<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 ANNUAL REPORT
                                  ON FORM 10K


      Pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934


    For the fiscal year ended                        Commission file number
       February 28, 1999                                      1-8798
------------------------------                     ----------------------------

                         Nu Horizons Electronics Corp.
-------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


          Delaware                                        11-2621097
--------------------------------                   ----------------------------
  (State of 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)

                                 (516) 396-5000
-------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

          Securities registered pursuant to Section 12(b) of the Act:

                                     None
--------------------------------------------------------------------------------
                               (Title of class)

          Securities registered pursuant to Section 12(g) of the Act:


                                                     Name of each exchange on
        Title of each class                        which registered

Common Stock Par Value $.0066 Per Share            NASDAQ National Market System
---------------------------------------            -----------------------------

---------------------------------------            -----------------------------

                               (Title of class)

     Indicate by check mark whether the registrant; (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No ____
                                              -

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 1-K or any amendment to this
Form 10K [X]

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of May 1, 1999.

Common Stock - Par Value $.0066                              8,753,076
-------------------------------                    -----------------------------
Class                                                     Outstanding Shares

<TABLE>
<CAPTION>
<S> <C>
  Aggregate Market Value of Non-Affiliate Stock at May 1, 1999 - approximately $40,485,000
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>


                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES


                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I:

<S>              <C>                                                                  <C>       <C>
   ITEM 1.   Business                                                              Pages             3 - 7

   ITEM 2.   Properties                                                            Pages             7 - 8

   ITEM 3.   Legal Proceedings                                                     Page                  8

   ITEM 4.   Submission of Matters to a Vote of Security Holders                   Page                  8

PART II:

   ITEM 5.    Market for the Registrant's Common Equity and Related Stockholder
              Matters                                                              Page                  8


   ITEM 6.    Selected Financial Data                                              Page                  9

   ITEM 7.    nagement's Discussion and Analysis of Financial Condition and
                 Results of Operations                                             Pages           10 - 14

   ITEM 8.    Financial Statements and Supplementary Data                          Pages     F1 - F17

   ITEM 9.    Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosures                                                Page                 15


PART III:

   ITEM 10.   Directors and Executive Officers of the Company                      Pages           15 - 16

   ITEM 11.   Executive Compensation                                               Pages           17 - 26

   ITEM 12.   Security Ownership of Certain Beneficial Owners and Management       Page                 27

   ITEM 13.   Certain Relationships and Related Transactions                       Page                 27

PART IV:

   ITEM 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K     Pages           28 - 34

Signatures                                                                          Page                 35

Exhibit Index
</TABLE>

<PAGE>

PART I.

ITEM 1.  BUSINESS

         GENERAL:

            Nu Horizons Electronics Corp. (the "Company") and its wholly-owned
         subsidiaries, NIC Components Corp. ("NIC") , Nu Horizons/Merit
         Electronics Corp. ("NUM"), Titan Logistics Corp. ("Titan"), Nu Horizons
         Eurotech Ltd. ("NUE") and NIC Eurotech Ltd. ("NIE") are engaged in the
         distribution of high technology active and passive electronic
         components. Nu Horizons International Corp. ("International"), another
         wholly-owned subsidiary, is an export distributor of electronic
         components. Nu Visions Manufacturing, Inc. ("NUV" or "Nu Visions")
         located in Springfield, Massachusetts, another wholly-owned subsidiary
         of the Company, is a contract assembler of circuit boards and related
         electromechanical devices for various OEMs. All references herein to
         the Company shall, unless the context otherwise requires, be deemed to
         refer to the Company and its subsidiaries.

            Active components distributed by the Company, principally to
         original equipment manufacturers (OEMs) in the United States, include
         mainly commercial semiconductor products such as memory chips,
         microprocessors, digital and linear circuits, microwave, RF and
         fiberoptic components, transistors and diodes. Passive components
         distributed by NIC, principally to OEMs and other distributors
         nationally, consist of a high technology line of chip and leaded
         components including capacitors, resistors and related networks.

            The active and passive components distributed by the Company are
         utilized by the electronics industry and other industries in the
         manufacture of sophisticated electronic products including: industrial
         instrumentation, computers and peripheral equipment, consumer
         electronics, telephone and telecommunications equipment, satellite
         communications equipment, cellular communications equipment, medical
         equipment, automotive electronics, and audio and video electronic
         equipment.

            Manufacturers of electronic components augment their marketing
         programs through the use of independent distributors and contract
         assemblers such as the Company, upon which the Company believes they
         rely to a considerable extent to market their products. Distributors
         and assemblers, such as the Company, offer their customers the
         convenience of diverse inventories and rapid delivery, design and
         technical assistance, and the availability of product in smaller
         quantities than generally available from manufacturers. Generally,
         companies engaged in the distribution of active and passive electronic
         components, such as the Company, are required to maintain a relatively
         significant investment in inventories and accounts receivable. To meet
         these requirements, the Company, and other companies in the industry,
         typically depend on internally generated funds as well as external
         borrowings.

            Management's policy is to manage, maintain and control all
         inventories from its principal headquarters and stocking facility on
         Long Island, New York and stocking facility in San Jose, California. As
         additional franchise line opportunities become available to the
         Company, the need for branch level inventories may be necessary and
         desirable, in order to better serve the specific needs of local
         markets.
<PAGE>

ITEM 1.  BUSINESS (Continued):

         Semiconductor Products (Active Components):

            The Company is a distributor of a broad range of semiconductor
         products to commercial and military OEM's principally in the United
         States. The Company is a franchised distributor of active components
         for approximately thirty product lines. Significant franchised product
         lines include Allegro, Cirrus Logic, Elantec, Exar, Hyundai, Maxim
         Integrated Products, ST Microelectronics, Sun Microsystems, TDK
         Semiconductor and Xilinx.

            The Company's franchise agreements authorize it to sell all or part
         of the product line of a manufacturer on a non-exclusive basis. Under
         these agreements, each manufacturer will grant credits for any
         subsequent price reduction by such manufacturer and inventory return
         privileges whereby the Company can return to each such manufacturer for
         credit or exchange a percentage ranging from 5% to 20% of the inventory
         purchased from said manufacturer during a semi-annual period. The
         franchise agreements generally may be cancelled by either party upon
         written notice. The Company anticipates, in the future, entering into
         additional franchise agreements and increasing its inventory levels in
         accordance with business demands.

         Passive Components and Relationship with Nippon:

            NIC has been the exclusive outlet in North America for Nippon
         Industries Co. Ltd.'s (Japan) brand of passive components and does not
         anticipate any change in this relationship. While the Company does not
         have a written agreement with Nippon in this regard, it believes that a
         formal written agreement is not material to its ongoing business
         relationship with Nippon.

            Due to certain market situations, NIC, with Nippon's assent, has
         also established several manufacturing associations with U.S. and
         Taiwan based companies. NIC intends to continue to give Nippon
         priority, however, in acquiring its products whenever the technology
         and pricing are commensurate with the North American market's
         requirements.

         Contract Assembly:

            As discussed above, the Company's core business is the distribution
         of active components to OEM's and passive components to OEM's and
         distributors nationally in the United States.

            Those components are then placed on printed circuit boards by the
         OEM's themselves or are contracted for placement to outside contract
         assembly companies (domestically or offshore). The Company believes
         that outside contract assembly is becoming more prevalent nationally,
         especially among small to midsize OEM's.

            With a view towards maximizing the Company's current customer base
         as well as offering new customers additional services, the Company
         decided that contract circuit board assembly was a natural extension to
         its business since 80% of the components found on most printed circuit
         boards can be provided through the Company's active and NIC's passive
         products.
<PAGE>

ITEM 1.  BUSINESS (Continued):

         Contract Assembly (continued):

            Nu Visions provides both surface mount and through-hole circuit
         board assembly services to the aforementioned OEMs. In order to expand
         and enhance this segment of the business, the Company has acquired
         approximately $2,500,000 of automated circuit board assembly equipment
         and in fiscal 1999 has expanded the size of Nu Vision's facility to
         45,000 square feet in anticipation of continued growth.

         Sales and Marketing:

            Management's strategy for long-term success has been to focus the
         Company's sales and marketing efforts towards the following industry
         segments: industrial, telecom/datacom, medical instrumentation,
         microwave and RF, fiberoptic, consumer electronics, security and
         protection devices, office equipment, computers and computer
         peripherals, factory automation and robotics, in each case both
         domestically and abroad. In order to help achieve these goals, the
         Company may enter into new franchise agreements for a broad base of
         commodity semiconductor products including those used in the key niche
         industries referred to above.

            As of February 28, 1999, the Company had approximately 13,000
         customers. All sales are made through customers' purchase orders.
         Semiconductors are sold primarily via telephone by the Company's in-
         house staff of approximately 100 salespersons, and by a field sales
         force of approximately 120 salespersons. The Company maintains branch
         sales facilities located as follows:

         EAST COAST
         ----------

         Massachusetts - Boston
         New York - Melville (Long Island) and Rochester
         New Jersey - Mt. Laurel (Philadelphia) and Pine Brook
         Ohio - Cleveland
         Maryland - Columbia
         North Carolina - Raleigh
         Georgia - Atlanta
         Alabama - Huntsville
         Florida - Ft. Lauderdale, Orlando and Tampa

         MIDWEST
         -------

         Arizona - Phoenix
         Illinois - Chicago
         Minnesota - Minneapolis
         Texas - Austin and Dallas

         WEST COAST
         ----------

         California - Irvine, Los Angeles, Sacramento, San Diego and San Jose
         Oregon - Portland

            NIC's passive components are marketed through the services of a
         national network of approximately 20 independent sales representative
         organizations, employing over 200 salespersons, as well as through
         NIC's in-house sales and engineering personnel. The independent
         representative organizations do not represent competing product lines
         but sell other related products. Commissions to such organizations are
         generally equal to 5% of all sales in a representative's exclusive
         territory.
<PAGE>

ITEM 1.  BUSINESS (Continued):

         Sales and Marketing (continued):

            NIC has developed a national network of approximately 75 regional
         distributor locations, which market passive components on a non-
         exclusive basis. Approximately 35 of the regional distributors have
         entered into agreements with NIC whereby they are required to purchase
         from NIC a prescribed initial inventory. These distributors are
         protected by NIC against price reductions and are granted certain
         inventory return and other privileges. Due to the efforts of NIC and
         its distributors, NIC's passive components have been tested and
         "designed in" as a prime source of qualified product by over 7,000 OEMs
         in the United States.

            Nu Visions' contract manufacturing facilities are marketed through
         the services of several East Coast independent sales representatives,
         as well as the Company's field sales force.

            No single customer accounted for more than 2% of the Company's
         consolidated sales for the year ended February 28, 1999.  The Company's
         sales practice is to require payment within thirty days of delivery.

         Source of Supply:

            The Company inventories an extensive stock of active and passive
         components, however, if the Company's customers order products for
         which the Company does not maintain inventory, the Company's marketing
         strategy is to obtain such products from its franchise manufacturers,
         or, if a product is unobtainable, to identify and recommend
         satisfactory interchangeable alternative components. For this purpose,
         the Company devotes considerable efforts to familiarizing itself with
         component product movement throughout the industry, as well as to
         constant monitoring of its own inventories.

            As of February 28, 1999, there were three manufacturers that
         represented more than 10% of the Company's inventory on a consolidated
         basis. Those suppliers accounted for approximately 36% of total
         inventory. Electronic components distributed by the Company generally
         are presently readily available; however, from time to time the
         electronics industry has experienced shortages or surplus of certain
         electronic products.

            For the year ended February 28, 1999, the Company purchased
         inventory from two suppliers that was in excess of 10% of the Company's
         total purchases. Purchases from these suppliers aggregated
         approximately $45,040,000 for the fiscal year.

         Competition and Regulation:

            The Company competes with many companies that distribute
         semiconductor and passive electronic components and, to a lesser
         extent, companies which manufacture such products and sell them
         directly to OEMs and other distributors. Many of these companies have
         substantially greater assets and possess greater financial and
         personnel resources than those of the Company. In addition, certain of
         these companies possess independent franchise agreements to carry
         semiconductor product lines which the Company does not carry, but which
         it may desire to have. Competition is based primarily upon inventory
         availability, quality of service, knowledge of product and price. The
         Company believes that the distribution of passive electronic components
         under its own label is a competitive advantage.
<PAGE>

ITEM 1.  BUSINESS (Continued):

         Competition and Regulation (continued):

            The Company's competitive ability to price its imported active and
         passive components could be adversely affected by increases in tariffs,
         duties, changes in the United States' trade treaties with Japan, Taiwan
         or other foreign countries, transportation strikes and the adoption of
         Federal laws containing import restrictions. In addition, the cost of
         the Company's imports could be subject to governmental controls and
         international currency fluctuations. Because imports are paid for with
         U.S. dollars, the decline in value of United States currency as against
         foreign currencies would cause increases in the dollar prices of the
         Company's imports from Japan and other foreign countries. Although the
         Company has not experienced any material adverse effect to date in its
         ability to compete or maintain its profit margins, as of result of any
         of the foregoing factors, no assurance can be given that such factors
         will not have a material adverse effect in the future.

         Backlog:

            The Company defines backlog as orders, believed to be firm, received
         from customers and scheduled for shipment, no later than 60 days for
         active components and no later than 90 days for passive components from
         the date of the order. As of May 1, 1999, the Company's backlog was
         approximately $24,000,000 as compared to a backlog of approximately
         $20,000,000 at May 1, 1998.

         Employees:

            As of February 28, 1999, the Company employed approximately 497
         persons: 12 in management, 260 in sales and sales support, 32 in
         product and purchasing, 17 in accounting and finance, 10 in MIS, 31 in
         operations, 90 in manufacturing, and 45 in quality control, shipping,
         receiving and warehousing. The Company believes that its employee
         relations are satisfactory.

ITEM 2.  PROPERTIES

            In December 1996, the Company leased an approximately 80,000 square
         foot facility in Melville, Long Island, New York to serve as its
         executive offices and main distribution center. The lease term is from
         December 17, 1996, to December 16, 2008 at an annual base rental of
         $601,290 and provision for a 4% annual escalation in each of the last
         ten years of the term.

            The Company leases approximately 45,000 square feet of manufacturing
         and office space in Springfield, Massachusetts for its Nu Visions
         subsidiary. The lease term is from June 15, 1998 to June 15, 2008 at an
         annual base rental of $244,260 subject to annual consumer price index
         increases not to exceed 2% annually.
<PAGE>

ITEM 2.  PROPERTIES (Continued):

            On May 1, 1996, the Company leased approximately 25,000 square feet
         of warehouse and office space in San Jose, California for its Nu
         Horizons/Merit subsidiary. This facility serves as the Company's West
         Coast regional sales and distribution headquarters. The lease term is
         from May 1, 1996 to April 30, 2001 at an annual base rental of
         $225,000.

