<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 November 30, 1995
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, 1995:
Common Stock 17,278,864 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: 9
1
<PAGE>
<TABLE>
<CAPTION>
MARSHALL INDUSTRIES
CONDENSED BALANCE SHEETS
(000's Omitted)
ASSETS
November 30, May 31,
1995 1995
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
Current Assets:
Cash $ 1,670 $ 3,508
Receivables - net 144,028 137,892
Inventories 217,689 196,097
Deferred income tax benefits 10,216 10,216
Prepaid expenses 586 507
-------- --------
Total Current Assets 374,189 348,220
-------- --------
Property, Plant and Equipment, net
of accumulated depreciation and
amortization of $48,224 at
November 30, 1995 and $45,704
at May 31, 1995 40,456 40,661
Note Receivable 29,872 29,050
Other Assets - net 4,366 5,376
-------- --------
Total Assets $448,883 $423,307
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Current portion of long-term debt $ --- $ 410
Accounts payable and accrued expenses 105,555 90,616
Income taxes payable 1,111 2,800
-------- --------
Total Current Liabilities 106,666 93,826
-------- --------
Long-Term Debt:
Bank lines of credit 7,000 20,000
Term loan and other debt 25,000 25,205
-------- --------
Total Long-Term Debt 32,000 45,205
-------- --------
Deferred Income Tax Liabilities 4,524 4,524
Shareholders' Investment 305,693 279,752
-------- --------
Total Liabilities and
Shareholders' Investment $448,883 $423,307
-------- --------
-------- --------
The accompanying notes are an integral part of these condensed balance sheets.
2
<PAGE>
MARSHALL INDUSTRIES
CONDENSED INCOME STATEMENTS
(000's Omitted Except Per Share Data)
(UNAUDITED)
Three Months Ended Six Months Ended
November 30, November 30,
-------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $295,532 $243,827 $571,402 $466,928
Cost of sales 241,840 197,562 466,765 376,551
-------- -------- -------- --------
Gross profit 53,692 46,265 104,637 90,377
Selling, general and
administrative expenses 30,212 29,648 60,110 58,235
-------- -------- -------- --------
Income from operations 23,480 16,617 44,527 32,142
Interest expense--net 281 428 589 967
-------- -------- -------- --------
Income before taxes 23,199 16,189 43,938 31,175
Provision for income taxes 9,560 6,800 18,100 13,050
-------- -------- -------- --------
Net income $ 13,639 $ 9,389 $ 25,838 $ 18,125
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share $ .78 $ .54 $ 1.48 $ 1.04
-------- -------- -------- --------
-------- -------- -------- --------
Average number of shares
outstanding 17,522 17,449 17,513 17,432
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these condensed income
statements.
3
<PAGE>
<TABLE>
<CAPTION>
MARSHALL INDUSTRIES
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's omitted)
SIX MONTHS ENDED
NOVEMBER 30,
-------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 25,838 $ 18,125
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 3,574 3,654
Net increase in current assets
and liabilities (14,557) (12,131)
Interest accrued on note receivable
(Note 3) (822) (281)
Other operating activities 26 (26)
-------- --------
Net cash provided by operating activities 14,059 9,341
Cash flows from investing activities:
Capital expenditures (2,315) (1,176)
Note receivable (Note 3) --- (27,954)
Deferred software costs (56) (529)
-------- --------
Net cash used for investing activities (2,371) (29,659)
Cash flows from financing activities:
Net repayments under bank
lines of credit (13,000) (6,000)
Term loan borrowings --- 25,000
Net repayments of other long-term debt (615) (855)
Proceeds from exercise of options 89 280
-------- --------
Net cash (used for) provided by
financing activities (13,526) 18,425
-------- --------
Net decrease in cash (1,838) (1,893)
Cash at the beginning of the period 3,508 3,694
-------- --------
Cash at the end of the period $ 1,670 $ 1,801
-------- --------
-------- --------
Supplemental disclosures of cash flow
information:
Interest paid $ 1,321 $ 928
-------- --------
-------- --------
Income taxes paid $ 19,789 $ 15,739
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed cash flow
statements.
4
<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, 1995.
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,
1995 and the results of its operations for the three and six month periods and
its cash flows for the six month periods ended November 30, 1995 and 1994.
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: INVESTMENT IN SONEPAR ELECTRONIQUE INTERNATIONAL
As described in Note 6 to the Financial Statements in the Company's Annual
Report on Form 10-K for the year ended May 31, 1995, the Company invested
151 million French Francs (approximately $27.9 million in U.S. dollars) in
Sonepar Electronique International ("SEI"), the third largest electronic
component distributor in Europe. This investment is in the form of an interest
bearing, convertible note guaranteed by a major French bank as to default.
