<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 February 28, 1998

     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: (626) 307-6000

Common Stock outstanding by class as of February 28, 1998

Common Stock  16,616,364 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
     -----        -----

                                         1
<PAGE>

                      MARSHALL INDUSTRIES
             CONDENSED CONSOLIDATED BALANCE SHEETS
                        (000's Omitted)


                             ASSETS

<TABLE>
<CAPTION>
                                     February 28,       May 31,
                                         1998             1997
                                      (Unaudited)      (Audited)
                                     ------------      ---------
<S>                                  <C>               <C>
Current Assets:
  Cash                                  $  1,968       $  1,687
  Receivables - net                      212,931        167,769
  Inventories                            356,476        284,419
  Deferred income tax benefits            16,353         14,272
  Prepaid income taxes                    11,038            -
  Prepaid expenses                         4,659            904
                                     ------------      ---------

Total Current Assets                     603,425        469,051
                                     ------------      ---------

Property, Plant and Equipment, net
  of accumulated depreciation and
  amortization of $49,673 at
  February 28, 1998 and $44,988
  at May 31, 1997                         46,414         36,232

Note Receivable      (Note 3)                -           33,110

Equity investment (Note 3)                30,246            -

Goodwill - net                           129,816            -

Deferred taxes and other assets            3,487          1,280
                                     ------------      ---------

Total Assets                            $813,388       $539,673
                                     ------------      ---------
                                     ------------      ---------

            LIABILITIES AND SHAREHOLDERS' INVESTMENT

Current Liabilities:
  Accounts payable and accrued
    expenses                            $183,362       $136,649
  Current portion of long-term debt          113            -
  Income taxes payable                       -            1,440
                                     ------------      ---------

Total Current Liabilities                183,475        138,089
                                     ------------      ---------

Long-Term Debt, excluding current
  portion                                230,000         50,000

Deferred Income Tax Liabilities            2,642          2,642

Shareholders' Investment                 397,271        348,942
                                     ------------      ---------

Total Liabilities and
Shareholders' Investment                $813,388       $539,673
                                     ------------      ---------
                                     ------------      ---------
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
balance sheets.

                                       2

<PAGE>
                              MARSHALL INDUSTRIES
                   CONDENSED CONSOLIDATED INCOME STATEMENTS
                     (000'S OMITTED EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                              Three Months Ended            Nine Months Ended 
                                                                 February 28,                   February 28,
                                                           -----------------------     -------------------------
<S>                                                        <C>            <C>          <C>              <C>     
                                                             1998           1997          1998            1997
                                                             ----           ----          ----            ----
Net sales                                                  $368,112       $304,007     $1,043,747       $859,643
  Cost of sales                                             309,431        255,733        882,500        716,687
                                                           --------       ---------    ----------       ---------

Gross profit                                                 58,681         48,274        161,247        142,956
   Selling, general and
   administrative expenses                                   43,032         31,873        112,199         95,927
                                                           --------       ---------     ---------        --------

Income from operations                                       15,649         16,401         49,048         47,029
   Interest expense (income)
     and other--net                                           1,902           (453)         3,067         (1,158)
                                                           --------       ---------     ---------        --------
Income before income taxes    
   and extraordinary gain                                    13,747         16,854         45,981         48,187

Provision for income taxes                                    5,740          7,055         19,295         20,255
                                                           --------       ---------     ---------        --------
Income before extraordinary    
   gain                                                       8,007          9,799         26,686         27,932

Extraordinary gain from termi-
  nation of joint venture (Net
  of income taxes of $10,535)                                    --            ---         14,615            ---
                                                           --------       ---------     ---------        --------
Net income                                                 $  8,007       $  9,799      $  41,301        $27,932
                                                           --------       ---------     ---------        --------
                                                           --------       ---------     ---------        --------
Earnings per share (basic):
 Income before extraordinary gain                          $    .48       $    .59      $    1.61        $  1.65
 Extraordinary gain per share                                    --             --            .88             --
                                                           --------       ---------     ---------        --------

