FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number: 33-15962
WHITEFORD PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 76-0222842
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
770 North Center Street, Versailles, Ohio 45380
(Address of principal executive offices)
(Zip Code)
937-526-5172
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
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 May 4, 2001
----- --------------------------------
Limited Partnership Class A $10 Units 1,306,890
This document contains 10 pages
WHITEFORD PARTNERS, L.P.
INDEX TO FORM 10-Q
THREE MONTHS ENDED MARCH 31, 2001 and 2000
Page
Number
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2001
(Unaudited) and December 31, 2000.............................3
Condensed Consolidated Statements of Operations for the three
months ended March 31, 2001 and 2000 (Unaudited)..............4
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 2001 and 2000 (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.
- --------------------------------------------------------------------------------
March 31, December 31,
2001 2000
---- ----
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 79,103 $ 329,311
Accounts receivable: trade 1,621,296 1,061,960
Inventories:
Finished products 1,053,097 1,002,319
Raw materials 436,968 490,015
Packaging supplies and other 985,073 1,009,383
------------ ------------
2,475,138 2,501,717
Prepaid expenses and other assets 77,090 67,715
------------ ------------
TOTAL CURRENT ASSETS 4,252,627 3,960,703
PROPERTY AND EQUIPMENT - net of accumulated depreciation
of $8,846,539 and $8,540,998 in 2001 and 2000 10,157,136 10,344,537
OTHER ASSETS - net of amortization 2,418,296 2,450,170
------------ ------------
TOTAL ASSETS $ 16,828,059 $ 16,755,410
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 1,915,831 $ 1,453,765
Notes payable and current maturities on long term debt 2,597,940 2,422,940
Accrued expenses and other liabilities 399,322 330,224
------------ ------------
TOTAL CURRENT LIABILITIES 4,913,093 4,206,929
LONG-TERM DEBT 3,896,493 4,050,711
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in Partnership net income 5,504 10,297
Distributions (38,171) (38,171)
------------ ------------
(17,536) (12,743)
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 533,779 1,008,283
Distributions (3,786,598) (3,786,598)
------------ ------------
8,036,009 8,510,513
TOTAL PARTNERS' CAPITAL 8,018,473 8,497,770
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 16,828,059 $ 16,755,410
============ ============
NOTE: The condensed balance sheet at December 31, 2000 has been taken from
the audited financial statements at such date.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
WHITEFORD PARTNERS, L.P.
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
----------------------------
2001 2000
---- ----
Revenue
Sales of meat products $ 6,876,279 $ 10,591,459
Interest and other income 28,549 31,504
------------ ------------
6,904,828 10,622,963
Costs and Expenses
Cost of meat products sold 6,534,272 9,985,763
Selling and administrative expenses 356,205 433,535
Depreciation and amortization 337,415 327,430
Interest 156,233 170,655
------------ ------------
$ 15,962,176 $ 14,931,908
------------ ------------
NET LOSS $ (479,297) $ (294,420)
============ ============
Summary of net loss allocated to
General Partner $ (4,793) $ (2,944)
Limited Partners (474,504) (291,476)
------------ ------------
$ (479,297) $ (294,420)
============ ============
Net loss per $10 unit of L.P. Capital $ (0.37) $ (0.23)
============ ============
Average units issued and outstanding 1,306,890 1,306,890
============ ============
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended
March 31,
--------------------------
2000 2001
---- ----
NET CASH (USED)/PROVIDED BY OPERATING ACTIVITIES $ (152,851) $ 663,144
----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment (118,140) (24,144)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (118,140) (24,144)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from notes payable 175,000 492,230
Payments on notes payable (154,217) (1,291,347)
Distributions to Limited and General Partners 0 0
----------- -----------
NET CASH PROVIDED/(USED) IN FINANCING ACTIVITIES 20,783 (799,117)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (250,208) (160,117)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 329,311 281,216
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 79,103 $ 121,099
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (excluding amount capitalized) $ 162,748 $ 168,560
=========== ===========
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
March 31, 2001
(Unaudited)
- --------------------------------------------------------------------------------
NOTE A - ORGANIZATION, BUSINESS AND ACQUISITIONS
Whiteford Partners, L.P., (the Partnership), formerly Granada Foods, L.P., was
formed on June 30, 1987, as a Delaware limited partnership. Prior to May 4,
1992, the Partnership consisted of a General Partner, Granada Management
Corporation, (Granada), and the Limited Partners. On May 4, 1992, Granada
assigned its sole general partner interest in the Partnership to Gannon Group,
Inc. and the Partnership was renamed Whiteford Partners, L.P.
The operational objectives of the Partnership are to own and operate businesses
engaged in the development, production, processing, marketing, distribution and
sale of food and related products (Food Businesses) for the purpose of providing
quarterly cash distributions to the partners while providing capital
appreciation through the potential appreciation of the Partnership's Food
Businesses. The Partnership expects to operate for twenty years from inception,
or for such shorter period as the General Partner may determine is in the best
interest of the Partnership, or for such shorter period as determined by the
majority of the Limited Partners.
The Partnership Agreement provides that a maximum of 7,500,000 Class A, $10
partnership units can be issued to Limited Partners. Generally, Class A units
have a preference as to cumulative quarterly cash distributions of $.25 per
unit. The sharing of income and loss from the Partnership operations is 99% to
the Class A and 1% to the General Partner. Amounts and frequency of
distributions are determinable by the General Partner.
