SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended November 30, 1993
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from
__________ to ___________
Commission file number 1-5441
MARSHALL INDUSTRIES
(Exact name of registrant as specified in its charter)
California 95-2048764
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9320 Telstar Avenue, El Monte, California 91731-2895
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,including area code
(818) 307-6000
Common Stock outstanding by class as of November 30, 1993:
Common Stock 8,604,682 shares
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
Total Number of Pages: 12
MARSHALL INDUSTRIES
CONDENSED BALANCE SHEETS
(000's Omitted)
ASSETS
November 30, May 31,
1993 1993
Current Assets:
Cash $ 1,333 $ 1,583
Receivables - net 103,540 101,120
Inventories 166,935 163,280
Deferred income tax benefits 7,681 7,681
Prepaid expenses 1,001 888
Total Current Assets 280,490 274,552
Property, Plant and Equipment, net
of accumulated depreciation and
amortization of $37,322 at
November 30, 1993 and $34,234
at May 31, 1993 45,030 47,631
Other Assets 7,751 8,661
Total Assets $333,271 $330,844
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ 1,740 $ 1,763
Accounts payable and accrued expenses 65,654 63,469
Income taxes payable 2,354 2,350
Total Current Liabilities 69,748 67,582
Long-Term Debt, net of current portion:
Bank lines of credit 32,000 48,000
Mortgages and other debt 5,237 6,468
Total Long-Term Debt 37,237 54,468
Deferred Income Tax Liabilities 6,003 6,003
Shareholders' Investment 220,283 202,791
Total Liabilities and
Shareholders' Investment $333,271 $330,844
The accompanying notes are an integral part of these condensed
balance sheets.
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<TABLE>
MARSHALL INDUSTRIES
<CAPTION>
CONDENSED INCOME STATEMENTS
(000's omitted except per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Net sales $200,594 $154,680 $400,401 $306,547
Cost of sales 157,854 117,940 314,761 233,493
Gross profit 42,740 36,740 85,640 73,054
Selling, general and
administrative expenses (Note 3) 27,782 26,276 57,219 52,107
Income from operations 14,958 10,464 28,421 20,947
Interest expense 490 470 1,101 941
Income before income taxes 14,468 9,994 27,320 20,006
Provision for income taxes (Note 4) 5,825 3,946 11,190 7,946
Net income $ 8,643 $ 6,048 $ 16,130 $ 12,060
Net income per share $ 1.00 $ .70 $ 1.86 $ 1.40
Average number of shares outstanding 8,678 8,647 8,650 8,635
The accompanying notes are an integral part of these condensed income statements.
</TABLE>
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MARSHALL INDUSTRIES
CONDENSED STATEMENTS OF CASH FLOWS
(000's omitted)
SIX MONTHS ENDED
NOVEMBER 30,
1993 1992
Cash flows from operating activities:
Net income $16,130 $12,060
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 4,110 3,255
Net increase in current assets
and liabilities (3,999) (13,652)
(Increase) decrease in other assets (16) 37
Other operating activities 52 108
Net cash provided by operating
activities 16,277 1,808
Cash flows from investing activities:
Capital expenditures (583) (1,690)
Deferred software costs -0- (2,146)
Net cash used for investing activities (583) (3,836)
Cash flows from financing activities:
Net borrowings (repayments) under bank
lines of credit (16,000) 3,000
Net repayments of other long-term debt (1,254) (878)
Exercise of options 1,310 89
Net cash (used for) provided by
financing activities (15,944) 2,211
Net (decrease) increase in cash (250) 183
Cash at the beginning of the period 1,583 1,809
Cash at the end of the period $ 1,333 $ 1,992
Cash payments during the period
for the following:
Interest $ 1,225 $ 997
Income taxes $11,186 $ 9,735
The accompanying notes are an integral part of these condensed
statements.
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MARSHALL INDUSTRIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1: GENERAL
The condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not
misleading. These condensed financial statements should be read in
conjunction with the financial statements and the notes thereto in
the Company's annual report on Form 10-K for the year ended May 31,
1993.
In the opinion of the Company, the unaudited condensed financial
statements reflect all adjustments (consisting of normal recurring
accruals) considered necessary to present fairly the Company's
financial position as of November 30, 1993 and the results of its
operations for the three month and six month periods and its cash
flows for the six month periods ended November 30, 1993 and 1992.
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NOTE 2: ACCOUNTING POLICIES
Reference is made to Note 1 of Notes to Financial Statements in the
Company's annual report on Form 10-K for the summary of significant
accounting policies.
NOTE 3: RESTRUCTURING CHARGE
As a result of a reorganization of the Company's field and
corporate support functions, the Company eliminated approximately
120 positions effective August 31, 1993. To provide for the costs
of this reorganization, a pre-tax charge of $890,000 was recorded
in the first quarter of fiscal 1994.
