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, 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
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer 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 May 4, 2000
-------------------------------- --------------------------------
Limited Partnership Class A $10 Units 1,306,890
This document contains 10 pages
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WHITEFORD PARTNERS, L.P.
INDEX TO FORM 10-Q
THREE MONTHS ENDED MARCH 31, 2000 and 1999
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Page Number
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000
(Unaudited) and December 31, 1999............................ 3
Condensed Consolidated Statements of Operations for the three
months ended March 31, 2000 and 1999 (Unaudited)............. 4
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---- ----
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 121,099 $ 281,216
Accounts receivable: trade 1,653,908 2,068,428
Inventories:
Finished products 1,454,528 1,531,532
Raw materials 735,028 834,763
Packaging supplies and other 1,046,496 1,012,392
------------ ------------
3,236,052 3,378,687
Prepaid expenses and other assets 143,223 91,659
------------ ------------
TOTAL CURRENT ASSETS 5,154,282 5,819,990
PROPERTY AND EQUIPMENT - net of accumulated depreciation
of $7,661,608 and $7,366,051 in 2000 and 1999 10,951,653 11,223,066
OTHER ASSETS - net of amortization 2,545,790 2,577,664
------------ ------------
TOTAL ASSETS $ 18,651,725 $ 19,620,720
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 2,384,067 $ 2,287,987
Notes payable and current maturities on long term debt 3,499,311 4,172,281
Accrued expenses and other liabilities 760,201 731,738
------------ ------------
TOTAL CURRENT LIABILITIES 6,643,579 7,192,006
LONG-TERM DEBT 3,400,980 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 11,391 14,335
Distributions (38,171) (38,171)
------------ ------------
(11,649) (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 1,116,585 1,408,061
Distributions (3,786,598) (3,786,598)
------------ ------------
8,618,815 8,910,291
TOTAL PARTNERS' CAPITAL 8,607,166 8,901,586
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 18,651,725 $ 19,620,720
============ ============
</TABLE>
NOTE: The condensed balance sheet at December 31, 1999 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)
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<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
Revenue
Sales of meat products $ 10,591,459 $ 13,968,250
Interest and other income 31,504 83,418
------------ ------------
10,622,963 14,051,668
Costs and Expenses
Cost of meat products sold 9,985,763 13,308,066
Selling and administrative expenses 433,535 672,964
Depreciation and amortization 327,430 318,164
Interest 170,655 156,231
------------ ------------
NET LOSS $ (294,420) $ (403,757)
============ ============
Summary of net loss allocated to
General Partner $ (2,944) $ (4,038)
Limited Partners (291,476) (399,719)
------------ ------------
$ (294,420) $ (403,757)
============ ============
Net loss per $10 unit of L.P. Capital . $ (0.23) $ (0.31)
============ ============
Average units issued and outstanding .. 1,306,890 1,306,890
============ ============
</TABLE>
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
2000 1999
--------------------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 663,144 $ 368,166
----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment (24,144) (510,164)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (24,144) (510,164)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from notes payable 492,230 5,811,446
Payments on notes payable (1,291,347) (5,728,311)
Distributions to Limited and General Partners 0 (65,998)
----------- -----------
NET CASH (USED)/ PROVIDED IN FINANCING ACTIVITIES (799,117) 17,137
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (160,117) (124,861)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 281,216 416,143
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 121,099 $ 291,282
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (excluding amount capitalized) $ 168,560 $ 156,000
=========== ===========
</TABLE>
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
March 31, 2000
(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, 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 included 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
(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, 2000 and the condensed consolidated results of its operations for
the three months ending March 31, 2000 and 1999 and the condensed consolidated
cash flows for the three months ending March 31, 2000 and 1999. Operating
results for the period ending March 31, 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 ANALYSI OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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, 2000 Compared to Three Months ended March 31, 1999
- -------------------------------------------------------------------------------
Revenues for the three months ended March 31, 2000 were $10,622,963 versus
$14,051,668 for the comparable period in 1999, a decrease of 24.4%. During the
2000 period 10,626,179 pounds of meat products were sold versus 15,900,123
pounds during the 1999 period, a decrease of 5,273,944 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, 2000 were
$9,985,763 versus $13,308,066 for the comparable period ended March 31, 1999, a
decrease of 25.0%. 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 5.7% for the three months ended March 31, 2000 and
4.7% for the 1999 period. This increase 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 $433,535 from $672,964, a
decrease of $239,429. Selling and administration expenses represented 4.1% of
revenue for the three months ended March 31, 2000 compared to 4.8% for the
comparable period in 1999.
