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Previous: MARSH & MCLENNAN COMPANIES INC, DEF 14A, 1998-03-31 |
Next: MASSACHUSETTS ELECTRIC CO, 10-K, 1998-03-31 |
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT TO CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 16, 1998
MARSHALL INDUSTRIES
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 1-5441 95-2048764
- -------------------------------------------------------------------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification No.)
of incorporation)
9320 TELSTAR AVENUE, EL MONTE, CALIFORNIA 91731-2895
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (626) 307-6000
(Former name or former address, if changed since last report.)
Not applicable.
<PAGE>
AMENDMENT NO. 1
The undersigned hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form
8-K filed with the Commission on January 31, 1998 (the "Current
Report") as set forth herein relating to the acquisition of Sterling
Electronics Corporation. Pursuant to Item 7 of Form 8-K, the
financial statements filed with this Amendment were omitted from the
Current Report and are being filed herewith.
The Current Report is hereby amended by deleting Item 7(b)
thereof and replacing it in its entirety with the following:
(b) PRO FORMA FINANCIAL INFORMATION (unaudited):
Description Page No.
Marshall Industries PRO FORMA statement of income for the
fiscal year ended May 31, 1997. 3
---
Marshall Industries PRO FORMA statement of income for the
six months ended November 30, 1997. 4
---
Marshall Industries PRO FORMA balance sheet as of
November 30, 1997. 5
---
* * * * *
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
By: /s/ Henry W. Chin
----------------------------------------
Henry W. Chin
Vice President, Finance, Chief Financial
Officer and Secretary
DATED: March 31 , 1998
2
<PAGE>
MARSHALL INDUSTRIES
Pro Forma Combined Income Statement
Reflecting the Acquisition of Sterling Electronics
Year Ended May 31, 1997
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Marshall Sterling Pro Forma Adj Pro Forma
Industries Electronics Adjustments Key Financials
----------- ----------- ----------- --- -----------
<S> <C> <C> <C> <C> <C>
Net Sales $ 1,184,604 $ 343,764 $ (493) (a) $ 1,527,875
Cost of Sales 988,371 268,466 (436) (a) 1,256,401
----------- --------- -------- -----------
Gross Profit 196,233 75,298 (57) (a) 271,474
Selling, general and
administrative expenses 128,927 57,415 3,636 (b) 189,978
----------- --------- -------- -----------
Income from operations 67,306 17,883 (3,693) 81,496
Interest expense (income)
and other -- net (1,197) 2,101 10,908 (c) 11,812
----------- --------- -------- -----------
Income before provision for income taxes 68,503 15,782 (14,601) 69,684
Provision for income taxes 28,850 6,184 (4,710) (d) 30,324
----------- --------- -------- -----------
Net Income $39,653 $ 9,598 $ (9,891) $ 39,360
----------- --------- -------- -----------
Earnings per share:
Basic $ 2.35 $ 2.33
----------- -----------
Diluted $ 2.33 $ 2.32
----------- -----------
Average number of shares outstanding:
Basic 16,861 16,861
----------- -----------
Diluted 16,997 16,997
----------- -----------
</TABLE>
See Accompanying Notes
3
<PAGE>
MARSHALL INDUSTRIES
Pro Forma Combined Income Statement
Reflecting the Acquisition of Sterling Electronics
Six Months Ended November 30, 1997
(Unaudited)
(in 000's, except per share data)
<TABLE>
<CAPTION>
Marshall Sterling Pro Forma Adj Pro Forma
Industries Electronics Adjustments Key Financials
----------- ----------- ----------- --- -----------
<S> <C> <C> <C> <C> <C>
Net Sales $ 675,635 $ 195,390 $ (523) (a) $ 870,502
Cost of Sales 573,069 155,536 (502) (a) 728,103
--------- --------- ------- ---------
Gross Profit 102,566 39,854 (21) (a) 142,399
Selling, general and
administrative expenses 69,167 33,234 1,622 (b) 104,023
--------- --------- ------- ---------
