SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1996 Commission File Number 2-95219 INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (Exact name of small business issuer as specified in its charter) Massachusetts 04-2859087 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization One International Place, Boston, MA 02110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 330-8600 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 PART I - FINANCIAL INFORMATION INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (DEBTOR-IN-POSSESSION) STATEMENT OF OPERATIONS (UNAUDITED) (NOTE 1) THREE MONTHS ENDED MARCH 31, 1996 1995 -------- ---- Fruit Sales $ 707,598 $ 714,549 Less - Harvesting expenses 155,541 226,070 ---------- ---------- Net Fruit Sales 552,057 488,479 Cost of Fruit Sales 257,840 398,460 ---------- ---------- Operating Margin 294,217 90,019 Other Revenues: Interest income 28,919 22,396 Other Expenses: Interest expense 697,113 644,657 Grove management fees 51,557 51,483 Partnership management fees 84,000 75,000 Real estate taxes 16,100 14,700 Amortization 4,692 11,416 Building depreciation - 2,368 General Administrative 53,291 18,105 ---------- ---------- 906,753 817,729 ---------- ---------- Net Loss $ (583,617) $ (705,314) ========== ========== Net Loss allocated to General Partner $ (58,362) $ (70,531) ========== ========== Net Loss allocated to Limited Partners $ (525,255) $ (634,783) ========== ========== Net Loss per Unit of Limited Partnership Interest $ (33.89) $ (40.95) ========== ========== The accompanying notes are an integral part of these financial statements. INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (DEBTOR-IN-POSSESSION) BALANCE SHEETS ASSETS (NOTE 1) March 31, December 31, 1996 1995 (Unaudited) (Audited) Current Assets: Cash and cash equivalents......................................... $ 2,977,366 $ 2,676,875 Accounts receivable............................................... 365,383 329,413 Inventory......................................................... 1,868,608 1,792,035 Other assets...................................................... 44,006 64,660 ----------- ----------- ........... $ 5,255,363 $ 4,862,983 Property, net......................................................... 18,234,094 18,401,799 Deferred financing costs............................................. - 4,692 ----------- ----------- ...... $24,489,457 $23,269,474 =========== =========== LIABILITIES AND PARTNERS' DEFICIT Current Liabilities: Notes payable .................................................... $22,869,735 $22,869,735 Accrued interest.................................................. 1,315,528 767,970 Other liabilities................................................. 439,552 183,510 ----------- ----------- 24,624,815 23,821,215 Partners' Deficit: Limited Partners, $1,000 stated value per Unit; 15,500 Units authorized, issued and outstanding................................................ 128,783 654,038 General Partner................................................... (1,264,141) (1,205,779) ----------- ----------- (1,135,358) (551,741) ----------- ----------- $23,489,457 $23,269,474 =========== =========== The accompanying notes are an integral part of these financial statements. INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (DEBTOR-IN-POSSESSION) STATEMENTS OF CASH FLOWS (UNAUDITED) (NOTE 1) THREE MONTHS ENDED MARCH 31, ------------- 1996 1995 -------- ------ Cash Flows From Operating Activities: Cash received from customers...................................... $ 673,758 $ 526,535 Cash paid to suppliers............................................ (252,630) (521,625) Interest received................................................. 28,919 22,392 Interest paid..................................................... (149,556) (1,300,277) ----------- ----------- Net cash provided by (used in) operating activities......................................... 300,491 (1,272,975) ----------- ----------- Cash Flows From Investing Activities: Capital expenditures.............................................. - (11,653) ----------- ----------- Net cash used in investing activities............................. - (11,653) ----------- ----------- Net Increase (Decrease) in Cash and Cash Equivalents....................................................... 300,491 (1,284,628) ----------- ----------- Cash and Cash Equivalents at Beginning of Period......................................................... 2,676,875 3,124,628 ----------- ----------- Cash and Cash Equivalents at End of Period............................ $ 2,977,366 $ 1,840,000 =========== =========== The accompanying notes are an integral part of these financial statements. INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (DEBTOR-IN-POSSESSION) STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) (NOTE 1) Reconciliation of net loss to net cash provided by operating activities: THREE MONTHS ENDED MARCH 31, --------------- 1996 1995 -------- ------ Net (Loss) Income $ (583,617) $ (705,314) Adjustments to Reconcile Net Loss to Net Cash Provided (Used) By Operating Activities: Depreciation and amortization................................ 4,692 13,784 Decrease (Increase) in: Accounts Receivable..................................... (35,970) (181,946) Inventory............................................... (76,573) (193,665) Other Assets............................................ 20,654 5,253 Increase (Decrease) in: Accrued Interest........................................ 547,558 (655,620) Other Liabilities....................................... 256,042 277,887 Depreciation capitalized to inventory........................ 