-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Epzt+O364vEge7aaTdFJ1HPXIn4RXG7GURjaCrAFKp8SLI55YMxZ5EiHiD+BRkMe XSEtzmKDpWGJegVNMYPJ6A== 0000950109-96-003054.txt : 19960515 0000950109-96-003054.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950109-96-003054 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNSOURCE LP CENTRAL INDEX KEY: 0000807396 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-HARDWARE [5072] IRS NUMBER: 232439550 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09375 FILM NUMBER: 96563928 BUSINESS ADDRESS: STREET 1: 2600 ONE LOGAN SQ CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2156653650 MAIL ADDRESS: STREET 1: 2600 ONE LOGAN SQ CITY: PILADELPHIA STATE: PA ZIP: 19103 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 -------------- Commission file number 1-9375 ------ SunSource L.P. ------------------------------------ (Exact name of registrant as specified in its charter) Delaware 23-2439550 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2600 One Logan Square Philadelphia, Pennsylvania 19103 ---------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (215) 665-3650 ---------------------------------------------------- (Registrant's telephone number, including area code) Sun Distributors L.P. -------------------------------------- (Former name, former address and former fiscal year, if changed from last report) 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 1 of 14 SUNSOURCE L.P. INDEX
PART I. FINANCIAL INFORMATION PAGE(S) Item 1. Consolidated Financial Statements Consolidated Balance Sheets as of March 31, 1996 (Unaudited), December 31, 1995, and March 31, 1995 (Unaudited) 3 Consolidated Statements of Income for the three months ended March 31, 1996 and 1995 (Unaudited) 4 Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 (Unaudited) 5 Notes to Consolidated Financial Statements (Unaudited) 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II. OTHER INFORMATION 13 SIGNATURES 14
2 Page 2 of 14 SUNSOURCE L.P. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (dollars in thousands)
MARCH 31, 1996 MARCH 31, 1995* ASSETS (Unaudited) DECEMBER 31, 1995* (Unaudited) ------ ----------- ------------------ ---------- Current assets: Cash and cash equivalents $ 633 $ 5,900 $ 11,963 Accounts and notes receivable, net 82,199 75,824 78,495 Inventories 93,847 96,022 86,745 Other current assets 5,435 4,742 6,624 -------- -------- -------- Total current assets 182,114 182,488 183,827 Property and equipment, net 20,156 20,181 21,079 Goodwill 43,915 44,250 44,450 Other intangibles 1,141 1,312 1,873 Deferred income taxes 3,098 2,844 2,348 Cash surrender value of life insurance policies 2,999 3,009 -- Other assets 527 507 735 -------- -------- -------- Total assets $253,950 $254,591 $254,312 ======== ======== ======== LIABILITIES AND PARTNERS' CAPITAL --------------------------------- Current liabilities: Accounts payable, trade $ 46,428 $ 42,437 $ 48,292 Notes payable 2,815 2,753 2,116 Current portion of senior notes 6,395 6,395 4,795 Distributions payable to partners 1,715 7,819 4,901 Accrued expenses: Salaries and wages 3,879 5,109 3,966 Interest on senior notes 2,081 520 2,223 Management fee due the general partner 821 3,330 821 Income and other taxes 3,429 3,398 3,693 Other accrued expenses 14,505 14,886 15,308 -------- -------- -------- Total current liabilities 82,068 86,647 86,115 Senior notes 63,934 63,934 70,330 Bank revolving credit 4,000 -- -- Deferred compensation 7,949 7,829 7,044 Other liabilities 1,336 1,238 52 -------- -------- -------- Total liabilities 159,287 159,648 163,541 -------- -------- -------- Commitments and contingencies Partners' capital: General partner 959 963 906 Limited partners: Class A interests 67,642 67,642 67,642 Class B interests 28,869 29,252 23,737 Class B interests held in treasury (1,514) (1,514) (1,514) Cumulative foreign currency translation adjustment (1,293) (1,400) -- -------- -------- -------- Total partners' capital 94,663 94,943 90,771 -------- -------- -------- Total liabilities and partners' capital $253,950 $254,591 $254,312 ======== ======== ========
* Reclassified for comparative purposes. SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3 Page 3 of 14 SUNSOURCE L.P. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, (dollars in thousands, except for partnership interest amounts)