Income from operations 33,399 6,620 (1,643) 38,376
Interest expense (income)
and other -- net 1,165 1,537 5,086 (c) 7,788
--------- --------- ------- ---------
Income before income taxes and
extraordinary gain 32,234 5,083 (6,729) 30,588
Provision for income taxes 13,555 1,982 (2,198) (d) 13,339
--------- --------- ------- ---------
Income before extraordinary gain 18,679 3,101 (4,531) 17,249
Extraordinary gain from termination of
joint venture (net of income taxes of
$10, 535) 14,615 - - 14,615
--------- --------- ------- ---------
Net Income $ 33,294 $ 3,101 (4,531) $ 31,864
--------- --------- ------- ---------
--------- --------- ------- ---------
Earnings per share (basic):
Income per share before extraordinary
gain $ 1.12 $ 1.04
Extraordinary gain per share 0.88 0.88
--------- ---------
Net income per share $ 2.00 $ 1.92
--------- ---------
Earnings per share (diluted):
Income per share before extraordinary
gain $ 1.11 $ 1.03
Extraordinary gain per share 0.87 0.87
--------- ---------
Net income per share $ 1.98 $ 1.90
--------- ---------
Average number of shares outstanding
Basic 16,616 16,616
--------- ---------
Diluted 16,809 16,809
--------- ---------
</TABLE>
See Accompanying Notes
4
<PAGE>
MARSHALL INDUSTRIES
Pro Forma Combined Balance Sheet
Reflecting the Acquisition of Sterling Electronics
As of November 30, 1997
(Unaudited)
(in 000's)
<TABLE>
<CAPTION>
Marshall Sterling Pro Forma Adj Pro Forma
Industries Electronics Adjustments Key Financials
----------- ----------- ----------- --- -----------
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash $ 5,372 $ 715 $ -- $ 6,087
Receivables, net 163,579 58,805 (42) (1) 222,342
Inventories 279,236 79,110 (2,500) (7) 355,846
Deferred income tax benefits 14,272 -- -- 14,272
Prepaid expenses 892 -- -- 892
Prepaid income taxes -- -- 6,239 (10) 6,239
Other current assets -- 1,630 -- 1,630
--------- --------- ---------- ---------
Total Current Assets 463,351 140,260 3,697 607,308
--------- --------- ---------- ---------
Property, plant and equipment, net 38,020 9,741 (8,606) (2) 39,155
Equity investment 40,168 -- -- 40,168
Goodwill, net of amortization -- 9,013 118,612 (3) 127,625
Other assets, net 365 4,804 1,001 (4)(9) 6,170
--------- --------- ---------- ---------
Total Assets $ 541,904 $ 163,818 $ 114,704 $ 820,426
--------- --------- ---------- ---------
Current Liabilities:
Accounts payable and accrued
expenses $ 130,737 $ 43,128 $ 22,823 (1)(8) $ 196,688
(11)
Current portion - long-term debt -- 242 (242) (5) --
Income taxes 1,271 2,521 (3,792) (10) --
--------- --------- ---------- ---------
Total Current Liabilities 132,008 45,891 18,789 196,688
--------- --------- ---------- ---------
Long-term debt 18,000 51,788 157,016 (5) 226,804
Deferred income tax liabilities 2,642 -- -- 2,642
Post-employment benefits and other
long-term liabilities -- 5,038 -- 5,038
Shareholders' Investment 389,254 61,101 (61,101) (6) 389,254
--------- --------- ---------- ---------
Total Liabilities and Shareholders'
Investment $ 541,904 $ 163,818 $ 114,704 $ 820,426
--------- --------- ---------- ---------
</TABLE>
See Accompanying Notes
5
<PAGE>
Notes to Pro Forma Combined Financial Statements
Reflecting the Acquisition of Sterling Electronics
(Unaudited)
(In 000's)
1. Principles of Presentation:
On January 16, 1998, Marshall Industries acquired all of the outstanding
capital stock of Sterling Electronics Corporation ("Sterling
Electronics"), a distributor of electronic components, for $21 per share in
cash plus the assumption of the balance of Sterling Electronics'
outstanding debt and other direct costs related to the acquisition for a
total of approximately $230 million. The preliminary allocation of the
purchase price resulted in goodwill of approximately $121 million which
will be amortized over 40 years. The goodwill allocation is subject to
final determination based on potential valuation adjustments.
