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, 2000
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 __
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 November 10, 2000
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Limited Partnership Class A $10 Units 1,306,890
This document contains 10 pages
WHITEFORD PARTNERS, L.P.
INDEX TO FORM 10-Q
NINE MONTHS ENDED SEPTEMBER 30, 2000 and 1999
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Page
Number
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2000
(Unaudited) and December 31, 1999...............................3
Condensed Consolidated Statements of Operations
for the three months and nine months
ended September 30, 2000 and 1999 (Unaudited)...................4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 2000 and 1999 (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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September 30, December 31,
2000 1999
(Unaudited)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 300,968 $ 281,216
Accounts receivable: Trade 1,516,194 2,068,428
Inventories:
Finished product 1,196,408 1,531,532
Raw materials 513,312 834,763
Packaging supplies and other 1,031,981 1,012,392
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2,741,701 3,378,687
Prepaid expenses and other assets 98,314 91,659
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TOTAL CURRENT ASSETS $ 4,657,177 $ 5,819,990
PROPERTY AND EQUIPMENT - net of accumulated depreciation
of $8,256,117 and $7,366,051 in 2000 and 1999 10,478,930 11,223,066
OTHER ASSETS - net of amortization 2,482,044 2,577,664
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TOTAL ASSETS $17,618,151 $19,620,720
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,073,088 $ 2,287,987
Notes payable and current maturities on long term debt 2,098,345 4,172,281
Accrued expenses and other liabilities 610,926 731,738
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TOTAL CURRENT LIABILITIES $ 4,782,359 $ 7,192,006
LONG-TERM DEBT 4,151,704 3,527,128
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in Partnership net income (loss) 12,161 14,335
Distributions (38,171) (38,171)
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$ (10,879) $ (8,705)
Limited Partners:
Capital Contributions - net of organization and
offering costs of $2,010,082 11,172,274 11,172,274
Capital transfers from General Partner 116,554 116,554
Interest in Partnership net income (loss) 1,192,737 1,408,061
Distributions (3,786,598) (3,786,598)
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$ 8,694,967 $ 8,910,291
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TOTAL PARTNERS' CAPITAL $ 8,684,088 $ 8,901,586
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 17,618,151 $ 19,620,720
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
WHITEFORD PARTNERS, L.P.
(Unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Revenues
Sales of meat products $ 9,204,279 $ 12,456,526 $ 33,479,435 $ 40,326,305
Interest and other income 42,594 28,948 120,368 143,511
------------ ------------ ------------ ------------
$ 9,246,873 $ 12,485,474 $ 33,599,803 40,469,816
Costs and Expenses
Cost of meat products sold 8,292,446 11,447,683 31,015,724 38,253,622
Selling and administrative expenses 408,015 510,250 1,280,254 1,785,138
Depreciation and amortization 330,139 327,533 985,687 970,894
Interest 185,561 168,575 535,637 485,453
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 30,712 $ 31,433 $ (217,499) $ (1,025,291)
============ ============ ============ ============
Summary of net income (loss) allocated to
General Partner $ 307 $ 314 $ (2,175) $ (10,253)
Limited Partners 30,405 31,119 (215,324) (1,015,038)
------------ ------------ ------------ ------------
$ 30,712 $ 31,433 $ (217,499) $ (1,025,291)
============ ============ ============ ============
Net income (loss) per $10 unit of L.P. Capital $ 0.02 $ 0.02 $ (0.17) $ (0.78)
============ ============ ============ ============
Average units issued and outstanding 1,306,890 1,306,890 1,306,890 1,306,890
============ ============ ============ ============
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(Unaudited)
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Nine Months Ended
September 30,
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2000 1999
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,615,042 $ 764,348
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CASH FLOW USED IN INVESTING ACTIVITIES:
Purchase of property and equipment $ (145,930) $ (774,419)
Proceeds from Disposal of property and equipment 0 0
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NET CASH USED IN INVESTING ACTIVITIES $ (145,930) $ (774,419)
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CASH (USED)/PROVIDED IN FINANCING ACTIVITIES:
Proceeds from notes payable $ 1,798,229 $ 14,476,888
Payments on notes payable (3,247,589) (14,451,402)
Distributions to Limited and General Partners 0 (131,996)
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NET CASH USED IN FINANCING ACTIVITIES $ (1,449,360) $ (106,510)
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INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS $ 19,752 $ (116,581)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 281,216 416,143
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 300,968 $ 299,562
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (excluding amount capitalized to
fixed assets and inventory) $ 531,620 $ 352,393
============ ============
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
September 30, 2000
(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 currently operates in the Food
Business Segment only.