 Net income per share                                      $    .48       $    .59      $    2.49        $  1.65
                                                           --------       ---------     ---------        --------
                                                           --------       ---------     ---------        --------
Earnings per share (diluted):
 Income before extraordinary gain                          $    .48       $    .58      $    1.59        $  1.64

 Extraordinary gain per share                                    --             --            .87             --
                                                           --------       ---------     ---------        --------
 Net income per share                                      $    .48       $    .58      $    2.46        $  1.64
                                                           --------       ---------     ---------        --------
                                                           --------       ---------     ---------        --------
</TABLE>
                                       3

<PAGE>

<TABLE>

<S>                                                          <C>            <C>            <C>             <C>    
Average number of shares
 outstanding:
 Basic                                                       16,616         16,741         16,616          16,938

 Diluted                                                     16,720         16,869         16,767          17,061
</TABLE>
                                                  
The accompanying notes are an integral part of these condensed consolidated
income statements.

                                       4

<PAGE>

                               MARSHALL INDUSTRIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (000'S OMITTED)

<TABLE>
<CAPTION>

                                                           Nine Months Ended 
                                                              February 28,
                                                              ------------
                                                           1998           1997
                                                           ----           ----

<S>                                                     <C>            <C>      
Cash flows from operating activities:
  Net income                                            $  41,301      $  27,932
  Adjustments to reconcile net income to
   net cash provided by operating activities:


  Extraordinary gain from termination of
   joint venture, net of income taxes                     (14,615)            --
  Depreciation and amortization                             6,521          6,708
  Changes in net current assets and
   current liabilities                                     15,417         11,211
  Accrued interest on note receivable                        (172)        (1,799)
  Deferred income tax benefit                              (1,186)            --
  Other operating activities                                  199             13
                                                        ----------      ---------
Net cash provided by operating activities                  47,465         44,065
                                                        ----------      ---------
Cash flows from investing activities:
  Cash consideration paid for acquired
   business                                              (174,460)            --
  Net proceeds from termination of joint
   venture                                                 14,615             --
  Capital expenditures                                    (10,967)        (1,970)
  Deferred software costs                                      --            (91)
                                                        ----------       --------

Net cash used for investing activities                   (170,812)        (2,061)
                                                        ----------      ---------
Cash flows from financing activities:
  Net borrowings under bank lines of credit                45,251          3,000
  Net borrowings (repayments) of other long-
     term debt                                             79,761        (25,000)
  Capitalized financing costs                              (1,384)            --
  Purchase of common stock                                     --        (21,014)
                                                        ----------      ---------
Net cash provided by (used for) financing
  activities                                              123,628        (43,014)
</TABLE>

                                       5

<PAGE>

                               MARSHALL INDUSTRIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (000'S OMITTED)
                                   (CONTINUED)

<TABLE>
<CAPTION>

                                                             Nine Months Ended 
                                                                February 28,
                                                                ------------
                                                             1998           1997
                                                             ----           ----

<S>                                                      <C>            <C>
Net increase (decrease) in cash                               281        (1,010)
Cash at the beginning of the period                         1,687          2,208
                                                         --------       ---------

Cash at the end of the period                            $  1,968       $  1,198
                                                         --------       ---------
                                                         --------       ---------

Supplemental disclosure of cash flow  
  information:
  Interest paid during the period                        $  1,599       $    943
                                                         --------       ---------
                                                         --------       ---------
  Income taxes paid during the period                    $ 35,891       $ 19,879
                                                         --------       ---------
                                                         --------       ---------
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
statements of cash flows.

                                       6

<PAGE>

                        MARSHALL INDUSTRIES
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:  GENERAL

The condensed consolidated 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 consolidated 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 consolidated financial statements 
should be read in conjunction with the consolidated financial statements and 
the notes thereto in the Company's annual report on Form 10-K for the year 
ended May 31, 1997.

In the opinion of the Company, the unaudited condensed consolidated financial 
statements reflect all adjustments (consisting of normal recurring accruals) 
considered necessary to present fairly the Company's financial position as of 
February 28, 1998 and the results of its operations for the three month and 
nine month periods and its cash flows for the nine month period ended 
February 28, 1998.

