documents or any of its confidential or proprietary information and if you have any of the foregoing as of your last day of work, you will return the same to the Company.

2.      Transition.  You agree that between December 8, 2008 and April 3, 2009, you will be available, upon no more than two (2) business days’ notice, to respond to questions and to provide assistance to the Company, whether by telephone or in person, concerning all matters you worked on during your employment.  During that period, you will receive salary of an aggregate $135,217.75.  Initially, you will receive a lump sum payment of $27,661.52 on the eighth (8th) day after you originally signed the Agreement providing you have not revoked the Agreement.  Then, providing you have not revoked the Agreement, effective for the week of December 12, 2008 and ending on April 3, 2009, you will receive payments in accordance with Nu Horizon’s regular payroll practices for executive employees at a rate of pay of $6,326.84 per week; however, the first weekly payment shall be payable at the same time as the lump sum payment described in the preceding sentence.

3.      Severance.  Providing this Agreement becomes effective and you abide by its terms, you will receive $189,805.20, representing thirty (30) weeks of salary at a rate of pay of $6,326.84 per week (the “Severance Payments”).  The Severance Payments shall be made in accordance with Nu Horizon’s regular payroll practices for executive employees.

4.      Withholding on Payments.  Taxes and other withholding amounts, as required by law, will be deducted from all payments to you.

5.      Benefits.  Your employee benefits (including medical, dental, vision, group life insurance, short and/or long term disability insurance, 40IK, and life insurance) shall end on March 31, 2009; however, to the extent that you own any then-exercisable options to purchase shares of the Company’s common stock, you may still exercise them to the extent permitted by the terms of such options and the stock incentive plan(s) under which they were granted.  After your Company-provided benefits end, you may continue medical, dental and hospitalization insurance coverage at your own expense pursuant to a federal law known as COBRA.   Information on COBRA has been mailed to you.  Provided that you sign this Agreement, the Company will pay your medical, dental and hospitalization insurance coverage through COBRA through and including October 31, 2009.  At that time you will be able to continue your coverage at your own expense for an additional twelve (12) months.  To be eligible for such coverage, you must complete the COBRA enrollment forms and return them as soon as possible.

6.      Acknowledgments.  You understand and agree that without this agreement, you would not otherwise be entitled to the payments and benefits specified in paragraphs 3 and 5.   Further, by signing this Agreement, you agree that you are not entitled to any other payments and/or benefits that are not specifically listed in this Agreement.

7.      General Release of All Claims.  In exchange for the payments and benefits outlined above and the Company's promises set forth in this Agreement, on behalf of yourself (and your heirs, successors and assigns), you hereby release the Company, and any and all of its respective subsidiaries, affiliates, divisions and each of its respective officers, managers, owners, attorneys, employees, agents, successors and assigns, including, but not limited to, Arthur Nadata and Richard Schuster, as well as their respective  heirs, successors and  assigns (hereinafter collectively "Releasees"),  from any and  all  legal, equitable or other claims, counterclaims, demands, setoffs, defenses, contracts, accounts, suits, debts, agreements, actions, causes of action, sums of money, reckonings, bonds, bills, specialties, covenants, promises, variances, trespasses, damages, extents, executions, judgments, findings, controversies and disputes, and any past, present or future duties, responsibilities, or obligations, existing from the beginning of the world through the date hereof, which are now known or unknown, including but not limited to the following:

a. any and all  such claims or counterclaims alleging or sounding in discrimination, harassment, retaliation, failure to accommodate, breach of contract, breach of any implied covenant of good faith, piercing the corporate veil, whistleblowing, corporate fraud, accounting, tort, defamation, libel, slander, injurious falsehood, public policy, assault, battery, intentional or negligent infliction of emotional distress, attorneys' fees, indemnification, and all claims for compensatory, punitive, and liquidated damages; and

