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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 September 30, 1997
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 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)
937-526-5172
(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 OCTOBER 31, 1997
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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
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
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Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1997
(Unaudited) and December 31, 1996 . . . . . . . . . . . . . .3
Condensed Consolidated Statements of Operations and
Undistributed Income for the three months and nine months
ended September 30, 1997 and 1996 (Unaudited) . . . . . . . .4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996 (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.
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<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1997 1996
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ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 281,977 $ 121,163
Accounts receivable: Trade 3,083,004 3,196,376
Inventories 2,893,783 2,612,515
Prepaid expenses and other assets 144,726 479,031
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TOTAL CURRENT ASSETS $ 6,403,490 $ 6,409,085
PROPERTY AND EQUIPMENT - net of accumulated
depreciation of $4,926,814 and $4,154,597
in 1997 and 1996 12,439,817 12,197,731
OTHER ASSETS - net of amortization 2,864,524 2,960,144
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TOTAL ASSETS $21,707,831 $21,566,960
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,685,638 $ 2,685,099
Notes payable and current maturities on long term debt 2,741,425 2,827,006
Accrued expenses and other liabilities 861,671 740,047
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TOTAL CURRENT LIABILITIES $ 6,288,734 $ 6,252,152
LONG-TERM DEBT 5,182,206 5,704,645
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in Partnership net income 23,067 16,140
Distributions (33,596) (32,943)
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$ 4,602 $ (1,672)
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) 2,272,648 1,586,849
Distributions (3,329,187) (3,263,842)
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$10,232,289 $ 9,611,835
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TOTAL PARTNERS' CAPITAL $10,236,891 $ 9,610,163
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $21,707,831 $21,566,960
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</TABLE>
NOTE: The condensed balance sheet at December 31, 1996 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)
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<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenues
Sales of meat products $16,314,380 $15,430,077 $ 49,320,481 $ 42,993,792
Interest and other income 65,757 64,104 181,367 250,458
----------- ----------- ------------- --------------
$16,380,137 $15,494,181 $ 49,501,848 43,244,250
Costs and Expenses
Cost of meat products sold 14,988,485 14,120,679 45,455,455 39,364,711
Selling and administrative expenses 676,753 583,105 1,930,908 1,595,414
Depreciation and amortization 308,253 291,466 895,000 866,515
Interest 178,894 204,212 550,850 636,903
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$16,152,385 $15,199,462 $ 48,832,213 $ 42,463,543
----------- ----------- ------------- --------------
Net Income - Operations $ 227,752 $ 294,719 $ 669,635 $ 780,707
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Other Income
Gain on Sale of Assets $23,091 --- $ 23,091 ---
NET INCOME (LOSS) $ 250,843 $ 294,719 $ 692,726 $ 780,707
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Summary of net income allocated to
General Partner $ 2,508 $ 2,947 $ 6,927 $ 7,807
Limited Partners 248,335 291,772 685,799 772,900
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$250,843 $ 294,719 $ 692,726 $ 780,707
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----------- ----------- ------------- --------------
Net income per $10 unit of L.P. Capital $ 0.19 $ 0.23 $ 0.53 $ 0.60
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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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</TABLE>
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(UNAUDITED)
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<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
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<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,853,206 $ 1,015,170
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CASH FLOW USED IN INVESTING ACTIVITIES:
Purchase of property and equipment $ (1,036,969) $ (477,773)
Proceeds from disposal of property and equipment 18,595 ---
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NET CASH USED IN INVESTING ACTIVITIES (1,018,374) $ (477,773)
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CASH PROVIDED/(USED) IN FINANCING ACTIVITIES:
Proceeds from notes payable $ 16,974,365 $ 12,886,680
Payments on notes payable (17,582,385) (13,691,944)
Distributions to Limited and General Partners (65,998) ---
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NET CASH PROVIDED/(USED) IN FINANCING ACTIVITIES $ (674,018) $ (805,264)
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INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS $ 160,814 $ (267,867)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 121,163 488,247
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 281,977 $ 220,380
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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) $ 555,414 $ 661,661
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</TABLE>
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NOTES TO CONDENSED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
SEPTEMBER 30, 1997
(UNAUDITED)
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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 final installment was paid in July
1997.
