<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, 2001                              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)

                                (631) 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, 2001.

      Common Stock - Par Value $.0066                    16,501,840
------------------------------------------   -----------------------------------
                 Class                               Outstanding Shares

   Aggregate Market Value of Non-Affiliate Stock at May 1, 2001 - approximately
                                 $154,457,000
--------------------------------------------------------------------------------
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I:
<S>                                                                                          <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 - 9

    ITEM 6.  Selected Financial Data                                                         Page     9

    ITEM 7.  Management's Discussion and Analysis of Financial Condition and
             Results of Operations                                                           Pages    10 - 13

    ITEM 8.  Financial Statements and Supplementary Data                                     Pages    F1 - F18

    ITEM 9.  Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosures                                                           Page     14

PART III:

    ITEM 10.  Directors and Executive Officers of the Company                                 Pages    14 - 15

    ITEM 11.  Executive Compensation                                                          Pages    16 - 27

    ITEM 12.  Security Ownership of Certain Beneficial Owners and Management                  Page     28

    ITEM 13.  Certain Relationships and Related Transactions                                  Page     28

PART IV:

    ITEM 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                Pages    29 - 35

Signatures                                                                                    Page     36

Exhibit Index
</TABLE>

                                                                          Page 2
<PAGE>

PART I.

ITEM 1.  BUSINESS

         GENERAL:

         Except for historical information contained herein, the matters set
         forth herein 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.

               Nu Horizons Electronics Corp. (the "Company") and its wholly-
         owned subsidiaries, NIC Components Corp. ("NIC") , Titan Logistics
         Corp. ("Titan"), Nu Horizons Eurotech Ltd. ("NUE"), Nu Horizons Asia
         PTE. LTD.("NUA"), and its majority owned subsidiaries NIC Components
         Asia PTE. LTD.("NIA") 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, a majority owned subsidiary of
         the Company, is a contract assembler of circuit boards and related
         electromechanical devices for various original equipment manufacturers
         or 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 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 the bulk
         of its 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 3
<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, Pericom, ST Microelectronics, Sun
           Microsystems, TDK Semiconductor and Xilinx among others.

                  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 generally 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 4
<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 $3,000,000 of automated circuit board assembly equipment
        and in fiscal 1999 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, both domestically and abroad: 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
        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, 2001, the Company had approximately 15,000
        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                    WEST COAST
        -------                    ----------

        Arizona - Phoenix          California - Irvine, Los Angeles, Sacramento,
        Colorado - Denver             San Diego and San Jose
        Illinois - Chicago          Oregon - Portland
        Minnesota - Minneapolis     Washington - Redmond
        Texas - Austin and Dallas

        CANADA
        ------

        Montreal
        Ottowa
        Toronto

               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 5
<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 3% of the Company's
        consolidated sales for the year ended February 28, 2001. 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, 2001, there were three manufacturers that
        represented more than 10% of the Company's inventory on a consolidated
        basis. Those suppliers accounted for approximately $57,621,648 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, 2001, the Company purchased
        inventory from two suppliers that was in excess of 10% of the Company's
        total purchases. Purchases from these suppliers were approximately
        $86,317,000 and $86,997,000 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 6
<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 a 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, 2001, the
           Company's backlog was approximately $46,973,000 as compared to a
           backlog of approximately $89,655,000 at May 1, 2000.

           Employees:

                  As of February 28, 2001, the Company employed approximately
           736 persons: 12 in management, 350 in sales and sales support, 34 in
           product and purchasing, 19 in accounting and finance, 21 in MIS, 31
           in operations, 209 in manufacturing, and 60 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 provides 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 7
<PAGE>

ITEM 2. PROPERTIES (Continued):

                  On May 1, 1996, the Company leased approximately 25,000 square
           feet of warehouse and office space for its San Jose, California
           operation. This facility serves as the Company's West Coast regional
           sales and distribution headquarters. The lease term is from May 1,
           2001 to April 30, 2006 at an annual base rental of $540,000.

                On August 1, 2000, the Company leased approximately 10,000
           square feet of office space in Melville, Long Island, New York to
           serve as the executive offices of it's NIC Components subsidiary. The
           lease term is from April 1, 2001 to December 31, 2008 at an annual
           base rental of $285,700 and provides for a 4% annual escalation in
           each subsequent year of the lease.

                  The Company also leases space for thirty two (32) branch sales
           offices which range in size from 1,000 square feet to 7,500 square
           feet, with lease terms that expire between June 2001 and June 2008.
           Annual base rentals range from $20,400 to $199,400 with aggregate
           base rentals approximating $1,680,000. The Company believes it can
           obtain extensions of the leases scheduled to expire in June 2001 on
           substantially similar terms to those currently in effect.

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, 2001 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 adjusted for
                  a 5% stock dividend declared on September 23, 1999 and a
                  3-for-2 stock split declared on September 11, 2000, as
                  reported by the NASDAQ National Market System.
<TABLE>
<CAPTION>
                  FISCAL YEAR 2000:                                    HIGH          LOW
                                                                       ----          ---
                 <S>                                                <C>          <C>
                      First Quarter                                 $  3.97      $   2.50
                      Second Quarter                                   5.55          3.53
                      Third Quarter                                    6.33          4.37
                      Fourth Quarter                                  11.67          5.83

                  FISCAL YEAR 2001:

                      First Quarter                                 $ 16.50      $   9.25
                      Second Quarter                                  22.68         10.67
                      Third Quarter                                   21.25          7.88
                      Fourth Quarter                                  13.37          6.56

                  FISCAL YEAR 2002:
                      First Quarter (Through May 1, 2001)           $ 11.06      $   6.18
</TABLE>

           b)     As of May 1, 2001, the Company's common stock was owned by
                  approximately 400 holders of record and 9,500 beneficial
                  holders.

                                                                          Page 8
<PAGE>

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

               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.

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, 2001           29, 2000          28, 1999           28, 1998           28, 1997
                               --------           --------          --------           --------           --------
<S>                           <C>              <C>                <C>                <C>                 <C>
INCOME STATEMENT
  DATA:

Net Sales                     $670,628,953     $379,238,562        $253,872,325      $233,325,408        $216,612,707
Gross profit on
  sales                        148,009,597       79,240,311          55,036,322        50,794,325          48,488,124
Gross profit
  percentage                          22.1%            20.9%               21.7%             21.8%               22.4%
Income before
   provision for
   income taxes
   and minority
   interests                    61,550,268       20,370,140           7,624,158         8,947,537          11,921,256
Net income                      35,352,085       11,698,786           4,544,831         5,297,991           7,073,560
Earnings per common
share:
Basic                         $       2.18     $        .87        $        .35      $        .41        $        .54

Diluted                       $       1.99     $        .67        $        .29      $        .35        $        .46
<CAPTION>
                               FEBRUARY           FEBRUARY          FEBRUARY           FEBRUARY           FEBRUARY
                               28, 2001           29, 2000          28, 1999           28, 1998           28, 1997
                               --------           --------          --------           --------           --------
<S>                           <C>              <C>                <C>                <C>                 <C>
BALANCE SHEET
  DATA:

Working capital               $197,937,637     $104,048,711         $68,849,897       $75,217,607         $51,941,472
Total assets                   251,059,132      147,537,145          99,758,895        99,641,428          74,783,314
Long-term debt                  85,181,496       38,307,319          22,377,852        32,790,395          15,523,483
Shareholders'
  equity                       124,361,211       75,461,183          56,337,068        51,542,045          46,950,735
</TABLE>

                                                                          Page 9
<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, NIC Components Corp. ("NIC"), Nu Horizons Eurotech
          Limited ("NUE"), Nu Horizons Asia PTE.LTD. ("NUA"), Titan Logistics
          Corp. ("TITAN") and Nu Horizons International Electronics Corp.
          ("International") and its majority owned subsidiaries NIC Components
          Asia PTE.LTD. ("NIA") and NIC Eurotech Limited ("NIE") 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, a majority owned subsidiary of the
          Company, is a contract assembler of circuit boards, harnesses and
          related electromechanical devices for various OEMs.

          The financial information presented herein includes: (i) Balance
          sheets as of February 28, 2001, and February 29, 2000; (ii) Statements
          of income for the twelve month periods ended February 28, 2001,
          February 29, 2000 and February 28, 1999; (iii) Statements of cash
          flows for the twelve month periods ended February 28, 2001, February
          29, 2000 and February 28, 1999; and (iv) Consolidated changes in
          shareholders' equity for the twelve month periods ended February 28,
          2001, February 29, 2000 and February 28, 1999.