b. any and all claims under any and all federal, state or local laws including, but not limited to claims under the fair employment practice laws or other employment related laws of the United States, New York and all jurisdictions, states, municipalities and localities, including, but not limited to Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§2000e et  seq., the Civil Rights Act of 1991; the Age Discrimination in Employment Act, 29 U.S.C. §§621-634; the Americans with Disabilities Act of 1990, 42 U.S.C. §§ 12101 et seq., and the Family and Medical Leave Act of 1993, 29 U.S.C. §§ 2601 ct seq., the Civil Rights Act of 1866. 42 U.S.C.  §§ 1981, the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq., the Sarbanes Oxley Act of 2002, the National Labor Relations Act, 29 U.S.C.  § 151, et seq., the Fair Labor Standards Act, 29 U.S.C. §§201, et seq., the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§1001-1461, New York Labor Law, the New York State Human Rights Law, the New York Executive Law §290 et seq., and the New York Worker's Compensation Law; and

d. any and all claims under all other employee relations, labor, corporate and commercial statutes, executive orders, laws, rules and/or regulations; and

e. any and all claims for wages, bonuses, commissions, vacation pay, employee fringe benefits, reimbursement of expenses, monetary and/or equitable relief, punitive and compensatory relief, and/or attorneys' fees and/or costs.

8.      Confidential Information.  You agree that you shall not publish, use or disclose Confidential Information to any entity, organization or person.  "Confidential Information" means any and all information, whether written or verbal, (other than information that is public knowledge or readily available to the public), which relates to the business operations, products, computer software data, documentation, processes, business plans, purchasing, marketing, customers, prospective customers, trade secrets, finances or suppliers of the Company, including, but not limited to the following (a) financial information and data; (b) information pertaining to personnel and compensation; (c) marketing plans and related information; (d) the names, addresses, contact information and practices of customers, prospective customers, vendors and suppliers; (e) business methods, techniques, plans, computer programs and files, know-how, improvements, trade secrets, concepts or writings; (f) any data relating to business contacts, vendor lists or supplier matters; (g) any technical data, marketing and business data, pricing and cost information, business and marketing plans; (h) any information that the Company has received from a third party and is obligated to treat as confidential; (i) all other confidential information of, about, or concerning the Company and (j) all analyses, compilations, forecasts, studies and other documents by whomsoever prepared which contain any of the foregoing information or data.

9.      Restrictive Covenants.  Through and including October 31, 2009, you agree that you shall not directly or indirectly (a) have an ownership interest in, manage, operate, control, solicit business or otherwise be involved the management, operation, or control of any Competitive Business; (b) perform any work or services (either as an employee, independent contractor or consultant) for any Competitive Business; (c) solicit or accept business from or perform any work or services for (either as an employee, independent contractor or consultant), any Customer, Supplier, Potential Customer or Potential Supplier; (d) solicit, induce, or attempt to induce any Customer, Potential Customer, Supplier or Potential Supplier  to do business with any Competitive Business; or (e) solicit, encourage, induce or attempt to induce any employee of the Company to leave his or her employment.

For purposes of this Agreement, (a) “Competitive Business” means any business entity that (i) distributes advanced technology semiconductor, display, illumination, power and system solutions to commercial original equipment manufacturers (OEMs) and electronic manufacturing services providers (EMS); and (ii) designs, manufactures and sells passive components; (b) “Customer” means a person or entity to whom the Company has sold product or performed services during the two-year period prior to your last day of work; (c) “Supplier”  means a person or entity from whom the Company has sold or purchased product or services during the two-year period prior to your last day of work and (d) “Potential Customer ” or “Potential Supplier” means a person or entity to whom the Company submitted a proposal for the sale or purchase of products or services, as the case may be, during said two year period.

- 2 - -

10.    Claims/Potential Litigation.  At the Company’s request, you agree to cooperate fully with the Company in any litigation, administrative proceeding, investigation or inquiry that involves the Company about which you may have knowledge or information, including, but not limited to, the U.S. Securities and Exchange Commission's ("SEC") investigation entitled "In the Matter of Vitesse Semiconductor" and the related internal investigation being conducted at the direction of the Company's Audit Committee.  This cooperation will include, but not be limited to, the following:  (1) if you are asked to appear for an interview, you will do so within five (5) business days of the request; (2) you will answer all questions truthfully concerning the Company and your work for the Company; (3) you will produce all non-privileged documents you are asked to produce; (4) you will appear for depositions and/or at trial related to any claim, action or litigation in which the Company is, or may become, a party; and (5) you will meet with representatives of the Company and/or its counsel to assist in preparation for such depositions and/or trials.  If you are participating at the Company’s request and legal counsel is required, the Company will provide such legal counsel pursuant to the April 28, 2008 letter signed on November 19, 2008 with effective date as of April 28, 2008 regarding counsel fees, and then, only to the extent permissible by law.

