1

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10Q

                 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

      For the quarter ended September 27, 1997 Commission File No.: 1-5522

                        STERLING ELECTRONICS CORPORATION
             (Exact name of registrant as specified in its charter)

          NEVADA                                            74-1261194 
(Sate or other  jurisdiction of IRS                 Employer Identification No.
   incorporation or organization

                  4201 Southwest Freeway, Houston, Texas 77027
               (Address of principal executive office) (Zip Code)

           Registrant's area code and telephone number: (713) 627-9800

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required by Section 13 or 15(d) of the  Securities  Exchange  act of 1934 during
the preceding  twelve 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 the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the close of the period by this report.

Class Outstanding at November 7,1997
Common Stock, $.50 par value 7,256,205

<PAGE>

                                      INDEX

                        STERLING ELECTRONICS CORPORATION

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements  (Unaudited) 

     Condensed  consolidated  statements of financial   position  September  27 
     1997  and  March  29,  1997 

     Condensed consolidated  statements  of income - thirteen and  twenty-six  
     weeks ended September 27, 1997 and September 28, 1996

     Condensed consolidated statements of cash flows - twenty-six weeks ended
     September 27, 1997 and September 28, 1996 

     Notes to condensed  consolidated  financial statements - September 27,
     1997

Item 2.  Management's  Discussion  and  Analysis  of the  Results  of
     Operations

<PAGE>
<TABLE>

                        STERLING ELECTRONICS CORPORATION

                            CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                                September 27,             March 29,
                                                                    1997                    1997

                                                              ------------------      ------------------
<S>                                                           <C>                     <C>   

ASSETS

Current Assets

     Cash                                                             $ 714,542             $ 3,817,570
     Receivables-net of reserve
         for doubtful accounts                                       58,804,845              55,722,058
     Inventory                                                       79,110,249              67,531,193
     Other current assets                                             1,630,211               1,472,205
                                                              ------------------      ------------------
                                                                    140,259,847             128,543,026
Property and equipment - net of
     depreciation                                                     9,741,404               9,708,564
Goodwill, net of amortization                                         9,012,609               9,205,174
Other assets                                                          4,804,608               4,072,845
                                                              ------------------      ------------------
                                                                  $ 163,818,468           $ 151,529,609
                                                              ==================      ==================


LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
     Trade accounts payable and
         accrued expenses                                          $ 43,127,635            $ 48,991,420
     Current portion - long term
         obligations                                                    242,201                 238,907
     Income taxes                                                     2,520,950               1,479,371
                                                              ------------------      ------------------
                                                                     45,890,786              50,709,698

Long-term obligations - net of
     amounts due within one year                                     51,788,478              39,300,820
Postemployment benefits and other
     non-current liabilities                                          5,038,136               5,035,258

Shareholders' Equity

     Common stock, $.50 par value                                     3,695,613               3,695,613
     Additional paid-in capital                                      26,655,472              26,794,705
     Retained earnings                                               33,071,627              29,970,978
                                                              ------------------      ------------------
                                                                     63,422,712              60,461,296
     Treasury stock, at cost                                         (2,222,801)             (3,905,829)
     Foreign currency translation adjustment                            (98,843)                (71,634)
                                                              ------------------      ------------------
                                                                     65,546,670              64,295,491
                                                              ------------------      ------------------
                                                                  $ 168,264,070           $ 159,341,267
                                                              ==================      ==================


</TABLE>

<PAGE>
<TABLE>

                                     STERLING ELECTRONICS CORPORATION
                                     CONSOLIDATED STATEMENT OF INCOME

                      THIRTEEN WEEKS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996

                                                                         1997                    1996
                                                                   -----------------        ----------------

<S>                                                                <C>                      <C>    

Net sales                                                              $100,547,836             $77,276,952

Cost of sales                                                            80,203,848              59,691,551
                                                                   -----------------        ----------------
Gross Profit                                                             20,343,988              17,585,401

Selling, administrative and

     other operating expenses                                            16,850,183              13,318,044
                                                                   -----------------        ----------------
Income from operations                                                    3,493,805               4,267,357
Interest expense                                                            853,059                 400,037
                                                                   -----------------        ----------------
Income before income taxes                                                2,640,746               3,867,320

Income taxes                                                              1,030,000               1,527,000
                                                                   -----------------        ----------------

Net Income                                                              $ 1,610,746             $ 2,340,320
                                                                   =================        ================





Income per common share and common share equivalents:

     Primary                                                                    $ 0.22                  $ 0.32
     Fully diluted                                                              $ 0.21                  $ 0.32



Number of common shares and common share
     equivalents used in computing per share amounts

     Primary                                                              7,435,147               7,226,688
     Fully diluted                                                        7,662,700               7,226,688

