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
Prior to the Sale Transaction, certain of the Partnership's loans with its
lender contain restrictive covenants. One of the covenants restricted the
Partnership from declaring or paying any distributions to its partners without
the prior consent of the bank. Such loans were paid in full in 2001 as the
result of the Sale Transaction.
The following table sets forth the approximate number of holders of record
of the equity securities of the Partnership as of December 31, 2001:
Title of Class Number of Record Holders
-------------- ------------------------
Limited Partnership Units 1,409
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.
Year Ended December 31
---------------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ----- ----- ----- ----
STATEMENT OF OPERATIONS DATA:
Revenues:
Sale of meat products $ 31,705,599 40,158,449 $ 51,549,748 $ 62,431,746 $ 62,224,110
Interest and other 231,103 158,450 166,680 338,696 256,416
------------ ------------ ------------ ------------ ------------
Total revenues 31,936,702 40,316,899 1,716,428 62,770,442 62,480,526
------------ ------------ ------------ ------------ ------------
Cost of sales 30,659,496 37,024,111 48,705,602 57,551,373 57,846,006
------------ ------------ ------------ ------------ ------------
Gross profit
Meat products 1,046,103 3,134,338 2,844,146 4,880,373 4,378,104
Other 231,103 158,450 166,680 338,696 256,416
------------ ------------ ------------ ------------ ------------
Total gross profit 1,277,206 3,292,788 3,010,826 5,219,069 4,634,520
------------ ------------ ------------ ------------ ------------
Selling and admin expenses 1,436,690 1,688,685 2,266,593 2,575,320 2,447,303
Depreciation, amortization
and interest 1,474,437 2,007,919 1,915,768 1,907,188 1,932,836
Writeoff of goodwill 2,350,550 0 0 0 0
Loss on sale of assets 1,972,651 0 0 0 0
------------ ------------ ------------ ------------ ------------
7,234,328 3,696,604 4,182,361 4,482,508 4,380,139
------------ ------------ ------------ ------------ ------------
Net (Loss) Income $ (5,957,122) $ (403,816) $ (1,171,535) $ 736,561 $ 254,381
============ ============ ============ ============ ============
(Loss) Income per unit of
Limited Partners' Capital $ (4.51) $ (0.31) $ (0.90) $ 0.56 $ 0.19
============ ============ ============ ============ ============
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 (deficit) $ 1,190,648 $ (246,226) $ (1,372,016) $ (55,756) $ (397,866)
Total assets $ 2,686,919 $ 16,755,410 $ 19,620,720 $ 20,986,810 $ 21,798,022
Long-term debt, less current
maturities 0 $ 4,050,711 $ 3,527,128 $ 4,001,939 $ 4,732,167
Total partners' capital $ 2,540,648 $ 8,497,770 $ 8,901,586 $ 10,205,117 $ 9,732,547
4
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.
Information Regarding and Factors Affecting Forward-Looking Statements:
The partnership is including the following cautionary statement in this
Annual Report on Form 10-K 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.
Results of Operations
Year Ended December 31, 2001, Compared to Year Ended December 31, 2000
Revenues for the year ended December 31, 2001 were $31,936,702 versus
$40,316,899 for the year ended December 31, 2000, a decrease of $8,380,197.
During the 2001 period, 28,929,580 pounds of products were sold versus
40,350,723 pounds during the 2000 period, a decrease of 11,421,143 pounds. This
decrease in pounds of meat products sold is primarily attributable to the
decrease in sales orders from certain customers and the Sale Transaction which
reduced the operation period in 2001.
Cost of meat products sold for the year ended December 31, 2001 were
$30,659,496 versus $37,024,111 for the year ended December 31, 2000, a decrease
of $6,364,615.
Gross margins on meat sales were 3.3% for the year ended December 31, 2001
and 7.8% for the 2000 period. This decrease in gross margins is primarily
attributable to: i) increase in raw material costs and ii) the semi-variable
nature of certain costs of meat products sold such as labor, packaging and
utilities.