NOTE 2:  ACCOUNTING POLICIES

Reference is made to Note 1 of the Notes to the Consolidated Financial 
Statements in the Company's annual report on Form 10-K for the year ended May 
31, 1997 for the summary of significant accounting policies.

NOTE 3: INVESTMENT IN SONEPAR ELECTRONIQUE INTERNATIONAL

During the first quarter of fiscal 1998, the Company converted the note 
receivable from Sonepar Electronique International ("SEI"), plus accrued 
interest into a minority equity interest of 16% in SEI's electronics 
distribution companies.  In connection with this conversion, the Company 
granted a stock option to SEI for a period of two years to purchase 874,545 
shares of the Company's stock at a price of $34.5685 per share which was 
based on the average trading price of the Company's stock for the 90 days 
preceding the conversion date. Based on a preliminary allocation of the 
investment cost, goodwill of approximately $10 million, of which $7.4 million 
was attributable to the granting of the stock options described herein, was 
recorded as a result of this transaction.  The goodwill is being amortized 
over a period of thirty years. Accumulated amortization at February 28, 1998 
related to this goodwill was $223,000. During fiscal 1998, the Company 
recorded a non-cash currency translation loss of $389,000 on the equity 
investment with an offsetting charge against shareholders' investment.  The 
Company's pro-rata share of the earnings from this 

                                       7

<PAGE>

equity investment was not material to the Company's results of operations to 
date for fiscal 1998.

NOTE 4:  JOINT VENTURE

As described in Note 8 to the Consolidated Financial Statements in the 
Company's Annual Report on Form 10-K for the year ended May 31, 1997, the 
Company formed a joint venture, known as Accord Contract Services LLC 
("Accord"), with Wyle Electronics ("Wyle"), another distributor of 
semiconductors and computer products in August 1996. Raab Karcher AG, an 
indirect wholly-owned subsidiary of VEBA AG, consummated a tender offer for 
all or substantially all of the common stock of Wyle in August 1997. Under 
the terms of the Accord Agreement, such a change in the ownership of Wyle 
allowed the Company, at its option, to terminate the joint venture and 
receive a termination fee.  The Company elected to terminate the joint 
venture and received a termination fee of $25.150 million on September 30, 
1997, which was recorded in the Company's second quarter results of 
operations as an extraordinary item, net of the related income taxes.

NOTE 5: EARNINGS PER SHARE AND CAPITAL STRUCTURE

During fiscal 1998, the Company adopted SFAS No. 128, which establishes 
standards for computing and presenting earnings per share.  As a result, 
earnings per share for fiscal 1997 has been restated as indicated below. 
Basic earnings per share was computed by dividing net income by the weighted 
average number of common shares outstanding during each year.  The 
computation of diluted earnings per share further assumes the dilutive effect 
of stock options.  The adoption of SFAS No. 128 did not result in changing 
earnings per share, except that primary earnings per share for the nine month 
period ended February 28, 1997, of $1.63 changed to diluted earnings per 
share of $1.64.

The following is a calculation of earnings per share for the three months 
ended February 28 (in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                             1998                                         1997
                                              ------------------------------------         ------------------------------------
                                                                        Per-Share                                     Per-Share
                                              Income         Shares       Amount           Income        Shares         Amount
                                              ------         ------     ---------          ------        ------       ---------

<S>                                           <C>            <C>         <C>               <C>           <C>           <C>   
Basic earnings per share:
   Net income                                 $  8,007       16,616      $  .48            $  9,799      16,741        $  .59

Diluted earnings per share:
   Dilutive effect of exercise of options 
   outstanding                                       -          104                               -         128 
                                              --------       ------                        ---------     -------
Net income                                    $  8,007       16,720      $  .48            $  9,799      16,869       $  .58
                                              --------       ------      ---------         ---------     --------     -------
                                              --------       ------      ---------         ---------     --------     -------
</TABLE>