            The Company also leases space for twenty two (22) branch sales
         offices which range in size from 1,000 square feet to 5,000 square
         feet, with lease terms that expire between August 1999 and January
         2004. Annual base rentals range from $15,600 to $100,800 with aggregate
         base rentals approximating $825,000.

ITEM 3.  LEGAL PROCEEDINGS:

            No material legal proceeding is pending to which the Company is a
         party or to which any of its property is or may be subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

            No matters were submitted during the fourth quarter of the fiscal
         year ended February 28, 1999 to a vote of security holders through the
         solicitation of proxies or otherwise.

PART II.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:

           a)  The Company's common stock is traded on the NASDAQ National
               Market System under the symbol "NUHC". The following table sets
               forth, for the periods indicated, the high and low closing prices
               for the Company's common stock, as reported by the NASDAQ
               National Market System.

               FISCAL YEAR 1998:                       HIGH       LOW
                                                      ------     -----


                 First Quarter                        $9.50      $6.75
                 Second Quarter                        9.00       7.25
                 Third Quarter                         9.25       6.75
                 Fourth Quarter                        7.17       5.50

               FISCAL YEAR 1999:

                 First Quarter                        $7.09      $6.00
                 Second Quarter                        6.62       4.00
                 Third Quarter                         6.87       3.50
                 Fourth Quarter                        6.50       4.25

               FISCAL YEAR 2000:
                 First Quarter (Through May 3, 1999)  $5.87      $3.87

          b) As of May 3, 1999, the Company's common stock was owned by
             approximately 4,500 holders of record.

          c) The Company has never paid a cash dividend on its common stock. The
             Company's current revolving credit line agreement permits dividends
             of up to 25% of the Company's consolidated net income.
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA:

<TABLE>
<CAPTION>
                          FOR THE              FOR THE              FOR THE              FOR THE            FOR THE
                         YEAR ENDED          YEAR ENDED           YEAR ENDED           YEAR ENDED         YEAR ENDED
                          FEBRUARY            FEBRUARY             FEBRUARY             FEBRUARY           FEBRUARY
                          28, 1999            28, 1998             28, 1997             29, 1996           28, 1995
                          --------            --------             --------             --------           --------
<S>                       <C>                  <C>                  <C>                  <C>                <C>
INCOME STATEMENT
   DATA:

Net Sales               $253,872,325        $233,325,408          $216,612,707        $202,803,184       $130,251,554
Gross profit on
  sales                   55,036,322          50,794,325            48,488,124          48,201,148         30,913,305
Gross profit
  percentage               21.7%               21.8%                 22.4%               23.8%              23.7%
Income before
  provision for
  income taxes             7,624,158           8,947,537            11,921,256          15,799,592          7,444,147
Net income                 4,544,831           5,297,991             7,073,560           9,396,301          4,421,823
Earnings per
 common share:
Basic                      $ .52                $.61                   $.81               $ 1.19              $.57

Diluted                    $.43                 $.52                   $.69                 $.97              $.52

                          FEBRUARY           FEBRUARY               FEBRUARY               FEBRUARY        FEBRUARY
                          28, 1999           28, 1998               28, 1997               29, 1996        28, 1995
                          --------           --------               --------               --------        --------

BALANCE SHEET
DATA:

Working capital           $68,849,897        $75,217,607          $51,941,472        $57,954,434       $36,328,941
Total assets               99,758,895         99,641,428           74,783,314         75,459,586        51,972,606
Long-term debt             22,377,852         32,790,395           15,523,483         27,094,030        20,580,613
Shareholders'
  equity                   56,337,068         51,542,045           46,950,735         37,617,703        22,541,916
</TABLE>
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS:

         Introduction:

         Nu Horizons Electronics Corp. (the "Company") and its wholly-owned
         subsidiaries, Nu Horizons/Merit Electronics Corp. ("NUM"), NIC
         Components Corp. ("NIC"), Nu Horizons Eurotech Limited ("NUE"), NIC
         Eurotech Limited ("NIE"), Titan Logistics Corp. ("TITAN") and Nu
         Horizons International Electronics Corp. ("International"), 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, principally to OEMs and other distributors
         nationally, consist of a high technology line of chip and leaded
         components, including capacitors, resistors and related networks.

         Nu Visions Manufacturing, Inc. ("NUV" or "Nu Visions") located in
         Springfield, Massachusetts, another wholly-owned subsidiary of the
         Company, is a contract assembler of circuit boards, harnesses and
         related electromechanical devices for various OEMs.

         In March 1998, the Company formed another wholly-owned subsidiary, NIC
         Eurotech, Ltd., which then began operations in the United Kingdom.

         The financial information presented herein includes: (i) Balance sheets
         as of February 28, 1999, and February 28, 1998; (ii) Statements of
         income for the twelve month periods ended February 28, 1999, February
         28, 1998 and February 28, 1997; (iii) Statements of cash flows for the
         twelve month periods ended February 28, 1999, February 28, 1998 and
         February 28, 1997; and (iv) Consolidated changes in shareholders'
         equity for the twelve month periods ended February 28, 1999, February
         28, 1998 and February 28, 1997.

         Results of Operations:

         Fiscal Year 1999 versus 1998

         Net sales for the year ended February 28, 1999 aggregated $253,872,325
         as compared to $233,325,408 for the year ended February 29, 1998, an
         increase of 8.8%. Management attributes this increase in sales for the
         period entirely to the core semiconductor distribution business which
         experienced demand but, due to reduced unit pricing as a result of
         excess inventory levels at the semiconductor manufacturing (supplier)
         level resulted in only moderate increases in net sales.

         Gross profit margin as a percentage of net sales was 21.7% for the year
         ended February 28, 1999 as compared to 21.8% for the year ended
         February 28, 1998. Management attributes this relative stability in
         profit margins to substantial inventory oversupplies at the supplier
         level, as mentioned above and resulting reduced unit pricing.. No
         assurance can be given that gross profit stabilization will continue in
         future periods.

         Operating expenses increased by $5,037,184 to $45,170,606 for the year
         ended February 28, 1999 from $40,133,422 for the year ended February
         28, 1998, an increase of approximately 12.5%. The dollar increase in
         operating expenses was due to increases in the following expense
         categories: Approximately $3,290,000 or approximately 65% of the
         increases were for personnel related costs -commissions, salaries,
         travel and fringe benefits. The remaining increase of approximately
         $1,747,000 or approximately 35% of the total increment is a result of
         increases in various other operating expenses including, but not
         limited to, freight out, rent, telephone, computer expenses and various
         general and administrative expenses. Toward the latter part of fiscal
         1998 and early in fiscal 1999, the Company decided to pursue and
         continue with a policy of upgrading and enlarging its sales and sales
         support staff as well as physical branch facilities to support
         anticipated future growth in the near as well as more distant future.
         Increased sales levels in the second, third and fourth quarters of
         fiscal 1998 and in fiscal 1999 did not meet expectations. The Company
         continues to believe in this strategy for long-term growth and expects
         market conditions to undergo a correction in the near future although
         no assurances can be given in this regard.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Continued):

         Fiscal Year 1999 versus 1998 (continued)

         Interest expense increased by $519,998 from $1,723,163 for the year
         ended February 28, 1998 to $2,243,161 for the year ended February 28,
         1999. This increase was primarily due to the interest on higher average
         levels of bank debt during the year resulting from an increase in
         average receivables and inventories which were necessary to support
         increased sales.

                                                  INTEREST COSTS
                                                  FOR THE FISCAL
                                                    YEAR ENDED

                                                February       February
                                                28, 1999       28, 1998
                                              --------------------------

                   Revolving Bank Credit      $1,660,794     $1,140,796
                   Sub. Convert. Notes           582,367        582,367
                                              --------------------------
                   Total Interest Expense     $2,243,161     $1,723,163
                                              ==========================

         Net income for the year ended February 28, 1999 was $4,544,831 or $.43
         per share diluted, as compared to $5,297,991 or $.52 per share diluted,
         for the year ended February 28, 1998. The decrease in earnings is
         primarily due to increased operating expenses and the lack of a
         commensurate increase in gross margin on sales.

         Fiscal Year 1998 versus 1997

         Results of Operations:

         Net sales for the year ended February 28, 1998 aggregated $233,325,408
         as compared to $216,612,707 for the year ended February 28, 1997, an
         increase of 7.7%. Management attributes this moderate increase in sales
         for the period entirely to the core semiconductor distribution business
         which experienced excess inventory levels at the semiconductor
         manufacturing (supplier) level evidenced by reduced unit pricing in
         spite of substantial increases in unit demand resulting in only
         moderate increases in sales dollar volume. Management believes that
         this situation is temporary and is now in the process of correction;
         however, no assurance can be given in this regard.

         Gross profit margin as a percentage of net sales was 21.8% for the year
         ended February 28, 1998 as compared to 22.4% for the year ended
         February 28, 1997. Management attributes this lower profit margin
         primarily to a general downward correction of selling prices in the
         marketplace, for both semiconductors and passive components, during the
         period and a greater volume of larger orders at lower gross profit
         margins. Although the Company expects that these conditions will not
         continue, as long as current market trends prevail, no assurances can
         be given in this regard.

         Operating expenses increased by $5,259,512 to $40,133,422 for the year
         ended February 28, 1998 from $34,873,910 for the year ended February
         28, 1997, an increase of approximately 15.1%. The dollar increase in
         operating expenses was due to increases in the following expense
         categories: Approximately $3,328,000 or approximately 63.3% of the
         increases were for personnel related costs -commissions, salaries,
         travel and fringe benefits. During fiscal 1998 the Company decided to
         continue to pursue a policy of upgrading and enlarging its sales and
         sales support staff to support anticipated future growth in the near as
         well as more distant future. Increased sales levels in the second,
         third and fourth quarters of fiscal 1998 did not meet expectations. The
         remaining increase of approximately $1,931,000 or approximately 36.7%
         of the total increment is a result of increases in various other
         operating expenses primarily due to increased overhead from the
         Company's new corporate headquarters and distribution facility.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Continued):

         Fiscal Year 1998 versus 1997 (Continued)

         Results of Operations (continued):


         Interest expense increased by $22,071 from $1,701,092 for the year
         ended February 28, 1997 to $1,723,163 for the year ended February 28,
         1998. This relative stability was primarily due to the interest on
         higher average levels of bank debt being offset by more favorable
         interest rates.

                                                INTEREST COSTS
                                                FOR THE FISCAL
                                                  YEARS END
                                   ----------------------------------------
                                         February              February
                                         28, 1998              28, 1997
                                   --------------------   -----------------
         Revolving Bank Credit        $1,140,796             $1,116,340
         Sub. Convert. Notes             582,367                584,752
                                   --------------------   -----------------
         Total Interest Expense       $1,723,163             $1,701,092
                                   ====================   =================


         Net income for the year ended February 28, 1998, was $5,297,991 or $.52
         per share, diluted, as compared to $7,073,560 or $.69 per share
         diluted, for the year ended February 28, 1997. The decrease in earnings
         is primarily due to increased operating expenses and the lack of
         commensurate increased sales volume.

         Liquidity and Capital Resources:

         Fiscal Year 1999 versus 1998

         The Company ended its 1999 fiscal year with working capital and cash
         aggregating approximately $68,850,000 and $504,000, respectively at
         February 28, 1999 as compared to approximately $75,218,000 and
         $4,334,000 respectively, at February 28, 1998. The Company's current
         ratio at February 28, 1999, was 4.3:1. The Company believes that its
         financial position at February 28, 1999, will enable it to take
         advantage of any new opportunities that may arise.

         On May 23, 1997, the Company entered into a new unsecured revolving
         line of credit, which currently provides for maximum borrowings of
         $35,000,000 through May 23, 2001 with two banks. At February 28, 1999,
         $14,900,000 was outstanding under this line of credit as compared to
         $25,300,000 at February 28, 1998.

         In a private placement completed on August 31, 1994, the Company issued
         $15 million principal amount of Subordinated Convertible Notes, which
         are due in $5,000,000 increments on August 31, 2000, 2001 and 2002. The
         notes are subordinate in right of payment to all existing and future
         senior indebtedness of the Company. The notes bear interest at 8.25%,
         payable quarterly on November 15, February 15, May 15 and August 15.
         The notes are convertible into shares of common stock at a conversion
         price of $9.00 per share. The cost of issuing these notes was $521,565
         and was amortized over three years. As of February 28, 1999, $7,941,000
         of the notes have been converted into 882,333 shares of common stock
         and $7,059,000 principal amount of subordinated convertible notes
         remained outstanding and are due in increments of $2,353,000 on August
         31, 2000, 2001 and 2002. No assurance can be given that the notes will
         be converted or that the shares of common stock underlying the notes
         will be sold by the holders thereof.

         The Company anticipates that its resources provided by its cash flow
         from operations and its bank lines of credit will be sufficient to meet
         its financing requirements for at least the next twelve-month period.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Continued):

         Fiscal Year 1999 versus 1998 (Continued)

         Impact of Year 2000 Issue:

         The year 2000 issue is the result of computer programs being written
         using two digits rather than four to define the applicable year. Any of
         the Company's computer programs that have date-sensitive software may
         recognize a date using "00" as the year 1900 rather than the year 2000.
         This could potentially result in a system failure or miscalculations
         causing disruptions of operations, including, among other things, a
         temporary inability to process transactions, send invoices, or engage
         in other similar normal business activities.

         Assessment. The Year 2000 problem could affect computers, software and
         other equipment which the Company uses, operates or maintains.
         Accordingly, the Company reviewed its internal computer programs and
         systems to ensure that the programs and systems will be Year 2000
         compliant. The Company has ensured that its software is already year
         2000 compliant.

         Vendors. The Company has initiated communications, including surveys,
         with its vendors (and customers) to identify and, to the extent
         possible, to resolve issues involving the Year 2000 problem. However,
         the Company has limited or no control over responses to our inquiries
         and the actions of these third parties. Thus, while the company does
         not anticipate any significant Year 2000 problems with its vendors,
         there can be no assurance that these vendors will resolve any or all of
         their Year 2000 problems before the occurrence of a disruption to its
         business or that of its customers. Since there are many suppliers of
         alternative products, the Company does not anticipate that the failure
         of its vendors to resolve Year 2000 problems with their systems in a
         timely manner will have a material adverse effect on the Company's
         business, financial condition, and results of operation; however no
         assurances can be given in this regard.

         Most Likely Consequences of Year 2000 Problems. The Company believes it
         has identified and resolved all potential internal Year 2000 problems
         that could materially adversely affect its business operations.
         However, the Company does not believe that it is possible to determine
         with complete certainty that all Year 2000 problems which affect it
         have been identified or corrected. The number of devices that could be
         affected and the interactions among these devices are simply too
         numerous. In addition, one cannot accurately predict how many Year 2000
         problem-related failures will occur or the severity, duration or
         financial consequences of these perhaps inevitable failures. In
         addition, the Company is unable to determine with any degree of
         certainty, the changes in buying habits of its current and potential
         customers due to their concerns over Year 2000 issues and whether its
         vendors will be Year 2000 compliant. As a result, the Company expects
         that it could likely experience a significant number of operational
         inconveniences and inefficiencies for its and its customers that may
         divert management's time and attention and financial and human
         resources from its ordinary business activities.

