FORM 10 - QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1995
Commission File No. 0-3026
PARADISE, INC.
INCORPORATED IN FLORIDA
IRS IDENTIFICATION NO. 59-1007583
1200 DR. MARTIN LUTHER KING, JR. BLVD.,
PLANT CITY, FLORIDA 33566
(813) 752-1155
"Indicate by check mark whether the registrant has filed all annual,
quarterly and other reports required to be filed with the Commission
within the past 90 days and in addition has filed the most recent
annual report required to be filed. Yes X No__."
"Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date."
Class Outstanding as of June 30,
1995 1994 Common Stock
$0.30 Par Value 519,170 Shares 519,170 Shares
Page 1
PARADISE, INC. COMMISSION FILE NO. 0-3026
Instruction 4. Financial Statements (Continued)
(a) (1) CONSOLIDATED BALANCE SHEET
AS OF JUNE 30,
1995 1994
ASSETS
CURRENT ASSETS
Cash and Unrestricted Demand Deposits $ 190,965 $ 156,730
Accounts and Notes Receivable, Less
Allowances of $-0- (1995 and 1994) 847,280 896,689
Inventories:
Raw Materials 1,927,891 2,380,945
Work in Process 311,200 308,312
Finished Goods 8,035,687 7,204,095
Deferred Income Tax Asset 201,367 517,038
Income Tax Refund Receivable 99,914
Prepaid Expenses and Other Current Assets 570,752 639,111
TOTAL CURRENT ASSETS 12,185,056 12,102,920
Real Estate Investment, at Cost 261,848 261,848
Property, Plant and Equipment, Less
Accumulated Depreciation of $11,677,123
(1995) and $10,986,267 (1994) 5,560,603 5,934,098
Deferred Charges and Other Assets 346,453 159,081
TOTAL ASSETS $18,353,961 $18,457,947
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and Trade Acceptances Payable $ 4,669,042 $ 6,831,417
Current Portion of Long-Term Debt 844,407 504,056
Accounts Payable 2,979,460 2,753,211
Accrued Liabilities 930,182 876,749
Federal and State Income Taxes Payable 0 0
TOTAL CURRENT LIABILITIES 9,423,091 10,965,433
LONG-TERM DEBT, NET OF CURRENT PORTION 3,370,337 1,972,527
DEFERRED INCOME TAX LIABILITY 605,862 655,183
STOCKHOLDERS' EQUITY
Common Stock: Auth; 2,000,000 shs. @ $.30
Par Value; Issued 582,721 (1995 and 1994) 174,926 174,916
Capital in Excess of Par Value 1,288,793 1,288,793
Retained Earnings 3,765,157 3,675,301
Less 63,551 (1995 and 1994) shares at cost
Held in Treasury ( 274,205) ( 274,205)
Total Stockholders' Equity 4,954,671 4,864,805
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $18,353,961 $18,457,947
Page 2
PARADISE, INC. COMMISSION FILE NO. 0-3026
Instruction 4. Financial Statements
(a) (1) CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTER ENDED
JUNE 30,
1995 1994
Net Sales $ 1,118,553 $ 1,896,208
Costs and Expenses:
Cost of Goods Sold 1,313,866 1,641,815
Selling, General and Admin. Expense 759,110 674,665
Depreciation and Amortization 133,248 208,845
Interest Expense - Long Term 63,511 51,314
Interest Expense - Short Term 119,727 113,038
Total Expenses 2,389,462 2,689,677
Other Income 117,051 21,939
Earnings (Loss) from Operations Before
Provision for Income Taxes (1,153,857) ( 771,529)
Provision for Income Taxes 0 0
Net Earnings (Loss) $(1,153,857) $( 771,529)
Earnings (Loss) per Common Share $(2.22) $(1.49)
Page 3
PARADISE, INC. COMMISSION FILE NO. 0-3026
Instruction 4. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED
JUNE 30,
1995 1994
Net Sales $ 2,375,044 $ 4,224,704
Costs and Expenses:
Cost of Goods Sold 2,105,755 3,453,403
Selling, General and Admin. Expense 1,256,330 1,331,851
Depreciation and Amortization 327,121 415,438
Interest Expense - Long Term 123,131 99,108
Interest Expense - Short Term 160,090 177,984
Total Expenses 3,972,427 5,477,784
Other Income 126,646 42,949
Earnings (loss) from Operations Before
Provision for Income Taxes (1,470,736) (1,210,130)
Provision for Income Taxes 0 0
Net Earnings (Loss) $(1,470,736) $(1,210,130)
Earnings (Loss) per Common Share $(2.83) $(2.33)
Page 4
PARADISE, INC. COMMISSION FILE NO. 0-3026
Instruction 4. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings (Loss) $(1,470,736) $(1,210,130)
Adjustments to Reconcile Net Earnings (Loss) to Net
Cash Used in Operating Activities
Depreciation and Amortization 327,121 415,438
Gain on Sale of Assets ( 102,500)
Decrease (Increase) in:
Accounts Receivable 1,064,162 759,762
Inventories (6,470,509) (4,705,882)
Prepaid Expenses 61,362 ( 88,917)
Increase (Decrease) in:
Accounts Payable 2,402,420 2,378,874
Accrued Expense ( 534,895) ( 29,371)
Net Cash Used in Operating Activities (4,723,576) (2,480,226)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment ( 208,423) ( 137,897)
Proceeds from Sale of Property and Equipment 102,500
Net Cash Used in Investing Activities 105,923) ( 137,897)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Proceeds of Short-Term Debt 4,497,407 2,426,941
Proceeds from Issuance of Long-Term Debt 136,932
Principal Payments of Long-Term Debt ( 163,116) ( 342,058)
Decrease (Increase) in Other Assets ( 197,083) 16,116
Net Cash Provided by Financing Activities 4,274,140 2,100,999
Net Decrease in Cash ( 555,359) ( 517,124)
CASH AT BEGINNING OF PERIOD 746,324 673,854
CASH AT END OF PERIOD $ 190,965 $ 156,730
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
PROCEEDS OF LONG TERM DEBT USED TO:
Pay Down Short-Term Debt $2,000,000
Pay Off Existing Long-Term Debt 2,063,068
$4,063,068
Page 5
PARADISE, INC. COMMISSION FILE 0-3026
Item 1. Financial Statements (continued)
(g) Earnings per common share, assuming no dilution, are based on the
weighted average number of shares outstanding during the period: 519,170
(1995 and 1994).
