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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 2005
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
incorporation or organization) Identification No.)
Sebaly Shillito & Dyer 45423
- ---------------------------------------- ----------------------------
1900 Kettering Tower, Dayton, Ohio
(Address of principal executive offices) (Zip Code)
1-800-225-6328
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
1,306,890 Units Outstanding
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes [ ] No [X]
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act.
Yes [ ] No [X]
At March 15, 2004, 1,306,890 Class A units had been subscribed and issued.
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INDEX
Item
No. Description Page
- ------ ----------------------------------------------------------- ----
PART I
1. Business 1
1A. Risk Factors 3
2. Properties 3
3. Legal Proceedings 3
4. Submission of Matters to a Vote of Security Holders 3
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters 4
6. Selected Financial Data 4
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 6
7A. Quantitative and Qualitative Disclosure About Market Risk 7
8. Financial Statements and Supplementary Data 7
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 7
PART III
10. Directors and Executive Officers of the Partnership 8
11. Executive Compensation 8
12. Security Ownership of Certain Beneficial Owners and Management 9
13. Certain Relationships and Related Transactions 9
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 10
PART I
ITEM 1. BUSINESS
A. GENERAL DEVELOPMENT OF BUSINESS
Whiteford Partners, L.P. (the ``Partnership'') was formed on June 30, 1987,
as a Delaware limited partnership. The Partnership consists of a General
Partner, Gannon Group, Inc., and Limited Partners. The offering period of the
Partnership terminated on November 10, 1989, with $13,557,550 of Limited Partner
gross subscriptions received in the form of Class A Units. Pursuant to the terms
of the Prospectus, offering proceeds in the amount of $140,365 were returned to
certain Ohio residents when the Partnership's business acquisition program was
not substantially completed by December 1989. The Partnership was organized
principally to form, acquire, own and operate businesses engaged in the
development, production, processing, marketing, distribution and sale of food
and related products (the ``Food Businesses'').
In the first quarter of 1990, the Partnership entered into a limited
partnership, Whiteford Foods Venture, L.P. ("Whiteford's") which was formerly
named Granada/Whiteford Foods Venture, L.P., with a wholly-owned subsidiary of
the former General Partner, G/W Foods, Inc., for the purpose of acquiring the
assets, certain liabilities and the operations of Whiteford's Inc., a further
processor and distributor of beef products to major fast food restaurants and
regional chains, which was located in Versailles, Ohio. The acquisition, which
was made with Partnership funds, was closed March 26, 1990, with the
Partnership's resultant equity interest in Whiteford's being in excess of 99%.
On April 23, 1990, all outstanding and contingent items were resolved and
completed, and the acquisition of the assets was funded on April 24, 1990.
On May 4, 1992, the outstanding shares of G/W Foods, Inc. were assigned by
the former General Partner to Gannon Group, Inc., a corporation owned by Kevin
T. Gannon, a Director and Vice President of G/W Foods, Inc. At that time, Mr.
Gannon was also a former Vice President of Granada Corporation and certain of
its affiliates. Also on May 4, 1992, Granada Management Corporation assigned its
sole general partnership interest in the Partnership to Gannon Group, Inc. The
effect of these assignments is for Gannon Group, Inc. to have general
partnership authority and responsibility with respect to the Partnership and,
through G/W Foods, Inc., of Whiteford's.
Subject to the availability of capital resources and/or financing, the
Partnership Agreement permits the acquisition of additional Food Businesses that
produce, process or distribute specialty food products including businesses that
possess technology or special processes which could increase the productivity or
processing capability of the Partnership's current Food Business or which
enhance the marketability or resale value of the Partnership's Food Business
products. At the present time, no acquisitions are contemplated.
The Partnership sold (the "Sale Transaction") substantially all of its
assets on November 11, 2001 to Whiteford Food Products, Inc., a wholly owned
subsidiary of JNR Corporation, an unaffiliated company. The purchase price was
$7,950,000, including the assumption or payment of certain liabilities. The
purchase price was paid $1,500,000 in cash and the issuance of a subordinated
note (the "Subordinated Note") due June 30, 2007 in the principal amount of
$1,350,000 (as adjusted) with the balance of the purchase price paid by the
assumption of certain liabilities net of other assets. The Subordinated Note
bears interest at 9.5% and is prepayable under certain conditions. Additionally,
the principal balance of the Subordinated Note may be adjusted downward under
certain conditions.
The Partnership has received accrued interest on the Subordinated Note
through June 30, 2005 at the rate of 9.5% annually. No payments of interest
accrued on the Subordinated Note subsequent to June 30, 2005 have been received.
On August 3, 2005 the Partnership was advised that Whiteford Foods Products,
Inc. noticed its employees of the possibility of the closure of the facility in
Versailles, Ohio, due to losses at such facility. Furthermore, U.S. Bank, the
lender to Whiteford Food Products, Inc. and Rochester Meat Company, a
subordinated guarantor of the Subordinated Note, declared a default on loans to
Whiteford Food Products, Inc. which resulted in the suspension of payments to
the Partnership under the Subordinated Note. On September 26, 2005, the
Partnership was advised that Whiteford Food Products, Inc. filed for protection
from creditors under Chapter 11 of the U.S. Bankruptcy Code, due to losses
arising from processing activities. Whiteford Food Products, Inc. conducted an
auction of equipment during December 2005 and filed a reorganization plan on
January 24, 2006. Based on this, the General Partner has assessed the financial
impact of such matters on the financial condition of the Partnership and
established a reserve in the amount of $800,000 against the $1,350,000 owed to
the Partnership and ceased the accrual of interest income on such note after
June 30, 2005.
In connection with the transaction with Whiteford Food Products, Inc., the
Partnership was obligated to pay up to $500,000 to Greenaway Consultants, Inc.
pursuant to a consulting agreement. Greenaway Consultants, Inc. acquired the
right to such payment in connection with its provision of management services
and financing to the Partnership. The Partnership and Greenaway Consultants,
Inc. agreed to: (i) a $50,000 payment made in January 2002, (ii) subordinate
$300,000 of such payment to the distribution by the Partnership of $2.00 per
limited partner unit (an aggregate of $2,613,780) and (iii) forgive $150,000 of
such payment. Greenaway Consultants, Inc. is wholly owned by Albert Greenaway.
Neither Mr. Greenaway nor Greenaway Consultants, Inc. owns any interest in the
general partner of the Partnership. Based upon the General Partner's estimate of
the value of the Subordinated Note Receivable, the General Partner has revised
its estimate of amounts due Greenaway Consultants Inc. to $0 and has reversed
amounts previously accrued.
1
B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Prior to the Sale Transaction, the Partnership operated principally in the
food processing and distribution business. The Partnership is presently holding
and managing the proceeds of sale and related assets.
C. DESCRIPTION OF BUSINESS
The Partnership was organized to form, acquire, own and operate businesses
engaged in the development, production, processing, marketing, distribution and
sale of food and related products. Prior to the Sale Transaction, the
Partnership operated a further processing and meat production operation at one
location--Versailles, Ohio.