                                       8

<PAGE>

The following is a calculation of earnings per share for the nine months ended
February 28 (in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                                 1998                                          1997    
                                                  ---------------------------------              ------------------------------
                                                                              Per-Share                                 Per-Share
                                                  Income         Shares         Amount           Income       Shares      Amount
                                                  ------         ------       ---------          ------       ------    ---------
<S>                                               <C>            <C>         <C>                <C>           <C>       <C>      
Basic earnings per share:
   Income before extraordinary gain               $ 26,686       16,616      $    1.61            $ 27,932    16,938     $  1.65
   Extraordinary gain                               14,615                         .88                   -                     -
                                                  --------                   ---------            --------               -------
Net income                                        $ 41,301                   $    2.49            $ 27,932               $  1.65
                                                  --------                   ---------            --------               -------
                                                  --------                   ---------            --------               -------

Diluted earnings per share:
   Income before extraordinary gain               $ 26,686       16,616                         $ 27,932      16,938          
   Dilutive effect of exercise of options  
    outstanding                                          -          151                                -         123
                                                  ---------      ------                         --------      ------
   Income before extraordinary gain                  26,686      16,767      $    1.59              27,932    17,061     $  1.64
   Extraordinary gain                                14,615                        .87                   -                     -
                                                  ---------                  ---------            --------               -------
Net income                                        $  41,301                  $    2.46            $ 27,932               $  1.64
                                                  ---------                  ---------            --------               -------
                                                  ---------                  ---------            --------               -------
</TABLE>

NOTE 6: ACQUISITION OF STERLING ELECTRONICS CORPORATION

On January 16, 1998, the Company acquired all of the outstanding capital stock
of Sterling Electronics Corporation ("Sterling"), a distributor of electronic
components, for $21 per share or $169 million in cash plus the assumption of
Sterling's outstanding debt of $55.5 million and other acquisition costs of $5
million.  This acquisition was accounted for using the purchase method of
accounting.  The excess of cost over the fair market value of the net assets
acquired at the date of acquisition was approximately $121 million, which is
being amortized over 40 years. The goodwill allocation is subject to final
resolution of carrying values and acquisition liabilities. Accumulated
amortization relating to this goodwill at February 28, 1998 was $376,000.  The
operating results of Sterling are included with those of the Company from the
date of acquisition.

NOTE 7: BANK CREDIT FACILITY

The Company entered into an agreement with a group of major banks (the 
"Agreement") on January 16, 1998 whereby the Company can borrow up to $325 
million to finance the acquisition of Sterling, for its working capital 
requirements and other general corporate purposes. The credit facility 
consists of a $100 million term loan and a revolving facility of $225 
million. This credit facility is for five years with interest rates under the 
Agreement determined at the time of borrowing based on a choice of LIBOR plus 
a margin or at a prime rate of interest. At February 28, 1998 the prime rate 
was 8.5%. There is a fee for the unused portion of the credit

                                       9

<PAGE>

facility and no compensating balance requirements.  The LIBOR margin on the 
borrowing, and the fees on the unused portion of the credit facility, is 
based on the Company's ratio of total funded debt to operating cash flow, as 
defined in the Agreement, calculated on a rolling four quarter basis.  Based 
on the Company's performance under this calculation, the LIBOR margin on 
borrowings is expected to range from .375% to .950% and fees for the unused 
portion of the credit facility will range from .125% to .375%.

The Agreement requires the Company, among other things, to meet certain 
interest coverage ratios and maintain certain minimum tangible net worth 
levels and current ratios.  In addition, the  Agreement prohibits the Company 
from making investments in other companies (with certain exceptions) or 
paying dividends in excess of certain amounts.  Pursuant to the terms of the 
Agreement, there is a first priority lien on 100% (65% for foreign) of the 
equity or other ownership interests of all material subsidiaries of the 
Company and all of the material subsidiaries of the Company will jointly and 
severally guarantee the Agreement.  The Company's current material 
subsidiaries, as defined in the Agreement, are Sterling and Marshall 
Industries Technology Products.

Beginning in 1999, there will be quarterly reductions in the term loan 
portion of the credit facility, increasing in amounts from $15 million in the 
aggregate for 1999 to a total reduction of $100 million over the term of the 
Agreement.

