UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-30D
ANNUAL REPORT PURSUANT TO SECTION 30(b) of
THE INVESTMENT COMPANY ACT OF 1940
For the fiscal year ended December 31, 1998
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(Exact name of Registrant as specified in its charter)
Delaware 75-2614883
(State or other jurisdiction (I.R.S. Employer
or incorporation or organization) Identification No.)
825 N.E. Multnomah, Suite 1900
Portland, Oregon 97232-4116
(Address of principal executive offices)
(Zip Code)
(214) 754-8400
(Registrant's telephone number, including area code)
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
825 NE Multnomah
Suite 1900, Portland, Oregon 97232-4116
March 29, 2000
To the Members of WhiteRock Portfolio Investors, L.L.C.:
Please find enclosed, for your information, the financial statements of
WhiteRock Portfolio Investors, L.L.C. for the periods ended December 31, 1997,
June 30, 1998, December 31, 1998, and June 30, 1999. This information reflects
the financial position of WhiteRock as of the dates of these statements and its
financial results for the periods shown. The statements for June 30, 1998 and
June 30, 1999 have not been audited. Please retain this information for future
reference and call the undersigned at (214) 754-8459 with any questions you may
have.
Sincerely,
/s/ Rhonda S. Brittain
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
FINANCIAL STATEMENTS
for the years ended December 31, 1998 and 1997
With Report of Independent Accountants
<PAGE>
PRICEWATERHOUSECOOPERS
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
301 Commerce Street
City Center Tower II
Suite 1900
Fort Worth, TX 76102-4183
Telephone (817) 810 9998
Facsimile (817) 877 2260
(817) 332 2710
Report of Independent Accountants
To the Board of Managers of
WhiteRock Portfolio Investors, L.L.C.
In our opinion, based upon our audits and the report of other auditors, the
accompanying balance sheets and the related statements of income, changes in
net assets, cash flows and financial highlights present fairly, in all material
respects, the financial position of WhiteRock Portfolio Investors, L.L.C. (a
Limited Liability Company) at December 31, 1998 and 1997, and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of Brazos Fund, L.P., a limited partnership investment,
which represents 5.00% and 37.26% of the Company's net assets at December 31,
1998 and 1997, respectively, and 34.78% and 82.14% of the Company's net income
for the years ended December 31, 1998 and 1997, respectively. Those statements
were audited by other auditors whose report thereon has been furnished to us. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit 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 and the report of other auditors provide a reasonable basis for the
opinion expressed above. The financial statements and financial highlights of
the Company as of December 31, 1996 and 1995, and for the periods then ended
were audited by other auditors whose report dated April 11, 1997, expressed an
unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
May 17, 1999
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
BALANCE SHEETS
December 31, 1998 and 1997
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1998 1997
------------ ------------
ASSETS
Cash and cash equivalents $ 8,536 $ 26,808
Investments in limited partnerships:
Lone Star Opportunity Fund, L.P.
Brazos Fund, L.P. 21,306,519 10,202,668
1,122,715 6,064,550
------------ ------------
Total investments in limited partnerships 22,429,234 16,267,218
Accounts receivable--related parties 30,884 12,783
------------ ------------
Total assets $ 22,468,654 $ 16,306,809
============ ============
LIABILITIES AND NET ASSETS
Liabilities, accounts payable - related parties 19,152 29,541
Net assets (4,959,786 and 3,025,495 units
outstanding, respectively) 22,449,502 16,277,268
------------ ------------
Total liabilities and net assets $ 22,468,654 $ 16,306,809
============ ============
Net asset value per unit $ 4.53 $ 5.38
============ ============
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
STATEMENTS OF INCOME
for the years ended December 31, 1998 and 1997
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1998 1997
------------ ------------
Investment income $ 2,978,045 $ 2,587,920
Other income 4,567 11,654
------------ ------------
2,982,612 2,599,574
Canadian tax on dividends received 7,629 23,958
------------ ------------
Net investment income 2,974,983 2,575,616
Unrealized gain (loss) on investments 682,858 (459,108)
------------ ------------
Net income $ 3,657,841 $ 2,116,508
============ ============
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended December 31, 1998 and 1997
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1998 1997
------------ ------------
Net investment income $ 2,974,983 $ 2,575,616
Unrealized gain (loss) on investments 682,858 (459,108)
------------ ------------
Net increase in net assets resulting from
operations 3,657,841 2,116,508
Distributions to members from net investment
income (7,235,000) (4,859,000)
Increase in net assets from members' capital
contributions 9,749,393 9,637,449