Versailles, Ohio Plant Operation
Prior to the Sale Transaction, Whiteford's was a further processor and
distributor of meat products to major fast food restaurants and regional chains
and food distributors. The Partnership served major metropolitan areas such as
Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Louisville and
St. Louis. Whiteford's principal products were fresh frozen hamburger patties;
precooked and uncooked ground beef, taco meat and roast beef; marinated beef
entrees; and other items processed to customers' specifications. Prior to the
Sale Transaction, Whiteford's purchased products principally from major domestic
packers and regional distributors.
Whitefords had no sales of meat products in 2003, 2004 or 2005.
Marketing and Sales
Whitefords had no sales of meat products in 2003, 2004 or 2005. Prior to
the Sale Transaction, Whiteford's customers consisted primarily of fast food
retail chains in addition to HRI (Hotel, Restaurant, Institutional) customers
and food products distributors. Sales operations were conducted locally by sales
representatives from the Versailles location and through unaffiliated food
products distributors and food brokers. Prior to the Sale Transaction, all of
Whiteford's sales were to customers in the United States and Canada.
Regulatory Matters
Prior to the Sale Transaction in 2001, all of Whiteford's meat production
operations were subject to ongoing inspection and regulation by the United
States Department of Agriculture ("USDA"). Whiteford's plant and facilities were
subject to periodic or continuous inspection, without advance notice, by USDA
employees to ensure compliance with USDA standards of sanitation, product
composition, packaging and labeling. All producers of meat and other food
products must comply with substantially similar standards.
Prior to the Sale Transaction in 2001, Whiteford's was subject to federal,
state and local laws and regulations governing environmental protection,
compliance with which has required capital and operating expenditures. The
General Partner believes Whiteford's was in substantial compliance with such
laws and regulations prior to the Sale Transaction. The General Partner is not
aware of any violations of, or pending changes in such laws and regulations that
are likely to result in material penalties.
Prior to the Sale Transaction in 2001, Whiteford Foods was subject to
various other federal, state and local regulations, none of which imposed
material restrictions on its operations.
Employees
The Partnership's operations have been managed by its general partner,
Gannon Group, Inc. since May 4, 1992, and Granada Management Corporation from
inception to May 4, 1992. Directly, the Partnership has no employees. The
Partnership has utilized the services of employees of the General Partner as
needed for certain administrative services.
The Whiteford's operation at Versailles, Ohio employed 175 personnel at
November 11, 2001, the date of the Sale Transaction and no employees as of
December 31, 2004 or December 31, 2005. The General Partner believes there will
be sufficient personnel available to adequately manage the Partnership's
business affairs.
2
ITEM 1A. RISK FACTORS
A. ADMINISTRATIVE COSTS MAY EXCEED REVENUES
The Partnership's assets consist of cash and cash equivalents aggregating
$424,797 and a subordinated note receivable with a carrying value of $550,000.
The cash and cash equivalent's balance earns a short term rate of interest of
less than 5% while the subordinated note receivable is due from Whiteford Food
Products, Inc., an entity which is presently operating under the protection from
creditors under Chapter 11 of the U.S. Bankruptcy Code. The Partnership does not
receive interest income on the subordinated note receivable at this time.
Therefore, the administrative expenses associated with the continued operation
of the Partnership are likely to exceed the interest income received by the
Partnership.
B. PROCEEDS FROM THE SUBORDINATED NOTE RECEIVABLE MAY BE REDUCED OR DELAYED
Whiteford Food Products, Inc. is in the process of seeking the approval of
a plan of reorganization which would result in the payment of approximately
$550,000 to the Partnership for the subordinated note receivable by Whiteford
Food Products, Inc. and affiliates during 2006. There can be no assurance that
the plan of reorganization will be approved by the creditors of Whiteford Food
Products, Inc. or that the amounts estimated as recoverable by the General
Partner will be received by the Partnership without further delay.
ITEM 2. PROPERTIES
Properties Utilized by the Partnership
The Partnership's executive offices are those of the legal counsel to the
Partnership, located at Sebaly Shillito & Dyer, 1900 Kettering Tower, Dayton,
Ohio 45423. As of December 31, 2005 and December 31, 2004, the Partnership owns
no operational facilities.
ITEM 3. LEGAL PROCEEDINGS
There are no other material pending or threatened legal proceedings
involving the Partnership, known to either the Partnership or the General
Partner.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Limited Partners of the
Partnership during 2005.
3
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Partnership's Limited
Partnership Units.
The following table sets forth the amounts and dates of distributions to
holders of Limited Partnership Units in 1998 and 1999 and 2002. No distributions
were issued during 2000, 2001, 2003, 2004 or 2005.
Amount Per Limited
Date Aggregate Amount Partnership Unit
---- ---------------- ----------------
February 25, 1998 $65,344.50 $0.05
May 29, 1998 65,344.50 0.05
August 25, 1998 65,344.50 0.05
November 27, 1998 65,344.50 0.05
March 2, 1999 65,344.50 0.05
May 31, 1999 65,344.50 0.05
June 30, 2002 980,167.50 0.75
The following table sets forth the approximate number of holders of record
of the equity securities of the Partnership as of December 31, 2005:
Title of Class Number of Record Holders
-------------- ------------------------
Limited Partnership Units 1,309
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in conjunction
with the consolidated financial statements, the notes thereto and other
financial information included elsewhere herein, including "Management's
Discussion and Analysis of Results of Operations and Financial Condition." The
table following reflects the results of operations of acquired businesses for
periods subsequent to their respective acquisition dates.
4
Year Ended December 31
==========================================================================
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA:
Revenues:
Sale of meat products $ 0 $ 0 $ 0 $ 0 $ 31,705,599
Interest and other 75,601 132,238 130,981 143,878 231,103
------------ ------------ ------------ ------------ ------------
Total revenues 75,601 132,238 130,981 143,878 31,936,702
Cost of sales 0 0 0 0 30,659,496
------------ ------------ ------------ ------------ ------------
Gross profit
Meat products 0 0 0 0 1,046,103
Other 75,601 132,238 130,981 143,878 231,103
------------ ------------ ------------ ------------ ------------
Total gross profit 75,601 132,238 130,981 143,878 1,277,206
------------ ------------ ------------ ------------ ------------
Selling and administrative expenses 112,395 132,238 145,009 129,022 1,436,690
Depreciation, amortization
and interest 0 0 0 0 1,474,437
Write-off of goodwill 0 0 0 0 2,350,550
Loss on sale of assets 0 0 0 0 1,972,651
Change in Estimate on
Subordinated Consulting Fee (183,903) 0 0 0 0
Subordinated Note Receivable 800,000 0 0 0 0
------------ ------------ ------------ ------------ ------------
728,492 132,238 145,009 129,022 7,234,328
------------ ------------ ------------ ------------ ------------
Net (loss) income $ (652,891) $ 0 $ (14,028) $ 14,856 $ (5,957,122)
============ ============ ============ ============ ============
(Loss) income per unit of
Limited Partners' Capital $ (.50) $ 0.00 $ (.01) $ 0.01 $ (4.51)
============ ============ ============ ============ ============
Weighted average units
outstanding 1,306,890 1,306,890 1,306,890 1,306,890 1,306,890
============ ============ ============ ============ ============
BALANCE SHEET DATA (DECEMBER 31):
Working capital (net) $ 358,417 $ 395,211 $ 325,466 $ 225,336 $ 1,190,648
Total assets 974,797 1,788,363 1,708,984 1,610,512 2,686,919
Long-term debt, less current
maturities 0 183,903 114,158 0 0
Total partners' capital $ 908,417 $ 1,561,308 $ 1,561,308 $ 1,575,336 $ 2,540,648
5
ITEM 7. 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 Consolidated Financial Statements and the notes thereto
included elsewhere herein.