          Results of Operations:

          Fiscal Year 2001 versus 2000

          Net sales for the year ended February 28, 2001 aggregated $670,628,953
          as compared to $379,238,562 for the year ended February 29, 2000, an
          increase of approximately 77%. Management attributes this increase in
          sales for the period to the core semiconductor and passive component
          distribution business, which experienced substantially increased
          demand. Management believes that the ability to generate greater
          market penetration to a larger account base coupled with an increased
          focus on fewer product lines, has contributed to the substantial
          increase in sales performance. Toward the latter part of the fourth
          quarter we and the market-place overall began to experience a
          significant decline in demand for electronic components. This reduced
          demand has continued to evidence itself in the first quarter of Fiscal
          2002. Management believes and expects that the current slowdown will
          extend at least through the first half of Fiscal 2002. As a result, we
          expect revenues to continue to soften significantly through the first
          half of Fiscal 2002.

          Gross profit margin as a percentage of net sales was 22.1% for the
          year ended February 28, 2001 as compared to 20.9% for the year ended
          February 29, 2000. This increase in gross margin percentage compared
          to the prior period resulted from a tightened inventory availability
          at the supplier level coupled with continued strong customer demand
          through the third quarter. The Company expects relative margin
          stability at current levels for the foreseeable future, however, no
          assurances can be given in this regard.

          Operating expenses increased by $24,866,957 to $80,899,482 for the
          year ended February 28, 2001 from $56,032,525 for the year ended
          February 29, 2000, an increase of approximately 44%. The dollar
          increase in operating expenses was due to increases in the following
          expense categories: Approximately $16,889,000 or approximately 67% of
          the increases were for personnel related costs -commissions, salaries,
          travel and fringe benefits. The remaining increase of approximately
          $7,978,000 or approximately 32% 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. While operating expenses,
          expressed in dollars, for Fiscal 2001 increased approximately 44% over
          Fiscal 2000, those same expenses, as a percentage of sales dollars,
          decreased from 14.8% for the prior year to 12.1% for the current
          fiscal year. Management is encouraged by the fact that sales volume
          increased at a greater rate than operating expenses, which it believes
          provided the economies of scale that were required to produce an
          enhanced bottom line performance. Management believes that this trend
          may not continue through the next fiscal year.

                                                                         Page 10
<PAGE>

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

          Fiscal Year 2001 versus 2000 (continued)

          Interest expense increased by $2,722,201 from $2,837,646 for the year
          ended February 29, 2000 to $5,559,847 for the year ended February 28,
          2001. This increase was primarily due to the higher average levels of
          bank debt during the year resulting from an increase in the Company's
          inventories and accounts receivable levels needed to support increased
          sales activity coupled with higher interest rates overall.

                                              INTEREST COSTS
                                              FOR THE FISCAL
                                                YEAR ENDED

                                                 February        February
                                                 28, 2001        29, 2000
                                              ----------------------------

                   Revolving Bank Credit      $5,559,847       $2,277,282
                   Sub. Convert. Notes                 0          560,364
                                              ----------------------------
                   Total Interest Expense     $5,559,847       $2,837,646
                                              ============================

          Net income for the year ended February 28, 2001 was $35,352,085 or
          $1.99 per share diluted, as compared to $11,698,786 or $.67 per share
          diluted, for the year ended February 29, 2000. Management attributes
          the increase in earnings to increased sales volume net of higher
          operating expenses for the year ended in 2001 as compared to 2000.

          Results of Operations:

          Fiscal Year 2000 versus 1999

          Net sales for the year ended February 29, 2000 aggregated $379,238,562
          as compared to $253,872,325 for the year ended February 28, 1999, an
          increase of approximately 50%. Management attributes this increase in
          sales for the period entirely to the core semiconductor distribution
          business which experienced substantially increase demand. Management
          believes that the ability to generate greater market penetration to a
          larger account base coupled with an increased focus on fewer product
          lines, contributed to the substantial increase in sales performance.

          Gross profit margin as a percentage of net sales was 20.9% for the
          year ended February 29, 2000 as compared to 21.7% for the year ended
          February 28, 1999. This decrease in gross margin percentage compared
          to the prior period is due to a greater percentage of larger orders
          from larger customers, which require a lower gross margin marketing
          approach on that business, thereby decreasing margins overall.

          Operating expenses increased by $10,861,919 to $56,032,525 for the
          year ended February 29, 2000 from $45,170,606 for the year ended
          February 28, 1999, an increase of approximately 24%. The dollar
          increase in operating expenses was due to increases in the following
          expense categories: Approximately $8,725,000 or approximately 80% of
          the increases were for personnel related costs-commissions, salaries,
          travel and fringe benefits. The remaining increase of approximately
          $2,137,000 or approximately 20% 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. While operating expenses,
          expressed in dollars, for Fiscal 2000 increased approximately 24% over
          the Fiscal 1999 period those same expenses, as a percentage of sales
          dollars, decreased from 17.8% for the prior year to 14.8% for the
          current fiscal year.

                                                                         Page 11
<PAGE>

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

          Fiscal Year 2000 versus 1999 (continued)

          Interest expense increased by $594,485 from $2,243,161 for the year
          ended February 28, 1999 to $2,837,646 for the year ended February 29,
          2000. This increase was primarily due to the higher average levels of
          bank debt during the year resulting from an increase in the Company's
          inventories and accounts receivable levels needed to support increased
          sales activity.



                                              INTEREST COSTS
                                              FOR THE FISCAL
                                                YEAR ENDED

                                                 February        February
                                                 29, 2000        28, 1999
                                              ----------------------------

                 Revolving Bank Credit        $2,277,282       $1,660,794
                 Sub. Convert. Notes             560,364          582,367
                                              ----------------------------
                 Total Interest Expense       $2,837,646       $2,243,161
                                              ============================

          Net income for the year ended February 29, 2000 was $11,698,786 or
          $.67 per share diluted, as compared to $4,544,831 or $.29 per share
          diluted, for the year ended February 28, 1999. Management attributes
          the increase in earnings to increased sales volume net of higher
          operating expenses for the year ended in 2000 as compared to 1999.

          Liquidity and Capital Resources:

          Fiscal Year 2001 versus 2000

          The Company ended its 2001 fiscal year with working capital and cash
          aggregating approximately $197,900,000 and $558,000, respectively at
          February 28, 2001 as compared to approximately $104,049,000 and
          $1,497,000 respectively, at February 29, 2000. The Company's current
          ratio at February 28, 2001, was 5.9:1. The Company believes that its
          financial position at February 28, 2001, will enable it to take
          advantage of any new opportunities that may arise.

          On October 18, 2000, the Company entered into a new unsecured
          revolving line of credit, which currently provides for maximum
          borrowings of $120,000,000 through October 18, 2004 with six banks at
          either (i) the lead bank's prime rate or (ii) LIBOR plus 87.5 to 147.5
          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 October 18, 2004. At February 28, 2001,
          $85,000,000 was outstanding under this line of credit as compared to
          $37,800,000 at February 29, 2000. The Company does not expect a
          fluctuation in interest rates to have a material effect on its
          financial results.

          In a private placement completed on August 31, 1994, the Company
          issued $15 million principal amount of Subordinated Convertible Notes,
          which were due in $5,000,000 increments on August 31, 2000, 2001 and
          2002. The notes were subordinate in right of payment to all existing
          and future senior indebtedness of the Company. The notes bore interest
          at 8.25%, payable quarterly on November 15, February 15, May 15 and
          August 15. The notes were 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 29,
          2000, all of the notes had been converted into 1,705,883 shares of
          common stock.

          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 12
<PAGE>

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

          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 13
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         Independent Auditors' Report

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

     We have audited the accompanying consolidated balance sheets of Nu Horizons
Electronics Corp. and subsidiaries as of February 28, 2001 and February 29,
2000, and the consolidated statements of income, changes in shareholders' equity
and cash flows for the three years in the period ended February 28, 2001.  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 auditing standards generally
accepted in the United States of America.  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 above,
present fairly in all material respects, the financial position of Nu Horizons
Electronics Corp. and subsidiaries at February 28, 2001 and February 29, 2000,
and the results of their operations and their cash flows for each of the three
years in the period ended February 28, 2001 in conformity with accounting
principles generally accepted in the United States of America.


