<PAGE>
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
<PAGE>
SUNSOURCE L.P.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE(S)
<S> <C>
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
</TABLE>
2 Page 2 of 14
<PAGE>
SUNSOURCE L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, 1996 MARCH 31, 1995*
ASSETS (Unaudited) DECEMBER 31, 1995* (Unaudited)
------ ----------- ------------------ ----------
<S> <C> <C> <C>
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
======== ======== ========
</TABLE>
* Reclassified for comparative purposes.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3 Page 3 of 14
<PAGE>
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)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995*
-------------- --------------
<S> <C> <C>
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
</TABLE>
* Restated for comparative purposes.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4 Page 4 of 14
<PAGE>
SUNSOURCE L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31,
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995*
-------------- --------------
<S> <C> <C>
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
======= =======
</TABLE>
*Reclassified for comparative purposes
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5 Page 5 of 14
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
Sales Increase (Decrease)
--------------------------
Amount %
---------------- --------
<S> <C> <C>
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 %
================
</TABLE>
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:
<TABLE>
<CAPTION>
1st Quarter
--------------------
1996 1995
------------- -----
<S> <C> <C>
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%
</TABLE>
Sales mix contributed principally to the changes in gross margins.
9 Page 9 of 14
<PAGE>
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:
<TABLE>
<CAPTION>
1st Quarter
-------------
1996 1995
------ -----
<S> <C> <C>
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%
==== ====
</TABLE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 633
<SECURITIES> 0
<RECEIVABLES> 84,223
<ALLOWANCES> 2,024
<INVENTORY> 93,847
<CURRENT-ASSETS> 182,114
<PP&E> 47,631
<DEPRECIATION> 27,475
<TOTAL-ASSETS> 253,950
<CURRENT-LIABILITIES> 82,068
<BONDS> 63,934<F1>
0
0
<COMMON> 0
<OTHER-SE> 94,663
<TOTAL-LIABILITY-AND-EQUITY> 253,950
<SALES> 154,892
<TOTAL-REVENUES> 154,892
<CGS> 92,428
<TOTAL-COSTS> 56,907
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 262
<INTEREST-EXPENSE> 1,659
<INCOME-PRETAX> 3,934
<INCOME-TAX> (76)
<INCOME-CONTINUING> 4,010
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,010
<EPS-PRIMARY> .04<F2>
<EPS-DILUTED> .04<F2>
<FN>
<F1>Bonds represents all Long-Term Debt for Senior Notes.
<F2>EPS represents Class B Limited Partnership Interests only.
</TABLE>