The unaudited pro forma combined balance sheet as of November 30, 1997
gives effect to the transaction as though it had occurred on November 30,
1997 and is based on the historical unaudited balance sheet of Marshall
Industries as of November 30, 1997 and the historical unaudited balance
sheet of Sterling Electronics as of September 27, 1997.
The unaudited pro forma combined income statements for the year ended May
31, 1997 and the six months ended November 30, 1997 give effect to the
transaction as though it had occurred at the beginning of each of Marshall
Industries' fiscal years 1997 and 1998, respectively. Marshall's fiscal
year begins on June 1. The unaudited pro forma combined income statements
are based on the historical income statements of Marshall Industries for
the year ended May 31, 1997 and for the six months ended November 30, 1997
(unaudited) and the historical income statements of Sterling Electronics
for the year ended March 29, 1997 and the six months ended September 27,
1997 (unaudited).
The unaudited pro forma combined financial statements give effect to the
transaction using the purchase method of accounting and the adjustments
described below.
The pro forma adjustments are based upon currently available information
and upon certain assumptions that management believes are reasonable. For
this reason and because pro forma statements include only the adjustments
described below, they should not be considered indicative of the results
that would have occurred if the combination had been in effect on the dates
indicated or which may be obtained in the future. No attempt has been made
to quantify in the pro forma statements additional costs which may be
incurred as a result of the combination.
6
<PAGE>
The pro forma statements should be read in conjunction with the historical
consolidated financial statements, together with the related notes thereto,
of Marshall Industries and Sterling Electronics.
2. Pro Forma Adjustments:
The following adjustments are reflected in the unaudited pro forma combined
income statements for the year ended May 31, 1997 and the six months ended
November 30, 1997 (in 000's):
a) Eliminate intercompany sales and gross profit
b) Record amortization of goodwill of $3,365 and $1,486, respectively,
and loan origination costs of $271 and $136, respectively
c) Record interest expense for new borrowings under the $325 million
credit facility net of historical interest expense of $2,101 and
$1,537, respectively, on Sterling Electronics debt retired
d) Record income taxes for the effect of the pro forma adjustments
The following adjustments are reflected in the unaudited pro forma combined
balance sheet as of November 30, 1997 (in 000's):
1) Eliminate intercompany balances
2) Adjust fixed assets to estimated fair market value
3) Record goodwill associated with the purchase of Sterling Electronics
4) Record loan origination costs on the new borrowings of $1,358
5) Borrowings related to the acquisition, net of retirement of Sterling
Electronics' debt
6) Eliminate Sterling Electronics' shareholders' investment
7) Conform inventory accounting policies to Marshall Industries'
accounting policies
8) Record reserve for severance costs for terminated employees of $3,000
9) Reduce other assets by $357 to reflect fair market value
10) Reduce goodwill for tax benefits related to the difference in book and
tax basis of $5,722 and the payout of stock options of $4,309
11) Accrue for costs related to the acquisition including the payout of
stock options of $12,814 and other transaction costs of $7,051
7
<PAGE>
3. The purchase cost and preliminary allocation of the excess of cost over net
book value of the assets acquired on November 30, 1997 are as follows:
<TABLE>
<CAPTION>
(in 000's)
<S> <C>
Cash paid for purchase of outstanding Sterling Electronics' stock $ 155,362
Payment for Sterling Electronics' options 12,814
Transaction fees and expenses 6,051
---------
Total purchase cost 174,227
Book value of net assets acquired (61,101)
---------
Excess of purchase cost over net book value of assets
acquired $ 113,126
---------
---------
Allocated to:
Sterling Electronics' historical net goodwill $ (9,013)
Adjustment to estimated fair value of property and
equipment and other assets (12,517)
Tax benefits related to difference in book and tax basis
and payment of options 10,031
Accruals for severance for terminated employees (3,000)
Residual excess purchase cost 127,625
---------
Total allocation $ 113,126
---------
---------
</TABLE>
8
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