Depreciation and amortization expense for the three months ended March 31, 2000
was $327,430 versus $318,164 for the same period in 1999, an increase of 2.9%.
Interest expense for the three months ended March 31, 2000 was $170,655 versus
interest expense of $156,231 for the same period in 1999. This increase of
$14,424 primarily relates to the increase in the average outstanding debt.
A net loss of $294,420 was realized in the 2000 period compared to a net loss of
$403,757 in the comparable period in 1999.
Impact of Year 2000
- -------------------
The Partnership has completed the changes required to ensure that all of its
software, hardware and operating equipment will function properly with respect
to dates in the Year 2000 and thereafter. The total cost of these changes was
not material and has been expenses as incurred. The majority of the Year 2000
costs were incurred during fiscal year 1998 with substantially all the remaining
costs expensed in fiscal year 1999. As of the date of this filing, the
Partnership's ability to provide products and services has not been adversely
affected by Year 2000 issues.
Liquidity and Capital Resources
- -------------------------------
At March 31, 2000, the Partnership had a negative working capital of $1,489,297
versus a negative working capital of $1,372,016 at December 31, 1999.
Cash provided by operating activities was $663,144 in 2000 versus $368,166 in
the first quarter of 1999.
Cash used in investing activities was $24,144 in 2000 as compared to $510,164 in
1999.
The Partnership used $799,117 from financing activities during 2000, which
represents net repayment of debt outstanding. During the comparable period in
1999, the Partnership provided $17,137 from financing activities, which
represents net proceeds from debt outstanding and distributions.
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Whiteford Foods working capital and equipment requirements are primarily met by
(a) a revolving credit agreement with Whiteford's principal lender on a
percentage of eligible accounts receivables and inventories plus an overadvance
amount of $900,000 through April 30, 2000, reduced to $800,000 through May 31,
2000 and reduced to $700,000 thereafter (with $2,900,000 outstanding at March
31, 2000), (the "Principal Revolver"); (b) a commercial mortgage note of
$4,165,000 (with $3,232,807 outstanding at March 31, 2000) ("the Principal
Mortgage Loan"); (c) an equipment note of $2,200,000 (with $711,415 outstanding
at March 31, 2000) (the "Principal Term Loan"); and (d) a credit facility of
$500,000, (with $26,069 outstanding at March 31, 2000) (the "Third Term Loan")
(collectively, the "Loans").
The Principal Revolver bears interest at prime plus 1% on the first $2,500,000
and prime plus 2% on amounts outstanding over $2,500,000. The Principal Mortgage
Loan and the Principal Term Loan bear interest at prime plus 1%. The Third Term
bears interest at 9.42%. 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 Principal Revolver, Principal Mortgage Loan and the Principal Term Loan
provided by the principal lender are secured by real property, fixed assets,
equipment, inventory, receivables and intangibles of Partnership.
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 Foods is in compliance with environmental protection laws and
regulations, and does not anticipate making additional capital expenditures for
such compliance in 2000. 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 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 $14,000,000 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' 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.
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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
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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 May 4, 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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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-01-2000 JAN-01-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<EXCHANGE-RATE> 1 1
<CASH> 121,099 281,216
<SECURITIES> 0 0
<RECEIVABLES> 1,653,908 2,068,428
<ALLOWANCES> 0 0
<INVENTORY> 3,236,052 3,378,687
<CURRENT-ASSETS> 5,154,282 5,819,990
<PP&E> 18,613,261 18,599,117
<DEPRECIATION> 7,661,608 7,366,051
<TOTAL-ASSETS> 18,651,725 19,620,720
<CURRENT-LIABILITIES> 6,643,579 7,192,006
<BONDS> 3,400,980 3,527,128
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 8,607,166 8,901,586
<TOTAL-LIABILITY-AND-EQUITY> 18,651,725 19,620,720
<SALES> 10,591,459 13,968,250
<TOTAL-REVENUES> 10,622,963 14,051,668
<CGS> 9,985,763 13,308,066
<TOTAL-COSTS> 10,917,383 14,455,425
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 170,655 156,231
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (294,420) (403,757)
<EPS-BASIC> 0 0
<EPS-DILUTED> (.23) (.31)
</TABLE>