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



New York, New York
May  7, 2001

                                                                        Page F-1
<PAGE>

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

<TABLE>
<CAPTION>
                                   -ASSETS-
                                    ------

                                                                                February                February
CURRENT ASSETS:                                                                 28, 2001                29, 2000
                                                                             -----------------------------------------
<S>                                                                          <C>                        <C>
   Cash                                                                           $    558,176            $  1,496,805
   Accounts receivable - net of allowance for doubtful accounts
      of $5,931,541 and $3,447,072 for 2001 and 2000, respectively                  94,955,532              64,709,037
   Inventories                                                                     135,123,669              69,544,396
   Prepaid expenses and other current assets                                         7,725,014               1,817,718
                                                                             -----------------------------------------
TOTAL CURRENT ASSETS                                                               238,362,391             137,567,956

PROPERTY, PLANT AND EQUIPMENT - NET (Note 3)                                         9,799,151               7,319,138

OTHER ASSETS:
   Costs in excess of net assets acquired - net                                      1,281,560               1,438,484
   Other assets (Note 4)                                                             1,616,030               1,211,567
                                                                             -----------------------------------------
                                                                                  $251,059,132            $147,537,145
                                                                             =========================================

                    -LIABILITIES AND SHAREHOLDERS' EQUITY-
                     ------------------------------------

CURRENT LIABILITIES:
   Accounts payable                                                               $ 31,987,944            $ 20,558,054
   Income taxes payable                                                                      -               3,623,248
   Accrued expenses                                                                  8,436,810               9,337,943
                                                                             -----------------------------------------
TOTAL CURRENT LIABILITIES                                                           40,424,754              33,519,245
                                                                             -----------------------------------------

LONG-TERM LIABILITIES:
   Deferred income taxes (Note 8)                                                      181,496                 507,319
   Revolving credit line (Notes 5)                                                  85,000,000              37,800,000
                                                                             -----------------------------------------
TOTAL LONG-TERM LIABILITIES                                                         85,181,496              38,307,319
                                                                             -----------------------------------------

MINORITY INTEREST (Note 7)                                                           1,091,671                 249,398
                                                                             -----------------------------------------

COMMITMENTS AND CONTINGENCIES (Notes 9, 10 and 11)

SHAREHOLDERS' EQUITY (Note 6):
   Preferred stock, $1 par value, 1,000,000 shares authorized; none
    issued or outstanding                                                                    -                       -
   Common stock, $.0066 par value, 20,000,000 shares authorized;
    16,501,840 and 10,018,652 shares issued and outstanding for 2001
    and 2000, respectively                                                             108,912                  66,122
   Additional paid-in capital                                                       41,798,615              29,455,741
   Retained earnings                                                                81,790,721              46,438,636
   Other accumulated comprehensive income                                              821,807                       -
                                                                             -----------------------------------------
                                                                                   124,520,055              75,960,499
   Less:  loan to ESOP (Note 9)                                                        158,844                 499,316
                                                                             -----------------------------------------
                                                                                   124,361,211              75,461,183
                                                                             -----------------------------------------

                                                                                  $251,059,132            $147,537,145
                                                                             =========================================
</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, 2001                  29, 2000                  28, 1999
                                          -------------------       -------------------       -------------------
<S>                                       <C>                       <C>                       <C>
NET SALES                                        $670,628,953              $379,238,562              $253,872,325
                                          -------------------       -------------------       -------------------

COSTS AND EXPENSES:
  Cost of sales (Note 11)                         522,619,356               299,998,251               198,836,003
  Operating expenses                               80,899,482                56,032,525                45,170,606
  Interest expense                                  5,559,847                 2,837,646                 2,243,161
  Interest income                                           -                         -                    (1,603)
                                          -------------------       -------------------       -------------------
                                                  609,078,685               358,868,422               246,248,167
                                          -------------------       -------------------       -------------------

INCOME BEFORE PROVISION FOR
  INCOME TAXES AND MINORITY INTERESTS
                                                   61,550,268                20,370,140                 7,624,158

  Provision for income taxes (Note 8)              25,354,598                 8,528,909                 3,079,327
                                          -------------------       -------------------       -------------------

INCOME BEFORE MINORITY INTERESTS                   36,195,670                11,841,231                 4,544,831

  Minority interest in earnings of
   subsidiary (Note 7)                                843,585                   142,445                         -
                                          -------------------       -------------------       -------------------

NET INCOME                                       $ 35,352,085              $ 11,698,786              $  4,544,831
                                          ===================       ===================       ===================


EARNINGS PER SHARE:

  Basic                                          $       2.18              $        .87              $        .33
                                          ===================       ===================       ===================

  Diluted                                        $       1.99              $        .67              $        .28
                                          ===================       ===================       ===================
</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>
                                                                                         ACCUMULATED                      TOTAL
                                                            ADDITIONAL                      OTHER           LOAN TO    SHAREHOLDERS'
                                               COMMON        PAID-IN        RETAINED     COMPREHENSIVE       ESOP         EQUITY
                                  SHARES       STOCK         CAPITAL        EARNINGS        INCOME
                              ------------- ----------- ---------------- -------------- --------------- -------------- -------------
<S>                           <C>           <C>         <C>              <C>            <C>             <C>            <C>
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


Stock dividend distributed         437,638       2,888        3,334,102     (3,336,990)              -             -              -
Exercise of stock options            4,388          29           25,844              -               -             -         25,873
Conversion of subordinated
 convertible notes                 823,550       5,435        7,053,565              -               -             -      7,059,000
Repayment from ESOP                      -           -                -              -               -       340,456        340,456
Net income                               -           -                -     11,698,786               -             -     11,698,786
                              ------------- ----------- ---------------- -------------- --------------- -------------- -------------
Balance at February 29, 2000    10,018,652      66,122       29,455,741     46,438,636               -      (499,316)    75,461,183

Three-for-two stock split        5,437,364      35,887          (35,887)             -               -             -              -
Exercise of stock options        1,045,824       6,903        7,310,016              -               -             -      7,316,919
Income tax benefit from stock
 options exercised                       -           -        5,068,745              -               -             -      5,068,745
Repayment from ESOP                      -           -                -              -               -       340,472        340,472
Foreign currency translation             -           -                -              -         821,807             -        821,807
Net income                               -           -                -     35,352,085               -             -     35,352,085
                              ------------- ----------- ---------------- -------------- --------------- -------------- -------------
Balance at February 28, 2001    16,501,840    $108,912      $41,798,615    $81,790,721        $821,807   $  (158,844)  $124,361,211
                              ============= =========== ================ ============== =============== ============== =============
</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, 2001                  29, 2000                  28, 1999
                                                -------------------       -------------------       -------------------
<S>                                               <C>                       <C>                       <C>
INCREASE (DECREASE) IN CASH AND
      CASH EQUIVALENTS:

Cash flows from operating activities:
  Cash received from customers                        $ 637,588,990             $ 355,352,590             $ 248,540,451
  Cash paid to suppliers and employees                 (659,196,422)             (368,622,165)             (236,336,921)
  Interest received                                               -                         -                     1,602
  Interest paid                                          (5,559,847)               (2,837,646)               (2,243,161)
  Income taxes paid                                     (29,847,868)               (4,134,402)               (1,359,716)
                                                      -------------             -------------             -------------
Net cash provided (used) by operating activities        (57,015,147)              (20,241,623)                8,602,255
                                                      -------------             -------------             -------------

Cash flows from investing activities:
  Capital expenditures                                   (4,330,953)               (1,691,765)               (2,031,604)
                                                      -------------             -------------             -------------
Net cash (used) by investing activities                  (4,330,953)               (1,691,765)               (2,031,604)
                                                      -------------             -------------             -------------

Cash flows from financing activities:
  Borrowings under revolving credit line                210,775,000                95,785,000                43,950,000
  Repayments under revolving credit line               (163,575,000)              (72,885,000)              (54,350,000)
  Proceeds from exercise of stock options                12,385,664                    25,873                         -
                                                      -------------             -------------             -------------
Net cash provided (used) by financing activities         59,585,664                22,925,873               (10,400,000)
                                                      -------------             -------------             -------------

Effect of exchange rate changes                             821,807                         -                         -
                                                      -------------             -------------             -------------


Net (decrease) increase in cash and cash
   equivalents                                             (938,629)                  992,485                (3,829,349)
Cash and cash equivalents, beginning of year              1,496,805                   504,320                 4,333,669
                                                      -------------             -------------             -------------

Cash and cash equivalents, end of year                $     558,176             $   1,496,805             $     504,320
                                                      =============             =============             =============
</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, 2001                 29, 2000                  28, 1999
                                               -------------------      -------------------       -------------------
<S>                                              <C>                      <C>                       <C>
RECONCILIATION OF NET INCOME TO
NET CASH FROM OPERATING
ACTIVITIES:

Net income                                            $ 35,352,085             $ 11,698,786               $ 4,544,831
                                                      ------------             ------------               -----------

