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 June 30, 2004
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
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 August 14, 2004
- ------------------------------------- ------------------------------------
Limited Partnership Class A $10 Units 1,306,890
This document contains 11 pages
----
WHITEFORD PARTNERS, L.P.
INDEX TO FORM 10-Q
SIX MONTHS ENDED JUNE 30, 2004 and 2003
- --------------------------------------------------------------------------------
Page Number
Part I. FINANCIAL INFORMATION
Item 1.Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2004
(Unaudited) and December 31, 2003..................................3
Condensed Consolidated Statements of Operations for the three and
six months ended June 30, 2004 and 2003 (Unaudited)................4
Condensed Consolidated Statements of Cash Flows for the six
months ended June 30, 2004 and 2003 (Unaudited)....................5
Notes to Condensed Consolidated Financial Statements (Unaudited).......6
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................8
Item 3. Quantitative and Qualitative Discussions About Market Risk......9
Item 4. Controls and Procedures..........................................9
PART II. OTHER INFORMATION...................................................9
Item 1. Legal Proceeding.................................................9
Item 2. Change in Securities.............................................9
Item 3. Defaults Upon Senior Securities..................................9
Item 4. Submission of Matters to a Vote of Security Holders..............9
Item 5. Other Materially Important Events................................9
Item 6. Exhibits and Reports on Form 8-K................................10
Signatures ...........................................................11
Exhibit 33.0
Exhibit 34.0
2 of 11
Whiteford Partners, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2004 2003
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 370,513 $ 348,296
Interest Receivable 10,688 10,688
------------ ------------
TOTAL CURRENT ASSETS 381,201 358,984
SUBORDINATED NOTE RECEIVABLE 1,350,000 1,350,000
------------ ------------
TOTAL ASSETS $ 1,731,201 $ 1,708,984
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accrued expenses and other liabilities $ 31,818 $ 33,518
------------ ------------
TOTAL CURRENT LIABILITIES 31,818 33,518
Subordinated consulting fee payable 138,075 114,158
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in net (loss) (49,266) (49,266)
Distributions (38,171) (38,171)
------------ ------------
(72,306) (72,306)
------------ ------------
Class A Limited Partners:
Capital contributions, net of organization and
Offering costs of $2,010,082 11,172,274 11,172,274
Capital transfers from the General Partner 116,554 116,554
Interest in net (loss) (4,888,448) (4,888,448)
Distributions (4,766,766) (4,766,766)
------------ ------------
1,633,614 1,633,614
------------ ------------
TOTAL PARTNERS' CAPITAL 1,561,308 1,561,308
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,731,201 $ 1,708,984
============ ============
See notes to consolidated financial statements.
Note: The Condensed Balance Sheet at December 31, 2003, has been taken from the
audited financial statements at such date.
3 of 11
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
WHITEFORD PARTNERS, L.P.
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2004 2003 2004 2003
---- ---- ---- ----
Revenues
Interest and other income $ 32,294 $ 32,471 $ 64,920 $ 65,922
---------- ---------- ---------- ----------
32,294 32,471 64,920 65,922
Costs and Expenses
Selling and administrative expenses 32,294 8,245 64,920 15,863
---------- ---------- ---------- ----------
NET INCOME OPERATIONS $ 0 $ 24,226 $ 0 $ 50,059
========== ========== ========== ==========
Summary of net income allocated to
General Partner $ 0 $ 242 $ 0 $ 500
Limited Partners 0 23,984 0 49,559
---------- ---------- ---------- ----------
$ 0 $ 24,226 $ 0 $ 50,059
========== ========== ========== ==========
Net income per $10 unit of L.P. Capital $ 0.00 $ 0.02 $ 0.00 $ 0.04
========== ========== ========== ==========
Weighted average units issued and outstanding 1,306,890 1,306,890 1,306,890 1,306,890
========== ========== ========== ==========
4 of 11
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
WHITEFORD PARTNERS, L.P.
(Unaudited)
- --------------------------------------------------------------------------------
Six Months Ended
June 30,
2004 2003
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 22,217 $ 47,831
-------- --------
CASH PROVIDED/(USED) IN FINANCING ACTIVITIES:
Distributions to Limited and General Partners 0 0
-------- --------
NET CASH PROVIDED/(USED) IN FINANCING ACTIVITIES 0 0
-------- --------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 22,217 47,831
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 348,296 249,824
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $370,513 $297,655
======== ========
5 of 11
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
WHITEFORD PARTNERS, L.P.