Application of Critical Accounting Policies (See also Notes to Consolidated
Financial Statements.)
The Partnership's discussion and analysis of its financial condition and
results of operations are based upon its consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The Partnership believes the following critical
accounting policies affect its more significant judgments and estimates used in
the preparation of its consolidated financial statements.
Revenue Recognition
The Partnership records revenue when earned.
Information Regarding and Factors Affecting Forward-Looking Statements:
The Partnership is including the following cautionary statement in this
Report on Form 10K to make applicable and take advantage of the safe harbor
provision of the Private Securities Litigation Reform Act of 1995 for any
forward-looking statements made by, or on behalf of the Partnership.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions and
other statements that are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and, accordingly,
involve risk and uncertainties, which could cause actual results to differ
materially from those expressed in the forward-looking statements. The
Partnership's expectations, beliefs and projections are expressed in good faith
and are believed by the Partnership to have reasonable basis, including without
limitation, Management's examination of historical operating trends, data
contained in the Partnership's records, and other data available from third
parties, but there can be no assurance that Management's expectations, beliefs,
or projections would result or be achieved or accomplished. In addition to other
factors and matters discussed elsewhere herein, important factors that, in the
view of the Partnership, could cause actual results to differ materially from
those discussed in the forward-looking statements include demand for Rochester
Meats (as the guarantor on the Subordinated Note) products, the ability of
Rochester Meats to obtain widespread market acceptance of its products, the
ability of Rochester Meats to obtain acceptable forms and amounts of financing,
competitive factors, regulatory approvals and developments, economic conditions,
the impact of competition and pricing, and other factors affecting the
Partnership, Rochester Meats' business that is beyond the Partnership's control.
Also, the realization of proceeds by Whiteford Food Products, Inc. from the sale
of its assets and the distribution of such proceeds in connection with Whiteford
Food Products, Inc. plan of reorganization under the protection of Chapter 11 of
the U.S. Bankruptcy Code, may have a material impact on the proceeds received by
the Partnership under the Subordinated Note Receivable. The Partnership has no
obligation to update or revise these forward-looking statements to reflect the
occurrence of future events or circumstances.
The Partnership was organized as a Limited Partnership with a maximum
operating life of twenty years ending 2007. The source of its capital has been
from the sale of Class A, $10 Limited Partnership units in a public offering
that terminated on November 10, 1989.
Results of Operations
Year Ended December 31, 2005, Compared to Year Ended December 31, 2004
The Partnership sold substantially all of its assets on November 11, 2001,
and as such, the results for the years ended December 31, 2005 and 2004, do not
include the sale of meat products or the costs related thereto.
For the year ended December 31, 2005, the Partnership received interest
income on the subordinated note receivable, cash investments and other
miscellaneous income aggregating $75,601. Also, during 2005, the Partnership
incurred general and administrative expenses associated with the audit and tax
return preparation, transfer agent fees, and other general and administrative
expenses aggregating $112,395. Additionally, for the year ended December 31,
2005, the Partnership accrued an $800,000 reserve associated with a revision in
its estimate for collectability of the Subordinated Note and reversed a $183,903
accrual of subordinated consulting fees payable (See note A to the Consolidated
Financial Statements). Operating expenses include general and administrative
expenses associated with audit fees, tax return preparation fees, legal fees and
transfer agent fees. The Partnership has discontinued, as of July 1, 2005, the
accrual of interest income on the Subordinated Note Receivable as collectability
is uncertain.
During the year ended December 31, 2004, the Partnership received interest
income of $132,238 and incurred general and administrative expenses associated
with the audit and tax return property, transfer agent fees, litigation expense
and other administrative expense (including the Greenaway Consultant Fee earned
of $69,745) aggregating $132,238.
Year Ended December 31, 2004, Compared to Year Ended December 31, 2003
The Partnership sold substantially all of its assets on November 11, 2001,
and as such, the results for the years ended December 31, 2004 and 2003, do not
include the sale of meat products or the costs related thereto.
6
For the year ended December 31, 2004, the Partnership received interest
income on the subordinated note receivable, cash investments and other
miscellaneous income aggregating $132,238. Also, during 2004, the Partnership
incurred general and administrative expenses associated with the audit and tax
return preparation, transfer agent fees, and other general and administrative
expenses (including the Greenaway Consultant fee accrual of $69,745) aggregating
$132,238.
During the year ended December 31, 2003, the Partnership received interest
income of $130,981 and incurred general and administrative expenses associated
with the audit and tax return property, transfer agent fees, litigation expense
and other administrative expense (including the Greenaway Consultant fee accrual
of $114,158) aggregating $145,009.
Liquidity and Capital Resources
At December 31, 2005, and December 31, 2004, the Partnership had a working
capital position of $358,417 and $395,211, respectively. Working capital
decreased due to expenses exceeding interest income.
The Limited Partnership Agreement provides for the General Partner to
receive an annual administrative fee. The fee is equal to 2% (adjusted for
changes in the Consumer Price Index after 1989) of net business investment
(defined as $8.50 multiplied by Partnership units outstanding). However, such
amounts payable to the General Partner are limited to 10% of aggregate
distributions to all Partners from "Cash Available for Distributions." As
defined in the Limited Partnership Agreement, that portion of the management fee
in excess of such 10% limitation is suspended, and future payment is contingent.
The Administrative Management Fees paid to the General Partner and recorded by
the Partnership were $0 in 2005, $0 in 2004, $0 in 2003, $0 in 2002, $0 in 2001,
$0 in 2000, $13,069 in 1999, $26,138 in 1998, $13,069 in 1997, $-0- in 1996,
$10,455 in 1995, $13,069 in 1994, $2,614 in 1993, and $-0- in 1992. Suspended
fees during 2005, 2004, 2003, 2002, 2001, 2000, 1999, 1998, 1997, 1996, 1995,
1994, 1993 and 1992 respectively, are $300,000, $300,000, $300,000, $300,000,
$300,000, $300,000, $300,000, $300,000, $287,000, $274,000, $287,000, $300,000,
$290,000 and $222,000, respectively. The General Partner has agreed to
subordinate payment of such fees to the distribution of $2.00 per unit to
Limited Partners and the payment of deferred payments to Greenaway Consultants,
Inc.