NOTE 4: INCOME TAXES
In August, 1993 the Omnibus Budget Reconciliation Act of 1993 was
enacted. As a result of the Act, a retroactive Federal tax
adjustment of $163,000, or $.02 per share, was charged to income
tax expense in the first quarter of fiscal 1994 for the period of
January to May 1993. The tax rate increase did not have a material
impact on the Company's deferred tax assets and liabilities.
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MARSHALL INDUSTRIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONDENSED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
November 30, November 30,
1993 1992 1993 1992
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 78.7 76.2 78.6 76.2
Gross profit 21.3 23.8 21.4 23.8
Selling, general and
administrative expenses 13.8 17.0 14.3 17.0
Income from operations 7.5 6.8 7.1 6.8
Interest expense - net .3 .3 .3 .3
Income before provision
for income taxes 7.2 6.5 6.8 6.5
Provision for
income taxes 2.9 2.6 2.8 2.6
Net income 4.3% 3.9% 4.0% 3.9%
Three and Six Month Periods Ended November 30, 1993 and 1992
The increase in net sales for the second quarter and the first six
months of fiscal 1994, as compared to fiscal 1993, was due to an
increase in the sales volume of semiconductor and computer subsystems
products. The sales of semiconductor products increased by
$48,440,000 and $96,198,000 for the three and six month periods ended
November 30, 1993, respectively. The substantial increase in the
sales of these products was primarily the result of the continuing
strong market demand for such products and the additional sales of
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products from new suppliers. The sales volume of the Company's other
major products in fiscal 1994 decreased modestly from fiscal 1993.
The decrease in net margins for the second quarter and six months to
date of fiscal 1994, as compared to fiscal 1993, was due to a decline
in the margins of the Company's semiconductor products. This decline
in margins was partially attributable to an increase in the sales
volume of DRAMS, which are lower margin products, as compared to the
Company's other products, and an increase in the volume of some of the
Company's lower margin value added products. The decrease in margins
was also due to market pressures on the pricing of some of the
Company's products and the Company's acceptance of some large customer
orders at lower than normal margins.
The increase in selling, general, and administrative expenses, in
dollars, for the second quarter and the first six months to date of
fiscal 1994, as compared to fiscal 1993, was largely due to higher
operating costs to meet the requirements from the significant increase
in sales volume. In addition, the Company is amortizing $463,000 per
quarter of deferred computer software costs associated with its new
operating and financial systems that became operational in December,
1992. Fiscal 1994 expenses also includes a charge of $890,000 that
was recorded in the first quarter related to the costs of the
elimination of approximately 120 positions. The elimination of these
positions, which was effective August 31, 1993, was the result of a
reorganization of the Company's field and corporate support functions.
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This reorganization had the effect of reducing the Company's expenses
for the second quarter of fiscal 1994 by approximately $1,000,000.
The increase in interest expense for the second quarter and six months
to date of fiscal 1994, as compared to fiscal 1993, was due to the
increased borrowing levels required to fund the Company's higher
levels of inventory and receivables that resulted from the increased
volume. The increase in interest expense from the higher borrowing
levels in fiscal 1994 was partly offset by the decline in interest
rates from fiscal 1993.
The Company's sources of liquidity at November 30, 1993 consisted
principally of working capital of $210,742,000 and unsecured bank
lines of credit of $70,000,000 of which $32,000,000 was used. The
Company believes that its working capital, borrowing capabilities and
additional funds generated from operations should be sufficient to
finance its anticipated operations requirements.
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PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Marshall Industries was held on
October 19, 1993.
The following matters were acted upon at the meeting.
1. Election of Directors.
All of the incumbent Directors of the Company were re-elected to serve
as Directors until the next Annual Meeting of Shareholders and until
their successors are elected and have qualified. The vote was as
follows:
Votes Abstentions/
Directors Votes For Against Broker Non-Votes
Gordon S. Marshall 8,071,086 0 210
Richard D. Bentley 8,071,086 0 210
William Bone 8,071,086 0 210
Richard C. Colyear 8,070,986 0 310
Lathrop Hoffman 8,071,014 0 282
Raymond G. Rinehart 8,071,086 0 210
Robert Rodin 8,071,086 0 210
Howard C. White 8,070,914 0 382
2. Ratification of Appointment of Auditors.
The appointment of Arthur Andersen & Co. as auditors for the fiscal
year ending May 31, 1994 was ratified by the following vote:
For: 8,065,735 Against: 3,508 Abstentions/Broker Non-Votes: 2,053
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
MARSHALL INDUSTRIES
January 7, 1994 ______________________________
Henry W. Chin
Vice President, Finance and
Chief Financial Officer
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