June 30, 2004
(Unaudited)
- --------------------------------------------------------------------------------
NOTE A - ORGANIZATION, BUSINESS AND ACQUISITIONS
Whiteford Partners, L.P. (the ``Partnership'') was formed on June 30, 1987, as a
Delaware limited partnership. The Partnership consists of a General Partner,
Gannon Group, Inc., and Limited Partners. The offering period of the Partnership
terminated on November 10, 1989, with $13,557,550 of Limited Partner gross
subscriptions received in the form of Class A Units. Pursuant to the terms of
the Prospectus, offering proceeds in the amount of $140,365 were returned to
certain Ohio residents when the Partnership's business acquisition program was
not substantially completed by December, 1989. The Partnership was organized
principally to form, acquire, own and operate businesses engaged in the
development, production, processing, marketing, distribution and sale of food
and related products (the ``Food Businesses'').
In the first quarter of 1990, the Partnership entered into a limited
partnership, Whiteford Foods Venture, L.P. ("Whiteford's") which was formerly
named Granada/Whiteford Foods Venture, L.P., with a wholly-owned subsidiary of
the former General Partner, G/W Foods, Inc., for the purpose of acquiring the
assets, certain liabilities and the operations of Whiteford's Inc., a further
processor and distributor of beef products to major fast food restaurants and
regional chains, which was located in Versailles, Ohio. The acquisition, which
was made with Partnership funds, was closed March 26, 1990, with the
Partnership's resultant equity interest in Whiteford's being in excess of 99%.
On April 23, 1990, all outstanding and contingent items were resolved and
completed, and the acquisition of the assets was funded on April 24, 1990.
On May 4, 1992, the outstanding shares of G/W Foods, Inc. were assigned by the
former General Partner to Gannon Group, Inc., a corporation owned by Kevin T.
Gannon, a Director and Vice President of G/W Foods, Inc. At that time, Mr.
Gannon was also a former Vice President of Granada Corporation and certain of
its affiliates. Also on May 4, 1992, Granada Management Corporation assigned its
sole general partnership interest in the Partnership to Gannon Group, Inc. The
effect of these assignments is for Gannon Group, Inc. to have general
partnership authority and responsibility with respect to the Partnership and,
through G/W Foods, Inc., of Whiteford's.
Subject to the availability of capital resources and/or financing, the
Partnership Agreement permits the acquisition of additional Food Businesses that
produce, process or distribute specialty food products including businesses that
possess technology or special processes which could increase the productivity or
processing capability of the Partnership's Food Business or which enhance the
marketability or resale value of the Partnership's Food Business products. At
the present time, no acquisitions are contemplated.
The Partnership sold (the "Sale Transaction") substantially all its assets on
November 11, 2001, to an affiliate of Rochester Meat Company ("Rochester Meat"),
an unaffiliated company, pursuant to an Asset Purchase Agreement (the
"Agreement"). The purchase price was $7,950,000, including the assumption or
payment of certain liabilities. The purchase price was paid $1,500,000 in cash
and the issuance of a subordinated note the "Subordinated Note" due June 30,
2007 in the principal amount of $1,350,000 (as adjusted) with the balance of the
purchase price paid by the assumption of certain liabilities net of other
assets. The Subordinated Note bears interest at 9.5% and is prepayable under
certain conditions. Additionally, the principal balance of the Subordinated Note
may be adjusted downward under certain circumstances.
6 of 11
In connection with the transaction with Rochester Meat, the Partnership was
obligated to pay up to $500,000 to Greenaway Consultants, Inc. pursuant to a
consulting agreement. Greenaway Consultants, Inc. acquired the right to such
payment in connection with its provision of management services and financing to
the Partnership. The Partnership and Greenaway Consultants, Inc. agreed to: (i)
a $50,000 payment made in January 2002, (ii) subordinate $300,000 of such
payment to the distribution by the Partnership of $2.00 per limited partner unit
(an aggregate of $2,613,780) and (iii) forgive $150,000 of such payment.
Greenaway Consultants, Inc. is wholly owned by Albert Greenaway. Neither Mr.