ITEM 7A. QUANTATATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In the normal operation, the Company has market risk exposure to interest
rates on its cash investments of $424,797.
At December 31, 2005, the Company had $1,350,000 in interest bearing
investments, against which the Company has reserved $800,000 due to uncertainty
of collection, that are subject to market risk exposure to change in interest
rates. The Subordinated Note bears interest fixed at 9 1/2% for the life of the
note that comes due June 30, 2007. However, since June 30, 2005, the Company has
not accrued interest on the note. The remaining amount is subject to normal
economic risk associated with fluctuating money markets as well as collection
risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data of the Partnership are
included in this report after the signature page.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROL AND PROCEDURES
The Company maintains a system of internal accounting controls designed to
provide reasonable assurance that transactions are properly recorded and
summarized so that reliable financial records and reports can be prepared and
assets safeguarded. In addition, a system of disclosure controls is maintained
to ensure that information required to be disclosed is recorded, processed,
summarized and reported in a timely manner to management responsible for the
preparation and reporting of the Company's financial information.
Management assesses the internal control and disclosure control systems as
being effective as they encompass material matters for the three months ended
December 31, 2005. To the best of management's knowledge, there were no changes
in the internal control and disclosure control systems during the quarter ended
December 31, 2005, that would materially affect the control systems.
ITEM 9B. OTHER INFORMATION
None.
7
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
Management
The Partnership has no officers or directors. The affairs of the
Partnership are managed by the Gannon Group, Inc., the General Partner. The
directors, executive officers and key employees of the General Partner as of
December 31, 2004, are as follows:
Kevin T. Gannon, age 49, sole director, President and sole stockholder of
Gannon Group, Inc.
Mr. Gannon is a private investor and a Managing Director of Robert A.
Stanger & Co., Inc., a New Jersey based investment banking, investment research
and consulting firm. Mr. Gannon is a Certified Public Accountant.
No director or officer of the General Partner was, during the last five (5)
years, the subject (directly, or indirectly as a general partner of a
Partnership or as an executive officer of a corporation) of a bankruptcy or
insolvency petition, of any criminal proceeding (excluding traffic violations
and other minor offenses), or restrictive orders, judgments or decrees enjoining
him from or otherwise limiting him from acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such activity, engaging
in any business activity, or engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal or State securities laws or Federal commodities laws, or
was the subject of any existing order of a federal or state authority barring or
suspending for more than sixty (60) days the right of such person to be engaged
in such activity.
ITEM 11. EXECUTIVE COMPENSATION
Current Year Remuneration
The Partnership has no officers or directors. Accordingly, no direct
remuneration was paid to officers and directors of the Partnership for the year
ended December 31, 2005 or 2004. Remuneration to the General Partner is pursuant
to Article VI of the LIMITED PARTNERSHIP AGREEMENT (filed as Exhibit A to the
Prospectus included in the Partnership's Registration Statement on Form S-1
[File No. 2-98273]) and incorporated herein by reference.
Pursuant to Section 6.4(c) of the Limited Partnership Agreement, the
General Partner is entitled to receive a management fee of approximately
$300,000 for the calendar year 2005. However, Section 6.4(c)(v) limits all
amounts payable to the General Partner pursuant to Section 6.4(c) to an amount
which does not exceed 10% of aggregate distributions to Partners from "Cash
Available for Distributions". Under the Limited Partnership Agreement, Cash
Available for Distributions is comprised of cash funds from operations (after
all expenses, debt repayments, capital improvements and replacements, but before
depreciation) less amounts set aside for restoration or reserves. That portion
of the management fee in excess of such 10% limitation is suspended, and future
payment is delayed until such payment may be made without exceeding such limit.
On dissolution of the Partnership, Section 15.3(a)(ii) of the Limited
Partnership Agreement generally provides for the payment of creditors, and then
pro rata payment to record holders for loans or other amounts owed to them by
the Partnership, including without limitation any amounts owed to the General
Partner pursuant to Section 6.4. Any amounts payable to the General Partner
under Section 15.3(a)(ii) will be dependent upon the funds available for
distribution on the dissolution of the Partnership.
Section 6.4(e) of the Limited Partnership Agreement also provides the
General Partner a subordinated special allocation equal to 15% of any gain on
the sale of partnership assets or food businesses. Among other things, this
special allocation is subordinated to payments to the limited partners for
certain distributions. Any payment pursuant to Section 6.4(e) will be dependent
upon the ultimate sale price of the Partnership's assets. The cumulative amount
of annual management fees that have been suspended is $3,917,000.
Other Compensation Arrangements
There is no plan provided for or contributed to by the Partnership or the
General Partner that provides annuity, pension or retirement benefits for the
General Partner or the officers and directors of the General Partner. There is
no existing plan provided for or contributed to by the General Partner that
provides annuity, pension or benefits for its officers or directors. There are
no arrangements for remuneration covering services as a director between the
Partnership and any director of the General Partner. No options to purchase any
securities of the General Partner were granted or exercised during its fiscal
year ended December 31, 2005 or December 31, 2004. No options were held to
purchase securities of the Partnership as of December 31, 2005 or December 31,
2004, and as of the date hereof.
After the Partnership acquired the assets of Whiteford's, Inc., Whiteford's
entered into a Services Agreement with Greenaway Consultant, Inc. ("GCI") under
which GCI managed Whiteford's. GCI is owned by one of Whiteford's, Inc.'s former
principal shareholders. This agreement was extended to December 31, 2002, and
modified pursuant to the Sale Transaction.
8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Security Holders
The General Partner owns the entire general partnership interest, which
interest controls the Partnership. The General Partner does not beneficially
own, either directly or indirectly, any equity security in the Partnership,
other than the general partner interest.
Contractual Arrangements Affecting Control
On May 4, 1992, the outstanding shares of G/W Foods, Inc. were assigned by
Granada Management Corporation to Gannon Group, Inc., a corporation owned by
Kevin T. Gannon, a Director and Vice President of G/W Foods, Inc. and also a
former Vice President of Granada Corporation and certain of its affiliates. Also
on May 4, 1992, Granada Management Corporation assigned its sole general
partnership interest in the Partnership to Gannon Group, Inc. The effect of
these assignments is for Gannon Group, Inc. to have general partnership
authority and responsibility with respect to the Partnership and, through G/W
Foods, Inc., of Whiteford's.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
9
PART IV
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Ernst & Young LLP served as the independent registered public accounting
firm for the Partnership for the year ending December 31, 2005. The following
sets forth the fees for the Partnership for the year ended December 31, 2005 and
2004 provided by the Partnership accounting firm, Ernst & Young LLP.
2005 2004
---- ----
Audit Fees $20,000 $25,000
Tax Fees 6,000 6,000
------- -------
Total $26,000 $31,000
======= =======
All fees were pre-approved.