------------ ------------
Total increase in net assets 6,172,234 6,894,957
Net assets, beginning of year 16,277,268 9,382,311
------------ ------------
Net assets, end of year $ 22,449,502 16,277,268
============ ============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1998 and 1997
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<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,657,841 $ 2,116,508
Adjustments to reconcile net income to net
cash used in operating activities:
Noncash investment income (2,978,045) (2,587,920)
Unrealized (gain) loss on investments (682,858) 459,108
Increase in accounts receivable - related
parties (18,101) (2,806)
Decrease in accounts payable - related parties (10,389) (4,759)
------------ ------------
Net cash used in operating activities (31,552) (19,869)
------------ ------------
Cash flows from investing activities:
Investments in limited partnerships (10,467,208) (9,641,180)
Distributions received from limited partnerships
investments 7,966,095 4,672,612
Return of invested capital -- 234,221
------------ ------------
Net cash used in investing activities (2,501,113) (4,734,347)
------------ ------------
Cash flows from financing activities:
Member capital contributions 9,749,393 9,637,449
Member capital distributions (7,235,000) (4,859,000)
------------ ------------
Net cash provided by financing activities 2,514,393 4,778,449
------------ ------------
Net increase (decrease) in cash and cash equivalents (18,272) 24,233
Cash and cash equivalents, beginning of year 26,808 2,575
------------ ------------
Cash and cash equivalents, end of year $ 8,536 $ 26,808
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
FINANCIAL HIGHLIGHTS
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<TABLE>
<CAPTION>
September 29,
1995 (inception)
Years ended December 31, through
-------------------------- December 31,
1998 1997 1996 1995
------ ------ ------ ---------------
<S> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of period $ 5.38 $ 6.50 $14.48 $ --
Net investment income 0.82 1.52 2.79 (0.07)
unrealized gain (loss) on investments 0.20 (0.27) -- --
------ ------ ------ ------
Net increase in net asset value resulting
from operations 1.02 1.25 2.79 (0.07)
------ ------ ------ ------
Capital contributions from members -- -- -- 14.55
Distributions to members (1.87) (2.38) (10.77) --
------ ------ ------ ------
Net asset value, end of period $ 4.53 $ 5.38 $ 6.50 $14.48
====== ====== ====== ======
Total investment return* 40.46% 33.32% 35.26% (0.49%)
====== ====== ====== ======
Ratio of net investment income to average 15.36% 20.08% 29.03% (0.49%)
net assets ====== ====== ====== ======
</TABLE>
* Total investment return represents aggregate net income (since inception)
to net assets at the and of the period.
The accompanying notes are an integral part of these financial statements
6
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
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1. Summary of Accounting Policies:
Description of business
WhiteRock Portfolio Investors, L.L.C. (WhiteRock) was formed on September
29, 1995 and is registered as a nondiversified, closed-end investment
company under the Investment Company Act of 1940. The investment objective
of WhiteRock is to seek high total returns by buying, selling, exchanging
or otherwise acquiring, holding, trading, investing in, managing, and
dealing with qualified investments, whether such assets are acquired
directly, or indirectly through partnerships, joint ventures, or
otherwise. In pursuing its objectives, WhiteRock focuses primarily on
acquiring, directly or indirectly, managing and disposing of distressed
mortgage loan and real estate owned (REO) portfolios, and high yield
commercial mortgage-backed securities, including but not limited to
investing in entities organized or to be organized by Brazos Fund, L.P.
(Brazos), Lone Star Opportunity Fund, L.P. (Lone Star) and their
affiliates.
The operations of WhiteRock are governed by a limited liability company
agreement dated September 29, 1995. The term of WhiteRock is six years and
eleven months from the date of inception.
Net income and losses of WhiteRock are allocated among the members based
on their respective ownership percentages in accordance with the limited
liability company agreement.
Income taxes
As a limited liability company, WhiteRock is not subject to federal income
taxes; therefore, no federal taxes have been reflected in the accompanying
financial statements. Federal income taxes are the responsibility of
WhiteRock's members.
Investments in limited partnerships
Investments in limited partnerships are initially recorded at cost, which
is the net of capital contributions and distributions and WhiteRock's
share of the partnerships' results of operations, and these investments
are subsequently recorded at the lower of cost or fair value.
Investments in Brazos and Lone Star as of December 31, 1998 are recorded
at estimated fair value. The fair value estimate of the investments is
determined based on projected future cash flows of the investments
discounted at a market rate of return for investments with similar risks.