         Contingency Plans. Since the Company has ensured that its software is
         Year 2000 compliant, it does not believe that it needs to develop
         contingency plans to identify and correct Year 2000 problems affecting
         its internal systems. The Company expects to develop contingency plans
         by the end of June 1999 to deal with any Year 2000 problems identified
         by its vendors. If the Company is required to implement any of these
         contingency plans, it could have a material adverse effect on the
         Company's financial condition and results of operations.

         Disclaimer. The discussion of the Company's efforts, and management's
         expectations , relating to Year 2000 compliance are forward-looking
         statements. The Company's ability to achieve Year 2000 compliance and
         the level of incremental costs associated with such compliance, could
         be adversely impacted by, among other things, the availability and cost
         of programming and testing resources, vendors' ability to modify
         proprietary software, and unanticipated problems identified in our
         ongoing compliance review.

         Inflationary Impact:

         Since the inception of operations, inflation has not significantly
         affected the operating results of the Company. However, inflation and
         changing interest rates have had a significant effect on the economy in
         general and therefore could affect the operating results of the Company
         in the future.
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (Continued):

         Fiscal Year 1999 versus 1998 (Continued)

         Other:

         Except for historical information contained herein, the matters set
         forth above are forward-looking statements that involve certain risks
         and uncertainties that could cause actual results to differ from those
         in the forward-looking statements. Potential risks and uncertainties
         include such factors as the level of business and consumer spending for
         electronic products, the amount of sales of the Company's products, the
         competitive environment within the electronics industry, the ability of
         the Company to continue to expand its operations, the level of costs
         incurred in connection with the Company's expansion efforts, the
         economic conditions in the semiconductor industry and the financial
         strength of the Company's customers and suppliers. Investors are also
         directed to consider other risks and uncertainties discussed in
         documents filed by the Company with the Securities and Exchange
         Commission.
<PAGE>

             ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          Independent Auditors' Report

To The Board of Directors
Nu Horizons Electronics Corp.
Melville, New York

     We have audited the accompanying consolidated financial statements of Nu
Horizons Electronics Corp. and subsidiaries as of February 28, 1999 and 1998,
and the consolidated statements of income, changes in shareholders' equity and
cash flows for the three years in the period ended February 28, 1999.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement.  An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements, referred to the
above, present fairly in all material respects, the financial position of Nu
Horizons Electronics Corp. and subsidiaries at February 28, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended February 28, 1999 in conformity with generally accepted
accounting principles.


                                                    /s/ LAZAR LEVINE & FELIX LLP
                                                    ----------------------------
                                                        LAZAR LEVINE & FELIX LLP



New York, New York
May  17, 1999
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------

<TABLE>
                                                   -ASSETS-           February                  February
CURRENT ASSETS:                                     ------            28, 1999                  28, 1998
                                                              ---------------------     ---------------------
<S>                                                             <C>                       <C>
Cash                                                                    $   504,320               $ 4,333,669
Accounts receivable-net of allowance for doubtful
     accounts of $2,630,984 and $2,362,722
     for 1999 and 1998, respectively                                     41,920,403                37,351,029
Inventories                                                              45,113,894                44,004,890
Prepaid expenses and other current assets                                 2,355,255                 4,837,007
                                                              ---------------------     ---------------------
TOTAL CURRENT ASSETS                                                     89,893,872                90,526,595

PROPERTY, PLANT AND EQUIPMENT - NET
(Note 3)                                                                  7,130,794                 6,359,775

OTHER ASSETS
Costs in excess of net assets acquired-net                                1,595,408                 1,752,332
Other assets (Note 4)                                                     1,138,821                 1,002,726
                                                              ---------------------     ---------------------
                                                                        $99,758,895               $99,641,428
                                                              =====================     =====================
</TABLE>
                     -LIABILITIES AND SHAREHOLDERS' EQUITY-
                      ------------------------------------
<TABLE>
<CAPTION>

CURRENT LIABILITIES:
<S>                                                             <C>                       <C>
Accounts payable                                                        $14,369,712               $12,112,365
Accrued expenses                                                          6,674,263                 3,196,623
                                                              ---------------------     ---------------------
TOTAL CURRENT LIABILITIES                                                21,043,975                15,308,988
                                                              ---------------------     ---------------------

LONG-TERM LIABILITIES:
Deferred income taxes (Note 8)                                              418,852                   431,395
Revolving credit line (Notes 5)                                          14,900,000                25,300,000
Subordinated convertible notes (Note 6)                                   7,059,000                 7,059,000
                                                              ---------------------     ---------------------
TOTAL LONG-TERM LIABILITIES                                              22,377,852                32,790,395
                                                              ---------------------     ---------------------

COMMITMENTS AND CONTINGENCIES
(Notes 9, 10 and 11)

SHAREHOLDERS' EQUITY (Note 7):
Preferred stock, $1 par value, 1,000,000
    shares authorized; none issued or outstanding
Common stock, $.0066 par value, 20,000,000
    shares authorized; 8,753,076 shares issued
    and outstanding for February 28, 1999 and
    1998, respectively                                                       57,770                    57,770
Additional paid-in capital                                               19,042,230                19,042,230
Retained earnings                                                        38,076,840                33,532,009
                                                              ---------------------     ---------------------
                                                                         57,176,840                52,632,009
Less:  loan to ESOP (Note 9)                                                839,772                 1,089,964
                                                              ---------------------     ---------------------
                                                                         56,337,068                51,542,045
                                                              ---------------------     ---------------------

                                                                        $99,758,895               $99,641,428
                                                              =====================     =====================
</TABLE>

                See notes to consolidated financial statements.

                                                                        Page F-2
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                       CONSOLIDATED STATEMENTS OF INCOME
                       ---------------------------------

<TABLE>
<CAPTION>
                                                                          FOR THE YEAR ENDED
                                               ---------------------------------------------------------------------
                                                     FEBRUARY                  FEBRUARY                 FEBRUARY
                                                     28, 1999                  28, 1998                 28, 1997
                                               -------------------       ------------------       ------------------

NET SALES                                             $253,872,325             $233,325,408             $216,612,707
                                               -------------------       ------------------       ------------------
<S>                                              <C>                       <C>                      <C>
COSTS AND EXPENSES:

     Cost of sales (Note 11)                           198,836,003              182,531,083              168,124,583
     Operating expenses                                 45,170,606               40,133,422               34,873,910
     Interest expense                                    2,243,161                1,723,163                1,701,092
     Interest income                                        (1,603)                  (9,797)                  (8,134)
                                               -------------------       ------------------       ------------------
                                                       246,248,167              224,377,871              204,691,451
                                               -------------------       ------------------       ------------------

INCOME BEFORE PROVISION
FOR INCOME TAXES                                         7,624,158                8,947,537               11,921,256

     Provision for income taxes (Note 8)                 3,079,327                3,649,546                4,847,696
                                               -------------------       ------------------       ------------------

NET INCOME                                            $  4,544,831             $  5,297,991             $  7,073,560
                                               ===================       ==================       ==================

EARNINGS PER SHARE (Note 2i):

     Basic                                            $.52                     $.61                     $.81
                                               ===================       ==================       ==================

     Diluted                                          $.43                     $.52                     $.69
                                               ===================       ==================       ==================
</TABLE>



                See notes to consolidated financial statements.

                                                                        Page F-3
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
          -----------------------------------------------------------


<TABLE>
<CAPTION>
                                                              ADDITIONAL                                        TOTAL
                                                   COMMON       PAID-IN       RETAINED        LOAN TO       SHAREHOLDERS'
                                       SHARES       STOCK       CAPITAL       EARNINGS          ESOP            EQUITY
                                    ------------  ---------  -------------  -------------  --------------  --------------
<S>                                   <C>          <C>        <C>            <C>            <C>             <C>
Balance at February 29, 1996          8,423,137    $55,593    $16,821,502    $21,160,458    $  (419,850)      $37,617,703

Exercise of stock options                93,495        617        177,905              -              -           178,522
Conversion of subordinated
  convertible notes                     215,667      1,423      1,939,577              -              -         1,941,000
Repayment from ESOP                           -          -              -              -        139,950           139,950
Net income                                    -          -              -      7,073,560              -         7,073,560
                                    ------------  ---------  -------------  -------------  --------------  --------------
Balance at February 28, 1997          8,732,299     57,633     18,938,984     28,234,018       (279,900)       46,950,735

Exercise of stock options                20,777        137        103,246              -              -           103,383
Loan to ESOP                                  -          -              -              -       (950,014)         (950,014)
Repayment from ESOP                           -          -              -              -        139,950           139,950
Net income                                    -          -              -      5,297,991              -         5,297,991

Balance at February 28, 1998          8,753,076     57,770     19,042,230     33,532,009     (1,089,964)       51,542,045
                                    ------------  ---------  -------------  -------------  --------------  --------------

Repayment from ESOP                           -          -              -              -        250,192           250,192
Net income                                    -          -              -      4,544,831              -         4,544,831
                                    ------------  ---------  -------------  -------------  --------------  --------------
Balance at February 28, 1999          8,753,076    $57,770    $19,042,230    $38,076,840    $  (839,772)      $56,337,068
                                    ============  =========  =============  =============  ==============  ==============
</TABLE>



                 See notes to consolidated financial statements

                                                                        Page F-4
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------

<TABLE>
<CAPTION>
                                                                            FOR THE YEAR ENDED
                                                -----------------------------------------------------------------------
                                                      FEBRUARY                  FEBRUARY                  FEBRUARY
                                                      28, 1999                  28, 1998                  28, 1997
                                                -------------------       -------------------       -------------------
<S>                                               <C>                       <C>                       <C>
INCREASE (DECREASE) IN CASH AND
        CASH EQUIVALENTS:

Cash flows from operating activities:
        Cash received from customers                  $ 248,540,451             $ 226,296,024             $ 215,279,744
        Cash paid to suppliers and employees           (236,336,921)             (232,653,486)             (197,159,875)
        Interest received                                     1,602                     9,797                     8,134
        Interest paid                                    (2,243,161)               (1,723,163)               (1,701,092)
        Income taxes paid                                (1,359,716)               (4,511,763)               (1,677,850)
                                                -------------------       -------------------       -------------------
               Net cash provided (used) by
                  operating activities                    8,602,255               (12,582,591)               14,749,061
                                                -------------------       -------------------       -------------------

Cash flows from investing activities:
        Capital expenditures                             (2,031,604)               (1,176,904)               (4,936,512)
        Purchase of stock for ESOP                                -                  (950,014)                        -
        Proceeds from sale of building                            -                 1,126,840                         -
                                                -------------------       -------------------       -------------------
               Net cash (used) by investing
                        activities                       (2,031,604)               (1,000,078)               (4,936,512)
                                                -------------------       -------------------       -------------------

Cash flows from financing activities:
        Borrowings under revolving credit line           43,950,000                51,650,000                21,150,000
        Repayments under revolving credit line          (54,350,000)              (34,350,000)              (30,450,000)
        Principal payments of long-term debt                      -                  (433,129)                 (619,254)
        Proceeds from exercise of employee
          stock options                                           -                   103,383                   178,522
                                                -------------------       -------------------       -------------------
               Net cash provided by (used in)
                        financing activities            (10,400,000)               16,970,254                (9,740,732)
                                                -------------------       -------------------       -------------------

Net (decrease) increase in cash and cash
 equivalents                                             (3,829,349)                3,387,585                    71,817

Cash and cash equivalents, beginning of year              4,333,669                   946,084                   874,267
                                                -------------------       -------------------       -------------------

Cash and cash equivalents, end of year                $     504,320             $   4,333,669             $     946,084
                                                ===================       ===================       ===================
</TABLE>



                See notes to consolidated financial statements.

                                                                        Page F-5
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
               -------------------------------------------------

<TABLE>
<CAPTION>
                                                                          FOR THE YEAR ENDED
                                               ----------------------------------------------------------------------
                                                      FEBRUARY                 FEBRUARY                  FEBRUARY
                                                      28, 1999                 28, 1998                 28, 1997
                                               --------------------      -------------------       ------------------
<S>                                              <C>                       <C>                       <C>
RECONCILIATION OF NET INCOME TO
NET CASH FROM OPERATING
ACTIVITIES:

Net income                                              $ 4,544,831             $  5,297,991              $ 7,073,560
                                               --------------------      -------------------       ------------------

Adjustments to reconcile net income to net cash
   provided (used) by operating activities:

        Depreciation and amortization                     1,417,509                1,488,057                1,238,967
        Bad debts                                           762,500                  315,000                  701,500
        Contribution to ESOP (compensation)                 250,192                  139,950                  139,950
              Loss on sale of building                            -                   60,871                        -
Changes in assets and liabilities:
        (Increase) in accounts receivable                (5,331,874)              (7,029,384)              (1,332,963)
        (Increase) decrease in inventories               (1,109,004)             (14,240,320)               7,044,345
        (Increase) decrease in prepaid
          expenses and other current assets               2,481,752               (1,933,738)              (1,889,346)
        (Increase) in other assets                         (136,095)                 (80,951)                 (77,902)
        Increase  in accounts payable
                 and accrued expenses                     5,734,987                3,190,686                1,964,667
        (Decrease) in income taxes                                -                        -                 (220,288)
        (Decrease) increase in deferred taxes               (12,543)                 209,247                  106,571
                                               --------------------      -------------------       ------------------
        Total adjustments                                 4,057,424              (17,880,582)               7,675,501
                                               --------------------      -------------------       ------------------

Net cash provided (used) by operating
 activities                                             $ 8,602,255             $(12,582,591)             $14,749,061
                                               ====================      ===================       ==================
</TABLE>

NON-CASH FINANCING ACTIVITIES:

  During the year ended February 28, 1997, the subordinated debt-holder
  (see Note 7) converted $1,941,000 of debt into 215,667 shares of the Company's
  common stock.


                See notes to consolidated financial statements.

                                                                        Page F-6
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 1999
                      -----------------------------------

1.  ORGANIZATION:

    Nu Horizons Electronics Corp. and its subsidiaries, are wholesale
    distributors throughout the United States or export distributors of
    electronic components, except for Nu Visions Manufacturing, which is a
    contract assembler of circuit boards and various electromechanical devices.
    During fiscal 1999 the Company incorporated two new subsidiaries in the
    United Kingdom, one of which is currently inactive.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    a.  Principles of Consolidation:

        The consolidated financial statements include the accounts of Nu
        Horizons Electronics Corp. (the "Company"), and its wholly-owned
        subsidiaries, NIC Components Corp. ("NIC"), Nu Horizons/Merit
        Electronics Corp. ("NUM"), Nu Visions Manufacturing, Inc. ("NUV"), Nu
        Horizons International Corp. ("International"), NIC Eurotech Limited
        ("NIE"), Nu Horizons Eurotech ("NUE") and Titan Logistics Corp.
        ("Titan"). All material intercompany balances and transactions have been
        eliminated.

    b.  Use of Estimates:

        In preparing financial statements, in accordance with generally accepted
        accounting principles, management makes certain estimates and
        assumptions, where applicable, that affect the reported amounts of
        assets, liabilities and disclosures of contingent assets and liabilities
        at the date of the financial statements, as well as reported amounts of
        revenues and expenses during the reporting period. While actual results
        could differ from those estimates, management does not expect such
        variances, if any, to have a material effect on the financial
        statements.

    c.  Concentration of Credit Risk/Fair Value:

        Financial instruments that potentially subject the Company to
        concentrations of credit risk consist principally of cash and accounts
        receivable.