There were no Form 8-K's filed during the quarter.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
All schedules to the consolidated financial statements are omitted, because
the required information is inapplicable or has been presented in the financial
statements or related notes thereto. The exhibits are included in this report
after the signature page.
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
-----------------------
(Registrant)
By Gannon Group, Inc.
Its General Partner
Date: March 22, 2006 /s/ Kevin T. Gannon
- -------------------- -------------------
Chief Executive Officer
And President
Pursuant to the requirements of the Securities Act of 1934, this Report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated:
Signatures Title Date
---------- ----- ----
Chief Executive officer, President, March 22, 2006
/s/Kevin T. Gannon Chairman of the Board and Sole
- ------------------ Director (Principal Executive Officer),
Gannon Kevin T. Chief Financial Officer, and Chief
Accounting Officer
11
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 15
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 2005
WHITEFORD PARTNERS, L.P.
12
FORM 10-K - Item 8 and 15(a)
The following financial statements of the Partnership are included as
part of this report at Item 8:
(a) 1. Financial Statements
Consolidated Balance Sheets - December 31, 2005 and 2004.
Consolidated Statements of Operations - for the years ended December
31, 2005, 2004, and 2003.
Consolidated Statements of Changes in Partners' Capital - for the
years ended December 31, 2005, 2004, and 2003.
Consolidated Statements of Cash Flows - for the years ended December
31, 2005, 2004, and 2003.
Notes to Consolidated Financial Statements
Report of Independent Auditors
(a) 2. See Index to Exhibits immediately following the financial statement
schedules.
13
Whiteford Partners, L.P.
CONSOLIDATED BALANCE SHEETS
Year Ended December 31
----------------------
ASSETS 2005 2004
------------ ------------
CURRENT ASSETS:
Cash and cash equivalents $ 424,797 $ 427,675
Interest receivable -- 10,688
------------ ------------
TOTAL CURRENT ASSETS 424,797 438,363
SUBORDINATED NOTE RECEIVABLE 550,000 1,350,000
------------ ------------
TOTAL ASSETS $ 974,797 $ 1,788,363
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accrued expenses and other liabilities $ 66,380 $ 43,152
------------ ------------
TOTAL CURRENT LIABILITIES 66,380 43,152
Subordinated consulting fee payable 0 183,903
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in net (loss) (55,796) (49,266)
Distributions (38,171) (38,171)
------------ ------------
(78,836) (72,306)
------------ ------------
Class A Limited Partners:
Capital contributions, net of organization and
offering costs of $2,010,082 11,172,274 11,172,274
Capital transfers from the General Partner 116,554 116,554
Interest in net (loss) (5,534,809) (4,888,448)
Distributions (4,766,766) (4,766,766)
------------ ------------
987,253 1,633,614
------------ ------------
TOTAL PARTNERS' CAPITAL 908,417 1,561,308
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 974,797 $ 1,788,363
============ ============
See notes to consolidated financial statements.
F-1
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31
-----------------------------------------
2005 2004 2003
----------- ----------- -----------
REVENUE
Interest and other $ 75,601 $ 132,238 $ 130,981
----------- ----------- -----------
75,601 132,238 130,981
COST AND EXPENSES
Selling and administrative 112,395 132,238 145,009
Change in Estimate on
Subordinated Consulting Fee (183,903) 0 0
Subordinated Note Receivable 800,000 0 0
----------- ----------- -----------
728,492 132,238 145,009
----------- ----------- -----------
NET (LOSS) INCOME ($ 652,891) $ 0 $ (14,028)
=========== =========== ===========
Summary of net (loss) income allocated to:
General Partner ($ 6,530) $ 0 $ (140)
Class A Limited Partners (646,361) 0 (13,888)
----------- ----------- -----------
($ 652,891) $ 0 $ (14,028)
=========== =========== ===========
Net (loss) income per unit of Limited Partner Capital $ (.50) $ 0.00 $ (0.01)
=========== =========== ===========
Weighted average units issued and outstanding 1,306,890 1,306,890 1,306,890
=========== =========== ===========
See notes to consolidated financial statements.
F-2
Whiteford Partners, L.P.
Consolidated Statements of Changes in Partners' Capital
General Partner Class A Limited Partners
----------------------------------------------------- --------------------------------------------------
Capital
Interest Transfers Interest
Capital in from in
Capital Transfers to Net Capital General Net
Contributions Limited Partners (Loss) Distributions Contributions Partner (Loss) Distributions
------------- ---------------- ------ ------------- ------------- ------- ------ -------------
Balance December 31, 2003 $132,931 ($117,800) ($49,266) ($38,171) $11,172,274 $116,554 ($4,888,448) $4,766,766
Net Income 0 0
---------------------------------------------------------------------------------------------------------
Balance December 31, 2004 132,931 (117,800) (49,266) (38,171) 11,172,274 116,554 (4,888,448) (4,766,766)
Net Income (6,530) (646,361)
---------------------------------------------------------------------------------------------------------
Balance December 31, 2005 $132,931 ($117,800) ($55,796) ($38,171) $11,172,274 $116,554 ($5,534,809) ($4,766,766)
=========================================================================================================
See notes to consolidated financial statements.
F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
-----------------------------------------------------
2005 2004 2003
-----------------------------------------------------
OPERATING ACTIVITIES:
Net (loss) income $(652,891) $ 0 $ (14,028)
Changes in operating assets and liabilities:
Interest receivable 10,688 0 0
Accrued expenses and subordinated
consulting fee payable (160,675) 79,379 112,500
Change in Estimate on Subordinated Note Receivable 800,000 0 0
---------------- ------------- ---------------
NET CASH (USED) PROVIDED BY OPERATING (2,878) 79,379 98,472
ACTIVITIES
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (2,878) 79,379 98,472
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 427,675 348,296 249,824
------------------ ------------ ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 424,797 $ 427,675 $ 348,296
=================== ============ ================
See notes to consolidated financial statements.
F-4
WHITEFORD PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
- --------------------------------------------------------------------------------
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,
("Whiteford's 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
Partnership and Whiteford's have operated in the food business segment only. 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.
At December 31, 2005, and at December 31, 2004, the Partnership had
1,306,890 Class A limited partnership units issued and outstanding.
The Partnership sold (the "Sale Transaction") substantially all of its
assets on November 11, 2001 to Whiteford Food Products, Inc., a wholly owned
subsidiary of JNR Corporation, an unaffiliated company. The purchase price was
$7,950,000, including the assumption or payment of certain liabilities. The
purchase price was paid $1,500,000 in cash and the issuance of a subordinated
note (the "Subordinated Note") due June 30, 2007 in the principal amount of
$1,350,000 (as adjusted) with the balance of the purchase price paid by the
assumption of certain liabilities net of other assets. The Subordinated Note
bears interest at 9.5% and is prepayable under certain conditions. Additionally,
the principal balance of the Subordinated Note may be adjusted downward under
certain conditions.
