SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 28, 2001
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SUNSOURCE INC.
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(Exact Name of Registrant Specified in Charter)
Delaware 1-13293 23-2874736
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(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
3000 One Logan Square
Philadelphia, Pennsylvania 19103
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 282-1290
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
SUNSOURCE INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
INTRODUCTION
The accompanying Pro Forma Financial Information is being filed by amendment to
the SunSource Inc. initial report on Form 8-K, Report of Disposition of Assets
filed on October 15, 2001.
This Form 8-K incorporates the sale of SunSource Technology Services, LLC and
related transactions as follows:
On September 26, 2001, SunSource Inc. ("SunSource" or the "Company") was
acquired by Allied Capital Corporation ("Allied Capital") pursuant to the terms
and conditions of an Agreement and Plan of Merger dated as of June 18, 2001, by
and among Allied Capital, Allied Capital Lock Acquisition Corporation and
SunSource (the "Merger Transaction"). Certain members of management and other
stockholders continued as stockholders of the Company after the merger. The
total transaction value was $74.0 million or $10.375 per SunSource common share,
consisting of the cash purchase price paid for the outstanding common stock of
the Company aggregating approximately $71.5 million and management and other
stockholder's common shares valued at approximately $2.5 million. The Company
survived the merger as an independently managed, privately held portfolio
company of Allied Capital.
As contemplated with the Merger Transaction, on September 28, 2001, the Company
completed the sale of substantially all of the assets of its SunSource
Technology Services business (the "STS Business") to STS Operating, Inc., an
entity formed by certain officers and managers of the STS Business, Allied
Capital and Easton Hunt Capital Partners, L.P. for the purpose of acquiring the
STS Business. STS Operating, Inc. purchased the assets of the STS Business from
SunSource Technology Services, LLC, an indirect wholly-owned subsidiary of
SunSource, pursuant to an Asset Purchase Agreement, dated September 28, 2001, by
and between SunSource Technology Services, LLC and STS Operating, Inc. The
purchase price aggregated approximately $25 million in cash and preferred stock,
subject to post-closing adjustments, plus the assumption of certain liabilities.
As contemplated with the Merger Transaction and the sale of the STS Business, on
September 28, 2001, the Company, through its Hillman Group subsidiary,
refinanced its $115 million bank revolving credit and $21.5 million term loan
with $105 million in senior secured credit facilities. The Company also issued
$10 million of unsecured subordinated notes to Allied Capital which was used in
part to repay an unsecured subordinated note held by Allied Capital in the
amount of $8.8 million. In addition, the Company amended certain terms and
conditions of its outstanding $30 million unsecured subordinated notes due
Allied Capital. The events noted herein are referred to collectively as the
"Refinancing".
GENERAL
The accompanying Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 2001 and the year ended December 31, 2000, assume
that all of the transactions noted above (collectively, the "Transactions")
were consummated on January 1, 2000.
Presentation of a Pro Forma Consolidated Balance Sheet is not required as of
September 30, 2001, since the effects of the above Transactions have been
properly reflected in the Consolidated Balance Sheet included with the
Company's Report filed on Form 10-Q for the quarter ended September 30, 2001.
The Pro Forma Consolidated Statements of Operations are unaudited and are not
necessarily indicative of what the results of operations would have been had the
Transactions occurred on those dates, nor are they necessarily indicative of the
future results of operations of the Company. Management believes the pro forma
adjustments reflected in the accompanying Pro forma Consolidated Statements of
Operations give effect to all material changes arising from the Transactions.
The pro forma adjustments are based upon available information and upon certain
assumptions that the Company believes are reasonable. The pro forma adjustments
are preliminary and subject to certain post-closing adjustments related to the
Transactions and changes in estimated fair values of the purchased assets. The
Company does not expect that the final adjustments will materially differ from
the preliminary adjustments.
The Pro Forma Consolidated Statements of Operations for both periods exclude the
effects of discontinued operations of the Company.
The Pro Forma Consolidated Statements of Operations should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Report filed with the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 2000; Form 10-Q for the
quarter ended September 30, 2001; the Proxy Statement dated August 28, 2001
related to the Merger Transaction; Form 8-K, Report of Unscheduled Material
Events, filed on June 21, 2001; and Form 8-K, Report of Change in Control of
Registrant filed on October 10, 2001.