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

        Depreciation and amortization                    2,007,864                1,660,345                 1,417,509
        Bad debts                                        2,793,468                1,097,338                   762,500
        Contribution to ESOP (compensation)                340,472                  340,456                   250,192
Changes in assets and liabilities:
        (Increase) in accounts receivable              (33,039,963)             (23,885,972)               (5,331,874)
        (Increase) in inventories                      (65,579,273)             (24,430,502)               (1,109,004)
        (Increase) decrease in prepaid
          expenses and other current assets             (5,907,296)                 537,537                 2,481,752
        (Increase) in other assets                        (404,463)                 (72,746)                 (136,095)
        Increase  in accounts payable
          and accrued expenses                          10,528,757                8,852,022                 5,734,987
        (Decrease) in income taxes                      (3,623,248)               3,391,863                         -
         Increase in minority interest                     842,273                  249,398                         -
        (Decrease) increase in deferred taxes             (325,823)                 319,852                   (12,543)
                                                      ------------             ------------               -----------
        Total adjustments                              (92,367,232)             (31,940,409)                4,057,424
                                                      ------------             ------------               -----------

Net cash provided (used) by operating  activities     $(57,015,147)            $(20,241,623)              $ 8,602,255
                                                      ============             ============               ===========
</TABLE>

                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, 2001
                      -----------------------------------

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.


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 International Corp.
      ("International"), Nu Horizons Eurotech ("NUE"), Nu Horizons Asia PTE.LTD.
      ("NUA"), and Titan Logistics Corp. ("Titan") and its majority owned
      subsidiaries, NIC Eurotech Limited ("NIE"), NIC Components Asia PTE. LTD.
      ("NIA") and NuVisions Manufacturing Inc. ("NUV"). All material
      intercompany balances and transactions have been eliminated.

  b.  Use of Estimates:

      In preparing financial statements, in accordance with accounting
      principles generally accepted in the United States of America, 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.  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-7
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

  e.  Inventories:

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

  f.  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.

  g.  Goodwill:

      Costs in excess of net assets acquired are being amortized on a straight-
      line basis over fifteen years. As of February 28, 2001 and February 29,
      2000, accumulated amortization of goodwill aggregated $1,072,314 and
      $915,390 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.  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, 2001 approximates $3,200,000.

                                                                        Page F-8
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

  i.  Revenue Recognition/Shipping and Handling Costs:

      Revenue is recognized when products are shipped to customers. Amounts
      related to shipping and handling that are billed to customers as part of
      sales transactions are reflected as a reduction of operating expenses and
      aggregated $279,181, $203,819 and $123,497 for each of the three years in
      the period ended February 28, 2001. Shipping and handling costs incurred
      by the Company, are included in costs of sales and aggregated $2,454,242,
      $1,313,014 and $1,158,329 for the three years ended February 28, 2001.

  j.  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, 2001, such costs aggregated $1,295,465, $662,646 and
      $909,156, respectively.

  k.  Earnings Per Common Share:

      Basic and diluted earnings per share have been computed in accordance with
      the adoption of SFAS No. 128.

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

                                      2001             2000             1999
                                 --------------   -------------    -------------

       Basic                       16,213,084       13,511,345       13,786,095
       Diluted                     17,746,075       17,547,789       17,753,178

      The number of average shares for each period has been adjusted to reflect
      the 3-for-2 stock split in October, 2000.

  l.  Stock-Based Compensation:

      The Company applies the intrinsic value-based method of accounting
      prescribed by Accounting Principles Board (APB) Opinion No. 25,
      "Accounting for Stock Issued to Employees," and related interpretations,
      in accounting for employee stock options. As such, compensation expense
      would be recorded on the date of grant only if the current market price of
      the underlying stock exceeded the exercise price. Compensation expense
      related to stock options granted to non-employees is accounted for under
      Statement of Financial Accounting Standards (SFAS) No. 123 "Accounting for
      Stock Based Compensation", whereby compensation expense is recognized over
      the vesting period based on the fair value of the options on the date of
      grant.

      In March 2000, the Financial Accounting Standards Board issued FASB
      Interpretation No. 44, "Accounting for Certain Transactions Involving
      Stock Compensation" (FIN 44). FIN 44 provides guidance for issues arising
      in applying APB Opinion No. 25. FIN 44 applies specifically to new awards,
      exchanges of awards in a business combination, modification to outstanding
      awards, and changes in grantee status that occur on or after July 1, 2000,
      except for the provisions related to repricings and the definition of an
      employee which apply to awards issued after December 15, 1998. Application
      of FIN 44 did not have a material effect on the Company's financial
      reporting.

                                                                        Page F-9
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

  m.  Foreign Currency Translation:

      Assets and liabilities of the Company's foreign subsidiaries are
      translated at current exchange rates, while income and expense are
      translated at average rates for the period. Translation gains and losses
      are reported as a component of accumulated other comprehensive income on
      the statement of shareholders' equity in accordance with SFAS No. 130.

  n.  Reclassifications:

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

  o.  New Accounting Pronouncements:

      SFAS No. 131 established new standards for determining operating segments
      and disclosure requirements for those segments, products, geographic
      areas, and major customers. The Company has adopted these new standards.

      In December 1999, the Securities and Exchange Commission (SEC) issued
      Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
      Statements." (SAB No. 101). SAB No. 101 expresses the views of the SEC
      staff in applying generally accepted accounting principles to certain
      revenue recognition issues. Subsequently, SAB Nos. 101A and 101B were
      issued delaying the implementation of SAB No. 101 to the fourth quarter of
      2001. The SAB requires companies to report any changes in revenue
      recognition as a cumulative change in accounting principle at the time of
      implementation in accordance with Accounting Principles Board ("APB")
      Opinion 20, `Accounting Changes". The Company does not believe that the
      adoption of SAB No. 101 will have a material impact on the Company's
      financial position or results of operations.

3.    PROPERTY, PLANT AND EQUIPMENT:

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

<TABLE>
<CAPTION>
                                                                   2001                  2000
                                                            ---------------         ---------------
<S>                                                           <C>                    <C>
             Furniture, fixtures and equipment                  $12,860,026             $ 9,559,507
             Computer equipment                                   5,422,217               4,390,884
             Leasehold improvements                               1,254,364               1,254,364
                                                                -----------             -----------
                                                                 19,536,607              15,204,755
             Less:  accumulated depreciation and amortization     9,737,456               7,885,617
                                                                -----------             -----------
                                                                $ 9,799,151             $ 7,319,138
                                                                ===========             ===========
</TABLE>

      Depreciation expense for the years ended February 28, 2001, February 29,
      2000 and February 28, 1999 aggregated $1,911,654, $1,503,421 and
      $1,260,585, respectively.

4.    OTHER ASSETS:

      Other assets consists of the following:

<TABLE>
<S>                                                             <C>                    <C>
                                                                     2001                   2000
                                                              ---------------        ---------------
             Net cash surrender value - life insurance             $1,155,155             $1,090,004
             Other                                                    460,875                121,563
                                                                   ----------             ----------
                                                                   $1,616,030             $1,211,567
                                                                   ==========             ==========
</TABLE>

                                                                       Page F-10
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------


5.    REVOLVING CREDIT LINE:

      On October 18, 2000, the Company entered into a new unsecured revolving
      line of credit with six banks, which currently provides for maximum
      borrowings of $120,000,000 at either (i) the lead bank's prime rate or
      (ii) LIBOR plus 87.5 to 147.5 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 October 18, 2004.
      Direct borrowings under lines of credit were $85,000,000 and $37,800,000
      at February 28, 2001 and February 29, 2000, respectively. As of the end of
      the fiscal years, the Company had met all of the required covenants.

6.    CAPITAL STOCK AND STOCK OPTIONS:

      On September 13, 2000, the Company's Board of Directors declared a three-
      for -two stock split of the Company's common stock, to be distributed on
      October 23, 2000 to all holders of record at the close of business on
      October 2, 2000. As a result of the stock split, 5,437,364 shares were
      distributed. All shares and per share data for all periods presented have
      been restated to reflect this stock split.

      On September 23, 1999, the Board of Directors approved a 5% stock dividend
      payable on November 4, 1999 to shareholders of record on November 19,
      1999. As a result of the stock dividend, 437,638 shares were distributed,
      common stock was increased by $2,888, additional paid in capital was
      increased by $ 3,334,102 and retained earnings was decreased by
      $3,336,990.

