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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 33-15962
WHITEFORD PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0222842
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
770 NORTH CENTER STREET, VERSAILLES, OHIO 45380
(Address of principal executive offices)
(Zip Code)
513-526-5172
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since 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
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INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
CLASS UNITS OUTSTANDING AT JULY 31, 1996
- ------------------------------------ ----------------------------------
LIMITED PARTNERSHIP CLASS A $10 UNITS 1,306,890
THIS DOCUMENT CONTAINS 10 pages
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WHITEFORD PARTNERS, L.P.
INDEX TO FORM 10-Q
SIX MONTHS ENDED JUNE 30, 1996 and 1995
Page Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . . . . 3
Condensed Consolidated Statements of Operations and
Undistributed Income for the three months and six months
ended June 30, 1996 and 1995 (Unaudited). . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 1996 and 1995 (Unaudited) . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements (Unaudited). 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 9
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CONDENSED CONSOLIDATED BALANCE SHEETS
WHITEFORD PARTNERS, L.P.
JUNE 30, DECEMBER 31,
1996 1995
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ASSETS (UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ 273,856 $ 488,247
Accounts receivable: Trade 2,574,091 2,545,169
Inventories 2,856,433 2,419,466
Prepaid expenses and other assets 785,278 755,515
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TOTAL CURRENT ASSETS $ 6,489,658 $ 6,208,397
PROPERTY AND EQUIPMENT - net of accumulated
depreciation of $3,826,567 and
$3,315,265 in 1996 and 1995 12,740,714 12,984,410
OTHER ASSETS - net of amortization 3,023,891 3,087,637
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TOTAL ASSETS $22,254,263 $22,280,444
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,873,388 $ 2,700,444
Notes payable and current maturities on
long term debt 3,051,697 3,097,979
Accrued expenses and other liabilities 797,108 935,011
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TOTAL CURRENT LIABILITIES $ 6,722,193 $ 6,733,434
LONG-TERM DEBT 6,253,597 6,754,525
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in Partnership net income 12,823 7,963
Distributions (32,943) (32,943)
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$ (4,989) $ (9,849)
Limited Partners:
Capital Contributions - net of
organization and offering costs
of $2,010,082 11,172,274 11,172,274
Capital transfers from General Partner 116,554 116,554
Interest in Partnership net income/(loss) 1,258,476 777,348
Distributions (3,263,842) (3,263,842)
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$ 9,283,462 $ 8,802,334
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TOTAL PARTNERS' CAPITAL $ 9,278,473 $ 8,792,485
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $22,254,263 $22,280,444
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NOTE: The condensed balance sheet at December 31, 1995 has been taken from
the audited financial statements at such date.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
WHITEFORD PARTNERS, L.P.
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ------------------------
1996 1995 1996 1995
------ ------ ------- -------
Revenues
Sales of meat products $14,375,693 $13,478,439 $27,563,715 $27,551,584
Interest and other income 135,402 28,696 186,354 68,412
----------- ----------- ----------- -----------
$14,511,095 $13,507,135 $27,750,069 $27,619,996
Costs and Expenses
Cost of meat products
sold 13,236,407 12,837,477 25,244,032 26,390,583
Selling and
administrative expenses 534,047 481,573 1,012,309 1,003,782
Depreciation and
amortization 288,308 259,794 575,049 489,395
Interest 207,902 222,330 432,691 336,478
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$14,266,664 $13,801,174 $27,264,081 $28,220,238
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NET INCOME (LOSS) $ 244,431 $ (294,039) $ 485,988 $ (600,242)
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Summary of net income
allocated to
General Partner $ 2,444 $ (2,940) $ 4,860 $ (6,002)
Limited Partners 241,987 (291,099) 481,128 (594,240)
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$ 244,431 $ (294,039) $ 485,988 $ (600,242)
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Net income per $10 unit
of L.P. Capital $ 0.19 $ (0.23) $ 0.37 $ (0.46)
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Average units issued and
outstanding 1,306,890 1,306,890 1,306,890 1,306,890
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
1996 1995
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NET CASH PROVIDED BY OPERATING ACTIVITIES $ 600,426 $ 592,116
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CASH FLOW USED IN INVESTING ACTIVITIES:
Purchase of property and equipment $ (267,606) $(2,567,363)
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NET CASH USED IN INVESTING ACTIVITIES $ (267,606) $(2,567,363)
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CASH PROVIDED/(USED) IN FINANCING ACTIVITIES:
Proceeds from notes payable $ 8,123,406 $10,845,613
Payments on notes payable (8,670,617) (8,964,209)
Distributions to Limited and General Partners --- (105,597)
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NET CASH PROVIDED/(USED) IN FINANCING ACTIVITIES $ (547 211) $ 1,775,807
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INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS $ (214,391) $ (199,440)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 488,247 429,457
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 273,856 $ 230,017
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (excluding amount capitalized
to fixed assets and inventory) $ 450,162 $ 336,478
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NOTES TO CONDENSED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
JUNE 30, 1996
(UNAUDITED)
NOTE A - ORGANIZATION, BUSINESS AND ACQUISITIONS
Whiteford Partners, L.P., (the Partnership), formerly Granada Foods, L.P.,
was formed on June 30, 1987, as a Delaware limited partnership. Prior to May
4, 1992, the Partnership consisted of a General Partner, Granada Management
Corporation, (Granada), and the Limited Partners. On May 4, 1992, Granada
assigned its sole general partner interest in the Partnership to Gannon
Group, Inc. and the Partnership was renamed Whiteford Partners, L.P.