        The Company maintains, at times, deposits in federally insured financial
        institutions in excess of federally insured limits. Management attempts
        to monitor the soundness of the financial institution and believes the
        Company's risk is negligible.

        Concentrations with regard to accounts receivable are limited due to the
        Company's large customer base.

        The carrying amounts of cash, accounts receivable, accounts payable and
        accrued expenses approximate fair value due to the short-term nature of
        these items. The carrying amount of long-term debt also approximates
        fair value since the interest rates on these instruments approximate
        market interest rates.


    d.  Inventories:

        Inventories, which consist primarily of goods held for resale, are
        stated at the lower of cost (first-in, first-out method) or market.

                                                                        Page F-7
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

 e. Depreciation:

    Depreciation is provided using the straight-line method as follows:

        Office equipment                                      5 years
        Furniture and fixtures                                5 - 12 years
        Computer equipment                                    5 years

    Leasehold improvements are amortized over the term of the lease. Maintenance
    and repairs are charged to operations and major improvements are
    capitalized. Upon retirement, sale or other disposition, the associated cost
    and accumulated depreciation are eliminated from the accounts and any
    resulting gain or loss is included in operations.

f.  Income Taxes:

    The Company has elected to file a consolidated federal income tax return
    with its subsidiaries. The Company utilizes Financial Accounting Standards
    Board Statement No. 109 (SFAS 109) "Accounting for Income Taxes". SFAS 109
    requires use of the asset and liability approach of providing for income
    taxes. Deferred income taxes are provided for on the timing differences for
    certain items which are treated differently for tax and financial reporting
    purposes. These items include depreciation of fixed assets, inventory
    capitalization valuations and the recognition of bad debt expense.

    International has elected under Section 995 of the Internal Revenue Code to
    be taxed as an "Interest Charge Disc". Based upon these rules, income taxes
    are paid when International distributes its income to the parent company.
    Until distributions are made, the parent company pays interest only on the
    deferred tax liabilities. International's untaxed income at February 28,
    1999 approximates $3,200,000.

g.  Goodwill:

    Costs in excess of net assets acquired are being amortized on a straight-
    line basis over fifteen years. As of February 28, 1999 and 1998, accumulated
    amortization of goodwill aggregated $758,466 and $601,542, respectively.

    The Company periodically reviews the valuation and amortization of goodwill
    to determine possible impairment by comparing the carrying value to the
    undiscounted future cash flows of the related assets, in accordance with
    Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
    the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed
    of.

h.  Cash and Cash Equivalents:

    For purposes of the statements of cash flows, the Company considers all
    highly liquid investments purchased with a remaining maturity of three
    months or less to be cash equivalents.

                                                                        Page F-8
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

    i.  Earnings Per Common Share:

        Basic and diluted earnings per share have been computed in accordance
        with the adoption of SFAS No. 128. In addition, prior period per share
        data has been restated in accordance with SFAS No. 128.

        The following average shares were used for the computation of basic and
        diluted earnings per share:


                                   1999           1998           1997
                               -------------  ------------   ------------

        Basic                      8,753,076     8,753,076      8,732,299
        Diluted                   11,271,859    10,898,859     10,818,859

    j.  Reclassifications:

        Certain prior year information has been reclassified to conform to the
        current year's reporting presentation.

    k.  Stock-Based Compensation:

        SFAS No. 123 "Accounting for Stock Based Compensation", effective
        January 1, 1996, requires the Company to either record compensation
        expense or to provide additional disclosures with respect to stock
        awards and stock option grants made after December 31, 1994. The
        accompanying Notes to Consolidated Financial Statements include the
        disclosures required by SFAS No. 123. No compensation expense is
        recognized pursuant to the Company's stock option plans under SFAS No.
        123 which is consistent with prior treatment under APB No. 25.

    l.  Advertising and Promotion Costs:

        Advertising and promotion costs, which are included in general and
        administrative expenses, are expensed as incurred. For the three years
        ended February 28, 1999, such costs aggregated $909,156, $774,000 and
        $616,000, respectively.

    m.  New Accounting Pronouncements:

        SFAS 130 "Reporting Comprehensive Income" is effective for years
        beginning after December 15, 1997. This statement prescribes standards
        for reporting other comprehensive income and its components. Since the
        Company currently does not have any items of other comprehensive income,
        a statement of comprehensive income is not required.

        SFAS 131 "Disclosures About Segments of an Enterprise and Related
        Information", is effective for years beginning after December 15, 1997.
        The Company has adopted this standard for the current fiscal year.

                                                                        Page F-9
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

3.  PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment which is reflected at cost, consists of the
     following:


<TABLE>
<CAPTION>
                                                                     1999                    1998
                                                              ----------------        ----------------
       <S>                                                      <C>                     <C>
       Furniture, fixtures and office equipment                    $ 7,839,268             $ 6,290,449
       Computer equipment                                            3,499,524               3,016,739
       Assets held under capitalized leases                            919,834                 919,834
       Leasehold improvements                                        1,254,364               1,254,364
                                                              ----------------        ----------------
                                                                    13,512,990              11,481,386

       Less:  accumulated depreciation and amortization              6,382,196               5,121,611
                                                              ----------------        ----------------

                                                                   $ 7,130,794             $ 6,359,775
                                                              ================        ================
</TABLE>

    Depreciation expense including depreciation of capitalized leases for the
    years ended February 28, 1999, February 28, 1998 and February 28, 1997
    aggregated $1,260,585, $1,331,133 and $1,082,043, respectively.

    During the year ended February 28, 1998, the Company completed the sale of
    the land and building that served as its prior corporate headquarters.

4.  OTHER ASSETS:

    Other assets as of February 28, 1999 and February 28, 1998 consists of the
    following:

<TABLE>
<CAPTION>
                                                                    1999                   1998
                                                              ---------------        ---------------

         <S>                                                    <C>                    <C>
         Net cash surrender value - life insurance                 $1,023,832             $  937,878
         Other                                                        114,989                 64,848
                                                              ---------------        ---------------
                                                                   $1,138,821             $1,002,726
                                                              ===============        ===============
</TABLE>

5.  REVOLVING CREDIT LINE:

    On May 23, 1997, the Company entered into a new unsecured revolving line of
    credit with two banks, which currently provides for maximum borrowings of
    $35,000,000 at either (i) the lead bank's prime rate or (ii) LIBOR plus 57.5
    to 112.5 basis points depending on the ratio of the Company's debt to its
    earnings before interest, taxes, depreciation and amortization, at the
    option of the Company through May 23, 2001. Direct borrowings under lines of
    credit were $14,900,000 and $25,300,000 at February 28, 1999 and 1998,
    respectively. The credit agreement contains various covenants including
    certain restrictions on the payment of cash dividends without the bank's
    consent. As of the end of the fiscal year, the Company met all of the
    required covenants.

                                                                       Page F-10
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                -----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------


6.    SUBORDINATED CONVERTIBLE NOTES:

      In a private placement completed on August 31, 1994, the Company issued
      $15 million principal amount of Subordinated Convertible Notes, which are
      due in $5,000,000 increments on August 31, 2000, 2001 and 2002. The notes
      are subordinate in right of payment to all existing and future senior
      indebtedness of the Company. The notes bear interest at 8.25%, payable
      quarterly on November 15, February 15, May 15, and August 15. The notes
      are convertible into shares of common stock at a conversion price of $9.00
      per share. The cost of issuing these notes was $521,565 and was amortized
      over three years.

      As of February 28, 1999, $7,941,000 of the notes had been converted into
      882,333 shares of common stock and $ 7,059,000 principal amount of
      subordinated convertible notes remained outstanding which are due in
      increments of $2,353,000 on August 31, 2000, 2001 and 2002.

7.    STOCK OPTIONS:

      Stock options granted to date under the Company's Key Employees Stock
      Incentive Plan and the 1994 and 1998 Stock Option Plans generally expire
      five years after date of grant and become exercisable in four equal annual
      installments commencing one year from date of grant. Stock options granted
      under the Company's Outside Director Stock Option Plan 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.

      A summary of options granted and related information for the three years
      ended February 28, 1999 is as follows:
<TABLE>
<CAPTION>
                                                                                           Weighted Average
                                                                        Options             Exercise Price
                                                                        -------             --------------
       <S>                                                           <C>                 <C>
       Outstanding, February 29, 1996                                     992,972                      $ 7.54
               Granted                                                    471,500                        8.56
               Exercised                                                  (93,495)                       1.91
               Cancelled                                                  (68,750)                      10.36
                                                                   --------------
       Outstanding, February 28, 1997                                   1,302,227                        8.16

       Weighted average fair value of options granted during the year                                  $ 4.39
                                                                                                       ======

               Granted                                                    118,500                        8.30
               Exercised                                                  (20,777)                       4.98
               Canceled                                                   (38,500)                      10.14
                                                                   --------------
       Outstanding, February 28, 1998                                   1,361,450                        8.20

       Weighted average fair value of options granted during the year                                  $ 3.13
                                                                                                       ======

               Granted                                                    378,000                        5.87
               Canceled                                                    (5,000)                       5.41
                                                                   --------------
       Outstanding, February 28, 1999                                   1,734,450                        6.81
                                                                   ==============

       Weighted average fair value of options granted during the year                                  $ 3.05
                                                                                                       ======

               Options exercisable:
               February 28, 1997                                          381,377                        7.86
               February 28, 1998                                          673,825                        7.52
               February 28, 1999                                          997,950                        8.06
</TABLE>

                                                                       Page F-11
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

  7.  STOCK OPTIONS (continued):

  Exercise prices for options outstanding as of February 28, 1999 ranged from
  $4.62 to $14.50.  The weighted-average remaining contractual life of these
  options is approximately 5 years.  Outstanding options at February 28, 1999
  are held by 44 individuals.

  The Company applies APB 25 and related Interpretations in accounting for the
  Option Plans.  Accordingly, no compensation cost has been recognized for its
  Option Plans.  Had compensation cost for the Option Plans been determined
  using the fair value based method, as defined in SFAS 123, the Company's net
  earnings and earnings per share would have been adjusted to the pro forma
  amounts indicated below:

<TABLE>
<CAPTION>
                                                             1999                1998               1997
                                                             ----                ----               ----
Net earnings:
<S>                                              <C>                 <C>                 <C>
  As reported                                            $4,544,831          $5,297,991        $7,073,560
  Pro forma                                               4,311,690           4,827,590         7,051,451
Basic earnings per share:
  As reported                                            $      .52          $      .61        $      .81
               Pro forma                                        .49                 .55               .81
Diluted earnings per share:
  As reported                                            $      .43          $      .52        $      .69
  Pro forma                                                     .41                 .47               .68
</TABLE>

The fair value of each option grant was estimated on the date of the grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions for 1999, 1998 and 1997, respectively: expected volatility of 45.3%,
45.8% and 48.3%, respectively; risk free interest rate of 6.0%, 6.1% and 6.5%
for 1999, 1998 and 1997, respectively; and expected lives of 1 to 5 years.

The effects of applying SFAS 123 in the above pro forma disclosures are not
indicative of future amounts, as they do not include the effects of awards
granted prior to 1995. Additionally, future amounts are likely to be affected by
the number of grants awarded since additional awards are generally expected to
be made at varying amounts.

8.  INCOME TAXES:

    The provision for income taxes is comprised of the following:


<TABLE>
                                             February               February               February
                                             28, 1999               28, 1998               28, 1997
                                        -----------------      -----------------      -----------------
<S>                                       <C>                    <C>                    <C>
Current:
  Federal                                      $2,523,535             $3,103,097             $4,213,767
  State and Local                                 680,931                655,559                900,193
Deferred:
  Federal                                         (64,760)               (74,103)              (221,867)
  State                                           (60,379)               (35,007)               (44,397)
                                        -----------------      -----------------      -----------------
                                               $3,079,327             $3,649,546             $4,847,696
                                        =================      =================      =================
</TABLE>

                                                                       Page F-12
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

8.    INCOME TAXES (continued):

      The components of the net deferred income tax liability, pursuant to SFAS
      109, as of February 28, 1999 and February 28, 1998 are as follows:

<TABLE>
<CAPTION>
                                                                 1999                       1998
                                                                 ----                       ----
Deferred Tax Assets:
<S>                                                       <C>                         <C>
  Accounts Receivable                                           $   672,003                $   708,610
  Inventory                                                          98,600                    100,300
                                                        -------------------         ------------------
  Total Deferred Tax Assets                                         770,603                    808,910
                                                        -------------------         ------------------

Deferred Tax Liabilities
  Fixed Assets                                                      (68,890)                  (184,500)
  Income of Interest Charge DISC                                 (1,120,565)                (1,055,805)
  Total Deferred Tax Liabilities                                 (1,189,455)                (1,240,305)
                                                        -------------------         ------------------

Net Deferred Tax Liabilities                                    $  (418,852)               $  (431,395)
                                                        ===================         ==================
</TABLE>

  The following is a reconciliation of the maximum statutory federal tax rate to
  the Company's effective tax rate:

<TABLE>
<CAPTION>
                                                   1999                    1998                 1997
                                                   ----                    ----                 ----
<S>                                       <C>                      <C>                    <C>
Statutory rate                                       35.0%                  35.0%               35.0%
State and local taxes                                 8.1                    7.1                 7.0
Other                                                (2.7)                  (1.3)               (1.3)
                                                     ----                   ----                ----

Effective tax rate                                   40.4%                  40.8%               40.7%
                                                     ====                   ====                ====
</TABLE>

9.   EMPLOYEE BENEFIT PLANS:

     On January 13, 1987, the Company's Board of Directors approved the
     termination of the Company's pension plan and approved the adoption of an
     employee stock ownership plan (ESOP) to replace the terminated pension
     plan. The ESOP covers all eligible employees and contributions are
     determined by the Board of Directors. The ESOP purchases shares of the
     Company's common stock using loan proceeds. As the loan is repaid, a pro
     rata amount of common stock is released for allocation to eligible
     employees. The Company makes cash contributions to the ESOP to meet its
     obligations. Contributions to the ESOP for the three years ended February
     28, 1999 aggregated $250,197 for fiscal 1999 and $139,950 for each of the
     other years . At February 28, 1999 the ESOP owned 431,251 shares at an
     average price of approximately $3.79 per share.