</TABLE>

<PAGE>
<TABLE>

                        STERLING ELECTRONICS CORPORATION

                        CONSOLIDATED STATEMENT OF INCOME
        TWENTY-SIX WEEKS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996

                                                                         1997                      1996
                                                                   -----------------        -------------------

<S>                                                                <C>                      <C>    

Net sales                                                              $195,390,134              $ 159,399,782

Cost of sales                                                           155,536,079                123,656,877
                                                                   -----------------        -------------------
Gross Profit                                                             39,854,055                 35,742,905

Selling, administrative and

     other operating expenses                                            33,234,159                 26,958,739
                                                                   -----------------        -------------------
Income from operations                                                    6,619,896                  8,784,166
Interest expense                                                          1,537,269                    918,030
                                                                   -----------------        -------------------
Income before income taxes                                                5,082,627                  7,866,136

Income taxes                                                              1,982,000                  3,135,000
                                                                   -----------------        -------------------

Net Income                                                              $ 3,100,627                $ 4,731,136
                                                                   =================        ===================





Income per common share and common share equivalents:

     Primary                                                                    $ 0.43                     $ 0.65
     Fully diluted                                                              $ 0.41                     $ 0.65



Number of common shares and common share
     equivalents used in computing per share amounts

     Primary                                                              7,280,406                  7,313,590
     Fully diluted                                                        7,619,224                  7,313,590

</TABLE>
<PAGE>

<TABLE>

                        STERLING ELECTRONICS CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
        TWENTY-SIX WEEKS ENDED SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996

                                                                                1997                 1996
                                                                         ----------------     ----------------
<S>                                                                      <C>                  <C>

OPERATING ACTIVITIES

      Net income                                                             $ 3,100,627          $ 4,731,134
      Adjustments needed to reconcile net income
            to net cash provided by operating acitivities:

               Depreciation and amortization                                   1,561,871              917,249
               Provision for losses on accounts receivable                       768,670              695,439
      Changes in operating assets and liabilities

           (Increase) decrease in accounts receivable                         (3,851,457)           8,834,680
           (Increase) decrease in inventories                                (11,579,056)           3,436,648
           Increase in prepaid and other current assets                         (158,006)            (250,175)
           Decrease in accounts payable and accrued
               expenses                                                       (4,949,883)          (2,607,110)
           Increase (decrease) in accrued income taxes                         1,041,579             (246,503)
           Increase in postemployment benefits and other
               non-current liabilities                                            72,170               97,743
                                                                         ----------------     ----------------
                  Net cash (used) provided by operating activities           (13,993,485)          15,609,105
INVESTING ACTIVITIES

      Purchase of property and equipment                                      (1,383,744)          (1,706,690)
      Increase in other assets                                                  (750,165)            (494,795)
                                                                         ----------------     ----------------
                  Net cash (used) provided in investing activities            (2,133,909)          (2,201,485)

FINANCING ACTIVITIES

      Proceeds from borrowings under revolver                                 54,332,460           11,615,700
      Repayments of borrwoings under revolver                                (41,715,332)         (39,287,249)
                                                                         ----------------     ----------------
      Net increase (decrease) in revolving line of credit                     12,617,128          (27,671,549)
      Proceeds from long term borrowings                                               -           15,000,000
      Principal payments on other long term debt                                (126,176)            (151,993)
      Stock issued under employee plans                                          680,653              168,225
      Purchases of treasury stock                                               (142,065)          (3,184,515)
                                                                         ----------------     ----------------
                  Net cash provided (used) by financing activities            13,029,540          (15,839,832)
      Effect of exchange rate changes on cash                                     (5,174)                   -
                                                                         ----------------     ----------------
                                                                              13,024,366          (15,839,832)

DECREASE IN CASH AND CASH EQUIVALENTS                                         (3,103,028)          (2,432,212)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                 3,817,570            4,376,818
                                                                         ----------------     ----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                       $ 714,542          $ 1,944,606
                                                                         ================     ================

</TABLE>
<PAGE>


                        STERLING ELECTRONICS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               September 27, 1997

Note A - Accounting Policies

          The accompanying unaudited condensed consolidated financial statements
     include the accounts of Sterling  Electronics  Corporation  (the "Company")
     and its  majority-owned  subsidiaries  after elimination of all significant
     intercompany accounts and transactions.  In the opinion of the Company, the
     unaudited  condensed  consolidated  financial  statements  contain  all the
     adjustments  (consisting  of only  normal  accruals)  necessary  to present
     fairly the  financial  position as of September 27, 1997 and the results of
     operations for the thirteen and twenty-six weeks then ended. The results of
     operations for the thirteen and twenty-six  weeks ended  September 27, 1997
     are not  necessarily  indicative of the results to be expected for the full
     year.