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.
At September 30, 2000 and December 31, 1999 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. While the Partnership believes that the disclosures presented are
adequate to make the information not misleading, it is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes in the Partnership's most recent annual report
for the year ended December 31, 1999. A summary of the Partnership's significant
accounting policies is presented on page F-5 of the Partnership's most recent
annual report. There have been no material changes in the accounting policies
followed by the Partnership during 2000.
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, 2000 and the condensed consolidated results of its operations for the three
and nine months ending September 30, 2000 and 1999 and the condensed
consolidated cash flows for the nine months ending September 30, 2000 and 1999.
Operating results for the period ended September 30, 2000, are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 2000.
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.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Statements contained in this discussion and elsewhere in this report are not
historical facts but are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forwarding-looking statements are based on current
expectations, estimates and projections about the industry and markets in which
the Partnership operates, management's beliefs and assumptions made by
management. Words such as "expects," "intends," "plans," "seeks," "estimates,"
and variations of such words and similar expressions are intended to identify
such forward-looking statements. Such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties.
Therefore, actual outcomes and results may differ materially from what is
expressed or suggested by such forward-looking statements. The Partnership
undertakes no obligation to update publicly and forward-looking statements,
whether as a result of new information, future events or otherwise. The
Partnership's operating results depend primarily on income from the sale of meat
products, which may be affected by various factors, including changes in
national and local economic conditions, competitive market conditions,
uncertainties and costs related to and the imposition of conditions on receipt
of governmental approvals and costs of material and labor, all of which may
cause actual results to differ materially from what is expressed herein. Capital
and credit market conditions, which affect the Partnership's cost of capital,
also influence operating results.
Management's discussion and analysis set forth below should be read in
conjunction with the accompanying condensed consolidated financial statements.
Results of Operations
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Three months ended September 30, 2000 Compared to Three Months ended September
30, 1999
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Revenues for the three months ended September 30, 2000 were $9,246,873 versus
$12,485,474 for the comparable period in 1999, a decrease of 25.9%. During the
2000 period 9,188,036 pounds of meat products were sold versus 12,958,868 pounds
during the 1999 period. The decrease in sales of meat products sold is primarily
attributable to a reduction in orders by customers. In response to this decline,
the Company analyzed its operations and reduced costs, including overhead and
administration. This positions the Company with its future expected revenue
stream.
Costs of meat products sold for the three months ended September 30, 2000 were
$8,292,446 versus $11,447,683 for the comparable period ended September 30,
1999, a decrease of 27.6%. The decrease in the costs is primarily attributable
to a decline in pounds produced and sold.
Gross margins on sales were 10.3% for the three months ended September 30, 2000
and 8.3% for the comparable period in 1999. The increase in gross margins is
attributable to the semi-variable nature of certain costs of meat products sold
such as labor, packaging and utilities.
Selling and administrative expenses were $408,015 for the 2000 period versus
$510,250 for the 1999 period. Selling and administration expenses represented
4.4% of revenue for the three months ended September 30, 2000 and 4.1% the
period ended September 30, 1999.
Depreciation and amortization expense for the three months ended September 30,
2000 was $330,139 versus $327,533 for the same period in 1999, an increase of
0.8%.
Interest expense for the three months ended September 30, 2000 was $185,561
versus interest expense of $168,575 for the same period in 1999. This increase
of $16,986 primarily relates to the average debt balance outstanding and higher
interest rates.
A net income of $30,712 was realized in the 2000 period compared to net income
of $31,433 in the comparable period in 1999.
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Nine months ended September 30, 2000 Compared to Nine Months ended September 30,
1999
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Revenues for the nine months ended September 30, 2000 were $33,599,803 versus
$40,469,816 for the comparable period in 1999, a decrease of 17.0%. During the
2000 period 33,128,282 pounds of meat products were sold versus 43,889,548
pounds during the 1999 period. The decrease in sales of meat products sold is
primarily attributable to a reduction in orders by customers. In response to
this decline, the Company analyzed its operations and reduced costs, including
overhead and administration. This positions the Company with its future expected
revenue stream.