The Company has entered into certain interest rate swap agreements to reduce 
the impact of changes in interest rates on its floating rate debt.  The swap 
agreements are contracts to exchange floating rate for fixed interest 
payments over the life of the agreements without the exchange of the 
underlying notional amounts.  The notional amounts of interest rate 
agreements are used to measure interest to be paid or received and do not 
represent the amount of exposure to credit loss.  The differential paid or 
received on interest rate agreements is recognized as an adjustment to 
interest expense.  The Company has entered into separate swap transactions 
with three banks pursuant to which it has exchanged its floating rate 
interest obligations on $50 million, $50 million and $25 million, 
respectively, of notional principal amounts for fixed rate payment 
obligations of 5.775%, 5.725% and 5.679% per annum, respectively.  These 
agreements are each effective for an approximate five year period ending 
January 21, 2003.  These agreements resulted in approximately $10,000 of 
additional interest expense for the quarter ended February 28, 1998.

NOTE 8: INVESTMENT IN SERIAL SYSTEM, LTD.

In April 1998, the Company purchased 17,814,138 shares (comprising 
approximately 9.5%) of the common stock of Serial System Ltd., an electronic 
components distributor based in Singapore, the shares of which are traded on 
the Stock Exchange of Singapore.  The purchase price for the shares, which 
were newly issued shares, was US$7.2 million. In connection with this 
transaction, Marshall and Serial 

                                       10

<PAGE>

also entered into a joint marketing agreement to increase each company's 
ability to service the global marketplace.
                                       
                                      11
                                       
<PAGE>


                                       
                             MARSHALL INDUSTRIES
                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS


The following table sets forth, for the periods indicated, the percentage 
relationship to net sales of certain items in the Company's Consolidated 
Income Statements:

<TABLE>
<CAPTION>
                                       THREE            NINE
                                    MONTHS ENDED     MONTHS ENDED
                                    FEBRUARY 28,     FEBRUARY 28,
                                    ------------     ------------
<S>                                <C>      <C>     <C>     <C>

                                    1998     1997    1998    1997
                                    ----     ----    ----    ----
Net sales                          100.0%   100.0%   100.0% 100.0%

Cost of sales                       84.1     84.1     84.6   83.4
                                    ----     ----     ----   ----
Gross profit                        15.9     15.9     15.4   16.6

Selling, general and
  administrative expenses           11.6     10.5     10.7   11.1
                                    ----     ----     ----   ----
Income from operations               4.3      5.4      4.7    5.5

Interest expense (income)
  and other - net                     .5      (.1)      .3    (.1)
                                    ----     ----     ----   ----
Income before provision for
 income taxes and extraordinary gain 3.8      5.5      4.4    5.6

Provision for income taxes           1.6      2.3      1.8    2.4
                                    ----     ----     ----   ----
Income before extraordinary gain     2.2      3.2      2.6    3.2

Extraordinary gain                     -        -      1.4      -
                                    ----     ----     ----   ----
Net income                           2.2%    3.2%      4.0%   3.2%
                                    ----     ----     ----   ----
                                    ----     ----     ----   ----
</TABLE>

                                       12
<PAGE>

THREE AND NINE MONTH PERIODS ENDED FEBRUARY 28, 1998 AND FEBRUARY 28, 1997:

The Company's net sales increased by $64.1 million or 21% and $184.1 million 
or 21% for the third quarter and nine months year to date of fiscal 1998, 
respectively, as compared to the same periods of a year ago.  The Company's 
results included those of Sterling, which was acquired on January 16, 1998. 
Sterling's net sales from its acquisition date to February 28, 1998 accounted 
for $46.6 million of these increases. In recent months, the industry and the 
Company have experienced a moderation in customer demand.  This, along with 
the increased availability of many products, has contributed to increased 
pressures on unit pricing and margins of many of the products that the 
Company sells.  As a result of these market conditions, the Company's net 
sales, excluding sales of Sterling, increased by 5.8% for the third quarter 
and 16.0% for the first nine months of fiscal 1998, as compared to the same 
periods of fiscal 1997.