5
<PAGE>
<TABLE>
<CAPTION>
MARSHALL INDUSTRIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
OPERATING RESULTS
Three Months Ended Six Months Ended
November 30, November 30,
------------------ ----------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 81.8 81.0 81.7 80.6
----- ----- ----- -----
-
Gross profit 18.2 19.0 18.3 19.4
Selling, general and
administrative expenses 10.2 12.2 10.5 12.5
----- ----- ----- -----
Income from operations 8.0 6.8 7.8 6.9
Interest expense--net .1 .2 .1 .2
----- ----- ----- -----
Income before provision
for income taxes 7.9 6.6 7.7 6.7
Provision for income taxes 3.3 2.8 3.2 2.8
----- ----- ----- -----
Net income 4.6% 3.8% 4.5% 3.9%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
THREE AND SIX MONTH PERIODS ENDED NOVEMBER 30, 1995 AND 1994
The increase in net sales for the second quarter and the first six months of
fiscal 1996, as compared to fiscal 1995, was primarily due to an increase in
the sales volume of semiconductor products. The sales of such products
increased by $49,796,000 and $97,075,000 for the three and six month periods
ended November 30, 1995, respectively, as compared to the same periods of
fiscal 1995. The increase in the sales of semiconductor products was mainly
the result of continuing strong market demand for these products. The Company
has experienced industry-wide shortages and excess supplies from time to time.
In recent months, there has been an increase in the availability of products,
particularly memory devices.
The decrease in net margins for the second quarter and six months to date of
fiscal 1996, as compared to fiscal 1995, was due to market pressures on the
pricing of most of the Company's products and an increase in the sales volume of
lower margin products. The Company believes that these conditions affecting
margins may continue in the near term.
The increase in selling, general, and administrative expenses ("SG&A"), in
dollars for the second quarter and first six months to date of fiscal 1996, as
compared to fiscal 1995, was mainly due to
6
<PAGE>
higher operating costs needed to meet the requirements from the significant
increase in sales volume. The higher levels of incentive payments from the
Company's increased profitability, partially offset by decreases in salaries
expenses from a reduction in headcount, and increases in outside consulting
costs primarily relating to various information systems enhancement projects
also contributed to the increases in SG&A expenses for fiscal 1996, as compared
to fiscal 1995. Primarily due to the significant increase in sales volume but
with relatively lower levels of increases in operating costs to meet this
volume increase, SG&A, as a percentage of sales, declined to 10.2% from 12.2%
and 10.5% from 12.5%, for the three and six month periods ended November 30,
1995, as compared to the same periods of a year ago.
The decrease in interest expense for the second quarter and first six months of
fiscal 1996, as compared to fiscal 1995, was due to lower borrowing levels,
partially offset by higher interest rates in fiscal 1996.
The Company's sources of liquidity at November 30, 1995 consisted principally
of working capital of $267,523,000 and unsecured bank lines of credit of
$55,000,000. The Company's borrowings under these lines of credit were
$7,000,000 at November 30, 1995. The Company believes that its working
capital, borrowing capabilities and additional funds generated from operations
should be sufficient to finance its anticipated operations requirements.
7
<PAGE>
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 24, 1995.
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 Votes Abstentions/
Directors For Against Broker Non-Votes
- --------- ---------- ------- ----------------
Gordon S. Marshall 14,764,853 0 2,514,011
Robert Rodin 14,747,993 0 2,530,871
Richard D. Bentley 14,742,903 0 2,535,961
Richard C. Colyear 14,748,971 0 2,529,893
Jean Fribourg 14,763,071 0 2,515,793
Lathrop Hoffman 14,765,231 0 2,513,633
Jose Menendez 14,763,695 0 2,515,169
Raymond G. Rinehart 14,765,537 0 2,513,327
Howard C. White 14,747,993 0 2,530,871
2. RATIFICATION OF APPOINTMENT OF AUDITORS.
The appointment of Arthur Andersen LLP as the Company's independent auditors
for the fiscal year ending May 31, 1996 was ratified by the following vote:
For: 14,840,569 Against: 6,144
Abstentions/Broker Non-Votes: 2,432,151
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.
8
<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
January 9, 1996 /s/ HENRY W. CHIN
-----------------------------
Henry W. Chin
Vice President, Finance and
Chief Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE MARSHALL INDUSTRIES QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> SEP-01-1995
<PERIOD-END> NOV-30-1995
<CASH> 1,670
<SECURITIES> 0
<RECEIVABLES> 151,958
<ALLOWANCES> (7,930)
<INVENTORY> 217,689
<CURRENT-ASSETS> 374,189
<PP&E> 88,680
<DEPRECIATION> 48,224
<TOTAL-ASSETS> 448,883
<CURRENT-LIABILITIES> 106,666
<BONDS> 32,000
0
0
<COMMON> 17,279
<OTHER-SE> 288,414
<TOTAL-LIABILITY-AND-EQUITY> 448,883
<SALES> 295,532
<TOTAL-REVENUES> 295,532
<CGS> 241,840
<TOTAL-COSTS> 29,406
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 806
<INTEREST-EXPENSE> 281
<INCOME-PRETAX> 23,199
<INCOME-TAX> 9,560
<INCOME-CONTINUING> 13,639
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,639
<EPS-PRIMARY> .78
<EPS-DILUTED> 0
</TABLE>