     On October 31, 1997, the Company, on behalf of the ESOP, entered into an
     additional credit agreement with a bank which provides for a $3,000,000
     revolving line of credit at the bank's prime rate until October 31, 2001.
     Direct borrowings under this line of credit are payable in forty-eight
     equal monthly installments commencing with the fiscal period subsequent to
     such borrowings. At February 28, 1999, there were no direct borrowings
     outstanding under the ESOP line of credit.

     In January 1991, the Company also established a 401-K profit sharing plan
     to cover all eligible employees. The Company's contributions to the plan
     are discretionary, but may not exceed 1% of compensation. Contributions to
     the plan for the three years ended February 28, 1999 were $114,216,
     $120,403 and $111,585, respectively.

                                                                       Page F-13
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

10. COMMITMENTS:

    (a) On September 13, 1996, the Company signed employment contracts (the
        "Contracts"), as amended, with three of its senior executives for a
        continually renewing five year term. The Contracts specify a base salary
        of $226,545 for each officer, which shall be increased each year by the
        change in the consumer price index, and also entitle two of the three
        officers to an annual bonus equal to 3.33% and the third officer to
        2.33% (9% in the aggregate) of the Company's consolidated earnings
        before income taxes. Benefits are also payable upon the occurrence of
        either a change in control of the Company, as defined, or the
        termination of the officer's employment, as defined. The Contracts also
        provide for certain payments of the executives' salaries, performance
        bonuses and other benefits in event of death or disability of the
        officer for the balance of the period covered by the agreement.

    (b) In December 1996, the Company leased an approximately 80,000 square foot
        facility in Melville, Long Island, New York to serve as its executive
        offices and main distribution center. In mid- 1997, the Company moved
        its executive offices and distribution operation to the facility. The
        lease term is from December 17, 1996 to December 16, 2008 at an annual
        base rental of $601,290 and provision for a 4% annual escalation in each
        of the last ten years of the term. The Company also leases certain other
        office, warehouse and other properties which leases include various
        escalation clauses, renewal options, etc. Aggregate minimum rental
        commitments under noncancelable operating leases are as follows:


        Fiscal 2000                                         $1,889,772
        Fiscal 2001                                          1,693,636
        Fiscal 2002                                          1,236,924
        Fiscal 2003                                            806,409
        Fiscal 2004                                            683,296
        Thereafter                                           2,455,595

        Rent expense was $1,837,330, $1,459,325, and $712,548 for each of the
        prior three years in the period ending February 28, 1999.


11.  MAJOR SUPPLIERS:

     For the year ended February 28, 1999, the Company purchased inventory from
     two suppliers that was in excess of 10% of the Company's total purchases.
     Purchases from these suppliers aggregated approximately $45,040,000.

     For the year ended February 28, 1998, the Company purchased inventory from
     one supplier that was in excess of 10% of the Company's total purchases.
     Purchases from this supplier aggregated approximately $18,872,000.

     For the year ended February 28, 1997, the Company purchased inventory from
     two suppliers that were in excess of 10% of the Company's total purchases.
     Purchases from these suppliers aggregated approximately $21,385,000.

                                                                       Page F-14
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

12.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION:

     The Company's operations have been classified into two business segments:
     Electronic component distribution and industrial contract manufacturing.
     The component distribution segment includes the resale of active and
     passive components to various original equipment manufacturers and
     distributors. The industrial contract-manufacturing segment consists of a
     subsidiary, which provides electronic circuit board and harness assembly
     services to original equipment manufacturers. This segment began operations
     in September 1991.

     Summarized financial information by business segment for fiscal 1999 and
     1998 is as follows:


<TABLE>
<CAPTION>
                                                                  1999                    1998               1997
------------------------------------------------------------------------------------------------------------------------
Net sales from external customers:

<S>                                                         <C>                     <C>                <C>
  Electronic Component Distribution                             $243,514,672             $221,217,251       $206,417,667
  Industrial Contract Manufacturing                               10,357,653               12,108,157         10,195,040
------------------------------------------------------------------------------------------------------------------------
                                                                $253,872,325             $233,325,408       $216,612,707
------------------------------------------------------------------------------------------------------------------------
Operating income (loss):

  Electronic Component Distribution                             $  9,210,235             $  9,430,055       $ 13,019,791
  Industrial Contract Manufacturing                                  655,481                1,230,848            594,423
------------------------------------------------------------------------------------------------------------------------
                                                                $  9,865,716             $ 10,660,903       $ 13,614,214
------------------------------------------------------------------------------------------------------------------------
Total assets:


  Electronic Component Distribution                             $ 94,340,725             $ 95,519,254       $ 70,577,102
  Industrial Contract Manufacturing                                5,418,170                4,122,174          4,206,212
------------------------------------------------------------------------------------------------------------------------
                                                                $ 99,758,895             $ 99,641,428       $ 74,783,314
------------------------------------------------------------------------------------------------------------------------
Depreciation and amortization:

  Electronic Component Distribution                             $  1,116,850             $  1,201,732       $    978,684
  Industrial Contract Manufacturing                                  300,659                  286,325            260,283
------------------------------------------------------------------------------------------------------------------------
                                                                $  1,417,509             $  1,488,057       $  1,238,967
------------------------------------------------------------------------------------------------------------------------
Capital expenditures (including capital leases):


  Electronic Component Distribution                             $  1,133,014             $    983,419       $  4,566,196
  Industrial Contract Manufacturing                                  898,590                  193,485            370,316
------------------------------------------------------------------------------------------------------------------------
                                                                $  2,031,604             $  1,176,904       $  4,936,512
------------------------------------------------------------------------------------------------------------------------
</TABLE>

Geographic:

The Company's operations are primarily conducted in the United States.
Information about the Company's operations in different geographic areas for the
three years in the period ended February 28, 1999, is not considered material to
the financial statements.

                                                                       Page F-15
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 28, 1999 (CONTINUED)
                -----------------------------------------------

13.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):

<TABLE>
<CAPTION>
                                                               THREE MONTH PERIOD ENDED


                                     FEBRUARY               NOVEMBER               AUGUST                  MAY
                                      28,1999               30, 1998              31, 1998               31, 1998
                               ------------------     ------------------     -----------------     ------------------
<S>                              <C>                    <C>                    <C>                   <C>
NET SALES                             $66,579,269            $64,263,220           $62,797,917            $60,231,919
                               ------------------     ------------------     -----------------     ------------------

COST OF SALES                          52,712,341             50,681,732            48,848,889             46,593,041
                               ------------------     ------------------     -----------------     ------------------

OPERATING AND INTEREST EXPENSES        12,343,878             11,460,371            11,869,342             11,738,573
                               ------------------     ------------------     -----------------     ------------------

PROVISION FOR
INCOME TAXES                              618,237                833,274               848,862                778,954
                               ------------------     ------------------     -----------------     ------------------

NET INCOME                            $  904, 813            $ 1,287,843           $ 1,230,824            $ 1,121,351
                               ==================     ==================     =================     ==================

BASIC EARNINGS
PER SHARE                                    $.10                   $.15                  $.14                   $.13
                               ==================     ==================     =================     ==================

WEIGHTED AVERAGE
NUMBER OF COMMON AND COMMON
 EQUIVALENT SHARES OUTSTANDING
                                        8,753,076              8,753,076             8,753,076              8,753,076
                               ==================     ==================     =================     ==================

                                                               THREE MONTH PERIOD ENDED
                               --------------------------------------------------------------------------------------

                                     FEBRUARY               NOVEMBER               AUGUST                  MAY
                                      28,1998               30, 1997              31, 1997               31, 1997
                               ------------------     ------------------     -----------------     ------------------

NET SALES                             $62,347,646            $60,013,458           $56,798,598            $54,165,706
                               ------------------     ------------------     -----------------     ------------------

COST OF SALES                          48,671,746             47,065,156            44,570,929             42,223,252
                               ------------------     ------------------     -----------------     ------------------

OPERATING AND INTEREST EXPENSES        11,284,786             10,754,379            10,382,809              9,424,814
                               ------------------     ------------------     -----------------     ------------------

PROVISION FOR
INCOME TAXES                              972,310                888,540               773,444              1,015,252
                               ------------------     ------------------     -----------------     ------------------

NET INCOME                            $ 1,418,804            $ 1,305,383           $ 1,071,416            $ 1,502,388
                               ==================     ==================     =================     ==================

BASIC EARNINGS
PER SHARE                                    $.16                   $.15                  $.12                   $.17
                               ==================     ==================     =================     ==================

WEIGHTED AVERAGE
NUMBER OF COMMON AND COMMON
 EQUIVALENT SHARES OUTSTANDING
                                        8,753,076              8,753,076             8,746,826              8,739,326
                               ==================     ==================     =================     ==================
</TABLE>

                                                                       Page F-16
<PAGE>

REPORT OF MANAGEMENT

The management of Nu Horizons Electronics Corp. is responsible for the
preparation of the consolidated financial statements in accordance with
generally accepted accounting principles and for the integrity and objectivity
of all the financial data included in this annual report.  In preparing the
financial statements, management makes informed judgments and estimates as to
the expected effects of events and transactions currently being reported.

To meet this responsibility, the Company maintains a system of internal
accounting controls to provide reasonable assurance that assets are safeguarded,
and that transactions are properly executed and recorded.  The system includes
policies and procedures, and reviews by officers of the Company.

The Board of Directors, through its Audit Committee, is responsible for
determining that management fulfills its responsibility with respect to the
Company's financial statements and the system of internal accounting controls.

The Audit Committee is composed solely of outside directors.  The Committee
meets periodically and, when appropriate, separately with representatives of the
independent accountants and officers of the Company to monitor the activities of
each.

Lazar Levine & Felix LLP, the independent accountants, have been selected by the
Board of Directors to examine the Company's financial statements.  Their report
appears herein.


BY:           /s/ PAUL DURANDO            BY:           /s/ ARTHUR NADATA
     --------------------------------            -----------------------------
                Paul Durando                              Arthur Nadata
        Vice President, Finance and                       President and
                 Treasurer                           Chief Executive Officer

                                                                       Page F-17
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES:

       The Company had no disagreements on accounting or financial disclosure
     matters with its accountants, nor did it change accountants, during the
     three year period ending February 28, 1999.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY:

                  NAME        AGE     POSITION
                  ----        ---     --------

       Irving Lubman          60      Chief Operating Officer and Chairman of
                                      the Board

       Arthur Nadata          53      President, Chief Executive Officer and
                                      Director

       Richard S. Schuster    50      Vice-President, Secretary and Director

       Paul Durando           55      Vice President - Finance, Treasurer and
                                      Director

       Harvey R. Blau         63      Director

       Herbert M. Gardner     59      Director

       Dominic A. Polimeni    52      Director

       The Company's Certificate of Incorporation provides for a Board of
     Directors consisting of not less than three nor more than eleven directors,
     classified into three classes as nearly equal in number as possible, whose
     terms of office expire in successive years.  The following table sets forth
     the directors of the Company.

<TABLE>
<CAPTION>
                  Class I                    Class II                     Class III
         <S>                         <C>                           <C>
           (To Serve Until the         (To Serve Until the           (To Serve Until the
            Annual Meeting of            Annual Meeting of             Annual Meeting of
          Stockholders in 2000)        Stockholders in 2001)         Stockholders in 1999)
          ---------------------      -----------------------        ----------------------
              Paul Durando                Harvey Blau (1)                Irving Lubman
          Herbert Gardner (1)         Dominic A. Polimeni (1)            Arthur Nadata
                                       Richard S. Schuster
</TABLE>

         (1) Member of Compensation and Audit Committees

            All officers serve at the discretion of the Board. There are no
         family relationships among the directors and officers.

            Irving Lubman has been Chairman of the Board since October 1982 and
         Chief Operating Officer since September 1996. Mr. Lubman was Chief
         Executive Officer from October 1982 to September 1996. Mr. Lubman has
         been actively involved in electronic components' distribution since
         1957, when he joined Milgray Electronics Corp., holding the position of
         sales manager until 1968. From 1968 through October 1982, when he
         joined the Company, Mr. Lubman was corporate vice president of Diplomat
         Electronics Corp., also a distributor of electronic components.

            Arthur Nadata has been President and a Director since October 1982
         and Chief Executive Officer since September 1996. Mr. Nadata was also
         the Treasurer of the Company from October 1982 to September 1996. Prior
         to joining the Company in October 1982, Mr. Nadata worked for eighteen
         years for Diplomat Electronics Corp. in various operational and sales
         positions of increasing responsibility, eventually becoming corporate
         vice president of sales and marketing.
<PAGE>

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY (Continued):



            Richard S. Schuster has been Vice President, Secretary and a
         Director since October 1982. For the seven years prior to joining the
         Company in November 1982, Mr. Schuster served as manager of Capar
         Components Corp., an importer and distributor of passive components,
         and a wholly-owned subsidiary of Diplomat Electronics Corp. For the six
         years prior to 1975, Mr. Schuster was employed by International
         Components Corp., responsible for production, engineering and sales of
         imported semiconductor and passive components.

            Paul Durando has been Vice President, Finance since joining the
         Company in March 1991, Treasurer since September 1996 and has been a
         Director since September 1994. Prior to joining the Company in March
         1991, Mr. Durando served for six years as Executive Vice President of
         Sigma Quality Foods, Inc. From 1977 to 1984, he was Vice President,
         Operations of the Wechsler Coffee Corp. Mr. Durando was also associated
         with Deloitte Haskins & Sells for seven years.

            Harvey R. Blau has been a director of the Company since May 1984.
         Mr. Blau has been a practicing attorney in the State of New York since
         1961, and is a member of the law firm of Blau, Kramer, Wactlar &
         Lieberman, P.C., Jericho, New York, counsel to the Company. Mr. Blau is
         Chairman of the Board of Griffon Corporation and Aeroflex Incorporated
         and is a Director of Reckson Associates Realty Corp.

            Herbert M. Gardner has been a Director of the Company since May
         1984. For more than the past five years, Mr. Gardner has been Senior
         Vice President of Janney Montgomery Scott Inc., investment bankers and
         Underwriter of the Company's May 1984 public offering. Mr. Gardner is
         Chairman of the Board of Supreme Industries Inc. and a director of
         Transmedia Network, Inc., TGC Industries Inc., Hirsch International
         Corp., and Inmark Enterprises, Inc.

            Dominic A. Polimeni has been a Director of the Company since
         September 1997. Mr. Polimeni has been President, Chief Operating
         Officer and a Director of Questron Technology, Inc. since March 1995,
         and Chairman and Chief Executive Officer of Questron Technology, Inc.
         since February 1996. Mr. Polimeni has been a Managing Director of
         Gulfstream Financial Group, Inc., a privately held financial consulting
         and investment banking firm since August 1990. Prior to that he held
         the position of Chief Financial Officer of Arrow Electronics, Inc. for
         four (4) years. Mr. Polimeni also practiced as a Certified Public
         Accountant for more than 12 years and was a Partner in the NewYork
         office of Arthur Young and Company.
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION:

          The following table sets forth the compensation paid by the Company to
          its Chief Executive Officer and each of the three other executive
          officers for the years ended February 28, 1999, February 28, 1998 and
          February 28, 1997.