Excluding the net sales from Sterling, most of the Company's major products, 
particularly mass storage products, recorded higher sales volumes for both 
the third quarter and nine months year to date of fiscal 1998, as compared to 
last year.  Excluding Sterling, the sales of mass storage products increased 
by $11.6 million and $60.4 million for the third quarter and nine months year 
to date of fiscal 1998, respectively, as compared to the same periods of a 
year ago.  The addition of new suppliers during the last several years was a 
major reason for the substantial growth of the Company's mass storage 
products.

The continuing decline in the sales of "DRAMs" partially offset the increases 
in the Company's sales for the third quarter and nine months year to date of 
fiscal 1998, as compared to last fiscal year. Excluding the operating results 
from Sterling, the sales of DRAMs decreased by $19.8 million and $38.3 
million for the third quarter and nine months to date of fiscal 1998, 
respectively, as compared to fiscal 1997. This decrease in DRAM sales is 
primarily due to the continuing declines in the unit pricing of such products.

Motorola, Inc., one of the largest American semiconductor manufacturers, 
recently announced a change in its policy whereby its authorized distributors 
in the United States can carry its line plus one Asian semiconductor line. 
This policy change is expected to increase competition in the distribution of 
Asian semiconductor products.  The Company is a leading distributor of Asian 
semiconductor products; however, the overall impact of this change in policy 
on the Company is uncertain at this time.

Despite the continuing competitive market pressures affecting many of the 
products the Company sells, net margins for the third quarter of fiscal 1998 
remained unchanged as compared to fiscal 

                                       13

<PAGE>

1997 at 15.9%, and improved significantly from the 14.8% recorded in second 
quarter of fiscal 1998.  This was primarily due to the significant decline in 
the sales of DRAMs, which are lower margin products, as compared to the 
Company's other major products, and the inclusion of Sterling's sales, which 
have relatively higher margins, due to differences in product and customer 
mix.

For the nine months ended February 28, 1998, the Company's net margins 
decreased to 15.4% from 16.6% for the same period last year. This decline was 
primarily attributable to the growth of the Company's mass storage products, 
which are lower margin products, as compared to the Company's other major 
products, and the continuing market pressures experienced by many electronic 
component products. These declines were partially offset by the decrease in 
the sales of DRAMs and the inclusion of Sterling's sales.

Selling, general and administrative ("SG&A") expenses increased by $11.1 
million for the third quarter and $16.3 million for the nine months ended 
February 28, 1998, as compared to the same periods of a year ago.  Excluding 
Sterling's SG&A expenses of $7.3 million from its acquisition date to the end 
of the third quarter, the Company's SG&A expenses increased by $3.8 million 
for the third quarter and $9.0 million for the nine months to date of fiscal 
1998 from last year.  Salary adjustments and staffing increases in areas such 
as Information Technology resulted in higher salary costs of $1.3 million and 
$3.0 million for the third quarter and nine months to date of fiscal 1998, 
respectively, as compared to the prior year.  In addition, increased expenses 
of $0.6 million and $2.0 million were incurred to enhance and expand the 
Company's information technology capabilities during the third quarter and 
first nine months of fiscal 1998, respectively, as compared to last year.  
For fiscal 1998, there was also approximately $.4 million in goodwill 
amortization expense relating to the Sterling acquisition.  The balance of 
the increase in the Company's SG&A expenses for current periods reported, as 
compared to last year, was mainly to service the higher sales volumes and 
costs of integrating Sterling's operations.

The increase in net interest expense to $1.9 million and $3.1 million from 
net interest income of $.4 million and $1.2 million for the third quarter and 
nine months to date of fiscal 1998, respectively, was primarily due to bank 
borrowings incurred for the acquisition of Sterling and higher levels of 
borrowings to support increases in inventories and receivables from the 
increased sales volumes.  In addition, there was a decrease in interest 
income as a result of the conversion of the note receivable from SEI, as 
described in Note 3 to the accompanying condensed consolidated financial 
statements.

During the second quarter of fiscal 1998, the Company received a fee of $25.1 
million, $14.6 million net of income taxes, from the termination of a joint 
venture, as described in Note 4 to the 

                                       14

<PAGE>

accompanying condensed consolidated financial statements.  This payment was 
reported as extraordinary income during that quarter.