Three Months Three Months Ended Ended March 31, 1996 March 31, 1995* -------------- -------------- Net sales $154,892 $146,407 Cost of sales 92,428 87,230 -------- -------- Gross profit 62,464 59,177 -------- -------- Operating expenses: Selling, general and administrative expenses 54,733 51,279 Management fee to general partner 821 821 Depreciation 868 833 Amortization 485 507 -------- -------- Total operating expenses 56,907 53,440 -------- -------- Net results of operations from division sold (note 3) -- (202) -------- -------- Income from operations 5,557 5,535 Interest income 32 269 Interest expense 1,659 2,090 Other income (expense), net 4 (234) Gain on sale of division (note 3) -- 16,500 -------- -------- Income before provision for income taxes 3,934 19,980 Provision (benefit) for income taxes (76) 118 -------- -------- Income before extraordinary loss 4,010 19,862 Extraordinary loss from early extinguishment of debt (note 4) -- (629) -------- -------- Net income $ 4,010 $ 19,233 ======== ======== Net income allocated to partners: General partner $40 $192 -------- -------- Class A limited partners $ 3,052 $ 3,052 -------- -------- Class B limited partners $ 918 $ 15,989 -------- -------- Earnings per Limited partnership interest: Income before extraordinary loss - Class A interest $0.27 $0.27 - Class B interest $0.04 $0.77 Extraordinary loss - Class A interest -- -- - Class B interest -- ($0.03) Net income - Class A interest $0.27 $0.27 - Class B interest $0.04 $0.74 Weighted average number of outstanding limited partnership interests: - Class A interests 11,099,573 11,099,573 - Class B interests 21,675,746 21,675,746
* Restated for comparative purposes. SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4 Page 4 of 14 SUNSOURCE L.P. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR THE THREE MONTHS ENDED MARCH 31, (dollars in thousands)
Three Months Three Months Ended Ended March 31, 1996 March 31, 1995* -------------- -------------- Cash flows from operating activities: Net income $ 4,010 $19,233 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Depreciation and amortization-Existing divisions 1,353 1,340 Depreciation and amortization-Divested division -- 90 Gain on sale of division -- (16,500) Extraordinary loss -- 629 Provision for deferred compensation 707 838 Deferred income tax benefit (254) (204) Changes in current operating items: Increase in accounts and notes receivable (6,375) (6,337) Decrease (increase) in inventories 2,175 (2,626) Increase in other current assets (693) (846) Increase in accounts payable 3,991 6,497 Increase in accrued interest 1,561 1,562 Decrease in other accrued liabilities (4,483) (7,899) Other items, net 96 194 ------- ------- Net cash provided by (used for) operating activities 2,088 (4,029) ------- ------- Cash flows from investing activities: Proceeds from sale of division -- 37,786 Proceeds from sale of property and equipment 4 449 Capital expenditures (834) (1,059) Other, net (42) (44) ------- ------- Net cash (used for) provided by investing activities (872) 37,132 ------- ------- Cash flows from financing activities: Early extinguishment of senior notes -- (14,175) Borrowings under bank credit agreement, net 4,000 -- Prepayment penalties and related costs -- (629) Cash distributions to partners (10,545) (10,631) Borrowings (repayments) under other credit facilities, net 62 (593) Principal payments under capitalized lease obligations -- (15) ------- ------- Net cash used for financing activities (6,483) (26,043) ------- ------- Net (decrease) increase in cash and cash equivalents (5,267) 7,060 Cash and cash equivalents at beginning of period 5,900 4,903 ------- ------- Cash and cash equivalents at end of period $ 633 $11,963 ======= =======
*Reclassified for comparative purposes SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5 Page 5 of 14 SUNSOURCE L.P. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) 1. Basis of Presentation: The accompanying financial statements include the consolidated accounts of SunSource L.P. (the "Company"), formerly Sun Distributors L.P., and its subsidiary partnership, SDI Operating Partners, L.P. (the "Operating Partnership"). All significant intercompany balances and transactions have been eliminated. The Company is one of the largest wholesale distributors of industrial products and related services in the United States. The Company's three principal lines of business are: (1) industrial products and services, primarily maintenance and fluid power products and inventory management services sold to industrial customers for machine and plant maintenance and for manufacturing of original equipment; (2) retail merchandising