Selling and administrative expenses decreased to $1,436,690 during the year
ended December 31, 2001 verses $1,688,685 for the same period in 2001. The
decrease is primarily attributable to reduction in volume.
Depreciation and amortization expense for the year ended December 31, 2001
was $1,034,873 versus $1,302,441 for the same period in 2000.
Interest expense for the year ended December 31, 2001 was $439,564 versus
interest expense of $705,478 for the same period in 2000. The decrease of
$265,914 primarily relates to the decrease in the average debt outstanding
during 2001 as the result of the Sale Transaction.
The Partnership reported a net loss of $5,957,122 for the year ended
December 31, 2001 versus a net loss of $403,816 for 2000 period, reflecting the
aforementioned change in operations, a loss on sale of assets and writeoff of
goodwill.
The loss on the sale of assets was taken in the third quarter to reflect
the expected transaction to occur with Rochester Meat Company, in the amount of
1,972,651. The assets were written down to their net realizable value in
accordance with Financial Accounting Standards Board Statement No. 121. The
decline in value was attributed to the declining economic conditions and the
events of September 11, 2001.
Goodwill was removed in the third quarter in the amount of 2,354,550 to
reflect the proposed sales transaction to Rochester Meat Company. The goodwill
was written down to $0 in accordance with Financial Accounting Standards Board
Statement No. 121. The write down was attributed to the declining economic
conditions and the events of September 11, 2001.
Year Ended December 31, 2000, Compared to Year Ended December 31, 1999
Revenues for the year ended December 31, 2000 were $40,316,899 versus
$51,716,428 for the year ended December 31, 1999, a decrease of $11,399,529.
During the 2000 period, 40,350,723 pounds of meat products were sold versus
55,948,467 pounds during the 1999 period, a
5
decrease of 15,597,744 pounds. The decrease in pounds of meat products sold is
primarily attributable to the decrease in sales order from certain customers.
Costs of meat products sold for the year ended December 31, 2000 were
$37,024,111 versus $48,705,602 for the year ended December 31, 1999, a decrease
of $11,681,491. During the 2000 period, 40,350,723 pounds of meat products were
sold versus 55,948,467 pounds during the 1999 period. The average cost of meat
products sold for 2000 was $.918 versus $.871 in the 1999 period, an increase of
5.4%. The increase in the cost per pound is primarily attributable to general
composition of the product.
Gross margins on meat sales were 7.8% for the year ended December 31, 2000
and 5.5% for the 1999 period. This increase in gross margins is primarily
attributable to the semi-variable nature of certain costs in the costs of meat
products sold such as labor, packaging, and utilities.
Selling and administrative expenses decreased to $1,688,685 during the year
ended December 31, 2000 versus $2,266,593 for the same period in 1999. The
decrease is primarily attributable to reduction in volume.
Depreciation and amortization expense for the year ended December 31, 2000
was $1,302,441 versus $1,263,659 for the same period in 1999, an increase of
3.1%.
Interest expense for the year ended December 31, 2000 was $705,478 versus
interest expense of $652,109 for the same period in 1999. This increase of
$53,369 primarily relates to the higher interest rates during 2000.
The Partnership reported net loss of $403,816 for the year ended December
31, 2000 versus a net loss of $1,171,535 for the 1999 period.
Liquidity and Capital Resources
At December 31, 2001, the Partnership had a working capital position of
$1,190,648, versus a negative working capital of $246,226 at December 31, 2000.
Cash provided by operating activities was $1,383,582 for the year ended
December 31, 2001 reflecting a net loss of $5,957,122, depreciation and
amortization of $1,034,873, a loss on sale of assets of $1,972,651, and the
write off of goodwill of $2,350,550, and a net decrease in other assets of
$1,982,631. Cash provided by operating activities for the year ended December
31, 2000 was $1,570,271, with a net loss of $403,816, depreciation and
amortization of $1,302,441,and a decrease in other net operating assets of
$671,646.
Cash provided by (used in) investing activities was $6,086,633 for 2001
versus ($296,418) for 2000. Cash used from financing activities for 2001 was
$6,473,651 verses cash used from financing activities for 2000 was $1,225,758.