Note B - Long-term Debt

          Long-term debt as of September 27, 1997 and the amounts due within one
     year are as follows:

                               AMOUNTS DUE           LONG TERM       MATURING IN

DESCRIPTION                  WITHIN ONE YEAR          PORTION        FISCAL YEAR

Revolving credit line        $         0            $ 36,617,128        1999

Senior note                            0              15,000,000        2007

Capitalized lease obligation        63,824                67,466        2000

Equipment loans                    178,377               103,884     1999-2001
                                ----------            ----------
                              $    242,201          $ 51,788,478


          On October 7, 1997 the  Company  borrowed  $5 million  under a 120 day
     note from one of the banks in the Company's revolving credit line.

<PAGE>

Note C - Merger

          On September 19, 1997  Sterling  announced the signing of a definitive
     agreement to be acquired by Marshall  Industries,  an El Monte,  California
     based electronics distributor. A merger proxy statement has been filed with
     the Securities and Exchange  Commission and is currently under review.  The
     acquisition is subject to the approval of Sterling's  shareholders  and the
     expiration  of the waiting  period  under the  Hart-Scott-Rodino  Antitrust
     Improvements  Act ("HSR").  The Company has been  informed that the waiting
     period under the HSR has been terminated.
<PAGE>

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS

Thirteen  Weeks  ended  September  27, 1997  compared  to  thirteen  weeks ended
September 28, 1996

     Net Sales -  Consolidated  net sales for the current  thirteen  week period
were 30% ahead of sales for the thirteen week period a year ago. If the sales of
Marsh Electronics,  Inc. ("Marsh"),  acquired in November,  1996, were excluded,
sales would have  increased  17%. Such increase would be the result of increased
passive and electromechanical, connector and semiconductor revenues.

     Gross Margin - Sterling's  consolidated gross margin for the thirteen weeks
declined to 20.2% from 22.8% for the thirteen weeks a year ago. The gross margin
percentage  declined in all major product  categories as a result of competitive
pricing pressures.

     Selling  and  Administrative   Costs  -  Consolidated   operating  expenses
decreased to 16.8% of sales  compared to 17.2% of sales for the thirteen weeks a
year ago.  Operating  expenses decreased as a percentage of sales as a result of
economies  of  scale from  sales  growth.  However,  operating  expense  dollars
increased  26%.  The  majority  of the  dollar  increase  is due to the  cost of
operating the four Marsh sales  offices and the Marsh service  center during the
current period. In addition to the four Marsh locations the Company operated two
more sales locations (Mission, Texas and Rochester, New York) during the current
period than a year ago. Warehouse expenses,  management information system costs
and the cost of the recently  established  team of field  application  engineers
increased  significantly  for the current  thirteen week period  compared to the
thirteen week period a year ago.

     Interest  Expense - The 113% increase in interest  expense is primarily the
result  of the $25  million  increase  from the  comparable  period  in  average
indebtedness.

Twenty-six  weeks ended  September 27, 1997  compared to twenty-six  weeks ended
September 28, 1996

     Net Sales - Consolidated  net sales for the current  twenty-six week period
were 23% ahead of sales for the twenty-six  week period a year ago. If the sales
of Marsh Electronics, Inc. ("Marsh"), acquired in November, 1996, were excluded,
sales would have  increased 9%. Such  increase  would be the result of increased
passive and electromechanical, connector and semiconductor revenues.

     Gross Margin -  Sterling's  consolidated  gross  margin for the  twenty-six
weeks  declined  to 20.4% from 22.4% for the  twenty-six  weeks a year ago.  The
gross margin percentage  declined in all major product categories as a result of
competitive pricing pressures.

     Selling  and  Administrative   Costs  -  Consolidated   operating  expenses
increased to 17.0% of sales compared to 16.9% of sales for the twenty-six  weeks
a year ago.  Operating expense dollars increased 23%. The majority of the dollar
increase is due to the cost of  operating  the four Marsh sales  offices and the
Marsh service  center during the current  period.  In addition to the four Marsh
locations  the Company  operated two more sales  locations  (Mission,  Texas and
Rochester,  New York)  during  the  current  period  than a year ago.  Warehouse
expenses,  management  information  system  costs  and the cost of the  recently
established team of field application engineers increased  significantly for the
current  twenty-six  week period  compared to the twenty-six  week period a year
ago.

     Interest  Expense - The 67% increase in interest  expense is primarily  the
result  of the $18  million  increase  from the  comparable  period  in  average
indebtedness.