products and services, primarily fasteners and related products sold to retail hardware stores; and (3) retail glass products and services sold to construction and retail markets. The accompanying consolidated financial statements and related notes are unaudited, except for the balance sheet as of December 31, 1995; however, in management's opinion all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of financial position, income and cash flows for the periods shown have been reflected. Results for the interim period are not necessarily indicative of those to be expected for the full year. Certain information in note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to Form 10-Q requirements although the Company believes that disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's report on Form 10-K for the year ended December 31, 1995. 2. Related Party Transaction: In March 1996, the Operating Partnership paid the 1995 management fee of $3,330 due the General Partner, SDI Partners I, L.P. (the "GP"). 3. Acquisitions/Divestitures: On January 3, 1995, the Operating Partnership sold certain assets of its Dorman Products Division for a cash consideration, net of expenses, of approximately $36,600 (subject to certain post-closing adjustments) and the assumption of certain liabilities. The Operating Partnership recorded a gain on the sale in the amount of $16,500 or $.75 per Class B interest included in the consolidated statement of income for the three months ended March 31, 1995. The aggregate assets sold, net of liabilities, in connection with the sale of Dorman Products was approximately $20,100. 6 Page 6 of 14 SUNSOURCE L.P. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued (dollars in thousands) 3. Acquisitions/Divestitures, continued: For comparison purposes the Company has reclassified the results of operations of its divested Downey Glass division (sold on October 27, 1995) for the three months ended March 31, 1995, to a separate component of income from operations in the Consolidated Statement of Income for the three months ended March 31, 1995. Downey's sales, gross profit and operating loss for the three months ended March 31, 1995, were $8.3 million, $2.3 million and $(.2), respectively. Total assets for Downey were $9,738 at March 31, 1995, and are included in the Consolidated Balance Sheet as of March 31, 1995. 4. Extraordinary Loss: During the first quarter of 1995, the Company recorded an extraordinary loss of $629 or approximately $.03 per Class B limited partnership interest due to early extinguishment of a portion of the Company's Series A 9.08% and Series B 8.44% senior notes. The extraordinary loss consists entirely of prepayment penalties. (See Note 5, Lines of Credit and Long-Term Debt). 5. Lines of Credit and Long-Term Debt: As of March 31, 1995, the Operating Partnership had $39.0 million available under its $50.0 million Bank Credit Agreement which provides revolving credit for working capital purposes and acquisitions. The $11.0 million outstanding under the Bank Credit Agreement consisted of bank borrowings amounting to $4.0 million as reflected on the Company's consolidated balance sheet at March 31, 1996, and letter of credit commitments aggregating $7.0 million. The Operating Partnership has another credit facility available in the amount of $500 for letter of credit commitments only, of which no amount was outstanding as of March 31, 1996. In addition, an indirect, wholly-owned Canadian subsidiary of the Operating Partnership has a $2,500 Canadian dollar line of credit for working capital purposes of which $965 USD was outstanding at March 31, 1996. In connection with the sale of the Electrical Group divisions in December 1994 and the Dorman Products division in January 1995, the Operating Partnership was required to offer the holders of its senior notes prepayment in the amount of $14,175 which the noteholders accepted. Prepayment of the senior notes was made on March 14, 1995, including accrued interest thereon of $360 and a prepayment penalty of $629. (See Note 4 - Extraordinary Loss.) 7 Page 7 of 14 SUNSOURCE L.P. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued (dollars in thousands) 6. Contingencies: On February 27, 1996, a lawsuit was filed against the Operating Partnership by the buyer of its Dorman Products division for alleged misrepresentation of certain facts by the Company upon which the buyer based its offer to purchase Dorman. The complaint seeks damages of approximately $21,000. In the opinion of management, the ultimate resolution of this matter will not have a material effect on the consolidated financial position, operations or cash flows of the Company. Certain other legal proceedings are pending which are either in the ordinary course of business or incidental to the Company's business. Those legal proceedings incidental to the business of the Company are generally not covered by insurance or other indemnity. In the opinion of management, the ultimate resolution of these matters will not have a material effect on the consolidated financial position, operations or cashflows of the Company. 7. Subsequent Event: On April 11, 1996, the Company's Industrial Services segment, through its Warren Fluid Power Division, purchased certain assets of Hydraulic Depot, Inc., of Reno, Nevada, for an aggregate purchase price of $.7 million. Annual sales of Hydraulic Depot, Inc. are approximately $2.5 million. 8 Page 8 of 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ____________________________________________________________________ Results of Operations Three Months Ended March 31, 1996 and March 31, 1995 ---------------------------------------------------- Net income for the quarter ended March 31, 1996, was $4.0 million compared with $19.2 million in 1995. The results for the first quarter of 1995 included a $16.5 million gain from the sale of Dorman Products, a $.6 million charge related to the early retirement of debt, and a $.2 million operating loss from Downey Glass which was divested on October 27, 1995. Excluding these items, net income increased $.4 million or 12.5% over the first quarter of 1995. Net sales increased $8.5 million or 5.8% over the first quarter of 1995 due to strengthening in most product markets and significant growth from sales programs and services initiated since 1992. Sales recorded in the first quarter of 1996 were $154.9 million compared with the first quarter of 1995 sales of $146.4 million, excluding divisions sold. Sales increases (decreases) by business segment are as follows:
Sales Increase (Decrease) -------------------------- Amount % ---------------- -------- Industrial Services Technology Services divisions $ 2.9 million 4.1 % SIMCO divisions 3.4 million 9.8 % ---------------- Total Industrial Services 6.3 million 6.0 % Retail Merchandising 3.0 million 15.4 % Retail Glass Services (.8)million (3.5)% ---------------- Total Company $ 8.5 million 5.8 % ================
Sales in the retail merchandising segment increased $3.0 million or 15.4% due primarily to the acquisition of the retail division of Curtis Industries, Inc., acquired in November 1995 by the Company's Hillman Fastener division. The decline in sales volume in the Retail Glass Services Segment is attributable to the discontinuation of certain product lines and markets served accounting for $.3 million of the sales decline and a decrease in flat glass, brokerage and other product line sales of $.9 million, offset by an increase in retail glass sales of $.4 million. Cost of sales increased $5.2 million or 6.0% from the first quarter of 1995, due primarily to increased sales levels in the comparison period. Gross margins were 40.3% in the first quarter of 1996 compared with 40.4% in the same period of 1995, comprised by business segment as follows:
1st Quarter -------------------- 1996 1995 ------------- ----- Industrial Services Technology Services divisions 26.7% 27.0% SIMCO divisions 63.0% 65.2% Total Industrial Services 39.0% 39.5% Retail Merchandising 50.6% 51.7% Retail Glass Services 36.4% 34.8%
Sales mix contributed principally to the changes in gross margins. 9 Page 9 of 14 Selling, general and administrative ("S,G&A") expenses increased by $3.5 million or 6.7% over the first quarter of 1995, comprised as follows: increased selling expenses of $1.8 million or 7.2%, increased warehouse and delivery expenses of $1.3 million or 15.2% and increased general and administrative expenses of $.4 million or 2.0%. The increase in S,G&A expenses supported increased 1996 sales levels, the integration of the retail division of Curtis Industries acquired in November 1995 by the Company's Hillman Fastener division and expansion programs by certain operating units. S,G&A expenses as a percentage of sales, were as follows:
1st Quarter ------------- 1996 1995 ------ ----- Selling Expenses 16.9% 16.7% Warehouse and Delivery Expenses 6.5% 6.0% General and Administrative Expenses 11.9% 12.3% ---- ---- Total S,G&A Expenses 35.3% 35.0% ==== ====