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 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 2001, 2000, 1999, 1998, 1997, 1996,
1995, 1994, 1993 and 1992 respectively, are $300,000, $300,000, $287,000,
$274,000, $287,000, $300,000, $290,000, $222,000, $229,000, and $228,000,
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.
During the second quarter of 2002, the Partnership expects to make a
distribution of excess working capital. The amount of such distribution will
depend upon the availability of cash at that time. The General Partner estimates
a per unit distribution of approximately $.75.
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 and subordinated note. At December 31, 2001, the
Company had $2,675,875 in interest bearing investments that are subject to
market risk exposure to change in interest rates.
The Company holds a Subordinated Note with interest fixed at 9 1/2% for the
life of the note which comes due June 30, 2007. The remaining amount is subject
to normal economic risk associated with fluctuating money markets. A 1% increase
or decrease in rates would have approximately $15,000 impact in net income.
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.
6
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 28, 2002 /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
---------- ----- ----
/s/ Kevin T. Gannon Chief Executive officer, President, March 28, 2002
- ------------------- Chairman of the Board and Sole Director --------------
Kevin T. Gannon (Principal Executive Officer), Chief
Financial Officer, and Chief Accounting
Officer
9
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31
--------------------------------------------
2001 2000 1999
------------ ------------ ------------
REVENUE
Sales of meat products $ 31,705,599 $ 40,158,449 $ 51,549,748
Interest and other 231,103 158,450 166,680
------------ ------------ ------------
31,936,702 40,316,899 51,716,428
COST AND EXPENSES
Cost of meat products sold 30,659,496 37,024,111 48,705,602
Selling and administrative 1,436,690 1,688,685 2,253,524
Administrative fee - General Partner 0 -- 13,069
Depreciation and amortization 1,034,873 1,302,441 1,263,659
Interest 439,564 705,478 652,109
Write off of Goodwill 2,350,550 0 0
Loss on Sale of Assets 1,972,651 0 0
------------ ------------ ------------
37,893,824 40,720,715 52,887,963
------------ ------------ ------------
NET LOSS $ (5,957,122) $ (403,816) $ (1,171,535)
============ ============ ============
Summary of net (loss) allocated to:
General Partner $ (59,571) $ (4,038) $ (11,715)
Class A Limited Partners (5,897,551) (399,778) (1,159,820)
------------ ------------ ------------
$ (5,957,122) $ (403,816) $ (1,171,535)
============ ============ ============
Net (loss) per unit of Limited Partner Capital $ (4.51) $ (0.31) $ (0.90)
============ ============ ============
Weighted average units issued and outstanding 1,306,890 1,306,890 1,306,890
============ ============ ============
See notes to consolidated financial statements.
F-2
NOTE I - QUARTERLY DATA (UNAUDITED)
2000 Quarters
-------------
1st 2nd 3rd 4th Total
--- --- --- --- -----
Sales $ 10,591,459 $ 13,683,697 $ 9,204,279 $ 6,679,014 $ 40,158,449
Gross profit 605,696 946,182 911,833 670,627 3,134,338
Net (loss) income (294,420) 46,209 30,712 (186,317) (403,816)
(Loss) income per
unit of Limited
Partners' Capital $ (0.23) $ 0.04 $ 0.02 $ (0.14) $ (0.31)
Weighted average units
outstanding 1,306,890 1,306,890 1,306,890 1,306,890 1,306,890
2001 Quarters
-------------
Sales 6,876,279 8,771,881 12,340,036 3,717,403 31,705,599
Gross profit 342,007 712,525 657,927 (666,356) 1,046,103
Net (loss) income (479,297) (133,145) (5,334,275) (10,405) (5,957,122)
(Loss) income per
unit of Limited
Partners' Capital $ (0.37) $ (0.11) $ (4.03) -- $ (4.51)
Weighted average units
outstanding 1,306,890 1,306,890 1,306,890 1,306,890 1,306,890
F-9
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.
F-14