7
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS, Continued
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1. Summary of Accounting Policies, Continued:
Investments in Limited Partnerships, continued
The estimated fair values of investments do not necessarily represent the
amounts that may be realized from their immediate sale or disposition.
Because of the inherent uncertainty of valuation, those estimated values
may differ from the values that would have been used had a ready market
for the investments existed, and the differences could be material.
WhiteRock recognizes investment income from its respective share of the
income reported by the limited liability partnerships, based on its
ownership percentages,
Cash and cash equivalents
WhiteRock considers cash on deposit at financial institutions (that
maintain insurance with the Federal Deposit Insurance Corporation) and
highly liquid investments with original maturities of 90 days or less to
be cash and cash equivalents.
WhiteRock maintains its cash in deposit accounts which, at times, may
exceed federally insured limits. WhiteRock has not experienced any losses
in such accounts and believes it is not exposed to any significant credit
risks on cash and cash equivalents.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Reclassifications
Certain amounts for the year ended December 31, 1997. have been
reclassified to conform to the presentation adopted for the year ended
December 31, 1998. These reclassifications had no effect on net assets as
previously reported.
8
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
2. Investments in Limited Partnerships:
The primary focus of Brazos and Lone Star, WhiteRock's two investments at
December 31, 1998, is the acquisition, management and disposition of
distressed mortgage loan and real estate portfolios and other real estate
related assets. In addition, Lone Star targets a broad range of
investments in various asset classes, property types, transaction
structures and deal sizes. As of June 1996, new investment activity on
Brazos was terminated with the sole focus on management and disposition of
its portfolios. Lone Star continues to invest. The objective of the two
funds is to achieve significant yields and capital gains for their
partners. The projected holding period for each of these investments is
three to five years. Brazos' and Lone Star's general partners are
responsible for the evaluation, execution and management of the
investments and investment opportunities of the respective funds. Brazos
and Lone Star will invest only where they believe that they have a
competitive advantage arising from their expertise in origination,
evaluation, management and disposition of assets. As of December 31, 1998,
Brazos and Lone Star have invested twenty-three and forty-one portfolios,
respectively. The operations of Brazos and Lone Star are governed by
limited partnership agreements (Agreements) dated March 30, 1995 and
November 21, 1996, respectively. All profits, losses and cash
distributions are allocated and governed in accordance with the
Agreements.
Summary contribution and distribution information related to Brazos and
Lone Star through December 31, 1998 is as follows:
Brazos Lone Star
------ ---------
Contributions inception-to-date $ 15,416,958 $ 20,717,814
============ ============
Distributions inception-to-date $ 20,761,842 $ 2,151 654
============ ============
The following investments in limited partnerships have been valued in good
faith by management:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
---------------------------------------- ---------------------------------------
Percentage Percentage
Ownership Estimated of Net Estimated of Net
Percentage Cost Fair Value Assets Cost Fair Value Assets
---------- ---- ---------- ------ ---- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Lone Star Opportunity
Fund. L.P. 5.05% $ 21,306,519 $ 21,306,519 95% $ 10,202,668 $ 10,202,668 63%
Brazos Fund, L.P. 6.09% 1,490,858 1,122,715 5% 7,115,551 6,064,550 37%
------------ ------------ --- ------------ ------------ ---
Total investments $ 22,797,377 $ 22,439,234 100% $ 17,318,219 $ 16,267,218 100%
============ ============ === ============ ============ ===
</TABLE>
9
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(A Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS, Continued
- --------------------------------------------------------------------------------
3. Related Party Transactions:
All WhiteRock expenses (except for Canadian taxes on dividends received),
including organizational expenses, are the responsibility of Brazos
Principal GenPar, L.P., the general partner of Brazos, or its general
partner, Brazos GenPar, Inc., and Lone Star Partners, L.P., the general
partner of Lone Star. Lone Star Partners, L.P. also functions as
WhiteRock's administrator, and in that capacity performs all accounting,
reporting and income tax services.
From time-to-time, WhiteRock has receivables from related parties relating
to capital calls and payables to related parties for distributions
declared but not paid. At December 31, 1998 and 1997, receivables from
related parties totaled $30,884 and $12,783, respectively, and payables to
related parties totaled $19,152 and $29,541, respectively. Related party
receivables and payables are generally settled within one month.
WhiteRock uses the facilities of the asset manager for Lone Star and
Brazos to maintain all records and transact all business.
10