The Company's sources of liquidity at February 28, 1998 consisted principally 
of working capital of $420.0 million and a bank credit facility of $325 
million, of which $230 million in borrowings were outstanding at February 28, 
1998.  The Company believes that its working capital, borrowing capabilities 
and additional funds generated from operations should be sufficient to 
finance its anticipated operating requirements.

Primarily as a result of the Company's borrowings to finance the Sterling 
acquisition, the Company's long term debt increased from $50 million at May 
31, 1997 to $230 million at February 28, 1998.  Under the terms of the bank 
facility, there are quarterly amortization payments required beginning in 
1999, which would result in payments in the aggregate of $100 million by 2002.

This Quarterly Report contains forward-looking statements within the meaning 
of the "safe harbor" provisions of the Private Securities Litigation Reform 
Act of 1995.  Reference is made in particular to the description of the 
Company's plans and objectives for future operations, assumptions underlying 
such plans and objectives and other forward-looking statements included in 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" and other portions of this Quarterly Report.  Such statements may 
be identified by the use of forward-looking terminology such as "may," 
"will," "expect," "believe," "estimate," "anticipate," "continue," or similar 
terms, variations of such terms or the negative of such terms.  Such 
statements are based on management's current expectations and are subject to 
a number of factors and uncertainties which could cause actual results to 
differ materially from those described in the forward-looking statements.  
Factors which could cause such results to differ materially from those 
described in the forward-looking statements include changes in industry 
conditions, the addition or loss of suppliers, fluctuation in quarterly 
results, foreign currency translations and other risks and uncertainties that 
are detailed in the Company's Annual Report on Form 10-K and other reports 
filed by the Company with the Securities and Exchange Commission.

                                       15

<PAGE>

                                       
                                   PART II

ITEM 2.  CHANGES IN SECURITIES

     The Agreement entered into in connection with the Company's new credit 
facility restricts the Company's ability to pay dividends on its capital 
stock. Pursuant to the Agreement, subject to certain exceptions, the Company 
may not declare or pay any dividends upon any of its capital stock; purchase, 
redeem, retire or otherwise acquire, directly or indirectly, any shares of 
its capital stock, or make any distribution of cash, property or assets 
among the holders of shares of its capital stock. Exceptions include, without 
limitation, the ability to pay cash dividends to its shareholders in an 
aggregate amount not exceeding five percent of the Company's consolidated net 
income (as defined in the Agreement).




ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the shareholders during the quarter 
for which this report is filed.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     10.1 Credit Agreement dated as of January 16, 1998 by and among Marshall
          Industries and, subject to and in accordance with Addendum A thereto,
          Sterling Electronics Corporation and First Union National Bank, as
          Administrative Agent, together with Addendum A thereto.

     10.2 First Amendment to Credit Agreement dated February 26, 1998 by and
          among Marshall Industries, Sterling Electronics Corporation the
          Lenders party to the Credit Agreement and First Union National Bank,
          as Administrative Agent.
     
     10.3 Pledge Agreement dated January 16, 1998 made by Marshall Industries
          in favor of First Union National Bank as Administrative Agent.
     
     10.4 Unconditional Guaranty Agreement dated as of January 16, 1998 made by
          each of the Subsidiary Guarantors in favor of First Union National
          Bank as Administrative Agent.

     27.1 Financial Data Schedule.

     27.2 Financial Data Schedule.

(b)  Form 8-K dated January 30, 1998 (Items 2,5 and 7) regarding consummation
     of merger pursuant to Agreement and Plan of Merger dated as of September
     18, 1997 between Marshall Industries, MI Holdings Nevada, Inc. and
     Sterling Electronics Corporation.

     Form 8-K/A dated March 31, 1998 (Item 7) regarding pro forma financial
     statements of Marshall Industries taking into account the acquisition of
     Sterling Electronics Corporation.


                            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.

                                       16

<PAGE>

                                      MARSHALL INDUSTRIES






April 13, 1998           /s/  HENRY W. CHIN
      ---                -------------------------------------------
                              Henry W. Chin
                              Vice President, Finance and
                                Chief Financial Officer
                             (Mr. Chin is the principal financial
                              officer and is duly authorized to sign
                              for the Company)


                                       17