The Partnership has received accrued interest on the Subordinated Note
through June 30, 2005 at the rate of 9.5% annually. No payments of interest
accrued on the Subordinated Note subsequent to June 30, 2005 have been received.
On August 3, 2005, the Partnership was advised that Whiteford Foods Products,
Inc. noticed its employees of the possibility of the closure of the facility in
Versailles, Ohio, due to losses at such facility. Furthermore, U.S. Bank, the
lender to Whiteford Food Products, Inc. and Rochester Meat Company, a
subordinated guarantor of the Subordinated Note, declared a default on loans to
Whiteford Food Products, Inc. which resulted in the suspension of payments to
the Partnership under the Subordinated Note. On September 26, 2005, the
Partnership was advised that Whiteford Food Products, Inc. filed for protection
from creditors under Chapter 11 of the U.S. Bankruptcy Code, due to losses
arising from processing activities. Whiteford Food Products, Inc. conducted an
auction of equipment during December 2005 and filed a reorganization plan on
January 24, 2006. Based upon the above, the General Partner has assessed the
financial impact of such matters on the financial condition of the Partnership
and established a reserve in the amount of $800,000 against the $1,350,000 owed
to the Partnership and ceased the accrual of interest income on such note as of
June 30, 2005.
In connection with the transaction with Whiteford Food Products, Inc., the
Partnership was obligated to pay up to $500,000 to Greenaway Consultants, Inc.
pursuant to a consulting agreement. Greenaway Consultants, Inc. acquired the
right to such payment in connection with its provision of management services
and financing to the Partnership. The Partnership and Greenaway Consultants,
Inc. agreed to: (i) a $50,000 payment made in January 2002, (ii) subordinate
$300,000 of such payment to the distribution by the Partnership of $2.00 per
limited partner unit (an aggregate of $2,613,780) and (iii) forgive $150,000 of
such payment. Greenaway Consultants, Inc. is wholly owned by Albert Greenaway.
Neither Mr. Greenaway nor Greenaway Consultants, Inc. owns any interest in the
general partner of the Partnership. Based upon the General Partner's estimate of
the value of the Subordinated Note Receivable, the General Partner has revised
its estimate of amounts due Greenaway Consultants Inc. to $0 and has reversed
amounts previously accrued.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The consolidated financial statements include
the Partnership and Whiteford's, from the date of acquisition (March 26, 1990).
Significant intercompany account balances and transactions have been eliminated
in consolidation.
Property and Equipment. The Partnership owned no property or equipment
during 2005 or 2004.
Revenue Recognition. Revenue is generally recognized as interest is
accrued.
F-5
Expense Estimate. For the year ended December 31, 2005, the Partnership
accrued an $800,000 reserve associated with a revision of its estimate of the
collectability of a Subordinated Note Receivable. Additionally, the Partnership
reversed a $183,903 accrual of subordinated consulting fees payable because such
consulting fee was subordinated to a payment of distributions to limited
partner's threshold which, in the General Partner's estimate, will not be met.
Distributions. 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 determination.
Distributions of $0, $0 and $0 to Limited Partners were recorded in 2005, 2004
and 2003, respectively.
Income Taxes. The Partnership files an information tax return. The items of
income and expense are 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.
Cash, Cash Equivalents and Cash Flows. Cash and cash equivalent amounts
approximate fair value. For the purpose of the statement of cash flows, the
Partnership considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. Total interest paid was
$0, $0, and $0, for 2005, 2004 and 2003, respectively.
Net (Loss) Income Per Unit of Limited Partners Capital. The net (loss)
income per unit of limited partners capital is calculated by dividing the net
(loss) income allocated to limited partners by the weighted average units
outstanding.
Concentrations. Financial instruments which potentially expose the
Partnership of credit risk, as defined by Statement of Financial Accounting
Standards No. 105, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial with Concentrations of Credit Risk, consist
primarily of a subordinated note receivable from the buyer of the Partnership's
assets. The Partnership's subordinated note receivable is concentrated in the
food processing business.
Use of Estimates. The preparation of the consolidated financial statements
in accordance with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those results.
Fair Value. The fair value of the subordinated note receivable as
determined by similar instruments in the marketplace is estimated at $550,000,
after considering the estimated realizable value.
NOTE C - RELATED PARTY TRANSACTIONS
The Limited Partnership Agreement provides for the General Partner to
receive an annual administrative fee. The fee is equal to 2% (adjusted for
changes in the consumer price index after 1989) of net business investment
(defined as $8.50 multiplied by Partnership units outstanding). However, such
amounts payable to the General Partner are limited to 10% of aggregate
distributions to all Partners from "Cash Available for Distributions". As
defined in the Limited Partnership Agreement, that portion of the management fee
in excess of such 10% limitation is suspended, and future payment is contingent.
The Administrative Management Fees paid to the General Partner and recorded
by the Partnership were $0 in 2005, $0 in 2004 and $0 in 2003. Suspended fees as
of December 31, 2005, for which no accrual had been recorded, total $3,917,000
($3,617,000 as of December 31, 2004). This only becomes an obligation of the
Partnership upon a change of control or sale of substantially all of the assets
of the Partnership. The Partnership also has a service agreement with Greenaway
Consultant, Inc. ("GCI"), which provides for the former principal owner of
Whiteford's to provide consulting services to the Partnership. The agreement was
extended for five years expiring December 31, 2001, and provides minimum
consulting fees of approximately $250,000 per annum. During 2000, 1999 and 1998
the minimum was paid. GCI was due a payment of $500,000 upon a sale of
substantially all of the assets of the Partnership. However, GCI and the
Partnership modified such agreement at the time of the Sale Transaction to
provide for a payment of $50,000 in January 2002 and the payment of up to
$300,000, subordinated to total distributions of $2 per unit to limited partner
investors. The remaining balance due under such agreement ($150,000) was
forgiven. The Partnership estimates that no amounts will be payable to GCI.
NOTE D - LONG TERM DEBT
The Partnership had no long-term debt outstanding as of December 31, 2005
or 2004.
No interest was paid in 2005, 2004 or 2003.
F-6
NOTE E - LEASES
Lease Commitments. The Partnership has no lease commitments.
NOTE F - MAJOR CUSTOMERS
Prior to the Sale Transaction, Whiteford's facility, located in Versailles,
Ohio, operated as a further processor and distributor of beef products to fast
food restaurants and regional chains and food distribution in the Midwest of the
United States. Whiteford's principal products were fresh frozen hamburger
patties; precooked and uncooked ground beef taco meat and roast beef, marinated
beef entrees; and other items processed to the customers' specifications. No
sales of meat products were made by the partnership in 2005, 2004 or 2003.