The increase in S,G&A as a percentage of sales is due to increased support payments, incentive programs and marketing efforts for the sales force, as well as integration costs associated with the Curtis acquisition. As calculated in accordance with the partnership agreement, the management fee due the General Partner (the "GP") annually amounts to $3.3 million which is based on 3% of the aggregate initial capital investment ($111 million) of the limited partners. The management fee is accrued each quarter in the amount of approximately $.8 million. Net results of operations from divisions sold in the first quarter of 1995 represents a $.2 million operating loss from the divested Downey Glass division. Interest income decreased $.2 million in the comparison period due primarily to reduced investment of excess cash that was generated during the fourth quarter of 1994 and the first quarter of 1995 from divisions sold. Interest expense decreased $.4 million in the comparison period due primarily to reduced financing costs from the prepayment of senior notes on March 14, 1995. Other income increased by $.2 million in the comparison period due primarily to a reduction in the minority interest charge as a result of lower net income in the first quarter of 1996 versus 1995. Currently, the Company incurs state and local income taxes on its domestic operations and foreign income taxes on its Canadian and Mexican Operations. Also, the Company provides for deferred income taxes as determined in accordance with Statement of Financial Accounting Standard No. 109 ("SFAS #109"). Deferred income taxes represent state and federal income tax benefits expected to be realized after December 31, 1997, when the Company will be taxed as a corporation. The Company's provision for income taxes in the first quarter of 1996 decreased $.2 million from the first quarter of 1995 due primarily to a decrease in the provision for foreign income taxes as a result of lower Canadian taxable income. 10 Page 10 of 14 The allocation of net income to the GP is based on the GP's 1% ownership interest in the profits of the Company. The allocation of net income to the limited partners for financial statement purposes represents a 99% interest in the profits of the Company. The net income allocation resulted in $.27 of income per Class A limited partnership interest for the quarters ended March 31, 1996 and March 31, 1995; and $.04 of income per Class B limited partnership interest in the first quarter of 1996 compared with $.74 of income per Class B interest for the first quarter of 1995. Income per Class B interest in 1995 included a gain of $.75 from the sale of Dorman Products, an extraordinary loss of $.03 from the early extinguishment of debt, and $.01 loss from operations of divisions sold. Excluding these items, income per Class B limited partnership interest amounted to $.04 in the first quarter of 1996 compared with $.03 in the first quarter of 1995. Liquidity and Capital Resources Net cash provided by operations in the first quarter of 1996 was $2.1 million compared with net cash used in operations in the first quarter of 1995 of $4.0 million, a change of $6.1 million. This change was due primarily to decreased working capital investment in operations in the comparison period of approximately $5.8. The Company's net interest coverage ratio (earnings before interest, taxes and gain on sale of divisions over net interest expense) improved to 3.42X in the first quarter of 1996 from 2.91X in the comparable prior year period. The Company's cash position of $.6 million as of March 31, 1996, decreased $5.3 million from the balance at December 31, 1995. Cash was provided during this period primarily from operations in the amount of $2.1 million and from borrowings under the bank credit agreement of $4.0 million. Cash was used during this period predominantly for distributions to the general and limited partners, capital expenditures, and other items in the amounts of $10.5 million, $.8 million and $.1 million, respectively. The Company's working capital position of $100.0 million at March 31, 1996, represents an increase of $4.2 million from the December 31, 1995 level of $95.8 million. The increase is attributable to reinvestment in working capital of $2.5 million, a decrease in distributions payable to partners of $6.1 million and a decrease in management fee payable to the General Partner of $2.5 million, offset by a decrease in cash of $5.3 million and an increase in interest payable on Senior Notes of $1.6 million. The Company's