                                  SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                       Long Term
                                        Annual Compensation (1)                       Compensation
                                      --------------------------                    ---------------
                                                                                  Securities
         Name of Principal and        Fiscal                                      Underlying      All other (2)
         Position                      Year          Salary          Bonus         Options        Compensation
         ----------------------        ----          ------          -----         -------        ------------
         <S>                       <C>              <C>          <C>           <C>            <C>
         Irving Lubman                1999           $243,893       $196,102        75,000          $21,552
         COO, Chairman                1998            236,789        344,370         -               16,781
         of the Board                 1997            229,893        446,843       100,000           14,945

         Arthur Nadata                1999           $243,893       $280,146       100,000          $20,514
         President and                1998            236,789        344,370         -               31,374
         CEO                          1997            229,893        446,843       100,000           18,457

         Richard Schuster             1999           $243,893       $280,146        75,000          $18,330
         Vice President               1998            236,789        344,370         -               18,922
         Secretary and                1997            229,893        446,843       100,000           16,222
         President, NIC
         Components Corp.

         Paul Durando                 1999           $150,000       $ 31,011        10,000          $ 1,500
         Vice President,              1998            138,942         25,827        15,000            1,389
         Finance and                  1997            130,000         33,514        20,000            1,500
         Treasurer
</TABLE>


                    SUMMARY COMPENSATION TABLE - Footnotes


       (1)  No Other Annual Compensation is shown because the amounts of
            perquisites and other non-cash benefits provided by the Company do
            not exceed the lesser of $50,000 or 10% of the total annual base
            salary and bonus disclosed in this table for the respective officer.

       (2)  The amounts disclosed in this column include the Company's
            contributions on behalf of the named executive officer to the
            Company's 401(k)-retirement plan in amounts equal to a maximum of 1%
            of the executive officer's annual salary and, for Messrs. Lubman,
            Nadata and Schuster contributions to life insurance policies where
            the Company is not the beneficiary, and the cost to the Company of
            the non-business use of Company automobiles used by executive
            officers.
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION (Continued):

         Employment Contracts

         On September 13, 1996, the Company signed employment contracts (the
         "Contracts"), as amended, with three of its senior executives for a
         continually renewing five year term. The Contracts specify a base
         salary of $226,545 for each officer in 1997, which shall be increased
         each year by the change in the consumer price index, and also entitle
         two of the three officers to an annual bonus equal to 3.33%, and the
         third officer to 2.33% (9% in the aggregate) of the Company's
         consolidated earnings before income taxes. Benefits are also payable
         upon the occurrence of either a change in control of the Company, as
         defined, or the termination of the officer's employment, as defined. In
         the event the employee terminates his employment within six months
         after a change in control of the Company, he will receive a lump sum
         payment equal to three-quarters of the remaining compensation under his
         employment agreement. Each Contract also provides for certain payments
         of the executive salary, performance bonuses and other benefits in the
         event of death or disability of the officer for the balance of the
         period covered by the agreement.

         The following table sets forth certain information with respect to
         stock options granted to the officers named in the Summary
         Compensation Table during the fiscal year ended February 28, 1999.

                    OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                        Potential Realizable Value at
                                    % of Total                                          Assumed Annual Rates of Stock
                   Options       Options Granted    Exercise Price     Expiration        Price Appreciation for Entire
                 Granted (1)       to Employees     ($ per share)          Date                 Term (2) (3)
                 -----------       ------------     -------------          ----         -----------------------------
                                                                                            5%               10%
                                                                                            --               ---
<S>            <C>               <C>               <C>               <C>              <C>               <C>
P. Durando          10,000               2.9%           $6.125           5/28/08         $ 38,550          $ 97,650
I. Lubman           75,000              21.6%            6.125           5/28/08          289,125           732,375
A. Nadata          100,000              28.7%            6.125           5/28/08          385,500           976,500
R. Schuster         75,000              21.6%            6.125           5/28/08          289,125           732,375
</TABLE>



               OPTIONS/SAR GRANTS IN LAST FISCAL YEAR - Footnotes

  (1)    Options were granted for a term of ten years, subject to earlier
         termination on termination of employment. Options become exercisable in
         two equal annual installments commencing one year from the date of
         grant.

  (2)    These amounts represent assumed rates of appreciation, which may not
         necessarily be achieved. The actual gains, if any, are dependent on the
         market value of the Company's stock at a future date as well as the
         option holder's continued employment throughout the vesting period.
         Appreciation reported is net of exercise price.

  (3)    Potential Realizable Value is based on the assumed annual growth rates
         for the ten-year option term. Annual growth of 5% results in a stock
         price of $9.98 per share and 10% results in a price of $15.89 per share
         for Mr. Durando on the shares granted at $6.125. Actual gains, if any,
         on stock option exercises are dependent on the future performance of
         the stock as well as the option holder's continued employment
         throughout the vesting period. There can be no assurance that the
         amounts reflected in this table will be achieved. Appreciation reported
         is net of exercise price.
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (Continued):

          The following table sets forth certain information as to each exercise
          of stock options during the fiscal year ended February 28, 1999 by the
          persons named in the Summary Compensation Table and the fiscal year
          end value of unexercised options:

                AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR-END
                               OPTIONS/SAR VALUES
<TABLE>
<CAPTION>                                                                                      Value of
                                                                           Number of          Unexercised
                                                                         Unexercised         In-the-Money
                                                                         Options/SARs         Options/SARs
                                                                           at FY End            at FY End
                                                                        --------------      --------------

                          Shares Acquired                                 Exercisable/          Exercisable/
                           on Exercise          Value Realized(1)        Unexercisable         Unexercisable
                          ---------------       -----------------        -------------         -------------
<S>                    <C>                     <C>                      <C>                     <C>
         Irving Lubman         -                      -                     236,150                      -
                                                                            137,500                      -

         Arthur Nadata         -                      -                     236,150                      -
                                                                            162,500                      -

         Richard Schuster      -                      -                     236,150                      -
                                                                            137,500                      -

          Paul Durando         -                      -                      36,250                      -
                                                                             36,250                      -
</TABLE>


       (1)  Market value less exercise price, before payment of applicable
            federal or state taxes.
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION (Continued):

         Directors who are not employees of the Company receive an annual fee
         of $2,500 for Board Membership and $500 for each Board of Directors
         or Committee meeting attended. There were two meetings of each of the
         Board of Directors and the Compensation Committee during the fiscal
         year ended February 28, 1999. Each director attended or participated
         in all of the meetings of the Board of Directors and the committees
         thereof on which he served.

         For the fiscal year ended February 28, 1999, there was one meeting of
         the Audit Committee. The Company's Audit Committee is involved in
         discussions with the Company's independent public accountants with
         respect to the scope and results of the Company's year-end audit, the
         Company's internal accounting controls and the professional services
         furnished by the independent auditors to the Company. During fiscal
         1999, the Company had no standing Nominating Committee or any
         committee performing similar functions.

  Compensation Committee Interlocks and Insider Participation

         The Company's Compensation Committee consisted during fiscal 1999 of
         Messrs. Gardner (Chairman), Polimeni and Blau. Mr. Gardner is Senior
         Vice President of Janney Montgomery Scott, Inc., investment bankers,
         which acted as placement agent in connection with the Company's $15
         million private placement of convertible subordinated notes in August
         1994. Mr. Blau is a partner in the law firm of Blau, Kramer, Wactlar
         & Lieberman, P.C. The Company has utilized, and anticipates that it
         will continue to utilize, the services of Blau, Kramer, Wactlar &
         Lieberman, P.C. as its general counsel.

         In accordance with rules promulgated by the Securities and Exchange
         Commission, the information included under the captions "Compensation
         Committee Report on Executive Compensation" and "Company Stock
         Performance" will not be deemed to be filed or to be proxy soliciting
         material or incorporated by reference in any prior or future filings
         by the Company under the Securities Act of 1933 or the Securities
         Exchange Act of 1934.

  Compensation Committee Report on Executive Compensation

         The compensation of the Company's executive officers generally is
         determined by the Compensation Committee of the Board of Directors.
         Each member of the Compensation Committee is a Director who is not an
         employee of the Company or any of its affiliates. The following
         report with respect to certain compensation paid or awarded to the
         Company's executive officers during fiscal 1999 is furnished by the
         Compensation Committee.

  General Policies

         The Company's compensation programs are intended to enable the
         Company to attract, motivate, reward and retain management talent
         required to achieve aggressive corporate objectives in a rapidly
         changing industry, and thereby increase stockholder value. It is the
         Company's policy to provide incentives to its senior management to
         achieve both short-term and long-term objectives and to reward
         exceptional performance and contributions to the development of the
         Company's business. To attain these objectives, the Company's
         executive compensation program includes a competitive base salary,
         coupled with, with respect to certain executives, a substantial cash
         bonus which is "at risk" based on the Company's earnings.

         Many of the Company's employees, including its executive officers, also
         are eligible to be granted stock options periodically in order to more
         directly align their interests with the long-term financial interest of
         the Company's stockholders.
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION (Continued):

  Relationship of Compensation to Performance

         The Compensation Committee annually establishes, subject to any
         applicable employment agreements, the salaries, which will be paid to
         the Company's executive officers during the coming year. In setting
         salaries, the Board of Directors takes into account several factors,
         including competitive compensation data, the extent to which an
         individual may participate in the stock option plan maintained by the
         Company and its affiliates, and qualitative factors bearing on an
         individual's experience, responsibilities, management and leadership
         abilities, and job performance.

         Stock options are granted to key employees, including the Company's
         executive officers, by the Compensation Committee of the Board of
         Directors under the Plans. Among the Company's executive officers, the
         number of shares subject to options granted to each individual
         generally depends upon his or her base salary and the level of that
         officer's management responsibility.

         During fiscal 1999, 10,000 options were granted to each outside
         director under the Company's Outside Director Stock Option Plan.
         Options to purchase 100,000 shares were granted to Mr. Nadata, 75,000
         shares were granted to each of Messrs. Lubman and Schuster and 10,000
         shares were granted to Mr. Durando under the Company's 1998 Stock
         Option Plan. Bonuses were paid to three executive officers, as set
         forth in the Summary Compensation Table, pursuant to the terms of their
         employment agreements with the Company and on a discretionary basis to
         Paul Durando, the Company's Vice President, Finance and Director. This
         latter bonus was determined to be appropriate by the Compensation
         Committee in light of Mr. Durando's contributions to the Company's
         performance, his base salary level and the level of his management
         responsibilities.

  Compensation of Chief Executive Officer

         The Company has entered into an employment agreement with Arthur
         Nadata, the Company's President and Chief Executive Officer, pursuant
         to which Mr. Nadata receives a base salary of $226,545, adjusted for
         CPI index increases, and an incentive bonus equal to three and thirty-
         three one-hundredths percent (3.33%) of the Company's consolidated pre-
         tax earnings. In this way, Mr. Nadata's cash compensation is tied
         directly to the Company's profitability.

                                                The Compensation Committee

                                                Herbert Gardner
                                                Harvey Blau
                                                Dominic Polimeni

  Compliance with Section 16(a) of the Securities Exchange Act

         Section 16(a) of the Exchange Act requires the Company's executive
         officers, directors and persons who own more than ten percent of a
         registered class of the Company's equity securities ("Reporting
         Persons") to file report of ownership and changes in ownership on Forms
         3, 4 and 5 with the Securities and Exchange Commission (the "SEC") and
         the National Association of Securities Dealers (the "NASD"). These
         Reporting Persons are required by SEC regulation to furnish the Company
         with copies of all Forms 3, 4 and 5 they file with the SEC and NASD.
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION (Continued):

Compliance with Section 16(a) of the Securities Exchange Act (continued)

 Based solely on the Company's review of the copies of the forms it has
 received, the Company believes that all Reporting Persons complied on a timely
 basis with all filing requirements applicable to them with respect to
 transactions during fiscal year 1999.

                        COMPANY STOCK PERFORMANCE GRAPH

 The following Performance Graph compares the Company's cumulative total
 stockholder return on its Common Stock for a five year period (February 28,
 1994 to February 28, 1999) with the cumulative total return of the NASDAQ
 Market Index (which includes the Company) and a peer group of companies
 selected by the Company for purposes of the comparison.  Dividend reinvestment
 has been assumed and, with respect to companies in the Peer Group, the returns
 of each such company have been weighted to reflect relative stock market
 capitalization.

                     COMPARE 5 -YEAR CUMLATIVE TOTAL RETURN
                      AMONG NU-HORIZONS ELECTRONICS CORP.,
                    NASDAQ MARKET INDEX AND PEER GROUP INDEX


<TABLE>
<CAPTION>
   Measurement Period             Nu Horizons                    NASDAQ
  (Fiscal Year Covered)           Electronics                 Market Index             Peer Group Index
-------------------------------------------------------------------------------------------------------------

<S>                        <C>                         <C>                         <C>
FYE 3/01/94                        $100.00                     $100.00                     $100.00
FYE 2/28/95                          84.51                       95.47                       95.07
FYE 2/29/96                         176.06                      131.83                      126.17
FYE 2/28/97                         104.23                      158.24                      142.88
FYE 2/28/98                          71.13                      215.21                      148.40
FYE 2/28/99                          49.30                      278.09                       78.88
</TABLE>


                     ASSUMES $100 INVESTED ON MARCH 1, 1994
                          ASSUMES DIVIDEND REINVESTED
                      FISCAL YEAR ENDING FEBRUARY 28, 1999

 Peer group includes All American Semiconductor, Arrow Electronics Inc., Avnet
 Inc., Bell Microproducts Inc., Jaco Electronics Inc., Kent Electronics Corp.,
 Marshall Industries, Pioneer Standard Electronics and Reptron Electronics Inc.
<PAGE>

         EXECUTIVE COMPENSATION (Continued):

         Key Employees Stock Incentive Plan:

            The Company has a Key Employees Stock Incentive Plan ("Plan"),
         approved by the stockholders in 1984, as amended in September 1987,
         which presently covers 712,765 shares of Common Stock. Options are
         currently outstanding for 192,450 shares and no shares are currently
         available for grant. The Plan is intended to provide an additional
         means of inducing executives and other "key salaried employees" of the
         Company (which is defined under Section 422A of the Internal Revenue
         Code) to join and remain with the Company by offering them a greater
         share of the Company's stock and a greater identification with the
         Company.