     Liquidity and Capital Resources - Since the beginning of the current fiscal
year,  Sterling has increased  inventory by approximately  $11.6 million and has
reduced accounts payable and accrued expenses by approximately $ 5.9 million. In
connection with the increase in inventory and reduction in current  liabilities,
the Company increased its borrowings by approximately $12.5 million.  Additional
use of  funds  has been  capital  expenditures  of  approximately  $  1,384,000,
principally for new computer hardware and software.  These capital  expenditures
were financed by cash flow from operations.

     Working  capital was $ 94.4 million at September 27, 1997 compared to $77.8
million at March 39,  1997.  The  current  ratio was 3.1  compared to 2.5 at the
beginning  of the year.  Working  capital  increased  as a result  of  increased
inventory  and  decreased   accounts  payable  and  accrued  expenses.   Average
annualized inventory turnover for the current period was 4.2, down slightly from
4.3 for fiscal 1997.

     At September 27, 1997 the Company had $ 3 million in available credit under
the $40 million bank credit line which  matures on February 16, 1999. On October
7, 1997,  the Company  borrowed $5 million  under a 120 day note from one of the
banks in the Company's bank credit line.  Management  believes that internal and
external  sources of cash will be  sufficient to meet  liquidity  needs over the
next year.

     On June 5,  1996,  the  Company  agreed  to  lease a  181,000  square  foot
warehouse which was  constructed  during fiscal 1997 adjacent to the Dallas/Fort
Worth  International  Airport.  The lease term is ten years with monthly  rental
payments  of  approximately  $82,000,  plus the Company is  responsible  for all
property taxes, insurance and maintenance. As of September 27, 1997, the Company
also has leased material  handling  equipment,  computer  equipment and material
management  software for this warehouse and distribution  center. The lease term
on  the  equipment   lease  is  five  years  with  monthly  rental  payments  of
approximately  $57,000,  plus the Company is responsible for all property taxes,
insurance and maintenance.  Additionally, the Company has advanced approximately
$3 million for  additional  equipment  and  software for which the Company has a
lease  commitment  from a major  leasing  company to lease for five  years.  The
Company intends to consolidate the distribution operations of its three existing
regional distribution centers into this new state-of-the-art facility during the
third and fourth quarters of fiscal 1998.  Management  believes that the capital
resources  described  above  should  be  adequate  to  fund  the  cost  of  this
consolidation and the operation of the new distribution center.

<PAGE>

                                OTHER INFORMATION

Item 1 through Item 5

The Company was not required to report on Items 1 through 5.

Item 6 - Exhibits and Reports on Form 8-K

(a)   The following exhibit is included herein
         (11) Statement re:  computation of earnings per share

(b)   Reports of Form 8-K - There  were no reports on Form 8-K filed  during the
      thirteen weeks ended September 27, 1997

                                   SIGNATURES

     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.

                        STERLING ELECTRONICS CORPORATION

                                        /s/ Mac McConnell

                                        --------------------------------------
                                        Date: November 10, 1997
                                        Mac McConnell, Vice-President
                                        Chief Financial Officer

<PAGE>
<TABLE>

                        STERLING ELECTRONICS CORPORATION

             (11) - Statement Re: COMPUTATION OF PER SHARE EARNINGS
<S>                                               <C>                              <C>

                                                      Thirteen weeks ended            Twenty-six weeks ended
                                                  ------------------------------   -----------------------------
                                                   Sept. 27,        Sept. 28,        Sept. 27,       Sept. 28,
                                                      1997            1996             1997            1996

PRIMARY

Average shares outstanding                           7,176,820        7,119,278        7,134,650      7,175,593
Net effect of dilutive stock options-
    based on the treasury stock
    method using average

    market price                                       258,327          107,410          145,756        137,997
                                                  -------------   --------------   --------------   ------------
Total                                                7,435,147        7,226,688        7,280,406      7,313,590
                                                  =============   ==============   ==============   ============


Net income applicable to common stock              $ 1,610,746      $ 2,340,320      $ 3,100,627    $ 4,731,136


Per share amount                                           $ 0.22           $ 0.32           $ 0.43         $ 0.65




FULLY DILUTED

Average shares outstanding                           7,176,820        7,119,278        7,135,651      7,175,593
Net effect of dilutive stock options-
    based on the treasury stock
    method using average

    market price                                       485,880          107,410          483,573        137,997
                                                  -------------   --------------   --------------   ------------
Total                                                7,662,700        7,226,688        7,619,224      7,313,590
                                                  =============   ==============   ==============   ============


Net income applicable to common stock              $ 1,610,746      $ 2,340,320      $ 3,100,627    $ 4,731,136


Per share amount                                           $ 0.21           $ 0.32           $ 0.41         $ 0.65
</TABLE>