The operational objectives of the Partnership are to own and operate
businesses engaged in the development, production, processing, marketing,
distribution and sale of food and related products (Food Businesses) for the
purpose of providing quarterly cash distributions to the partners while
providing capital appreciation through the potential appreciation of the
Partnership's Food Businesses. The Partnership expects to operate for twenty
years from inception, or for such shorter period as the General Partner may
determine is in the best interest of the Partnership, or for such shorter
period as determined by the majority of the Limited Partners.
The Partnership Agreement provides that a maximum of 7,500,000 Class A, $10
partnership units can be issued to Limited Partners. Generally, Class A
units have a preference as to cumulative quarterly cash distributions of $.25
per unit. The sharing of income and loss from the Partnership operations is
99% to the Class A and 1% to the General Partner. Amounts and frequency of
distributions are determinable by the General Partner.
On March 26, 1990, the Partnership, through Whiteford Foods Venture, L.P.
"Whiteford's",(formerly Granada/Whiteford Foods Venture, L.P.), a joint
venture with an affiliate of the then General Partner, acquired the business
assets of Whiteford's Inc., a meat processing and distribution company. The
cash purchase price of the assets was $8,275,000 with liabilities of
$3,776,806 assumed. The excess of the purchase price over the estimated fair
value of the net tangible assets acquired of approximately $3,825,000 was
recorded as goodwill. The acquisition was accounted for using the purchase
method of accounting and, accordingly, the financial statements include the
operations of Whiteford's from the date of acquisition.
The Partnership entered into a settlement agreement with certain participants
in the Partnership's Distribution Reinvestment and Unit Acquisition Plan
under which the Partnership repurchased 33,165 Class A Units for a total
purchase price of $218,194 payable over a five year period. The first
installment in the amount of $62,049 was paid in 1993 with four subsequent
annual installments of $39,036.25, the most recent of which was paid in July
1996.
At June 30, 1996 and December 31, 1995, the Partnership had 1,306,890 Class A
limited partnership units issued and outstanding.
The Partnership records distributions of income and/or return of capital to
the General Partner and Limited Partners when paid. Special transfers of
equity, as determined by the General Partner, from the General Partner to the
Limited Partners are recorded in the period of determinations.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions of Form 10-Q and therefore do not include
all information and footnotes for a fair presentation of financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles.
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In the opinion of management, the unaudited information includes all
adjustments (consisting of normal accruals) which are necessary for a fair
presentation of the condensed consolidated financial position of the
Partnership at June 30, 1996 and the condensed consolidated results of its
operations for the six months ending June 30, 1996 and 1995 and the condensed
consolidated cash flows for the six months ending June 30, 1996 and 1995.
Operating results for the period ended June 30, 1996, are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1996.
NOTE B - INCOME TAXES
The Partnership files an information tax return, the items of income and
expense being allocated to the partners pursuant to the terms of the
Partnership Agreement. Income taxes applicable to the Partnership's results
of operations are the responsibility of the individual partners and have not
been provided for in the accounts of the Partnership.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management's discussion and analysis set forth below should be read in
conjunction with the accompanying condensed consolidated financial statements.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Revenues for the six months ended June 30, 1995 were $27,750,069 versus
$27,619,996 for the comparable period in 1995, an increase of 0.5%. This
increase in sales is primarily attributable to the increase in pounds sold
along with a decline in meat prices during the first six months of 1996 as
compared to the same period in 1995. During the 1996 period 30,489,489
pounds of meat products were sold versus 27,649,913 pounds during the 1995
period, an increase of 2,839,576 pounds or 10.3%. The increase is pounds of
meat products sold is primarily attributable to the increased sales effort
and production capabilities at the Versailles plant.
Costs of meat products sold for the six months ended June 30, 1996 were
$25,244,032 versus $26,390,583 for the comparable period ended June 30, 1995,
a decrease of 4.3%. The decline in the cost per pound is primarily
attributable to general commodity price declines. The General Partner
expects general commodity prices to decline slightly during 1996.
Gross margins on meat sales were 9.0% for the six months ended June 30, 1996
and 4.5% for the 1995 period. This increase in gross margins is primarily
attributable to: i) the semi-variable nature of certain costs in the costs of
meat products sold such as labor, packaging, and utilities and ii) the
increased efficiencies associated with the recently renovated Versailles
plant whereby lower labor and utilities costs are realized in the manufacture
and warehousing of products.
Selling and administrative expenses increased to $1,012,309 from $1,003,782,
a 0.8% increase. Selling and administration expenses represented 3.6% of
revenue for the six months ended June 30, 1996 and 3.6% the period ended June
30, 1995.