            The Board of Directors or a Committee, which may be appointed and
         maintained by the Board, shall have the power to administer the Plan.
         The Board or Committee has full power and authority: (i) to designate
         participants; (ii) to designate options or any portion thereof as
         Incentive Stock Options ("ISO"); (iii) to determine the terms and
         provisions of respective option agreements (which need not be
         identical) including, but not limited to, provisions concerning the
         time or times when and the extent to which the stock options
         ("Options") and Stock Appreciation Rights ("SARs") may be exercised and
         the nature and duration of restrictions as to transferability or
         constituting substantial risk forfeiture; (iv) to accelerate the right
         to an optionee to exercise in whole or in part any previously granted
         ISO including any options modified to qualify as ISOs; and (v) to
         interpret the provisions and supervise the administration of the Plan.
         The Board has appointed the Compensation Committee to administer the
         Plan.

            The purchase price of each share subject to an Option or any portion
         thereof, which has been designated by the Board or the Committee as an
         ISO, shall not be less than 100% (or 110%, if at the time of grant the
         optionee owns more than 10% of the voting stock of the Company) in the
         case of options designated as ISOs or 85% in case of options not
         designated as incentive stock options, of the fair market value of such
         shares on the date the option is granted. In no event shall the option
         price be less than the par value of the stock.

         1994 Stock Option Plan:

            In September 1994, the Company's stockholders approved the 1994
         Stock Option Plan (the "1994 Plan"), as amended in September 1996,
         under which key employees and officers of the Company, its subsidiaries
         and affiliates may be granted options to purchase an aggregate of
         1,100,000 shares of the Company's Common Stock. The 1994 Plan is
         administered by the Compensation Committee, consisting of at least two
         members of the Board of Directors. The Compensation Committee, subject
         to provisions in the 1994 Plan, has the authority to designate, in its
         discretion, which persons are to be granted options, the number of
         shares subject to each option, and the period of each option. Each
         recipient must be an employee of the Company at the time of grant and
         throughout the period ending on the day three months before the date of
         exercise. Under the terms of the 1994 Plan, the exercise price of the
         shares subject to each option granted will be not less than 85% nor
         more than 100% of the fair market value at the date of grant or 110% of
         such fair market value for options granted to any employee to or
         director who owns stock possessing more than ten percent (10%) of the
         total combined voting power of all classes of stock of the Company.
         Adjustments will be made to the purchase price in the event of stock
         dividends, corporate reorganizations, or similar events. During fiscal
         1999, 10,500 options were granted under the 1994 Plan with an exercise
         price of $6.125. Options are currently outstanding for 1,094,500 shares
         and 5,500 options are currently available for grant. No options to
         purchase shares granted under the 1994 Plan have been exercised.
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION (Continued):

         1994 Stock Option Plan (continued):

            The Compensation Committee of the Board of Directors has the
         responsibility and authority to administer and interpret the provisions
         of the 1994 Plan. The Compensation Committee shall appropriately adjust
         the number of shares for which awards may be granted pursuant to the
         1994 Plan in the event of reorganization, recapitalization, stock
         split, reverse stock split, stock dividend, exchange or combination of
         shares, merger, consolidation, rights offering or any change in
         capitalization. The Board may, from time to time, amend, suspend or
         terminate any or all of the provisions of the 1994 Plan, provided that,
         without the participant's approval, no change may be made which would
         prevent an ISO granted under the 1994 Plan from qualifying as an ISO
         under Section 422A of the Internal Revenue Code of 1986, as amended
         (the "Code") or results in a modification of the ISO under Section
         425(h) of the Code or otherwise alter or impair any right theretofore
         granted to any participant; and further provided that, without the
         consent and approval of the holders of a majority of the outstanding
         shares of Common Stock of the Company present at that meeting at which
         a quorum exists, neither the Board nor the Committee may make any
         amendment which (i) changes the class of persons eligible for options;
         (ii) increases (except as provided under Section 1.6 of the 1994 Plan)
         the total number of shares or other securities reserved for issuance
         under the 1994 Plan; (iii) decreases the minimum option prices stated
         in Section 2.2 of the 1994 (other than to change the manner of
         determining Fair Market Value to conform to any then applicable
         provision of the Code or any regulation thereunder); (iv) extends the
         expiration date of the 1994 Plan, or the limit on the maximum term of
         options; or (v) withdraws the administration of the 1994 Plan from a
         committee consisting of two or more members, each of whom is a
         Disinterested Person. With the consent of the Participant affected
         thereby, the Committee may amend or modify any outstanding option in
         any manner not inconsistent with the terms of the 1994 Plan.

         1998 Stock Option Plan

            In May 1998, the Board of Directors adopted the Nu Horizons
         Electronics Corp. 1998 Stock option Plan (the "1998 Option Plan"),
         under which any director, officer, employee or consultant of the
         Company, a subsidiary or an affiliate may be granted options to
         purchase an aggregate 350,000 shares of the Company's Common Stock. The
         1998 Option Plan is to be administered by the Board of Directors of the
         Company; provided, however, that the Board may, in the exercise of its
         discretion, designate from among its members a Compensation committee
         or a Stock Option Committee (the "Committee") consisting of no fewer
         than two non-employee Directors, as defined by Rule 16b-3 under the
         Securities Exchange Act of 1934. The Compensation Committee administers
         the 1998 Option Plan. Subject to the terms of the 1998 Option Plan, the
         Board of Directors or the Committee may determine and designate those
         directors, officers, employees and consultants who are to be granted
         stock options under the 1998 Option Plan and the number of shares to be
         subject to such options and the term of the options to be granted,
         which term may not exceed ten years. The Board of Directors of the
         Committee shall also, subject to the express provisions of the 1998
         Option Plan, have the authority to interpret the 1998 Option Plan and
         to prescribe, amend and rescind the rules and regulations relating to
         the 1998 Option Plan. Only non-qualified stock options may be granted
         under the terms of the 1998 Option Plan. The exercise price of the
         options granted under the 1998 Option Plan will not be less than such
         fair market value at the date of grant. The option price, as well as
         the number of shares subject to such option, shall be appropriately
         adjusted by the Committee in the event of stock splits, stock
         dividends, recapitalizations, and certain other events involving a
         change in the Company's capital. During fiscal 1999, 337,500 options
         were granted under the 1998 Option Plan with exercise prices of $6.125,
         $5.00 and $4.62. Options are currently outstanding for 337,500 shares
         and 12,500 options are currently available for grant. No options
         granted under the 1998 Option Plan have been exercised.

         Outside Director Stock Option Plan:

         In September 1994, the Company's stockholders approved the Outside
         Directors Stock Option Plan (the "Director Plan") which covers 150,000
         shares of the Company's Common Stock. The primary purposes of the
         Director Plan are to attract and retain well-qualified persons for
         service as directors of the Company and to provide such outside
         directors with the opportunity to increase their proprietary interest
         in the Company's continued success and further align their interests
         with the interests of the stockholders of the Company through the grant
         of options to purchase shares of the Company's Common Stock.
<PAGE>

ITEM 11.    EXECUTIVE COMPENSATION (Continued):

          Outside Director Stock Option (continued):

          All directors of the Company who are not employees of the Company, of
         which there are presently three, are eligible to participate in the
         Director Plan.

            The Board of Directors of the Company may amend the Director Plan
         from time to time in such manner as it may deem advisable. The
         provisions of the Director Plan relating to (i) which directors shall
         be granted options; (ii) the amount of shares subject to options
         granted; (iii) the price at which shares subject to options may be
         purchased; and (iv) the timing of grants of options shall not be
         amended more than once every six (6) months, other than to comport with
         changes in the Code or the Employee Retirement Income Security Act of
         1974, as amended. No amendment to the Director Plan shall adversely
         affect any outstanding option, however, without the consent of the
         optionee that holds such option.

            The Compensation Committee of the Board of Directors has the
         responsibility and authority to administer and interpret the provisions
         of the Director Plan. The Compensation Committee shall appropriately
         adjust the number of shares for which awards may be granted pursuant to
         the Director Plan in the event of reorganization, recapitalization,
         stock split, reverse stock split, stock dividend, exchange or
         combination of shares, merger, consolidation, rights offering, or any
         change in capitalization.

            Under the Director Plan, on June 1, 1994 each non-employee Director
         then serving received options to purchase 10,000 shares of Common Stock
         at a price of $8.25 per share (the price of shares of Common Stock on
         June 1, 1994) and on the June 1 of each subsequent year each non-
         employee director then serving has or will be granted options to
         purchase 10,000 shares of Common Stock at a price equal to the closing
         price of the Common Stock on a national securities exchange upon which
         the Company's stock is listed or the average of the mean between the
         last reported "bid" and "asked prices if the Common Stock is not so
         listed for the five business days immediately preceding the date of
         grant. Options awarded to each outside director vest in three equal
         installments over a period of two years, subject to forfeiture under
         certain conditions and shall be exercisable by the outside director
         upon vesting.

         Summary of Fiscal 1999 Stock Option Grants:

            During fiscal 1999, the Company granted options to purchase 100,000
         shares to Mr. Nadata, 75,000 shares to each of Messrs. Lubman and
         Schuster and 10,000 shares to Mr. Durando at a price of $6.125 per
         share and options to purchase 10,000 shares to each of Messrs. Blau,
         Gardner and Polimeni at at a price of $6.125 per share.

         Employee Stock Ownership Plan:

            In January 1987, the Company adopted an Employee Stock Ownership
         Plan ("ESOP" or "Plan") which covers substantially all of the Company's
         employees. The ESOP is managed by three Trustees, Messrs. Lubman,
         Nadata and Schuster (the "Trustees"), who vote the securities held by
         the Plan (other than securities of the Company which have been
         allocated to employees' accounts).

            The annual contributions to the Plan are to be in such amounts, as
         the Board of Directors in its sole discretion shall determine. Each
         employee who participates in the Plan has a separate account and the
         annual contribution by the Company to an employee's account is not
         permitted to exceed the lesser of $30,000 (or such other limit as may
         be the maximum permissible pursuant to the provisions of Section 415 of
         the Code and Regulations issued thereunder) or 25% of such employee's
         annual compensation, as defined under the Plan. No contributions are
         required/of, nor shall any be accepted from, any employee.
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION (Continued):

         Employee Stock Ownership Plan (continued):

            All contributions to the Plan are invested in the Company's
         securities (except for temporary investments), the Trustees having the
         right to purchase the Company's securities on behalf of employees. The
         Trustees are considered the stockholder for the purpose of exercising
         all owners' and stockholders' rights, with respect to the Company's
         securities held in the Plan, except for voting rights which inure to
         the benefit of each employee who can vote all shares held in his
         account, even if said shares are not vested. Vesting is based upon an
         employee's years of service, with employees generally becoming fully
         vested after six years.

            Benefits are payable to employees at retirement or upon death,
         disability or termination of employment, with payments commencing no
         later than sixty days following the last day of the Plan year in which
         such event occurred. Subject to the right of the employee to demand
         payment in the form of the Company's Common Stock, all benefits are
         payable in cash or in Common Stock, at the discretion of the Trustees.

            The Trustees are empowered to borrow funds for the purpose of
         purchasing the Company's securities. The securities so purchased are
         required to be held in an acquisition indebtedness account, to be
         released and made available for reallocation as principal is repaid. In
         May, 1997 the Company, on behalf of the ESOP, entered into a revolving
         credit agreement with its bank which provides for a $3,000,000
         revolving line of credit at the bank's prime rate until May 22, 2001.
         Direct borrowings under this line of credit are payable in forty-eight
         equal monthly installments commencing with the fiscal period subsequent
         to such borrowings. At February 28, 1999, the ESOP owned 431,251 shares
         at an average price of approximately $3.79 per share.

         401(k) Savings Plan

            The Company sponsors a retirement plan intended to be qualified
         under Section 401(k) of the Code. All non-union employees over age 21
         who have been employed by the Company for at least six months are
         eligible to participate in the plan. Employees may contribute to the
         plan on a tax-deferred basis up to 15% of their total annual salary,
         but in no event more than the maximum permitted by the Code ($10,000 in
         calendar 1998). Company contributions are discretionary. Effective with
         the plan year ended February 28, 1999, the Company has elected to make
         matching contributions at the rate of $ .25 per dollar contributed by
         each employee up to a maximum of 1% of an employee's salary vesting at
         the cumulative rate of 20% per year of service starting one year after
         commencement of service and, accordingly, after five years of any
         employee's service with Company, matching contributions by the Company
         are fully vested. As of February 28, 1999 approximately 250 employees
         had elected to participate in the plan. For the fiscal year ended
         February 28, 1999, the Company contributed approximately $114,216 to
         the plan, of which $8,814 was a matching contribution of $2,438 for
         each of Mr. Lubman, Mr. Nadata, Mr. Schuster and $1,500 for Mr.
         Durando.
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

             The following table sets forth, as of May 1, 1999, certain
          information with regard to the record and beneficial ownership of the
          Company's Common Stock by (i) all persons known to the Company to be
          beneficial owners of more than 5% of the company's outstanding Common
          Stock, based on filings with the Commission; (ii) each Director, (iii)
          the Company's Chief Executive Officer and the three other most highly
          compensated executive officers of the Company; and (iv) all executive
          officers and Directors as a group.


  <TABLE>
  <CAPTION>
                                   NAME                                      SHARES              PERCENT
           ------------------------------------------------------      -----------------     ---------------

           <S>                                                     <C>                          <C>
           Paul Durando                                                    46,502 (1) (2)             *
           Herbert M. Gardner                                                  62,612 (3)             *
           Harvey R. Blau                                                      47,075 (3)             *
           Dominic Polimeni                                                     6,667 (3)             *
           Irving Lubman                                                  320,321 (4) (5)           3.6%
           Arthur Nadata                                              591,481 (4) (5) (6)           6.5%
           Richard S. Schuster                                            584,884 (4) (5)           6.5%
           Dimensional Fund Advisors                                          497,642 (7)           5.7%
           Heartland Advisors                                                 700,000 (8)           8.0%
           All officers and directors as a group (7 persons)                   1,659,542            7.1%
  </TABLE>

  NOTES:
  ------
  (*)    Less than 1% of the Company's outstanding stock.
  (1)    Includes options exercisable within 60 days for 41,250 shares of common
         stock under the Company's Key Employees Stock Option Plan and the 1994
         Stock Option Plan.
  (2)    Includes 5,252 shares of fully vested common stock owned through the
         Employee's Stock Ownership Plan, which include voting power.
  (3)    Includes options exercisable within 60 days for 46,667 shares of common
         stock for Messrs. Gardner and Blau and 6,667 shares for Mr. Polimeni
         under the Company's Outside Director Stock Option Plan.
  (4)    Includes options exercisable within 60 days for 273,650 shares of
         common stock for Messrs. Lubman and Schuster and 286,150 shares for Mr.
         Nadata under the Company's Key Employees Stock Option
         Plan and the 1994 Stock Option Plan.
  (5)    Includes 15,133 shares of fully vested common stock owned through the
         Employees Stock Ownership Plan, which include voting power. These
         Officers are also Trustees of the Plan.
  (6)    Includes 45,398 shares held by his children as to which Mr. Nadata
         disclaims beneficial ownership.
  (7)    1299 Ocean Avenue, Santa Monica, CA  90401
  (8)    790 Milwaukee Street, Milwaukee, WI  53202

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

             Harvey R. Blau, a Director of the Company, is a member of Blau,
          Kramer, Wactlar & Lieberman, P.C., general counsel to the Company. For
          the fiscal year ended February 28, 1999, the Company paid $75,481 in
          legal fees to Blau, Kramer, Wactlar & Lieberman, P.C.