You hereby represent and agree that you will fully cooperate with, and provide truthful testimony in, any governmental investigation involving the Company or your employment with the Company.  Furthermore, nothing in this Agreement shall prohibit you from responding to a valid subpoena or court order provided that you notify the Company of such subpoena or court order within two (2) business days of receipt in order to allow the Company an opportunity to seek a protective order or other relief limiting or barring such disclosure.

11.    Subsequent Discoveries.  As part of this Agreement, you represent and warrant that you have not knowingly participated in any violation of law or regulation in the course of performing services for the Company.  In the event that the Company discovers that, in the course of your performance of services for the Company, you knowingly committed or knowingly participated in any violation of law or regulation, you agree and undertake to repay to the Company all monies paid to you pursuant to paragraph 3 of this Agreement, and you further waive and forfeit any claim for any monies still due and payable to you pursuant to paragraph 3.  In the event that the SEC or any other United States or foreign criminal or regulatory authority files criminal, civil, administrative or other regulatory proceedings against you for any reason related to your performance of services for the Company, you acknowledge and agree that such action will suspend and toll any further obligations that the Company may have under this Agreement.  Such suspension or tolling shall remain in effect pending final resolution, including final exhaustion of any appellate remedies in such proceedings.  In the event that you are convicted of or plead nolo contendere to a crime or subject to a finding by a regulatory authority (including, but not limited to, the SEC) that you violated U.S. laws or regulations or the laws or regulations of a foreign country in the course of your performance of services for the Company, then: (1) the Company shall be relieved of all of its obligations under this Agreement; (2) you agree and undertake to repay to the Company all monies paid pursuant to Paragraph 3 herein, excluding any monies previously repaid; and (3) you further waive and forfeit any claim for any monies still due and payable and any benefits to be provided under this Agreement.

12.    Non-admission of Wrongdoing.  By entering into this Agreement, neither you nor the Company, its owners, parents, subsidiaries, affiliates, officers, managers, employees or agents, admit any wrongdoing or violation of law.

13.    Changes to the Agreement. This Agreement may not be changed unless the changes are in writing and signed by you and an authorized representative of the Company.

14.    Jurisdiction and Applicable Law.  This Agreement arises out of employment within the State of New York and it shall in all respects be interpreted, enforced and governed under the laws of the State of New York.

15.    Entire Agreement.  This Agreement contains the entire agreement between you and the Company relating to your employment and termination of your employment and replaces any prior agreements or understandings between you and the Company relating to your employment or separation.

16.    Waiver. By signing this Agreement, you acknowledge that:

a)	You have carefully read, and understand, this Agreement;
b)	You have been given at least 21 days to consider your rights and obligations under this Agreement and to consult with an attorney;

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c) You have been advised to consult with an attorney and/or any other advisors of your choice before signing this Agreement;

d) You understand that this Agreement is LEGALLY BINDING and by signing it you give up certain rights;

e) You have voluntarily chosen to enter into this Agreement and have not been forced or pressured in any way to sign it;

f) You knowingly and voluntarily release the Company and its parents, subsidiaries, affiliates, officers, directors, agents, or employees from any and all claims you may have, known or unknown, in exchange for the payments and benefits you have obtained by signing, and that these payments and benefits are in addition to any benefit you would have otherwise received if you did not sign this Agreement;

g) The General Release in this Agreement includes a WAIVER OF ALL RIGHTS AND CLAIMS you may have under the Age Discrimination In Employment Act of 1967 (29 LJ.S.C. §621 et seq.); and

h) This Agreement does not waive any rights or claims that may arise after this Agreement is signed and becomes effective.

17.    Return Of Signed Agreement.  You should return the signed Agreement to Nancy Lieberman, Esq., at Farrell Fritz, P.C., 1320 RexCorp Plaza, Uniondale, New York no later than December 12, 2008.