Depreciation and amortization expense for the six months ended June 30, 1996
was $575,049 versus $489,395 for the same period in 1995, an increase of
17.5%. Such increase is primarily due to the expansion of the freezer space
at the Versailles plant. Such construction project was completed during 1995
and the property was put into service in March 1995.
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Interest expense for the six months ended June 30, 1996 was $432,691 versus
interest expense of $336,478 for the same period in 1995. This increase of
$96,213 primarily relates to the increase in the average debt outstanding
primarily due to the expansion of the Versailles plant.
A net gain of $485,988 was realized in the 1996 period compared to a net loss
of $600,242 in the comparable period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996 the Partnership had a net working capital deficit of
$232,535 versus a working capital deficit of $525,037 at December 31, 1995.
Cash provided by operating activities was $600,426 in 1996 versus $592,116 in
the 1995 period.
Cash used in investing activities was $267,606 in 1996 as compared to
$2,567,363 in 1995. This decrease is attributable to the completion of the
freezer expansion in 1995.
The Partnership used $547,211 from financing activities during 1996
representing net repayment of debt outstanding. For the comparable period in
1995, the Partnership provided $1,775,807 in financing activities due to the
increase in borrowing.
Whiteford's working capital and equipment requirements are primarily met by
(a) a revolving credit agreement with Whiteford's principal lender in the
maximum amount of $2,600,000 (with $2,366,006 outstanding at June 30,
1996),(the "Principal Revolver"); (b) a five year term credit facility of
$2,200,000,(the "Principal Term Loan"); (c) a five year credit facility of
$4,165,000,(the "Principal Mortgage Term Loan"); (d) a two year credit
facility of $700,000,(the "Second Term Loan"); (e) a five year credit
facility of $500,000, (the "Third Term Loan") and (f) a credit facility with
Greenaway Consultant, Inc. of $420,000, with $157,500 outstanding as of June
30, 1996 (the "GCI Loan"),(collectively, the "Loans").
The Principal Revolver bears an interest rate of prime plus 3/4%. The
Principal Term Loan bears an interest rate of 8.717%. The Principal Mortgage
Loan bears interest of 9.89%. The Second Term Loan bears an interest rate of
prime plus 1.00%. The Third Term bears an interest rate of 9.42%. The Loans
require the Partnership to meet certain financial covenants and restrict the
ability of the Partnership to make distributions to Limited Partners without
the consent of the principal lender. The Principal Revolver and the
Principal Term Loan (together with the Principal Mortgage Loan provided by
the principal lender) are secured by real property, fixed assets, equipment,
inventory, receivables and intangibles of Whiteford's.
The GCI Loan bears interest at a rate equal to 1-1/2 % above the prime rate
established from time to time by the Company's financial institution lender
having the highest outstanding credit balance. The GCI Loan is secured by
real property, fixed assets, equipment inventory and intangibles and is
subordinated to the Principal Revolver, the Principal Term Loan, the
Principal Mortgage Loan.
The Partnership's 1996 capital budget calls for the expenditure of $900,000
for building, plant and equipment modifications and additions. The General
Partner believes Whiteford's is in compliance with environmental protection
laws and regulations, and does not anticipate making additional capital
expenditures for such compliance in 1996. Such amounts are expected to be
funded by internally generated cash flow. The General Partner believes that
the above credit facilities along with cash flow from operations will be
sufficient to meet the Partnership's working capital and credit requirements
for 1996.
The nature of the Partnership's business activities (primarily meat
processing) are such that should annual inflation rates increase materially
in the foreseeable future, the Partnership would experience increased costs
for personnel and raw materials; however, it is believed that increased costs
could substantially be passed on in the sales price of its products.
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PART II. OTHER INFORMATION
Item 1. Legal Proceeding
None
Item 2. Change in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Materially Important Events
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - None
b. Reports on Form 8-K - None
Item 7.
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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.
WHITEFORD PARTNERS, L.P.
Date August 9, 1996 By /s/ Kevin T. Gannon
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Kevin T. Gannon, President
Chief Executive Officer
Chief Financial Officer
Gannon Group, Inc.
General Partner
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<TABLE> <S> <C>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 273,856
<SECURITIES> 0
<RECEIVABLES> 2,574,091
<ALLOWANCES> 0
<INVENTORY> 2,856,433
<CURRENT-ASSETS> 6,489,658
<PP&E> 16,567,281
<DEPRECIATION> 3,826,567
<TOTAL-ASSETS> 22,254,263
<CURRENT-LIABILITIES> 6,722,193
<BONDS> 6,253,597
0
0
<COMMON> 0
<OTHER-SE> 9,278,473
<TOTAL-LIABILITY-AND-EQUITY> 22,254,263
<SALES> 27,563,715
<TOTAL-REVENUES> 27,750,069
<CGS> 25,244,032
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,020,049
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 432,691
<INCOME-PRETAX> 485,988
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 485,988
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0
</TABLE>