SUNSOURCE INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001
(DOLLARS IN THOUSANDS)
Divestments Pro Forma
Historical (a) Adjustments Pro Forma
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Net sales $ 341,307 $ (152,561) $ - $ 188,746
Cost of sales 197,743 (115,538) - 82,205
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Gross profit 143,564 (37,023) - 106,541
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Operating expenses:
Selling, general and administrative expenses 113,443 (38,143) - 75,300
Depreciation 9,593 (1,616) - 7,977
Amortization 2,895 (429) 2,098 (b) 4,564
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Total operating expenses 125,931 (40,188) 2,098 87,841
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Other income (expense) (398) 85 - (313)
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Income from operations 17,235 3,250 (2,098) 18,387
Interest expense, net 9,222 (80) (98) (c) 9,044
Distributions on guaranteed preferred
beneficial interests 9,174 - - 9,174
Equity in earnings of affiliate 1,063 - (348) (d) 715
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Income (loss) from continuing operations
before provision (benefit) for income taxes (98) 3,330 (2,347) 885
Provision (benefit) for income taxes 1,229 (185) 878 (e) 1,922
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Income (loss) from continuing operations $ (1,327) $ 3,515 $ (3,225) $ (1,037)
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SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL INFORMATION
SUNSOURCE INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)
Divestments Pro Forma
Historical (f) Adjustments Pro Forma
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Net sales $ 459,826 $ (224,538) $ - $ 235,288
Cost of sales 272,682 (171,805) - 100,877
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Gross profit 187,144 (52,733) - 134,411
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Operating expenses:
Selling, general and administrative expenses 166,057 (58,388) - 107,669
Depreciation 9,455 (2,070) - 7,385
Amortization 3,369 (561) 2,965 (g) 5,773
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Total operating expenses 178,881 (61,019) 2,965 120,827
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Loss on curtailment/termination of
defined pension plan (5,204) - - (5,204)
Contribution to defined contribution plan 925 - - 925
Other income 181 997 - 1,178
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Income from operations 4,165 9,283 (2,965) 10,483
Interest expense, net 11,286 (155) 606 (h) 11,737
Distributions on guaranteed preferred
beneficial interests 12,232 - - 12,232
Gain on contribution of subsidiaries 49,115 - - 49,115
Equity in earnings of affiliate 2,438 - (321) (i) 2,117
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Income (loss) from continuing operations
before provision for income taxes 32,200 9,438 (3,892) 37,746
Provision for income taxes 4,910 216 3,111 (j) 8,237
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Income (loss) from continuing operations $ 27,290 $ 9,222 $ (7,003) $ 29,509
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SEE ACCOMPANYING NOTES TO PRO FORMA FINANCIAL INFORMATION
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying Pro Forma Consolidated Statements of Operations are
unaudited and assume that the Transactions described above were
consummated on January 1, 2000.
A Pro Forma Consolidated Balance Sheet is not presented since the
effects of the above Transactions have been properly reflected in the
Consolidated Balance Sheet included with the Company's Report filed on
Form 10-Q for the quarter ended September 30, 2001.
Results from discontinued operations have been excluded from the
accompanying Pro Forma Consolidated Statement of Operations.
2. PRO FORMA ADJUSTMENTS TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2001:
(a) Adjustment to exclude the results of operations of SunSource
Technology Services, LLC for the nine months ended September
30, 2001.
(b) Adjustment to reflect amortization of goodwill arising from
application of Accounting Principles Board #16, Accounting for
Business Combinations ("APB #16") and push-down accounting to
the Merger Transaction.
(c) Adjustment to reflect the net decrease in interest expense
resulting from the Transactions based on current effective
interest rates.
(d) To adjust equity in earnings in the Company's investment in
GC-Sun Holdings for the nine months ended September 30, 2001 as
a result of the application APB #16 and push-down accounting to
the Merger Transaction.
(e) Adjustment to reflect additional consolidated net tax expense
as a result of pro forma adjustments (a) through (d).
PRO FORMA ADJUSTMENTS TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 2000:
(f) Adjustment to exclude the results of operations of SunSource
Technology Services, LLC for the year ended December 31, 2000.
(g) Adjustment to reflect amortization of goodwill arising from
application of APB #16 and push-down accounting to the Merger
Transaction.
(h) Adjustment to reflect net decrease in interest expense
resulting from the Transactions based on current effective
interest rates.
(i) To adjust equity in earnings in the Company's investment in
GC-Sun Holdings for the year ended December 31, 2001, arising
from application of APB #16 and push-down accounting to the
Merger Transaction.
(j) Adjustment to reflect additional consolidated net tax expense
as a result of pro forma adjustments (f) through (i).
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 hereunto duly authorized.
SUNSOURCE INC.
By /s/ Joseph M. Corvino
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Joseph M. Corvino
Senior Vice President and Chief
Financial Officer
Dated: December 14, 2001