18.    Effective Date. You have seven (7) days from the date you sign this Agreement to change your mind. If you change your mind, you must send written notice of your decision to me at 70 Maxess Road, Melville, New York 11747, so that I RECEIVE your revocation no later than the eighth (8th) day after you originally signed the Agreement. You should understand that the Company will not be required to provide the payments and benefits set forth in paragraphs 3 and 6 unless this Agreement becomes effective.

		Very truly yours,
		/s/ Arthur Nadata
		Arthur Nadata, Chairman & CEO
Agreed and Accepted:
/s/ C. David Bowers		12 - 5 - 08
Charles David Bowers		Date
STATE OF    New York	)
	: ss.:
COUNTY OF  Suffolk	)

On the 5th day of December, 2008 before me personally came Charles David Bowers, to me known and known to me to be the individual described in, and who executed, the above Agreement, and duly acknowledged to me that he executed the same.

/s/ Julie A. Augustine                                 

        Notary Public

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EX-10.2

EXHIBIT 10.2

Compensation of Outside Directors

In connection with a reduction in compensation payable to certain of the Company’s employees, including its executive officers, at a meeting held on January 7, 2009, the Board of Directors of the Company approved a reduction of 10% to the cash compensation of its non-employee directors effective as of January 19, 2009. Consequently, effective January 19, 2009 until the elimination of the salary reduction for employees, the cash compensation payable to the outside directors will be as follows:

• the amount of the per meeting fee for in-person Board of Directors meetings will be $1,440;
• the amount of the per meeting fee for in-person Committee meetings will be $1,080;
• the amount of the per meeting fee payable for telephonic meetings of the Board of Directors or a Committee lasting one hour or less is fixed at 50% of the per meeting for a Board of Directors or Committee meeting, as applicable; and
• the amount of the compensation payable to the members of any Special Committee, if and when such a Committee is needed, will be $4,500 per month for the Special Committee Chairman, $2,250 per month for the Special Committee Vice-Chairman, and $1,800 per meeting for all members of the Special Committee. The additional compensation will be discontinued when any Special Committee project is suspended or concluded.

In addition, in the event that the compensation reduction is still in effect on March 1, 2009, which is the commencement of the Company’s fiscal 2010 and the time at which the annual cash retainers are paid to the non-employee directors, the annual cash retainers will similarly be decreased, as follows:

• the annual cash retainer payable for Company Board-level (as opposed to Committee-level) service will be $27,000;
• the annual cash retainer payable to the chairman of the Audit Committee will be $10,800; and
• the annual cash retainer payable to the chairman of the Compensation Committee will be $9,000.

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CFO PURSUANT TO RULE 13a-14(a) ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kurt Freudenberg, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Nu Horizons Electronics Corp.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,  to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this  report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 9, 2009

/s/ Kurt Freudenberg

Kurt Freudenberg

Executive Vice President and Chief Financial Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CEO PURSUANT TO RULE 13a-14(a) ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Arthur Nadata, certify that:

1.           I have reviewed this quarterly report on Form 10-Q of Nu Horizons Electronics Corp.;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this  report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 4.           The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this  report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: January 9, 2009

/s/ Arthur Nadata

Arthur Nadata

Chairman of the Board and Chief Executive Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350 ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Kurt Freudenberg, certify that:

The Form 10-Q of Nu Horizons Electronics Corp. for the period ended November 30, 2008 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Nu Horizons Electronics Corp. for the periods presented.

.

/s/ Kurt Freudenberg

Kurt Freudenberg

Executive Vice President and Chief Financial Officer

Date:  January 9, 2009

A signed original of this written statement required by Section 906 has been provided to Nu Horizons Electronics Corp. and will be retained by Nu Horizons Electronics Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. 1350 ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Arthur Nadata, certify that:

The Form 10-Q of Nu Horizons Electronics Corp. for the period ended November 30, 2008 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

The information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Nu Horizons Electronics Corp. for the periods presented.

/s/ Arthur Nadata

Arthur Nadata

Chairman of the Board and Chief Executive Officer

Date:  January 9, 2009

A signed original of this written statement required by Section 906 has been provided to Nu Horizons Electronics Corp. and will be retained by Nu Horizons Electronics Corp. and furnished to the Securities and Exchange Commission or its staff upon request.