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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 March 31, 1996
OR
[ ] 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: 33-15962
WHITEFORD PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 76-0222842
incorporation or organization) (I.R.S. Employer Identification No.)
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 ____
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 APRIL 30, 1996
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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
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
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Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1996
(Unaudited) and December 31, 1995 ................... 3
Condensed Consolidated Statements of Operations and
Undistributed Income for the three months
ended March 31, 1996 and 1995 (Unaudited) ........... 4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 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.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 283,433 $ 488,247
Accounts receivable: Trade 2,155,951 2,545,169
Inventories 2,303,541 2,419,466
Prepaid expenses and other assets 720,130 755,515
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TOTAL CURRENT ASSETS $ 5,463,055 $ 6,208,397
PROPERTY AND EQUIPMENT - net of accumulated depreciation
of $3,570,133 and $3,315,265 in 1996 and 1995 12,904,793 12,984,410
OTHER ASSETS - net of amortization 3,055,763 3,087,637
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TOTAL ASSETS $21,423,611 $22,280,444
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,545,915 $ 2,700,444
Notes payable and current maturities on long term debt 2,488,546 3,097,979
Accrued expenses and other liabilities 798,175 935,011
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TOTAL CURRENT LIABILITIES $ 5,832,636 $ 6,733,434
LONG-TERM DEBT 6,556,933 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 10,379 7,963
Distributions (32,943) (32,943)
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$ (7,433) $ (9,849)
Limited Partners:
Capital Contributions - net of organization and
offering costs of $2,010,082 11,172,274 11,172,274
Capital transfers from General Partner 116,554 116,554
Interest in Partnership net income 1,016,489 777,348
Distributions (3,263,842) (3,263,842)
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$ 9,041,475 $ 8,802,334
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TOTAL PARTNERS' CAPITAL $ 9,034,042 $ 8,792,485
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $21,423,611 $22,280,444
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</TABLE>
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)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
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1996 1995
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<S> <C> <C>
Revenues
Sales of meat products $13,188,022 $14,073,145
Interest and other income 50,952 39,716
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$13,238,974 14,112,861
Costs and Expenses
Cost of meat products sold 12,007,625 13,553,106
Selling and administrative expenses 478,262 522,209
Depreciation and amortization 286,741 229,601
Interest 224,789 114,148
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$12,997,417 $14,419,064
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NET INCOME (LOSS) $ 241,557 $ (306,203)
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Summary of net income allocated to
General Partner $ 2,416 $ (3,062)
Limited Partners 239,141 (303,141)
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$ 241,557 $ (306,203)
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Net income per $10 unit of L.P. Capital $ 0.18 $ (0.23)
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Average units issued and outstanding 1,306,890 1,306,890
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</TABLE>
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
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<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 777,461 $ 245,519
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CASH FLOW USED IN INVESTING ACTIVITIES:
Purchase of property and equipment $ (175,251) $(1,724,369)
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NET CASH USED IN INVESTING ACTIVITIES $ (175,251) $(1,724,369)
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CASH PROVIDED/(USED) IN FINANCING ACTIVITIES:
Proceeds from notes payable $ 4,502,072 $ 5,110,304
Payments on notes payable (5,309,096) (3,852,943)
Distributions to Limited and General Partners -- (52,798)
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NET CASH PROVIDED/(USED) IN FINANCING ACTIVITIES $ (807 024) $ 1,204,563
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INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS $ (204,814) $ (274,287)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 488,247 429,457
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 283,433 $ 155,170
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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) $ 238,433 $ 114,148
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</TABLE>
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NOTES TO CONDENSED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
MARCH 31, 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.,
(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.
In 1993, 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.
At March 31, 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 March 31,
1996 and the condensed consolidated results of its operations for the three
months ending March 31, 1996 and 1995 and the condensed consolidated cash flows
for the three months ending March 31, 1996 and 1995. Operating results for the
period ending March 31, 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
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Revenues for the three months ended March 31, 1996 were $13,238,974 versus
$14,112,861 for the comparable period in 1995, a decrease of 6.2%. This decline
in sales is primarily attributable to the decline in meat prices during the
first three months of 1996 as compared to the same period in 1995. Sales
declines attributable to product pricing were partially offset by increases in
pounds of product sold. During the 1996 period 14,385,039 pounds of meat
products were sold versus 13,894,623 pounds during the 1995 period, an increase
of 490,416 pounds or 3.5%. The increase in 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 three months ended March 31, 1996 were
$12,007,625 versus $13,553,106 for the comparable period ended March 31, 1995, a
decrease of 11.4%. 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 sales were 9.3% for the three months ended March 31, 1996 and
4.0% 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 decreased to $478,262 from $522,209, a 8.4%
decrease. Selling and administration expenses represented 3.6% of revenue for
the three months ended March 31, 1996 compared to 3.7% for the comparable period
in 1995.
Depreciation and amortization expense for the three months ended March 31, 1996
was $286,741 versus $229,601 for the same period in 1995, an increase of 24.9%.
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 three months ended March 31, 1996 was $224,789 versus
interest expense of $114,148 for the same period in 1995. This increase of
$110,641 primarily relates to the increase in the average debt outstanding
primarily due to the expansion of the Versailles plant.
A net gain of $241,557 was realized in the 1996 period compared to a net loss of
$306,203 in the comparable period in 1995.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996 the Partnership had a net working capital deficit of $369,581
versus a working capital deficit of $525,037 at December 31, 1995.
Cash provided by operating activities was $777,461 in 1996 versus $245,519 in
the first quarter of 1995.
Cash used in investing activities was $175,251 in 1996 as compared to $1,724,369
in 1995. This decrease is attributable to the completion of the freezer
expansion in 1995.
The Partnership used $807,024 from financing activities during 1996 representing
net repayment of debt outstanding. For the comparable period in 1995, the
Partnership provided $1,204,563 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 $1,802,856 outstanding at March 31, 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 Mortagage 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 $183,750 outstanding as of March 31, 1996 (the "GCI
Loan"),(collectively, the "Loans").
The Principal Revolver bears interest at prime plus 1/2%. 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
1.25%. 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, and 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.
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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.
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
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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 May 15, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 283,433
<SECURITIES> 0
<RECEIVABLES> 2,155,951
<ALLOWANCES> 0
<INVENTORY> 2,303,541
<CURRENT-ASSETS> 5,463,055
<PP&E> 16,474,926
<DEPRECIATION> 3,570,133
<TOTAL-ASSETS> 21,423,611
<CURRENT-LIABILITIES> 5,832,636
<BONDS> 9,045,479
0
0
<COMMON> 0
<OTHER-SE> 9,034,042
<TOTAL-LIABILITY-AND-EQUITY> 21,426,311
<SALES> 13,188,022
<TOTAL-REVENUES> 13,238,974
<CGS> 12,007,625
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 989,792
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 224,789
<INCOME-PRETAX> 241,557
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 241,557
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