      Stock options granted to date under the Company's 1994 Stock Option Plan
      generally expire five years after date of grant and become exercisable in
      four equal annual installments, respectively, commencing one year from
      date of grant. Stock options granted to date under each of the Company's
      1998 and 2000 Stock Option Plans generally expire ten years after the date
      of grant and become exercisable in two equal annual installments
      commencing one year from date of grant. To date, no options have been
      granted under the Company's 2000 Key Employee Stock Option Plan. Stock
      options granted under the Company's Outside Director Stock Option Plan and
      2000 Outside Directors' 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.

                                                                       Page F-11
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------

6.   CAPITAL STOCK AND STOCK OPTIONS (Continued):

     A summary of options granted and related information for the three years
     ended February 28, 2001 is as follows:

<TABLE>
<CAPTION>

                                                                                                      Weighted Average
                                                                        Options                       Exercise Price
                                                                        ----------                    --------------
<S>                                                                     <C>                           <C>
Outstanding, February 28, 1998                                           1,361,450                        8.20

              Granted                                                      378,000                        5.87
              Cancelled                                                     (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
                                                                                                       =======
              Stock Dividend (5%)                                           98,698                           -
              Granted                                                      833,950                        6.27
              Exercised                                                     (4,388)                       5.90
              Cancelled                                                   (595,500)                       7.69
                                                                   ---------------
Outstanding, February 29, 2000                                           2,067,210                        3.02

Weighted average fair value of options granted during the year                                         $  3.20
                                                                                                       =======

              Stock Split (3-for-2)                                        762,063                           -
              Granted                                                      479,750                       14.62
              Exercised                                                 (1,045,824)                       7.00
              Cancelled                                                    (14,420)                       4.70
                                                                   ---------------
Outstanding February 28, 2001                                            2,248,779                        5.88
                                                                   ===============

Weighted average fair value of options granted during the year                                          ($8.15)
                                                                                                       =======


Options exercisable at the end of each fiscal year:

                    February 28, 1999                                      1,496,925                   $5.37
                    February 29, 2000                                      1,328,770                    5.07
                    February 28, 2001                                        996,890                    4.35
</TABLE>

     Exercise prices for options outstanding as of February 28, 2001 ranged from
     $2.93 to $18.33. The weighted-average remaining contractual life of these
     options is approximately 5 years. Outstanding options at February 28, 2001
     are held by 70 individuals.


                                                                       Page F-12
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                THREE YEARS ENDED FEBRUARY 29, 2000 (CONTINUED)
                -----------------------------------------------

6.   CAPITAL STOCK AND STOCK OPTIONS (Continued):

     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>
                                                                2001               2000              1999
                                                                ----               ----              ----
<S>                                                          <C>                <C>               <C>
     Net earnings:
         As reported                                         $35,352,085        $11,698,786        $4,544,831
         Pro forma                                            34,344,329         11,004,402         4,311,690
     Basic earnings per share:
         As reported                                         $      2.18        $       .87        $      .33
         Pro forma                                           $      2.12        $       .81               .31
     Diluted earnings per share:
         As reported                                         $      1.99        $       .67        $      .28
         Pro forma                                           $      1.94                .63               .24
</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 2001, 2000 and 1999, respectively: expected
     volatility of 49.8%, 51.7%, and 45.3%, respectively; risk free interest
     rate of 5.5%, 5.9%, and 6.0% for 2001, 2000 and 1999, respectively; and
     expected lives of 1 to 10 years.

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


7.   MINORITY INTEREST IN SUBSIDIARY:

     Represents the liability related to the 30% minority interest in NIC
     Components Asia PTE.LTD., the 20% minority interest in NIC Eurotech Limited
     and the 5% minority interest in NuVisions Manufacturing Inc.


8.   INCOME TAXES:

     The provision for income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                   2001                 2000                   1999
                                                   ----                 ----                   ----
<S>                                             <C>                   <C>                   <C>
     Current:
         Federal                                $18,126,841           $6,639,410             $2,523,535
         State and local                          4,439,382            1,801,032                680,931
         Foreign                                  1,022,644                    -                      -
     Deferred:
         Federal                                  1,390,836               69,889                (64,760)
         State                                      374,895               18,578                (60,379)
                                                -----------           ----------             ----------
                                                $25,354,598           $8,528,909             $3,079,327
                                                ===========           ==========             ==========
</TABLE>

                                                                       Page F-13
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------

8.   INCOME TAXES (Continued):

     The tax benefits associated with the disqualifying disposition of stock
     acquired with incentive stock options reduced taxes currently payable as
     shown above by $5,068,745 for 2001. Such benefits are credited to
     additional paid-in capital.

     The components of the net deferred income tax liability, pursuant to SFAS
     109, are as follows:

<TABLE>
<CAPTION>
                                                                        2001                       2000
                                                                        ----                       ----
<S>                                                                  <C>                        <C>
     Deferred tax assets:
         Accounts receivable                                         $ 2,139,409                $   684,060
         Inventory                                                       289,416                    205,920
                                                                    ------------               ------------
         Total deferred tax assets                                     2,428,825                    889,980
                                                                    ------------               ------------

     Deferred tax liabilities:
         Fixed assets                                                 (1,680,000)                  (877,605)
         Income of Interest Charge DISC                                 (930,321)                  (519,694)
                                                                    ------------               ------------
         Total deferred tax liabilities                               (2,610,321)                (1,397,299)
                                                                    ------------               ------------

     Net deferred tax liabilities                                    $  (181,496)               $  (507,319)
                                                                    ============               ============
</TABLE>

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

<TABLE>
<CAPTION>
                                                                 2001                2000                 1999
                                                                 ----                ----                 ----
<S>                                                              <C>                 <C>                  <C>
     Statutory rate                                              35.0%               35.0%                35.0%
     State and local taxes                                        8.6                 8.9                  8.1
     Foreign and other                                           (2.4)               (2.0)                (2.7)
                                                                 ----                ----                 ----

     Effective tax rate                                           412%               41.9%                40.4%
                                                                 ====                ====                 ====
</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, 2001 aggregated $340,464 for 2001, $340,456 for 2000 and $250,197 for
     1999. At February 28, 2001 the ESOP owned 602,130 shares of the Company's
     common stock at an average price of approximately $2.40 per share.

                                                                       Page F-14
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------


9.   EMPLOYEE BENEFIT PLANS (Continued):

     On October 28, 1999, 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 28, 2003.
     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, 2001, 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, 2001 were $117,968,
     $115,401 and $114,216, respectively.


10.  COMMITMENTS:

     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 specified 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.

     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 provides 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, and other provisions. Aggregate minimum rental
     commitments under noncancelable operating leases are as follows:


          Fiscal 2002             $3,206,281
          Fiscal 2003              3,030,174
          Fiscal 2004              2,844,794
          Fiscal 2005              2,624,201
          Fiscal 2006              1,633,366
          Thereafter               3,399,091

     Rent expense was $2,464,878, $2,175,834, and $1,837,330 for each of the
     prior three years in the period ending February 28, 2001.


                                                                       Page F-15
<PAGE>

                NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                ----------------------------------------------
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
                      THREE YEARS ENDED FEBRUARY 28, 2001
                      -----------------------------------

11.  MAJOR SUPPLIERS:

     For the year ended February 28, 2001, the Company purchased inventory from
     two suppliers that was in excess of 10% of the Company's total purchases.
     Purchases from these suppliers were approximately $86,997,000 and
     $86,317,000 for the fiscal year.

     For the year ended February 29, 2000 the Company purchased inventory from
     two suppliers that was in excess of 10% of the Company's total purchases.
     Purchases from these suppliers were approximately $49,816,000 and
     $57,230,000  for the fiscal year.

     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.