NOTE I - QUARTERLY DATA (UNAUDITED)
2005 Quarters
---------------------------------------------------------------------------------------- ------------------
First Second Third Fourth Total
--------------------- ---------------------- --------------------- --------------------- ------------------
Sales $0 $0 $0 $0 $0
Gross profit 0 0 0 0 0
Net income (loss) 0 (138,924) (19,979) (443,988) (652,891)
Income (loss) per
unit of Limited
Partners' Capital $0 $(0.11) $(.02) $(.38) $(0.50)
Weighted average
units outstanding 1,306,890 1,306,890 1,306,890 1,306,890 1,306,890
2004 Quarters
--------------------- ---------------------- --------------------- --------------------- ------------------
First Second Third Fourth Total
--------------------- ---------------------- --------------------- --------------------- ------------------
Sales $0 $0 $0 $0 $0
Gross profit 0 0 0 0 0
Net income (loss) 0 0 0 0 0
Income (loss) per
unit of Limited
Partners' Capital $0.00 $0.00 $0.00 $0.00 $0.00
Weighted average units
outstanding 1,306,890 1,306,890 1,306,890 1,306,890 1,306,890
F-7
Report of Independent Registered Public Accounting Firm
Limited and General Partners
Whiteford Partners, L.P.
We have audited the accompanying consolidated balance sheets of Whiteford
Partners, L.P. (a Delaware limited partnership) and subsidiary as of December
31, 2005 and 2004 and the related consolidated statements of operations, changes
in partners' capital, and cash flows for each of the three years in the period
ended December 31, 2005. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. We were not engaged to perform an
audit of the Company's internal control over financial reporting. An audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Whiteford Partners, L.P. and subsidiary at December 31, 2005 and 2004 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2005, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Dayton, Ohio
March 20, 2006
F-8
INDEX TO ATTACHED EXHIBITS
Exhibit
- -------
------------------------------------------------------------------------
3. & 4. Limited Partnership Agreement of the Partnership incorporated by
reference to Exhibit ``A'' to Prospectus (pages A 1 - A 40) included in
the Partnership's Registration Statement on Form S-1 (File No.
33-15962).
10.1 Consulting Agreement between the Partnership and Granada Acquisitions,
Inc. incorporated by reference to Exhibit 10.2 to the Partnership's
Registration Statement on Form S-1 (File No. 33-15962).
10.2 Asset Purchase Agreement between Granada/Whiteford Foods Venture, L.P.,
Whiteford's Inc. and Albert D. Greenaway, incorporated by reference to
Exhibit 2 to the Partnership's Form 8-K filing dated May 10, 1990, as
amended (File No. 33-15962).
10.3 Services Agreement between Granada/Whiteford Foods Venture, L.P.,
Granada Cincinnati Multifoods, Inc. and Greenaway Consultants, Inc. to
engage Greenaway Consultants, Inc. to perform management services for
the operations of Granada/Whiteford Foods Venture, L.P. and CMF, a joint
venture, incorporated by reference to Exhibit 10.3 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1990.
10.4 Agreement of Limited Partnership dated March 27, 1990, between the
Registrant as limited partner, and G/W Foods, Inc. as General Partner,
to acquire the assets, certain liabilities, and meat purveying
operations of Whiteford's Inc., incorporated by reference to Exhibit
10.4 to the Partnership's Annual Report on Form 10K for the year ended
December 31, 1990.
10.5 Joint Venture Agreement dated July 1, 1990, between Granada/Whiteford
Foods Venture, L.P., North American Agrisystems, Inc. and Cincinnati
Multifoods, Inc. for the formation of a joint venture for
Granada/Whiteford Foods Venture, L.P. to operate meat production
facilities of North American Agrisystems, Inc., incorporated by
reference to Exhibit 10.5 to the Partnership's Annual Report on Form 10K
for the year ended December 31, 1990.
10.6 Promissory Note payable by Granada/Whiteford Foods Venture to Fifth
Third Bank of Miami Valley, N.A. in the face amount of $3,000,000, dated
July 19, 1991, together with Hypothecation Agreement, incorporated by
reference to Exhibit 10.6 to the Partnership's Annual Report on Form 10K
for the year ended December 31, 1990.
10.7 Promissory Note payable by Granada/Whiteford Foods Venture to Fifth
Third Bank of Miami Valley, N.A. in the face amount of $280,000 dated
June 21, 1991, together with Hypothecation Agreement, incorporated by
reference to Exhibit 10.7 to the Partnership's Annual Report on form 10K
for the year ended December 31, 1990.
10.8 Agreement dated November 6, 1991, between G/W Foods, Inc. and Fifth
Third Bank of Miami Valley, N.A. amending terms of Promissory Note dated
July 19, 1991, incorporated by reference to Exhibit 10.8 to the
Partnership's Annual Report on Form 10K for the year ended December 31,
1990.
10.9 Memorandum of Agreement -- Dissolution of CMF (a Texas joint venture)
effective October 1, 1991, stipulating terms and conditions of
dissolution and wind-up of operations of CMF, incorporated by reference
to Exhibit 10.9 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1990.
10.10 Amendment to Certificate of Limited Partnership of Granada/Whiteford
Foods Venture, L.P., State of Ohio Certificate of Amendment of Foreign
Limited Partnership and Trade Name Registration, all dated April 30,
1992, and amending Name of Granada/Whiteford Foods Venture, L.P. to
Whiteford Foods Venture, L.P., incorporated by reference to Exhibit
10.10 to the Partnership's Annual Report on Form 10K for the year ended
December 31, 1990.
F-9
INDEX TO ATTACHED EXHIBITS (CONT.)
10.11 Loan Agreement dated May 5, 1992, between Greenaway Consultant, Inc. and
Whiteford FoodsVenture, L.P., providing for $750,000 revolving credit
facility, incorporated by reference to Exhibit 10.11 to the
Partnership's Annual Report on Form 10K for the year ended December 31,
1990.
10.12 Stock Purchase Agreement and Assignment of Partnership Interest dated
May 4, 1992, by and between Granada Management Corporation and Gannon
Group, Inc., incorporated by reference to Exhibit 10.12 to the
Partnership's Annual Report on Form 10K for the year ended December 31,
1990.
10.13 Loan Agreement dated December 23, 1992 between Whiteford Foods Venture,
L.P. and The Fifth Third Bank of Western Ohio, N.A. for a credit
facility of $2,300,000, incorporated by reference to Exhibit 10.13 to
the Partnership's Annual Report on Form 10K for the year ended December
31, 1992.
10.14 Letter of Agreement dated February 23, 1993 by and between Greenaway
Consultants, Inc. and Whiteford Foods Venture, L.P., proceeding for (i)
the termination of the revolving credit facility, (ii) the issuance of a
term promissory note in the amount of $750,000, (iii) the termination of
the Services Agreement between Whiteford Partners, L.P. and Greenaway
Consultants, Inc., and (iv) an agreement regarding a new Services
Agreement, incorporated by reference to Exhibit 10.14 to the
Partnership's Annual Report on Form 10K for the year ended December 31,
1993.
10.15 Loan Agreement dated August 27, 1993 between Whiteford Foods Venture,
L.P. and PNC Bank, Ohio, N.A., incorporated by reference to Exhibit
10.15 to the Partnership's Annual Report on Form 10K for the year ended
December 31, 1993.