Costs of meat products sold for the nine months ended September 30, 2000 were
$31,015,724 versus $38,253,622 for the comparable period ended September 30,
1999, a decrease of 18.9%. The decrease in the costs is primarily attributable
to a decline in pounds produced and sold.
Gross margins on sales were 7.7% for the nine months ended September 30, 2000
and 5.5% for the comparable period in 1999. The increase in gross margins is
attributable to the semi-variable nature of certain costs of meat products sold
such as labor, packaging and utilities.
Selling and administrative expenses were $1,280,254 for the 2000 period versus
$1,785,138 for the 1999 period. Selling and administration expenses represented
3.8% of revenue for the nine months ended September 30, 2000 and 4.4% the period
ended September 30, 1999.
Depreciation and amortization expense for the nine months ended September 30,
2000 was $985,687 versus $970,894 for the same period in 1999, an increase of
1.5%.
Interest expense for the nine months ended September 30, 2000 was $535,637
versus interest expense of $485,453 for the same period in 1999. This increase
of $50,184 primarily relates to the average debt balance outstanding and higher
interest rates.
A net loss of $217,499 was realized in the 2000 period compared to net loss of
$1,025,291 in the comparable period in 1999.
Liquidity and Capital Resources
- -------------------------------
At September 30, 2000 the Partnership had a negative working capital of $125,182
versus a negative working capital of $1,372,016 at December 31, 1999.
Cash provided by operating activities was $1,615,042 in 2000 versus $764,348 in
the 1999 period.
Cash used in investing activities was $145,930 in 2000 as compared to $774,419
in 1999.
The Partnership used $1,449,360 from financing activities during 2000. For the
comparable period in 1999, the Partnership used $106,510.
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 $2,500,000 (with $1,506,000 outstanding at September 30, 2000), (the
"Principal Revolver"); (b) a term credit facility of $3,177,804, (with
$3,166,807 outstanding at September 30, 2000)(the " Term A Loan"); (c) a term
credit facility of $574,605, (with $549,242 outstanding at September 30, 2000)
(the " Term B Loan"); and (d) a term credit facility of $1,000,000, (with
$1,000,000 outstanding at September 30, 2000) (the "Term C Loan"),
(collectively, the "Loans"). During 2000, the Partnership amended its Credit
Agreement with the Bank. In September 2000, the Principal Revolver was decreased
from $3,500,000 to $2,500,000 with a maturity of January 31, 2001 and a new Tern
C Loan of $1,000,000 was received..
The Principal Revolver bears an interest rate of prime plus 2%. The Term A Loan
bears an interest rate of prime plus 1%. The Term B Loan bears interest of the
Euro-Rate plus 3%. The Term C Loan bears an interest rate of prime plus 2%. 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 Loans are secured by real property,
fixed assets, equipment, inventory, receivables and intangibles of Whiteford's.
8 of 10
The Partnership's 2000 capital budget calls for the expenditure of $200,000 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 2000. 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 2000.
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.
Customer Issue
- --------------
The Partnership has been advised by one of its major customers, representing
approximately $l4,000,000 of budgeted revenue for 2000, that commencing on July
9, 2000, such customer will no longer purchase meat products from the
Partnership. The customer, as the result of a reorganization of its distribution
system necessitated by the bankruptcy of a third party distributor, has
eliminated Whiteford's as one of its suppliers. The Partnership anticipates a
substantial decline in meat revenues and cost of sales subsequent to July 9,
2000. The Partnership has developed a plan to transition to a lower volume level
and does not anticipate that the loss of such business will have a material
adverse impact on the operations of the Partnership.
Market Risk
- -----------
There have been no significant changes in market risk since December 31, 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
None
Item 2. Change in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Materially Important Events
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - None
b. Reports on Form 8-K - None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITEFORD PARTNERS, L.P.
Date November 10, 2000 By /s/ Kevin T. Gannon
-------------------- -----------------------
Kevin T. Gannon, President
Chief Executive Officer
Chief Financial Officer
Gannon Group, Inc.
General Partner
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WHITEFORD PARTNERS, L.P.
THIRD QUARTER REPORT 2000