12.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION:

     The Company's operations have been classified into two business segments in
     accordance with SFAS 131 "Disclosure About Segments of on Enterprise and
     Related Information": 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 2001, 2000
     and 1999 is as follows:

<TABLE>
<CAPTION>
                                                                     2001               2000               1999

     Net sales from external customers:
     <S>                                                         <C>                <C>                <C>
          Electronic Component Distribution                      $634,009,475       $364,069,937       $243,514,672
          Industrial Contract Manufacturing                        36,619,478         15,168,625         10,357,653
                                                                 --------------------------------------------------
                                                                 $670,628,953       $379,238,562       $253,872,325
                                                                 --------------------------------------------------

     Operating income:
          Electronic Component Distribution                      $ 63,376,114       $ 22,383,840       $  9,210,235
          Industrial Contract Manufacturing                         3,734,001            823,946            655,481
                                                                 --------------------------------------------------
                                                                 $ 67,110,115       $ 23,207,786       $  9,865,716
                                                                 --------------------------------------------------

     Total assets:
          Electronic Component Distribution                      $223,270,770       $136,625,267       $ 94,340,725
          Industrial Contract Manufacturing                        27,788,362         10,911,878          5,418,170
                                                                 --------------------------------------------------
                                                                 $251,059,132       $147,537,145       $ 99,758,895
                                                                 --------------------------------------------------

     Depreciation and amortization:
          Electronic Component Distribution                      $  1,292,964       $  1,183,185       $  1,116,850
          Industrial Contract Manufacturing                           714,900            477,160            300,659
                                                                 --------------------------------------------------
                                                                 $  2,007,864       $  1,660,345       $  1,417,509
                                                                 --------------------------------------------------

     Capital expenditures:
          Electronic Component Distribution                      $  2,036,581       $  1,059,381       $  1,133,014
          Industrial Contract Manufacturing                         2,294,372            632,384            898,590
                                                                 --------------------------------------------------
                                                                 $  4,330,953       $  1,691,765       $  2,031,604
                                                                 --------------------------------------------------
</TABLE>

                                                                       Page F-16
<PAGE>

                 NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
                 ----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                THREE YEARS ENDED FEBRUARY 29, 2000 (CONTINUED)
                -----------------------------------------------


12.  BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION (Continued):

     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, 2001, is not
     considered material to the financial statements.


14.  SELECTED QUARTERLY FINANCIAL DATA (Unaudited):

<TABLE>
<CAPTION>
                                                                THREE MONTH PERIOD ENDED
                                                --------------------------------------------------------
                                                  FEBRUARY       NOVEMBER        AUGUST          MAY
                                                  28, 2001       30, 2000       31, 2000       31, 2000
                                               ------------   ------------   ------------   ------------
<S>                                            <C>            <C>            <C>            <C>
Net sales                                      $153,452,194   $190,492,283   $179,145,177   $147,539,299
                                               ------------   ------------   ------------   ------------

Cost of sales                                   117,749,603    149,410,886    140,272,953    115,185,914
                                               ------------   ------------   ------------   ------------

Operating and interest expenses                  23,610,971     21,714,103     20,841,218     20,293,037

Provision for income taxes                        4,934,295      8,037,427      7,901,231      4,481,645
                                               ------------   ------------   ------------   ------------

Net income                                     $  6,844,704   $ 11,045,899   $ 10,036,675   $  7,424,807
                                               ============   ============   ============   ============

Basic earnings per share                       $        .41   $        .67   $        .63   $        .48
                                               ============   ============   ============   ============

Weighted average number of common
 and common equivalent shares
 outstanding                                     16,501,860     16,479,565     15,924,308     15,568,881
                                               ============   ============   ============   ============
</TABLE>

<TABLE>
<CAPTION>
                                                                    THREE MONTH PERIOD ENDED
                                               ---------------------------------------------------------
                                                 FEBRUARY       NOVEMBER        AUGUST          MAY
                                                 29, 2000       30, 1999       31, 1999       31, 1999
                                               ------------   ------------   ------------   ------------
<S>                                            <C>            <C>            <C>            <C>
Net sales                                      $115,402,898   $100,822,657   $ 88,871,395   $ 74,141,612
                                               ------------   ------------   ------------   ------------

Cost of sales                                    90,004,959     79,918,457     70,907,363     59,167,472
                                               ------------   ------------   ------------   ------------

Operating and interest expenses                  17,206,496     15,038,122     14,218,696     12,406,857
                                               ------------   ------------   ------------   ------------

Provision for income taxes                        3,685,827      2,267,059      1,535,587      1,040,436
                                               ------------   ------------   ------------   ------------

Net income                                     $  4,585,740   $  3,376,450   $  2,209,749   $  1,526,847
                                               ============   ============   ============   ============

Basic earnings per share                               $.34           $.25           $.17           $.12
                                               ============   ============   ============   ============

Weighted average number of common
 and common equivalent shares
 outstanding                                     13,511,345     13,349,220     13,129,614     13,129,614
                                               ============   ============   ============   ============
</TABLE>

                                                                       Page F-17

<PAGE>

REPORT OF MANAGEMENT

The management of Nu Horizons Electronics Corp. is responsible for the
preparation of the consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America 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-18
<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, 2001.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY:

<TABLE>
<CAPTION>
               NAME                  AGE         POSITION
               ----                  ---         --------
          <S>                       <C>       <C>
          Irving Lubman              62       Chief Operating Officer and Chairman of the Board

          Arthur Nadata              55       President, Chief Executive Officer and Director

          Richard S. Schuster        52       Vice-President, Secretary and Director

          Paul Durando               57       Vice President - Finance, Treasurer and Director

          Harvey R. Blau             65       Director

          Herbert M. Gardner         66       Director

          Dominic A. Polimeni        54       Director

          David Siegel               75       Director
</TABLE>

          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.

               Class I                 Class II                   Class III
         (To Serve Until the      (To Serve Until the       (To Serve Until the
          Annual Meeting of       Annual Meeting of         Annual Meeting of
        Stockholders in 2003)    Stockholders in 2001)     Stockholders in 2002)
        ---------------------    ---------------------     ---------------------
            Paul Durando            Harvey Blau (1)            Irving Lubman
         Herbert Gardner (1)      Dominic A. Polimeni (1)       Arthur Nadata
            David Siegel           Richard S. Schuster

     (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 14
<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 LLC., 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.,
     Co-Active Marketing Group, Inc. and Rumson-Fair Haven Bank and Trust
     Company.

         Dominic A. Polimeni has been a Director of the Company since September
     1997. Mr. Polimeni is Chairman and Chief Executive Officer of Questron
     Technology, Inc. and has over 25 years experience in the distribution and
     Inventory Logistics Management ("ILM") businesses. 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. (over $12.9 billion in sales in 2000) from 1986 to 1991
     and has been responsible for evaluating and negotiating over 50
     acquisitions of distribution and ILM businesses. He also held several other
     positions, including general management positions, with Arrow over an eight
     year period. Mr. Polimeni began his career as a certified public
     accountant, becoming a partner in the New York office of Arthur Young &
     Company.

         David Siegel has been a director since June 2000. For more than the
     past five years Mr. Siegel has been a Vice President and director of Great
     American Electronics, a distribution company, which he founded. Mr. Siegel
     is also a director of Kent Electronics Corp., Micronetics Corp. and Surge
     Components Corp. Mr. Siegel previously served on our Board of Directors
     from September 1991 to October 1996.

                                                                         Page 15
<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, 2001, February 29, 2000 and February 28, 1999.

                          SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                Long Term
                                   Annual Compensation (1)                    Compensation
                                   -----------------------                    ------------
                                                                     Securities
       Name of Principal       Fiscal                                Underlying     All other (3)
         and Position           Year         Salary       Bonus      Options (2)    Compensation
     --------------------       ----         ------       -----      -----------    ------------
     <S>                       <C>          <C>         <C>          <C>            <C>
     Irving Lubman              2001         $258,700   $1,560,860        82,500       $40,415
     COO, Chairman              2000          251,210      520,087       336,498        39,500
     of the Board               1999          243,893      196,102       112,500        21,552

     Arthur Nadata              2001         $258,700   $2,229,791       112,500       $37,910
     President and              2000          251,210      742,983       375,875        39,047
     CEO                        1999          243,893      280,146       150,000        20,514

     Richard Schuster           2001         $258,700   $2,229,791        97,500       $35,724
     Vice President             2000          251,210      742,983       336,498        34,432
     and Secretary and          1999          243,893      280,146       112,500        18,330
     President, NIC
     Components Corp.

     Paul Durando               2001         $180,000   $  187,400        15,000       $ 1,800
     Vice President,            2000          155,000       80,724        35,438         1,550
     Finance and                1999          150,000       31,011        15,000         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) Number of shares have been adjusted to reflect the Company's 3-for-2
         stock split in October 2000.

     (3) 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 16
<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, 2001.

                    OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                   % of Total                                     Potential Realizable Value
                                     Options        Exercise                      at Assumed Annual Rates of
                     Options       Granted to        Price(1)     Expiration     Stock Price Appreciation for
                   Granted (1)      Employees    ($ per share)       Date            Entire Term (2) (3)
                   -----------     ---------     -------------       ----       -----------------------------
                                                                                    5%              10%
                                                                                    --              ---
<S>                <C>             <C>           <C>              <C>           <C>            <C>
P. Durando              15,000        1.8%          $10.71         4/24/10        $101,100     $   257,700

I. Lubman               82,500       14.6%           10.71         4/24/10         556,050       1,417,350

A. Nadata              112,500       19.9%           10.71         4/24/10         758,250       1,932,750

R. Schuster             97,500       17.3%           10.71         4/24/10         657,150       1,675,050
</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. Options Granted and Exercise Price have been adjusted for a 3-
           for-2 stock split declared in September, 2000 and paid on October 23,
           2000.