             For the fiscal year ended February 28, 1999, the Company received
          an aggregate $380,000 in respect of various electronic components sold
          to Procomponents, Inc. and PCI Manufacturing, two corporations in
          which Mitchell Lubman, Mr. Lubman's brother, is an officer and owns
          greater than ten percent equity interest.

             For the fiscal year ended February 28, 1999, the Company received
          an aggregate $412,000 in respect of various electronic components sold
          to Brevan Electronics, a corporation in which Stuart Schuster, Mr.
          Schuster's brother, is an officer and owns a greater than ten percent
          equity interest.
<PAGE>

PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K:

(a) (1) The following consolidated financial statements of the registrant and
        its subsidiaries are filed as a part of this report:

<TABLE>
<CAPTION>
                                                                                                         Page
                                                                                                         ----
<S>                                                                                          <C>
        Independent Auditors' Report                                                                      F-1

        Consolidated Balance Sheets as of February 28, 1999 and February 28, 1998                         F-2

        Consolidated Statements of Income for the three years in the period ended February 28, 1999
                                                                                                          F-3

        Consolidated Statements of Changes in Shareholders' Equity for the three years in the
         period ended February 28, 1999                                                                   F-4


        Consolidated Statements of Cash Flows for the three years in the period ended February 28,
         1999                                                                                             F-5


        Notes to Consolidated Financial Statements                                                        F-7

        Schedule II - Valuation and Qualifying Accounts and Reserves                                       34
</TABLE>


(a) (3) See exhibits required - Item (c) below

(b)     No reports were filed by the Company on Form 8-K during the last quarter
        of the fiscal year.

(c)     Exhibits


<TABLE>
<CAPTION>
      EXHIBIT
      NUMBER                                             DESCRIPTION
    ----------------------------------------------------------------------------------------------------

    <S>                  <C>
        3.1          Certificate of Incorporation, as amended (Incorporated by Reference to Exhibit 3.1
                     to the Company's Annual Report on Form 10-K for the year ended February 29, 1988)

        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)

        3.3          Certificate of Amendment to Certificate of Incorporation (Incorporated by Reference
                     to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the Quarter ended
                     August 31, 1994)

        4.1          Specimen Common Stock Certificate (Incorporated by Reference as Exhibit 4.1 to the
                     Company's Registration Statement on Form S-1, Registration No. 2-89176).
</TABLE>
<PAGE>

PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K:

(c)    Exhibits (continued):


    EXHIBIT
     NUMBER                                     DESCRIPTION
--------------------------------------------------------------------------------

      10.1        The Registrant's Key Employee Incentive Stock Option Plan, as
                  amended (Incorporated by Reference to the Company's
                  Registration statement on form S-8 Registration No. 33-20661).

      10.2        Agreement between the Company and Trustees relating to the
                  Company's Employee Stock Ownership Plan (Incorporated by
                  Reference to Exhibit 10.5 to the Company's Annual Report on
                  Form 10-K for the year ended February 28, 1987).

      10.3        Note Agreement dated August 15, 1994 between the Company and
                  Massachusetts Mutual Life Insurance Company (Incorporated by
                  Reference to Exhibit 10.1 to the Company's Quarterly Report on
                  Form 10-Q for the quarter ended August 31, 1994).

      10.4        1994 Stock Option Plan (Incorporated by Reference to Exhibit
                  10.3 to the Company's Quarterly Report on Form 10-Q for the
                  quarter ended August 31, 1994).

      10.5        Outside Director Stock Option Plan (Incorporated by Reference
                  to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
                  for the quarter ended August 31, 1994).

      10.6        Agreement dated September 22, 1995 between the Company and
                  Paul Durando (Incorporated by Reference to Exhibit 10.13 to
                  the Company's Quarterly Report on Form 10-Q for the quarter
                  ended August 31, 1995).

      10.7        Employment and Change of Control Agreements dated September
                  13, 1996, between and Company and Irving Lubman. (Incorporated
                  by Reference to Exhibit 10.15 to the Company's Quarterly
                  Report on Form 10Q for the quarter ended August 31, 1996).

      10.8        Employment and Change of Control Agreements dated September
                  13, 1996, between and Company and Arthur Nadata. (Incorporated
                  by Reference to Exhibit 10.16 to the Company's Quarterly
                  Report on Form 10Q for the quarter ended August 31, 1996).

      10.9        Employment and Change of Control Agreements dated September
                  13, 1996, between and Company and Richard Schuster.
                  (Incorporated by Reference to Exhibit 10.17 to the Company's
                  Quarterly Report on Form 10Q for the quarter ended August 31,
                  1996).

     10.10        Revolving Credit Agreement dated May 23, 1997, between the
                  Company and two banks, Mellon Bank, N.A. and KeyBank National
                  Association (incorporated by reference to Exhibit 10.18 to
                  Form 10-K for the year ended February 28, 1997).

     10.11        Indemnity Agreements Dated May 23, 1997 between the Company
                  and Messrs. Blau, Durando, Gardner, Lubman, Nadata and
                  Schuster (incorporated by reference to Exhibit 10.19 to Form
                  10-Q for the quarter ended May 31, 1997)
<PAGE>

PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K:

(d)    Exhibits (continued):

      EXHIBIT
      NUMBER                            DESCRIPTION
    ----------------------------------------------------------------------------

      10.12  First Amendment to Resolving Credit Agreement Dated May 23, 1997,
             between the Company and two banks, Mellon Bank, N.A. and Key Bank
             National Association. (Incorporated by reference to Exhibit 10.20
             to From 10-Q for the quarter ended May 31, 1997)

      10.13  Second Amendment to Revolving Credit Agreement Dated May 23, 1997,
             between the Company and two banks, Mellon Bank, N.A. and Key Bank
             National Association. (Incorporated by reference to Exhibit 10.20
             to Form 10-Q for the quarter ended May 31, 1997)

      11.    Computation of Per Share Earnings

      22.    The following is a list of the Company's subsidiaries:


                                                            State of
                   Name                                   Incorporation
             -------------------------------------      -----------------

             NIC Components Corp.                       New York
             NIC Eurotech Limited                       United Kingdom
             Nu Horizons International Corp.            New York
             Nu Visions Manufacturing, Inc.             Massachusetts
             Nu Horizons/Merit Electronics Corp.        Delaware
             Nu Horizons Eurotech Limited               United Kingdom
             Titan Logistics Corp.                      New York


      23.    Accountant's Consent

      27.    Financial Data Schedule

      99.    Additional Exhibit
<PAGE>

        23.  Accountant's Consent
             --------------------




       We consent to the incorporation by reference in Registration Statement
       numbers 33-11032, 33-20661, 33-88952 and 33-88958 on Form S-8 of our
       opinion dated May 17, 1999 on the consolidated financial statements of Nu
       Horizons Electronics Corp. and subsidiaries included in the Corporation's
       annual report on Form 10-K for the fiscal year ended February 28, 1999.






                                                 /s/ LAZAR LEVINE & FELIX LLP
                                                 ----------------------------
                                                 LAZAR LEVINE & FELIX LLP
                                                 Certified Public Accountants



       New York, New York
       May  26, 1999
<PAGE>

      99.  Additional Exhibit:
           -------------------

        The following undertakings are incorporated by reference into the
      Company's Registration Statements on Form S-8 (Registration Nos. 33-11032,
      22-20661, 33-88952 and 33-88958).

       (a) The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
          made, a post-effective amendment to the registration statement:

              (i) To include any prospectus required by section 10(a) (3) of the
              Securities Act of 1933;

              (ii) To reflect in the prospectus any facts or events arising
              after the effective date of the registration statement (or the
              most recent post-effective amendment thereof) which, individually
              or in the aggregate, represent a fundamental change in the
              information set forth in the registration statement;

              (iii) To include any material information with respect to the plan
              of distribution not previously disclosed in the registration
              statement or any material change to such information in the
              registration statement;

              Provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do
              not apply if the registration statement is on Form S-3 or Form S-
              8, and the information required to be included in a post-effective
              amendment by those paragraphs is contained in periodic reports
              filed by the registrant pursuant to section 13 periodic reports
              filed by the registrant pursuant to section 13 or section 15(d) of
              the Securities Exchange Act of 1934 that are incorporated by
              reference in the registration statement.

          (2) That, for the purpose of determining any liability under the
          Securities Act of 1933, each such post-effective amendment shall be
          deemed to be a new registration statement relating to the securities
          offered therein, and the offering of such securities at that time
          shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
          any of the securities being registered, which remain, unsold at the
          termination of the offering.

       (b) The undersigned registrant hereby undertakes that, for purposes of
       determining any liability under the Securities Act of 1933, each filing
       of the registrant's annual report pursuant to section 13(a) or section
       15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
       filing of an employee benefit plan's annual report pursuant to section
       15(d) of the Securities Exchange Act of 1934) that is incorporated by
       reference in the registration statement shall be deemed to be a new
       registration statement relating to the securities offered therein, and
       the offering of such securities at that time shall be deemed to be the
       initial bona fide offering thereof.
<PAGE>

       99.  Additional Exhibit (Continued):
            ------------------


       (f)     (1) The undersigned registrant hereby undertakes to deliver or
       cause to be delivered with the prospectus to each employee to whom the
       prospectus is sent or given a copy of the registrant's annual report to
       stockholders for its last fiscal year, unless such employee otherwise has
       received a copy of such report, in which case the registrant shall state
       in the prospectus that it will promptly furnish, without charge, a copy
       of such report on written request of the employee.  If the last fiscal
       year of the registrant has ended with 120 days prior to the use of the
       prospectus, the annual report for the fiscal year will be furnished to
       each such employee.

          (2) The undersigned registrant hereby undertakes to transmit or cause
          to be transmitted to all employees participating in the plan who do
          not otherwise receive such material as stockholders of the registrant,
          at the time and in the matter such material is sent to its
          stockholders, copies of all reports, proxy statements and other
          communications distributed to its stockholders generally.

          (3) Where interests in a plan are registered herewith, the undersigned
          registrant and plan hereby undertake to transmit or cause to be
          transmitted promptly, without charge, to any participant annual report
          of the plan filed pursuant to section 15(d) of the Securities Exchange
          Act of 1934 (Form 11-K).  If such report is filed separately on Form
          11-K, such form shall be delivered upon written request.  If such
          report is filed as a part of the registrant's annual report to
          stockholders delivered pursuant to paragraph (1) or (2) of this
          undertaking, additional delivery shall not be required.

          (4) If the registrant is a foreign private issuer, eligible to use
          Form 20-F, then the registrant shall undertake to deliver or cause to
          be delivered with the prospectus to each employee to whom the
          prospectus is sent or given, a copy of the registrant's latest filing
          on Form 20-F in lieu of the annual report to stockholders.

            (i) Insofar as indemnification for liabilities arising under the
            Securities Act of 1933, may be permitted to directors, officers and
            controlling persons of the registrant pursuant to the foregoing
            provisions, or otherwise, the registrant has been advised that in
            the opinion of the Securities and Exchange Commission such
            indemnification is against public policy as expressed in the Act and
            is, therefore, unenforceable.  In the event that a claim for
            indemnification against such liabilities (other than the payment by
            the registrant of expenses incurred or paid by a director, officer
            or controlling person of the registrant in the successful defense of
            any action, suit or proceeding) is asserted by such director,
            officer or controlling person in connection with the securities
            being registered, the registrant will, unless in the opinion of its
            counsel the matter has been settled by controlling precedent, submit
            to a court of appropriate jurisdiction the question whether such
            indemnification by it is against public policy as expressed in the
            act and will be governed by the final adjudication of such issue.
<PAGE>

SCHEDULE II

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------

                     SCHEDULE II--VALUATION AND QUALIFYING
                             ACCOUNTS AND RESERVES

                      Three Years Ended February 28, 1999

<TABLE>
<CAPTION>
                               Balance at             Additions
                               Beginning          charged to costs                                    Balance at end
      Description              of period            and expenses             Deductions (A)              of period
      -----------              ---------            ------------             -------------               ---------
<S>                           <C>                 <C>                      <C>                       <C>

Valuation account
 deducted in the
 balance sheet from
 the asset to which
 it applies:
   Allowance for
   doubtful accounts-
   accounts receivable

          1999                   $2,362,722              $762,500                    $494,238            $2,630,984
                            ===============     =================           =================      ================

          1998                   $2,192,079              $315,000                    $144,357            $2,362,722
                            ===============     =================           =================      ================

          1997                   $1,509,802              $701,500                    $ 19,223            $2,192,079
                            ===============     =================           =================      ================

(A)    Accounts written off.
</TABLE>
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                   NU HORIZONS ELECTRONICS CORP.
                                          (Registrant)

                                By:  /s/ ARTHUR NADATA
                                   -----------------------------------------
                                     Arthur Nadata,
                                     President (Principal Operating Officer)

                                By:  /s/ PAUL DURANDO
                                   -----------------------------------------
                                     Vice President, Finance
                                     (Principal Financial and
                                     Accounting Officer)


Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the date indicated:

<TABLE>
<CAPTION>
               SIGNATURE                     CAPACITY                                   DATE
               ---------                     --------                                   ----
<S>     <C>                                <C>                                     <C>

By:     /s/ IRVING LUBMAN                  Chairman of The Board,                  May  26, 1999
      --------------------------           Chief Operating Officer
        Irving Lubman

By:     /s/ ARTHUR NADATA                  President, Chief Executive              May  26, 1999
      --------------------------           Officer and Director
        Arthur Nadata

By:     /s/ RICHARD SCHUSTER               Vice President, Secretary               May  26, 1999
      --------------------------           and Director
        Richard Schuster

By:     /s/ PAUL DURANDO                   Vice President, Finance,                May  26, 1999
      --------------------------           Treasurer and Director
        Paul Durando

By:     /s/ HARVEY R. BLAU                       Director                          May  26, 1999
      --------------------------
        Harvey R. Blau

By:     /s/ HERBERT M. GARDNER                   Director                          May  26, 1999
      --------------------------
        Herbert M. Gardner

By:     /s/ DOMINIC A. POLIMENI                  Director                          May 26, 1999
      --------------------------
        Dominic A. Polimeni
</TABLE>
<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                        -------------------------------

                                 EXHIBIT INDEX

                                      to

                                   FORM 10-K

                  FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934

                        -------------------------------

                         NU HORIZONS ELECTONICS CORP.

            (Exact Name of Registrant as Specified in Its Charter)


EXHIBIT
NUMBER                                 DESCRIPTION
-----------------------------------------------------------------------------

11                   Computation of Per Share Earnings

27A                  Financial Data Schedule