<PAGE>
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 August 31, 1994
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
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(Exact name of registrant as specified in its charter)
California 95-2048764
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9320 Telstar Avenue, El Monte, California 91731-2895
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,including area code
(818) 307-6000
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Common Stock outstanding by class as of August 31, 1994:
Common Stock 17,232,864 shares
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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
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MARSHALL INDUSTRIES
CONDENSED BALANCE SHEETS
(000's Omitted)
ASSETS
<TABLE>
<CAPTION>
August 31, May 31,
1994 1994
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<S> <C> <C>
Current Assets:
Cash $ 2,353 $ 3,694
Receivables - net 119,035 120,489
Inventories 180,637 180,753
Deferred income tax benefits 8,325 8,325
Prepaid Expenses 731 510
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Total Current Assets 311,081 313,771
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Property, Plant and Equipment, net
of accumulated depreciation and
amortization of $41,745 at
August 31, 1994 and $40,482
at May 31, 1994 42,511 43,060
Other Assets 6,662 6,828
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Total Assets $360,254 $363,659
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<CAPTION>
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C>
Current Liabilities:
Current portion of long-term debt $ 1,358 $ 1,358
Accounts payable and accrued expenses 74,854 80,530
Income taxes payable 5,798 2,864
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Total Current Liabilities 82,010 84,752
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Long-Term Debt, net of current portion:
Bank lines of credit 21,000 30,000
Mortgages and other debt 4,315 4,742
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Total Long-Term Debt 25,315 34,742
Deferred Income Tax Liabilities 5,449 5,449
Shareholders' Investment 247,480 238,716
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Total Liabilities and
Shareholders' Investment $360,254 $363,659
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</TABLE>
The accompanying notes are an integral part of these condensed balance sheets.
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MARSHALL INDUSTRIES
CONDENSED INCOME STATEMENTS
(000's omitted except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
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1994 1993
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<S> <C> <C>
Net sales $223,101 $199,807
Cost of sales 178,989 156,907
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Gross profit 44,112 42,900
Selling, general
and administrative expenses (Note 3) 28,587 29,437
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Income from operations 15,525 13,463
Interest expense 539 611
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Income before income taxes 14,986 12,852
Provision for income taxes (Note 4) 6,250 5,365
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Net income $ 8,736 $ 7,487
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-------- --------
Net income per share $ .50 $ .43
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-------- --------
Average number of shares outstanding 17,414 17,336
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-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed income statements
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<PAGE>
MARSHALL INDUSTRIES
CONDENSED STATEMENTS OF CASH FLOWS
(000's omitted)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
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1994 1993
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,736 $ 7,487
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,808 2,053
Net decrease (increase) in
current assets 1,349 (11,418)
Net (decrease) increase in
current liabilities (2,742) 2,656
Other operating activities 14 28
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Net cash provided by operating
activities 9,165 806
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Cash flows from investing activities:
Capital expenditures (714) (367)
Deferred software costs (372) -
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Net cash used in investing activities (1,086) (367)
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Cash flows from financing activities:
Net paydown under bank
lines of credit (9,000) -
Repayments of other long-term debt (427) (797)
Other financing activities 7 52
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Net cash used in financing activities (9,420) (745)
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Net decrease in cash (1,341) (306)
Cash at the beginning of the period 3,694 1,583
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Cash at the end of the period $ 2,353 $ 1,277
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------- --------
Cash payments during the quarter
for the following:
Interest $ 519 $ 696
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------- --------
Income taxes $ 3,338 $ 3,016
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------- --------
</TABLE>
The accompanying notes are an integral part of these condensed statements.
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<PAGE>
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, 1994.
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 August 31,
1994 and the results of its operations and cash flows for the three month
periods ended August 31, 1994 and 1993.
All share and per share data included in these condensed financial statements
have been restated to reflect the two-for-one stock split paid on February 28,
1994.
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<PAGE>
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 $.01 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.