     (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 $17.45 per share and 10% results in a price of $27.78
           per share for on the shares granted at $10.71. 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 17
<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, 2001 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              243,167               $3,989,490            199,145           $1,231,347
                                                                                 242,938            1,185,121

          Arthur Nadata              195,667               $3,316,397            290,083            1,560,889
                                                                                 243,249            1,058,324

          Richard Schuster           195,666               $3,322,438            249,709            1,394,346
                                                                                 233,249            1,058,324

          Paul Durando                76,126               $1,489,315                  -                    -
                                                                                  38,624              140,917
</TABLE>

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

                                                                         Page 18
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (Continued):

          Directors who are not employees of the Company receive an annual fee
          of $3,000 for Board Membership and $500 for each Board of Directors or
          Committee meeting attended. There were seven meetings of the Board of
          Directors and two meetings of the Compensation Committee during the
          fiscal year ended February 28, 2001. Three directors attended or
          participated in all of the meetings of the Board of Directors, four
          directors attended six meetings and one director attended five. All
          three directors, who are members of the compensation committee,
          attended or participated in all of the meetings of the Compensation
          Committee.

          For the fiscal year ended February 28, 2001, 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
          2001, 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 2001 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 2001 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 19
<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 2001, 15,000 options were granted to each outside
          director under the Company's 2000 Outside Directors' Stock Option
          Plan. Options to purchase 112,500 shares were granted to Mr. Nadata,
          82,500 shares were granted to Mr. Lubman, 97,500 shares to Mr.
          Schuster and 15,000 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 20
<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 2001.

                         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, 1996 to February 28, 2001) 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 CUMULATIVE 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 Corp.            Market Index                Peer Group
-------------------------------------------------------------------------------------------------------------
<S>                              <C>                          <C>                         <C>
        FYB 3/01/96                   $100.00                    $100.00                    $100.00
        FYE 2/28/97                     59.20                     120.03                     113.52
        FYE 2/28/98                     40.40                     163.24                     121.45
        FYE 2/28/99                     28.00                     210.94                      63.07
        FYE 2/29/00                    114.71                     409.77                     125.91
        FYE 2/28/01                    103.31                     191.78                      99.77
</TABLE>

                    ASSUMES $100 INVESTED ON MARCH 1, 1996
                          ASSUMES DIVIDEND REINVESTED
                     FISCAL YEAR ENDING FEBRUARY 28, 2001

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

                                                                         Page 21
<PAGE>

     EXECUTIVE COMPENSATION (Continued):

     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 1,732,500 shares of the
     Company's Common Stock, as adjusted for a 5% stock dividend and a three for
     two stock split. 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 2001, 434,250 options
     were granted under the 1994 Plan with an exercise price of $10.71. Options
     are currently outstanding for 629,982 shares and no options are currently
     available for grant.

        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.

                                                                         Page 22
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (Continued):

          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"),
              as amended, under which any director, officer, employee or
              consultant of the Company, a subsidiary or an affiliate may be
              granted options to purchase an aggregate 1,653,750 shares of the
              Company's Common Stock, as adjusted for a 5% dividend and a three
              for two stock split. The 1998 Option Plan may be administered by
              the Board of Directors of the Company or by a committee consisting
              of two or more non-employee Directors, as defined by Rule 16b
              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 also,
              subject to the express provisions of the 1998 Option Plan, has 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
              2001, 7,500 options were granted under the 1998 Option Plan with
              an exercise price of $8.83. Options are currently outstanding for
              1,344,397 shares and 32,409 options are currently available for
              grant.

              2000 Stock Option Plan:

                    In July 2000, the Board of Directors adopted the Nu Horizons
              Electronics Corp. 2000 Stock Option Plan, under which any of the
              Company's employees or consultants, or those of its subsidiaries
              or affiliates, may be granted options to purchase an aggregate
              300,000 shares of our common stock, as adjusted for a three for
              two stock split. The Company's executive officers and directors
              are not eligible to participate in the 2000 Option Plan. The 2000
              Option Plan may be administered by the Board of Directors or a
              committee consisting of two or more Non-Employee Directors, as
              defined by Rule 16(b) of the Securities Exchange Act of 1934. The
              Compensation Committee administers the 2000 Option Plan. Subject
              to the terms of the 2000 Option Plan, the Board of Directors or
              the Committee may determine and designate those employees and
              consultants who are to be granted stock options under the 2000
              Option Plan , 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 or the Committee also,
              subject to the express provisions of the 2000 Option Plan, has the
              authority to interpret the 2000 Option Plan and to prescribe,
              amend and rescind the rules and regulations relating to the 2000
              Option Plan. Only non-qualified stock options may be granted under
              the terms of the 2000 Option Plan. The exercise price for the
              options granted under the 2000 Option Plan will not be less than
              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
              2001 130,250 options were granted under the plan with exercise
              prices of $18.33, $14.62 and $9.88 and 169,750 options remain
              available for grant.

              2000 Key Employee Stock Option Plan:

                    In November 2000, the Company's stockholders approved the
              2000 Key Employee Stock Option Plan (the "2000 Key Employee Plan")
              under which key employees and officers of the Company, its
              subsidiaries and affiliates may be granted options to purchase an
              aggregate of 600,000 shares of the Company's Common Stock, as
              adjusted for a three for two stock split. The 2000 Key Employee
              Plan may be administered by the Board of Directors or a
              compensation committee, consisting of two or more members of the
              Board of Directors who are Non-Employee Directors, as defined by
              Rule 16(b) of the Securities Exchange Act of 1934. Our
              Compensation Committee administers the 2000 Key Employee Plan.
              Subject to the terms of the 2000 Key Employee Plan, the Board of
              Directors or the Committee may determine and designate those
              employees and consultants who are to be granted stock options
              under the 2000 Key Employee 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 or the
              Committee shall also, subject to the express provisions of the
              2000 Key Employee Plan, have the authority to interpret the 2000
                                                                         Page 23
<PAGE>

          Key Employee Plan and to prescribe, amend and rescind the rules and
          regulations relating to the 2000 Key Employee Plan. Only non-qualified
          stock options may be granted under the terms of the 2000 Key Employee
          Plan. The exercise price for the options granted under the 2000 Key
          Employee Plan will not be less than 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 our capital. During fiscal 2001 no
          options were granted under the plan and 600,000 options remain
          available for grant.

          Outside Director Stock Option Plan:

               In September 1994, the Company's stockholders approved the
          Outside Directors Stock Option Plan (the "Director Plan") which covers
          236,250 shares of the Company's Common Stock, as adjusted for a 5%
          stock dividend and a three for two stock split. 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. At
          February 28, 2001, there are 84,150 director options outstanding and
          no options remain available for grant.

               All directors of the Company who are not employees of the Company
          were eligible to participate in the Director Plan.

               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 each non-employee Director then serving
          received, on June 1 of each year from 1994 through 1999, 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.

                                                                         Page 24
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (Continued):

          2000 Outside Directors' Stock Option Plan:

             In November 2000, the Company's stockholders approved the 2000
          Outside Directors' Stock Option Plan (the "2000 Director Plan") which
          covers 210,000 shares of the Company's Common Stock, as adjusted for a
          three for two stock split. The primary purposes of the 2000 Director
          Plan are to attract and retain highly skilled individuals as directors
          of the Company, to provide additional incentive to such outside
          directors to serve as directors and to encourage their continued
          service on the Board of Directors. At February 28, 2001, there are
          60,000 director options outstanding and 150,000 options remain
          available for grant.

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

               The Board of Directors has the responsibility and authority to
          administer and interpret the provisions of the 2000 Director Plan. The
          Board of Directors of the Company may at any time amend, suspend or
          discontinue the 2000 Director Plan but no such action shall adversely
          affect any outstanding option, however, without the consent of the
          optionee that holds such option. 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 of the Company, the number
          of shares covered by each outstanding option, the number of shares
          authorized under the 2000 Director Plan as well as the exercise price
          of each outstanding option shall be appropriately adjusted.

               Under the Director Plan, on November 9, 2000 each non-employee
          Director then serving received options to purchase 15,000 shares of
          Common Stock at a price of $14.62 per share (the price of shares of
          Common Stock on November 9, 2000) and on the June 1 of each subsequent
          year each non-employee director then serving has or will be granted
          options to purchase 15,000 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.