167,705 166,646 ----------- ----------- Net Cash Provided by Operating Activities............................. $ 300,491 $(1,272,975) =========== =========== Disclosure of accounting policy: For purposes of the statement of cash flows, the partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The accompanying notes are an integral part of these financial statements. INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (DEBTOR-IN-POSSESSION) STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (NOTE 1) Limited Partners General Units Capital Partner Total Balance, December 31, 1995 15,500 $ 654,038 $(1,205,779) $ (551,741) Net Loss (525,255) (58,362) (583,617) ---------- ---------- ----------- ---------- Balance, March 31, 1996 15,500 128,783 $(1,264,141) (1,135,358) ========== ========== =========== ========== Balance, December 31, 1994 15,500 $2,256,415 $ (1,027,737) $1,228,678 Net Loss (634,783) (70,531) (705,314) ---------- ---------- ----------- ---------- Balance, March 31, 1995 15,500 $1,621,632 $ (1,098,268) $ 523,364 ========== ========== ============ ========== Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This Item should be read in conjunction with the financial statements and other items contained elsewhere in the report. Liquidity and Capital Resources The Registrant's only business is owning and operating a commercial citrus grove consisting of approximately 3,150 acres of land and related improvements and equipment located near Stuart, Martin County, Florida (the "Grove"). The two mortgages encumbering the Grove were scheduled to mature on January 31, 1996. Due to the unpredictable nature of fruit prices which are affected by many factors outside the control of the Registrant such as weather conditions and supply and demand, over the past eight years the Registrant's net cash flow has fluctuated from a low of $509,000 to a high of $4,500,000. During the past five years, including returns anticipated from the 1995 harvest, the Grove has generated average cash flow of under $1,500,000 which is insufficient to service total debt service at maturity. As a result, starting in November 1995, the Partnership entered into discussions with the first mortgage holder, NationsBank of Florida ("Nations") and the second mortgage holder, Caulkins Citrus Company ("Caulkins"), in an attempt to renegotiate the debt. At December 31, 1995, the total debt encumbering the Grove was approximately $22.9 million. Nations granted the Partnership a four month extension on the maturity to enable the Partnership to engage in discussions with Caulkins. After extensive discussions, Caulkins, without notice, terminated negotiations in February 1996 by declaring a default, commencing foreclosure proceedings and obtaining a court order to appoint a receiver to collect revenues and take over control of the Grove. On March 4, 1996, as a result of the pending foreclosure proceeding instituted by the holder of the second mortgage note on the Grove, the Registrant filed for protection under Chapter 11 of the United States Bankruptcy Act in the Federal District Court for the State of Florida, Southern District (Case No. 96-30843-BKC- SHF). If the Registrant is not permitted to reorganize under the Bankruptcy Act or cannot reach an agreement with the existing lenders, the Registrant could lose the Grove in a foreclosure proceeding. At this time, it appears that investors will not receive a return of a substantial portion of their original investment in the Registrant. The level of liquidity based on cash and cash equivalents experienced a $300,491 increase at March 31, 1996 as compared to December 31, 1995. Increases in the Partnership's cash from quarter to quarter are primarily related to the difference in timing of the harvesting of the crop. The Partnership invests its working capital reserves in a money market account or repurchase agreements secured by United States Treasury obligations. RESULTS OF OPERATIONS Operating results improved $121,697 for the three months ended March 31, 1996 as compared to 1995 due to an increase in the operating margin on fruit sales of $204,198 and an increase in interest income of $6,523 due to increased cash and cash equivalents which was partially offset by an increase in expenses of $89,024. The operating margin on fruit sales increased by $204,198 for the three months ended March 31, 1996 as compared to 1995 due to an increase in net fruit sales of $63,578 and a decrease in cost of fruit of $140,620. The increase in net fruit sales and the decrease in the cost of fruit sales is primarily attributable to (i) a reduction in the number of boxes harvested during the three months ended March 31, 1996 (81,700) as compared to 1995 (120,000), (ii) a slight increase in the pounds-solid per box ad the price received per pound-solid and (iii) a reduction in the cost of fruit sales per box from $3.26 in 1995 to $3.16 in 1996. The harvesting expense per box cost remained constant for the three months ended March 31, 1996 as compared to 1995 at approximately $1.90 per box. The increase in other expenses of $89,024 was primarily attributable to increases in interest expense of $52,456, partnership management fees of $9,000 and general and administrative expenses of $35,186. Interest expense increased as result of an increase in the principal of the Caulkins loan. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K No Report on Form 8-K was required to be filed during the period. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INDIAN RIVER CITRUS INVESTORS LIMITED PARTNERSHIP (Partnership) By: Winthrop Agricultural Management, II, Inc. General Partners By: /s/ Michael L. Ashner Michael L. Ashner Chief Executive Officer By: /s/ Edward V. Williams Edward V. Williams Chief Financial Officer DATED: May 15, 1996