Greenaway nor Greenaway Consultants, Inc. owns any interest in the general
partner of the Partnership. The $300,000 obligation to Greenaway Consultants is
being accrued after distributions and limited partner net asset values equal
$2.00 per unit.
Upon completion of the transaction, the Partnership's assets included the net
cash proceeds and the Subordinated Note, subject to the then remaining
obligations to Greenaway Consultants, Inc. and the General Partner and other
closing costs.
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, 2003. 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
2004.
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 June 30, 2004 and the condensed consolidated results of its operations for
the three months and six months ending June 30, 2004 and 2003 and the condensed
consolidated cash flows for the three and six months ending June 30, 2004, and
2003. Operating results for the period ending June 30, 2004 are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 2004.
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.
7 of 11
ITEM 2. 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 Rochester Meats (as the obligor on the
Subordinated Note) products, the ability of Rochester Meats to obtain widespread
market acceptance of its products, the ability of Rochester Meats 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 Rochester Meats'
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 and Six Months ended June 30, 2004 Compared to Three and Six Months Ended
- -------------------------------------------------------------------------------
June 30, 2003
- -------------
The Partnership sold substantially all of its operating assets on November 11,
2001. For the three and six months ended June 30, 2004, the Partnership received
net interest issued on the subordinated note and cash balances aggregating
$32,294 and $64,920, respectively and incurred operating expenses of $32,294 and
$64,920, respectively. Such operating expenses include general and
administrative expenses associated with audit fees, tax return preparation fees,
accrual of the subordinated consulting fee to Greenaway Consultants Inc., and
transfer agent fees.
For the three and six months ended June 30, 2003, the Partnership received
interest income on the subordinated note receivable and cash investments
aggregating $32,471 and $65,922 respectively and incurred operating expenses of
$8,245 and $15,863 respectively. Such operating expenses include primarily
general and administrative expenses associated with audit fees, tax return
preparation fees and transfer agent fees.
The net profit for the three and six month periods in 2004 were $0 and $0,
respectively versus $24,226 and $50,059 for the three month and six month
periods in 2003, respectively.
Liquidity and Capital Resources
- -------------------------------
At June 30, 2004, the Partnership had working capital of $349,383 versus working
capital of $325,466 at December 31, 2003. Subsequent to the sale of assets to
Rochester Meats, the Partnership has no interest bearing debt outstanding.
8 of 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Market Risk
- -----------
There have been no significant changes in market risk since December 31, 2003.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this quarterly report, an evaluation was
performed by the Chairman of the General Partner of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management concluded that the Company's
disclosure controls and procedures were effective. There have been no
significant changes in the Company's internal controls over financial reporting
that occurred during the quarter ended June 30, 2004, that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.
The Company maintains a system of disclosure controls and procedures (as defined
in Exchange Act Rules 13a -15(e) and 15d -15(e)) designed to ensure that
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms and to ensure
that material information relating to the Company is made known to the Chairman
of Gannon Group, Inc., the General Partner of the Company, by others within the
Company. The Company evaluated the effectiveness of the design and operation of
its disclosure controls and procedures under the supervision and with
participation of management, including the Chairman of Gannon Group, Inc., the
General Partner of the Company, as of the end of the period covered by this
report on Form 10-Q. Based on that evaluation, the Company's management,
including the Chairman of Gannon Group, Inc., the General Partner of the
Company, concluded that these disclosure controls and procedures were effective.
The Company also maintains a system of internal control over financial reporting
(as defined in Exchange Act Rules 13a -15(f) and 15d -15(f)) designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the U.S. There were no changes in
the Company's internal control over financial reporting during the second
quarter of 2004 that have materially affected, or are reasonably likely to
materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
There are no material pending or threatened legal proceedings involving the
Partnership, known to either the Partnership or the General Partner.
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
9 of 11
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description
------ -----------
31 CEO certification pursuant to Section 302 of Sarbanes - Oxley
Act of 2002.
32 CEO and CFO certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes - Oxley Act
of 2002.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 2004.
10 of 11
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: August 14, 2004 By: /s/ Kevin T. Gannon
-------------------
Kevin T. Gannon, Chairman, President,
Chief Executive Officer and
Chief Financial Officer of
Gannon Group, Inc. its
General Partner
11 of 11