NOTE 5: INVESTMENT IN SONEPAR ELECTRONIQUE INTERNATIONAL
As described in Note 6 to the Financial Statements in the Company's Annual
Report on Form 10K for the year ended May 31, 1994, the Company entered into an
agreement to invest $151 million French Francs (approximately $28 million in
U.S. dollars) in Sonepar
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Electronique International ("S.E.I."), the third largest electronic component
distributor in Europe. To finance the investment, the Company entered into an
agreement with a major United States bank for an unsecured term loan in the
amount of $25 million, with principal repayment due on September 30, 1997. The
definitive Agreements with S.E.I. and the bank were signed in August, 1994 and
the investment and loan transactions will be completed in September, 1994.
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<PAGE>
MARSHALL INDUSTRIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
August 31,
------------------
1994 1993
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<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 80.2 78.5
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Gross profit 19.8 21.5
Selling, general and
administrative expenses 12.8 14.7
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Income from operations 7.0 6.8
Interest expense - net .3 .4
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Income before provision
for income taxes 6.7 6.4
Provision for income taxes 2.8 2.7
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Net income 3.9% 3.7%
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</TABLE>
THREE MONTH PERIODS ENDED AUGUST 31, 1994 AND 1993
The increase in net sales for the three months ended August 31, 1994, the first
quarter of fiscal 1995, as compared to fiscal 1994, was primarily due to an
increase in the sales volume of semiconductor products. The sales of such
products increased by $23,914,000 for the first quarter of fiscal 1995 as
compared to the same period of a year ago. The increase in the sales of
semiconductor products was mainly the result of continued strong market demand
for these products and the increased sales of products from suppliers added
during recent years. The sales volume of the Company's other major products
decreased modestly or remained relatively unchanged between periods.
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The decrease in net margins for the first quarter of fiscal 1995, as compared to
fiscal 1994, was due to a decline in the margins on most of the Company's major
products. This decline in margins resulted from market pressures on the pricing
of many of the Company's products, and an increase in the sales volume of lower
margin products, such as DRAMS.
Selling, general and administrative expenses ("SG & A") decreased for the first
quarter of fiscal 1995 as compared to fiscal 1994. The SG & A expenses for the
first quarter of fiscal 1994 included a charge of $890,000 related to the costs
of eliminating approximately 120 positions. These positions were eliminated as
of August 31, 1993 as a result of a reorganization of the Company's field and
Corporate Support functions. This reorganization reduced the Company's SG & A
expenses by approximately $1,000,000 per quarter beginning in the second quarter
of 1994. This reduction in SG & A expenses for the first quarter of fiscal 1995
was offset by higher operating costs incurred to support the increase in sales
volume.
The decrease in interest expense for the first quarter of fiscal 1995, as
compared to fiscal 1994, was due to lower borrowing levels, offset by higher
interest rates in fiscal 1995.
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<PAGE>
PART II
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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<PAGE>
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
September 19, 1994 /s/ HENRY W. CHIN
--------------------------------
Henry W. Chin
Vice President, Finance and
Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARSHALL
INDUSTRIES QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000062765
<NAME> MERRILL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> AUG-31-1994
<CASH> 2,353
<SECURITIES> 0
<RECEIVABLES> 125,518
<ALLOWANCES> (6,483)
<INVENTORY> 180,637
<CURRENT-ASSETS> 311,081
<PP&E> 84,256
<DEPRECIATION> (41,745)
<TOTAL-ASSETS> 360,254
<CURRENT-LIABILITIES> 82,010
<BONDS> 25,315
<COMMON> 17,232
0
0
<OTHER-SE> 230,248
<TOTAL-LIABILITY-AND-EQUITY> 360,254
<SALES> 223,101
<TOTAL-REVENUES> 223,101
<CGS> 178,989
<TOTAL-COSTS> 27,893
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 694
<INTEREST-EXPENSE> 539
<INCOME-PRETAX> 14,986
<INCOME-TAX> 6,250
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,736
<EPS-PRIMARY> .50
<EPS-DILUTED> 0
</TABLE>