current ratio increased to 2.22 at March 31, 1996 from the December 31, 1995 level of 2.11. As of March 31, 1996, the Company's total debt as a percentage of its consolidated capitalization is 44.9% compared with 46.0% as of March 31, 1995. The Company anticipates spending approximately $3.4 million for capital expenditures in 1996, primarily for machinery and equipment. As of March 31, 1996, the Operating Partnership had $39.0 million available under its $50.0 million Bank Credit Agreement which provides revolving credit for working capital purposes and acquisitions through December 31, 1997. The $11.0 million outstanding under the Bank Credit Agreement consisted of bank borrowings totaling $4.0 million and Letter of Credit commitments aggregating $7.0 million. In addition, an indirect, wholly-owned Canadian subsidiary of the Operating Partnership has a $2.5 million Canadian dollar line of credit for working capital purposes of which $.9 million USD was outstanding at March 31, 1996. 11 Page 11 of 14 On March 29, 1996, the Partnership distributed the balance of the tax distribution due of $.279517 per Class B Interest, as follows: $.174544 to holders of record on December 30, 1994 for the balance due on the taxable gain on the sale of Dorman Products; $.001968 per month to holders of record of Class B Interests on the first day of the month during January through December 1995 for the balance due on ordinary taxable income; and $.081356 to holders of record on September 29, 1995 related to the taxable gain on the sale of Downey Glass on October 27, 1995. On April 19, 1996, the Company announced an increase in the monthly Class B tax-related cash distribution from $.02 to $.03 per Class B interest to holders of record May 1, 1996, payable May 31, 1996. The Company expects this tax distribution rate to continue for the balance of 1996 to assist the holders of Class B interests in meeting their 1996 estimated tax obligations. See Item 3 - Legal Proceedings of Form 10-K dated December 31, 1995, for the description of a recent lawsuit with respect to the sale of the Company's Dorman Products Division. Certain other legal proceedings are pending which are either in the ordinary course of business or incidental to the Company's business. Those legal proceedings incidental to the business of the Company are generally not covered by insurance or other indemnity. In the opinion of management, the ultimate resolution of these matters will not have a material effect on the consolidated financial position, operations or cash flows of the Company. Subsequent Event On April 11, 1996, the Company's Industrial Services segment, through its Warren Fluid Power Division, purchased certain assets of Hydraulic Depot, Inc. of Reno, Nevada for an aggregate purchase price of $.7 million. Annual sales of Hydraulic Depot, Inc. are approximately $2.5 million. This acquisition expands Warren's current geographic markets. 12 Page 12 of 14 PART II OTHER INFORMATION Item 1 - Legal Proceedings. - -------------------------- With respect to the action commenced by Dorman Products of America, Ltd. ("Dorman") against the Company's Operating Partnership ("SDI") reported in the Form 10-K for the year ended December 31, 1995, SDI has filed a motion to dismiss for lack of jurisdiction. SDI also filed on April 25, 1996, an action against Dorman and its parent, R&B, Inc., in the Court of Common Pleas of Montgomery County, Pennsylvania alleging breach of contract, intentional interference with contractual relations and negligence and requesting a declaratory judgment that SDI did not make any misrepresentations in connection with the sale of the Dorman Products division. Items 2-6 - None. - ---------------- 13 Page 13 of 14 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. SUNSOURCE L.P. BY: /s/ Joseph M. Corvino BY: /s/ John J. Dabrowski ---------------------------- --------------------------- Joseph M. Corvino John J. Dabrowski Vice President - Finance Controller Chief Financial Officer (Chief Accounting Officer) DATE: May 14, 1996 14 Page 14 of 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AS OF MARCH 31, 1996 AND THE RELATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 633 0 84,223 2,024 93,847 182,114 47,631 27,475 253,950 82,068 63,934 0 0 0 94,663 253,950 154,892 154,892 92,428 56,907 4 262 1,659 3,934 (76) 4,010 0 0 0 4,010 .04 .04 Bonds represents all Long-Term Debt for Senior Notes. EPS represents Class B Limited Partnership Interests only.
-----END PRIVACY-ENHANCED MESSAGE-----