At March 31, 2001 and December 31, 2000, 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 accounting principles generally
accepted in the United States. 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 included in the
Partnership's most recent annual report for the year ended December 31, 2000. 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
2001.
In the opinion of management, the unaudited information includes all adjustments
(all of which are of a normal recurring nature) which are necessary for a fair
presentation of the condensed consolidated financial position of the Partnership
at March 31, 2001 and the condensed consolidated results of its operations for
the three months ending March 31, 2001 and 2000 and the condensed consolidated
cash flows for the three months ending March 31, 2001 and 2000. Operating
results for the period ending March 31, 2001 are not necessarily indicative of
the results that may be expected for the entire year ending December 31, 2001.
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 Partnership is including the following cautionary statement in this Report
on Form 10Q 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 Whiteford Foods' products, the ability of
Whiteford Foods to obtain widespread market acceptance of its products, the
ability of the Partnership 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 and Whiteford Foods' business that is beyond the Partnership's
control. 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 . Management's discussion and analysis set forth
below should be read in conjunction with the accompanying condensed consolidated
financial statements.
Results of Operations
- ---------------------
Three Months ended March 31, 2001 Compared to Three Months ended March 31, 2000
- -------------------------------------------------------------------------------
Revenues for the three months ended March 31, 2001 were $6,904,828 versus
$10,622,963 for the comparable period in 2000, a decrease of 35.0%. During the
2001 period 6,438,678 pounds of meat products were sold versus 10,626,179 pounds
during the 2000 period, a decrease of 4,187,501 pounds. The decrease in sales of
meat products sold is primarily attributable to the reduction in orders by
customers.
Costs of meat products sold for the three months ended March 31, 2001 were
$6,534,272 versus $9,985,763 for the comparable period ended March 31, 2000, a
decrease of 34.6%. The decrease in the cost of meat products sold is primarily
attributable to a decline in pounds produced and sold.
Gross margins on sales were 5.0% for the three months ended March 31, 2001 and
5.7% for the 2000 period. This decrease in gross margins is primarily
attributable to the semi-variable nature of certain costs of meats products sold
such as labor, packaging and utilities.
Selling and administrative expenses decreased to $356,205 from $433,535, a
decrease of $77,330. Selling and administration expenses represented 5.2% of
revenue for the three months ended March 31, 2001 compared to 4.1% for the
comparable period in 2000.
Depreciation and amortization expense for the three months ended March 31, 2001
was $337,415 versus $327,430 for the same period in 2000, an increase of 3.0%.
Interest expense for the three months ended March 31, 2001 was $156,233 versus
interest expense of $170,655 for the same period in 2000. This decrease of
$14,422 primarily relates to the decrease in the average outstanding debt and
interest rates.
A net loss of $479,297 was realized in the 2001 period compared to a net loss of
$294,420 in the comparable period in 2000.
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Liquidity and Capital Resources
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At March 31, 2001, the Partnership had a negative working capital of $660,466
versus a negative working capital of $246,226 at December 31, 2000.
Cash used by operating activities was $152,851 in 2001 versus cash provided by
operating activities of $663,144 in the first quarter of 2000.
Cash used in investing activities was $118,140 in 2001 as compared to $24,144 in
2000.
The Partnership provided $20,783 from financing activities during 2001, which
represents net proceeds from debt outstanding. During the comparable period in
2000, the Partnership used $799,117 from financing activities, which represents
net repayment from debt outstanding.
Whiteford Foods working capital and equipment requirements are primarily met by
(a) a revolving credit agreement with Whiteford's banks in the maximum amount of
$2,500,000 (with $1,981,071 outstanding at March 31, 2001) (the "Principal
Revolver"); (b) a term credit facility of $3,177,804 (with $3,100,807
outstanding at March 31, 2001) (the "Term A Loan"); (c) a term credit facility
of $574,605 (with $383,070 outstanding at March 31, 2001 (the "Term B Loan") and
(d) a term credit facility of $1,000,000 (with $940,000 outstanding at March 31,
2001) (the "Term C Loan). During 2000 the Partnership amended its credit
agreement with its banks. Effective January 31, 2001, the maturity date for term
notes A, B and C were changed from December 31, 2001 to March 31, 2002. The
revolving credit commitment expiration date is May 31, 2001.
The Principal Revolver bears interest at prime plus 2%. The Term A Loan bears an
interest rate of prime plus 1%. The Term B Loan bears an interest rate 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 restricts
the ability of the Partnership to make distributions to the Limited Partners
without the consent of the principal lender. The loans are secured by real
property, fixed assets, equipment, inventory, receivables and intangibles of the
Partnership.
The Partnership's 2001 capital budget calls for the expenditure of $200,000 for
building, plant and equipment modifications and additions. The General Partner
believes Whiteford Foods is in compliance with environmental protection laws and
regulations, and does not anticipate making additional capital expenditures for
such compliance in 2001. Capital expenditures 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 2001.
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 was advised by one of its major customers representing
approximately $14,000,000 of budgeted revenue for 2000, that commencing in 2000,
such customer would 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, eliminated
Whiteford' 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.
Market Risk
- -----------
There have been no significant changes in market risk since December 31, 2000.
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PART II. OTHER INFORMATION
Item 1. Legal Proceeding
None
Item 2. Change in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Materially Important Events
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits - None
b. Reports on Form 8-K - None
9 of 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITEFORD PARTNERS, L.P.
Date May 4, 2001 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.
FIRST QUARTER REPORT 2001