10.16 Services Agreement dated October 1, 1993 between Whiteford Foods
Venture, L.P., Greenaway Consultant, Inc. and Albert D. Greenaway to
engage Greenaway Consultant, Inc., to perform management services for
the operation of Whiteford Foods Venture, L.P., incorporated by
reference to Exhibit 10.16 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1993.
10.17 Loan Agreement dated October 1, 1993 between Whiteford Foods Venture,
L.P. and Greenaway Consultant, Inc. authorizing November 8, 1993
promissory note and certain security therefor, incorporated by reference
to Exhibit 10.17 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1993.
10.18 Promissory note dated November 8, 1993 between Greenaway Consultant,
Inc. and Whiteford Foods Venture, L.P., incorporated by reference to
Exhibit 10.18 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1993.
10.19 Credit agreement dated June 13, 1994 between Whiteford Foods Venture,
L.P. and PNC Bank, Ohio, National Association and Fifth Third Bank of
Western Ohio, incorporated by reference to Exhibit 10.19 to the
Partnership's Annual Report on Form 10K for the year ended December 31,
1994.
10.20 Construction loan agreement dated June 13, 1994 between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association, incorporated by
reference to Exhibit 10.20 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1994.
10.21 Lease agreement dated December 15, 1994 between Whiteford Foods Venture,
L.P. and Star Bank, National Association, incorporated by reference to
Exhibit 10.21 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1994.
10.22 Term note B dated April 14, 1995, between Whiteford Foods Venture, L.P.
and PNC Bank, Ohio, National Association, incorporated by reference to
Exhibit 10.22 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1995.
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INDEX TO ATTACHED EXHIBITS (CONT.)
10.23 Note payable dated September 18, 1995, between Whiteford Foods Venture,
L.P. and PNC Bank, Ohio, National Association, incorporated by reference
to Exhibit 10.23 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1995.
10.24 Second amendment to Revolving Note dated July 11, 1995, incorporated by
reference to Exhibit 10.24 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1995.
10.25 Second amendment to Credit agreement dated July 11, 1995, incorporated
by reference to Exhibit 10.25 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1995.
10.26 Third amendment to Credit agreement dated July 11, 1995, incorporated by
reference to Exhibit 10.26 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1995.
10.27 Guarantee Compensation agreement dated September 18, 1995 between
Whiteford Foods Venture, L.P. and Albert D. Greenaway, incorporated by
reference to Exhibit 10.27 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1995.
10.28 Mortgage granted to Albert D. Greenaway by Whiteford Foods Venture,
L.P., incorporated by reference to Exhibit 10.28 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995
10.29 Mortgage granted to Albert D. Greenaway by Whiteford Foods Venture,
L.P., incorporated by reference to Exhibit 10.29 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.30 Security agreement dated September 18, 1995 between Whiteford Foods
Venture, L.P. and Albert D. Greenaway, incorporated by reference to
Exhibit 10.30 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 1995.
10.31 Fifth Amendment to Credit Agreement dated May 9, 1996, incorporated by
reference to Exhibit 10.31 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1996.
10.32 Lease agreement dated October 8, 1996 between Whiteford Foods Venture,
L.P. and Fifth Third Leasing, incorporated by reference to Exhibit 10.32
to the Partnership's Annual Report on Form 10K for the year ended
December 31, 1996.
10.33 Lease agreement dated November 1, 1996 between Whiteford Foods Venture,
L.P. and PNC Leasing Corporation, incorporated by reference to Exhibit
10.33 to the Partnership's Annual Report on Form 10K for the year ended
December 31, 1996.
10.34 Second Amendment to Term Note dated March 31, 1997.
10.35 Sixth Amendment to Credit Agreement dated June 30, 1997.
10.36 Lease agreement dated December 22, 1997 between Whiteford Foods Venture,
L.P. and PNC Leasing.
10.37 Seventh Amendment to Credit Agreement dated March 26, 1998, incorporated
by reference to Exhibit 10.37 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1998.
10.38 Eighth Amendment to Credit Agreement dated July 1, 1998, incorporated by
reference to Exhibit 10.38 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1998.
10.39 Third Amendment to Revolving Note dated July 1, 1998, incorporated by
reference to Exhibit 10.39 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1998.
F-11
INDEX TO ATTACHED EXHIBITS (CONT.)
10.40 Fourth Amendment to Revolving Note dated May 3, 1999, incorporated by
reference to Exhibit 10.40 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1999.
10.41 Ninth Amendment to Credit Agreement dated May 3, 1999, incorporated by
reference to Exhibit 10.41 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1999.
10.42 Tenth Amendment to Credit Agreement dated November 1, 1999, incorporated
by reference to Exhibit 10.42 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1999.
10.43 Third Amendment to Construction and Term Note dated March 1, 2000,
incorporated by reference to Exhibit 10.43 to the Partnership's Annual
Report on Form 10K for the year ended December 31, 2000.
10.44 Fifth Amendment to Revolving Note dated March 24, 2000, incorporated by
reference to Exhibit 10.44 to the Partnership's Annual Report on Form
10K for the year ended December 31, 2000.
10.45 Eleventh Amendment to Credit Agreement dated January 1, 2000,
incorporated by reference to Exhibit 10.45 to the Partnership's Annual
Report on Form 10K for the year ended December 31, 2000.
10.46 Twelfth Amendment to Credit Agreement dated March 24, 2000, incorporated
by reference to Exhibit 10.46 to the Partnership's Annual Report on Form
10K for the year ended December 31, 2000.
10.47 Amended and Restated Credit Agreement dated September 5, 2000,
incorporated by reference to Exhibit 10.47 to the Partnership's Annual
Report on Form 10K for the year ended December 31, 2000.
10.48 Amended and Restated Revolving Credit Note dated September 5, 2000,
incorporated by reference to Exhibit 10.48 to the Partnership's Annual
Report on Form 10K for the year ended December 31, 2000.
10.49 Amended and Restated Term Note A dated September 5, 2000, incorporated
by reference to Exhibit 10.49 to the Partnership's Annual Report on Form
10K for the year ended December 31, 2000.
10.50 Amended and Restated Term Loan B dated September 5, 2000, incorporated
by reference to Exhibit 10.50 to the Partnership's Annual Report on Form
10K for the year ended December 31, 2000.
10.51 Term Note C. dated September 5, 2000, incorporated by reference to
Exhibit 10.51 to the Partnership's Annual Report on Form 10K for the
year ended December 31, 2000.
10.52 Amended and Restated Security Agreement dated September 5, 2000,
incorporated by reference to Exhibit 10.52 to the Partnership's Annual
Report on Form 10K for the year ended December 31, 2000.
10.53 Promissory Note from Whiteford Food Products, Inc. to Whiteford Foods
Venture, L.P., dated November 16, 2001.
13. 1990 Annual Report to Limited Partners, incorporated by reference to
Exhibit 13 to the Partnership's Annual Report on Form 10K for the year
ended December 31, 1990.
14.1 Code of Ethics.
14.2 Certificate.
F-12