At September 30, 1997 and December 31, 1996, 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 September 30, 1997 and the condensed consolidated results of
its operations for the nine months ending September 30, 1997 and 1996 and the
condensed consolidated cash flows for the nine months ending September 30,
1997 and 1996. Operating results for the period ended September 30, 1997,
are not necessarily indicative of the results that may be expected for the
entire year ending December 31, 1997.
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
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
Revenues for the nine months ended September 30, 1997 were $49,501,848 versus
$43,244,250 for the comparable period in 1996, an increase of 14.5%. This
increase in sales is primarily attributable to the increased volume during
the first nine months of 1997 as compared to the same period in 1996. During
the 1997 period 52,070,790 pounds of meat products were sold versus
47,278,530 pounds during the 1996 period, an increase of 4,792,260 pounds or
10.1%. 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 nine months ended September 30, 1997 were
$45,455,455 versus $39,364,711 for the comparable period ended September 30,
1996, an increase of 15.5%. The average cost of meat sold for 1997 was $.843
versus $.833 for the 1996 period. The increase in the cost per pound is
primarily attributable to general commodity price increases.
Selling and administrative expenses were $1,930,908 for the 1997 period
versus $1,595,414 for the comparable 1996 period. Selling and administrative
expenses represented 3.9% of revenue for the nine months ended September 30,
1997 and 3.7% the period ended September 30, 1996.
Depreciation and amortization expense for the nine months ended September 30,
1997 was $895,000 versus $866,515 for the same period in 1996, an increase of
3.3%.
Interest expense for the nine months ended September 30, 1997 was $550,850
versus interest expense of $636,903 for the same period in 1996. This
decrease of $86,053 primarily relates to the decrease in the average debt
outstanding.
Net income of $692,726 was realized in the 1997 period compared to a net
income of $780,707 in the comparable period in 1996.
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LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997 the Partnership had a net working capital position of
$114,756 versus a working capital position of $156,933 at December 31, 1996.
Cash provided by operating activities was $1,853,206 in 1997 versus
$1,015,170 in the 1996 period.
Cash used in investing activities was $1,018,374 in 1997 as compared to
$477,773 in 1996. This increase is attributable to the addition of a 3400
square foot employee welfare area and equipment modifications and additions
during 1997.
The Partnership used $674,018 from financing activities during 1997
representing net repayment of debt outstanding. For the comparable period in
1996, the Partnership used $805,264.
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 $2,114,320 outstanding at September 30,
1997),(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 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 $52,500 outstanding as of September 30,
1997 (the "GCI Loan"),(collectively, the "Loans").
The Principal Revolver bears interest at a rate equal to prime plus 1/2%.
The Principal Term Loan bears an interest rate of 8.717%. The Principal
Mortgage Loan bears interest of 8.99%. The Second Term Loan bears an
interest rate of prime plus 1/2%. The Third Term Loan 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 1997 revised capital budget calls for the expenditure of
$1,100,000 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 1997. 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 1997.
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
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 November 14, 1997 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 281,977
<SECURITIES> 0
<RECEIVABLES> 3,083,004
<ALLOWANCES> 0
<INVENTORY> 2,893,783
<CURRENT-ASSETS> 6,403,490
<PP&E> 17,366,631
<DEPRECIATION> 4,926,814
<TOTAL-ASSETS> 21,707,831
<CURRENT-LIABILITIES> 6,288,734
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,236,891
<TOTAL-LIABILITY-AND-EQUITY> 21,707,831
<SALES> 49,320,481
<TOTAL-REVENUES> 49,501,848
<CGS> 45,455,455
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,376,758
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 550,850
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 669,635
<EPS-PRIMARY> .53
<EPS-DILUTED> 0
</TABLE>