                                                                         Page 25
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (Continued):

          Summary of Fiscal 2001 Stock Option Grants:

             During fiscal 2001, the Company granted options to purchase 112,500
          shares to Mr. Nadata, 97,500 shares to Mr. Schuster, 82,500 shares to
          Mr. Lubman and 15,000 shares to Mr. Durando at a price of $10.71 per
          share, options to purchase 15,000 shares to each of Messrs. Blau,
          Gardner, Polimeni and Siegel at a price of $14.62 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 Internal Revenue 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.

               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 October, 1999, 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
          October, 2003. 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, 2001, there were
          no amounts outstanding under this line of credit. At February 28,
          2001, the ESOP owned 602,130 shares at an average price of
          approximately $2.40 per share.

                                                                         Page 26
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION (Continued):

          401(k) Savings Plan

               The Company sponsors a retirement plan intended to be qualified
          under Section 401(k) of the Internal Revenue 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 ($10,500 in calendar 2000). Company contributions are
          discretionary. Effective with the plan year ended February 28, 2001,
          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, 2001 approximately 250 employees had elected to participate in the
          plan. For the fiscal year ended February 28, 2001, the Company
          contributed approximately $117,968 to the plan, of which $9,561 was a
          matching contribution of $2,587 for each of Mr. Lubman, Mr. Nadata,
          Mr. Schuster and $1,800 for Mr. Durando.

                                                                         Page 27
<PAGE>

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

         The following table sets forth, as of May 1, 2001, 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 solely 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                                                     34,398 (1)(2)               *
      Herbert M. Gardner                                              115,781 (3)                  *
      Harvey R. Blau                                                    5,642 (3)                  *
      Dominic Polimeni                                                  9,650 (3)                  *
      David Siegel                                                     21,804 (3)                  *
      Irving Lubman                                                   475,247 (4)(5)             2.8%
      Arthur Nadata                                                   887,385 (4)(5)             5.2%
      Richard S. Schuster                                             901,310 (4)(5)             5.3%
      Merrill Lynch Investment Managers                             1,785,860 (6)               10.8%
      All officers and directors as a group (8 persons)             2,451,217                   13.7%
</TABLE>

NOTES:
-----
(*)  Less than 1% of the Company's outstanding stock.
(1)  Includes options exercisable within 60 days for 25,218 shares of Common
     Stock under the Company's 1998 Stock Option Plan and the 1994 Stock Option
     Plan.
(2)  Includes 9,180 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 84,500 shares of common
     stock for Mr. Gardner, 5000 for Mr. Blau , 9,650 shares for Mr. Polimeni
     and 5,000 shares for Mr. Siegel under the Company's Outside Director Stock
     Option Plan.
(4)  Includes options exercisable within 60 days for 400,833 shares of common
     stock for Mr. Lubman, 434,208 for Mr. Schuster and 477,082 shares for Mr.
     Nadata under the Company's 1998 Stock Option Plan and the 1994 Stock Option
     Plan.
(5)  Includes 24,743 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)  World Fin. Ctr., North Tower, 250 Vessey St., N.Y., N.Y. 10381


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, 2001, the Company paid $166,513 in legal fees to
     Blau, Kramer, Wactlar & Lieberman, P.C.

         For the fiscal year ended February 28, 2001, the Company received an
     aggregate $493,000 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, 2001, the Company received an
     aggregate $1,005,000 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 28
<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, 2001 and February 29, 2000                F-2

           Consolidated Statements of Income for the three years in the period ended February
           28, 2001                                                                                 F-3

           Consolidated Statements of Changes in Shareholders' Equity for the three years in
           the period ended February 28, 2001                                                       F-4

           Consolidated Statements of Cash Flows for the three years in the period ended
           February 28, 2001                                                                        F-5

           Notes to Consolidated Financial Statements                                               F-7

           Schedule II - Valuation and Qualifying Accounts and Reserves                             35
</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

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

     3.1       Certificate of Incorporation, as amended(Incorporated by
               Reference to Exhibit 3.1 to the Company's Quarterly Report on
               Form 10-Q for the Quarter ended November 30, 2000).

     3.2       By-laws, as amended (Incorporated by Reference to Exhibit 3.2 to
               the Company's Annual Report on Form 10-K for the year ended
               February 29, 1988)

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

    10.1       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).

                                                                         Page 29
<PAGE>

PART IV.

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

   (c) Exhibits (continued):

        EXHIBIT
        NUMBER                          DESCRIPTION
        ------------------------------------------------------------------------
         10.2      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).

         10.3      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).

         10.4      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).

         10.5      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).

         10.6      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).

         10.7      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).

         10.8      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).

         10.9      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)

         10.10     Revolving Credit Agreement dated October 18,2000 between the
                   Company and six banks: Mellon Bank, N.A., European American
                   Bank, HSBC Bank USA, Fleet Bank, The Chase Manhattan Bank and
                   The Bank of New York (Incorporated by reference to Exhibit
                   10.13 to form 10Q for the quarter ended November 30,2000).

         10.11     1998 Stock Option Plan, as amended (Incorporated by reference
                   to Exhibit 4.1 to the Company's Registration Statement on
                   Form S-8, No.333-82805).

         10.12     2000 Stock Option Plan (Incorporated by reference to Exhibit
                   4.1 to the Company's Registration Statement on Form S-8,
                   No.333-51188).

         10.13     2000 Key Employee Stock Option Plan (Incorporated by
                   reference to Exhibit 4.1 to the Company's Registration
                   Statement on Form S-8 No. 333-51192).

         10.14     2000 Outside Directors' Stock Option Plan (Incorporated by
                   reference to Exhibit 4.1 to the Company's Registration
                   Statement on Form S-8 No.333-51190).

                                                                         Page 30
<PAGE>

PART IV.

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

   (d) Exhibits (continued):

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

            11.    Computation of Per Share Earnings

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




                                                             State or
                                     Name                   Country of
                                                           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
                   NIC Components Asia PTE.LTD.           Singapore
                   Nu Horizons Asia PTE.LTD.              Singapore


            23.    Accountant's Consent

            99.    Additional Exhibit

                                                                         Page 31
<PAGE>

      Accountant's Consent
      --------------------

We consent to the incorporation by reference in Registration Statement numbers
333-79561, 333-82805, 33-88952, 33-88958, 333-51188, 333-51190 and 333-51192 on
Form S-8 of our opinion dated May 7, 2001 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,
2001.

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

New York, New York
May 24, 2001

                                                                         Page 32
<PAGE>

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

  The following undertakings are incorporated by reference into the Company's
Registration Statements on Form S-8 (Registration Nos. 33-88952, 33-88958, 333-
79561, 333-82805, 333-51188, 333-51190 and 333-51192).

  (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 33
<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 34
<PAGE>

SCHEDULE II

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

                     SCHEDULE II--VALUATION AND QUALIFYING
                             ACCOUNTS AND RESERVES

                      Three Years Ended February 28, 2001

<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

        2001               $3,447,072       $2,793,468         $308,999       $5,931,541
                          =============   ===============    ============   ==============

        2000               $2,630,984       $1,097,338         $281,250       $3,447,072
                          =============   ===============    ============   ==============

        1999               $2,362,722       $  762,500         $494,238       $2,630,984
                          =============   ===============    ============   ==============
</TABLE>


(A) Accounts written off.

                                                                         Page 35
<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:

    SIGNATURE                                CAPACITY                   DATE
    ---------                                --------                   ----

By: /s/ IRVING LUBMAN                 Chairman of The Board,       May  24, 2001
    --------------------------
        Irving Lubman                  Chief Operating Officer

By: /s/ ARTHUR NADATA                 President, Chief Executive   May  24, 2001
    --------------------------
        Arthur Nadata                  Officer and Director

By: /s/ RICHARD SCHUSTER              Vice President, Secretary    May  24, 2001
    --------------------------
        Richard Schuster               and Director

By: /s/ PAUL DURANDO                  Vice President, Finance,     May  24, 2001
    --------------------------
        Paul Durando                   Treasurer and Director

By: /s/ HARVEY R. BLAU                       Director              May  24, 2001
    --------------------------
        Harvey R. Blau

By: /s/ HERBERT M. GARDNER                   Director              May  24, 2001
    --------------------------
        Herbert M. Gardner

By: /s/ DOMINIC A. POLIMENI                  Director              May 24, 2001
    --------------------------
        Dominic A. Polimeni

By: /s/ DAVID SIEGEL                         Director              May 24, 2001
    --------------------------
        David  Siegel

                                                                         Page 36
<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

                                 _____________

                                 EXHIBIT INDEX

                                      to

                                   FORM 10-K

                  FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2001

                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