(h) The foregoing information is unaudited, but, in the opinion of
management, includes all adjustments, consisting of normal accruals,
necessary for a fair presentation of the results for the period reported.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
As noted at the beginning of each interim financial report, it is the
opinion of management that only a full year's accounting offers a
reasonable basis for judging operating results. That is due to the
extremely seasonal nature of the Company's core business segment, glace'
fruit, in which approximately 80% of annual sales are concentrated
between the second week of September and the first week in November each
year.
However, in order to make timely deliveries of this traditional
Thanksgiving and Christmas holiday confection, the Company must
manufacture and build inventories for about ten months of the year.
During these months, there is relatively little income to offset
expenses, and growing losses on operations are common until the late
third or early fourth quarters.
Briefly stated, the Company operated four segments of business during
1994 (with the percentage of total 1994 sales given in parentheses):
candied fruit (75%), molded plastics (15%), edible nuts (3%), and fresh
and frozen strawberry products (7%). Total net sales aggregated nearly
$22 million for the year.
The seasonal nature of sales, together with annual variations in the
timing of the harvest of fruit raw materials, result in differing
intensities of operations from one quarter to the next. Therefore,
it is the opinion of management that analysis of the relationship
between quarters is not productive, so this discussion is limited to a
comparison of the current reporting period with the like period
during the preceding year.
During the first six months of 1995, sales declined by over $1.8
million, when compared to the like period during the prior year. While
this is a material reduction, closed examination reveals that much of it
was rooted in the sales increases experienced during 1994, and was not
entirely unexpected.
As noted in the Company's annual audited financial statements, it is trade
practice and sales policy to allow some customers to return unsold
packed-for-retail candid fruit products after the holiday season. Since
most of the $4.4 million increase in 1994 sales were subject to this
policy, it is logical to expect that merchandise returns would increase
during the ensuing year in equal proportions. Part of these returns are
deducted from the net sales reported herein.
However, it is also Company policy to set aside a provision for
unrealized profits on estimated returns when calculating operating
results at year-end. Therefore, the impact on profits (loss) for
the period was not as substantial as otherwise might have been
anticipated.
Page 6
PARADISE, INC. COMMISSION FILE 0-3026
During the period, two other segments of business reported reductions in
sales: plastics, which continued to withdraw from unprofitable markets
for injection molded products, particularly one-pint baskets for the
marketing of fresh strawberries; and processed strawberry operations,
which had substantially less product available for sale during the
period, due both to the absence of carryover inventory from the 1994
season, and smaller production during the 1995 season.
Costs of goods sold declined in excess of $1.4 million. Expressed as a
comparative percentage,this decline was not quite as great as the
reduction in net sales, as there were slight increases in unit costs for
raw materials and manufacturing expenses.
Selling, general and administrative expenses were approximately 6%
lower, which reflects credits from returns against accrued brokerage and
related selling expenses, but which were partially offset by increased
payrolls. Interest expense remained virtually unchanged with an
increase of little more that $6,000. Other income increase by more than
$80,000, most of which was profit on the sale of some fully depreciated
plastics machinery.
Debt was restructured, as the Company successfully negotiated renewal of
its revolving inventory and accounts receivable financing, as well as an
additional $4.2 million term loan the proceeds of which were used to pay
out the balances of existing term loans and to provide additional working
capital.
While some deterioration in net profit (loss) was recorded during the
period, annual sales have barely begun, and yet to be realized are the
benefits from lower expenses, particularly the materially reduced
royalty payments on sales of a former competitor, the rights to which
were acquired by the Company during 1994. Therefore, it is the opinion
of management that operating results to date are not a reliable basis
upon which 1995 performance can be forecast with any degree of certainty.
PART II. OTHER INFORMATION
None of the item numbers on captions are applicable to this report and
are, therefore, omitted.
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.
Date: August 10, 1995 PARADISE, INC.
s/ Melvin S. Gordon
Melvin S. Gordon, President
s/ Eugene L. Weiner
Eugene L. Weiner, Executive Vice
President, Secretary-Treasurer
Page 7
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> QTR-2 QTR-2
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994
<PERIOD-END> JUN-30-1995 JUN-30-1994
<CASH> $190,965 $156,730
<SECURITIES> $0 $0
<RECEIVABLES> $847,280 $896,689
<ALLOWANCES> $0 $0
<INVENTORY> $10,274,778 $9,893,352
<CURRENT-ASSETS> $12,185,056 $12,102,920
<PP&E> $17,237,726 $16,920,365
<DEPRECIATION> $11,677,123 $10,986,267
<TOTAL-ASSETS> $18,353,961 $18,457,947
<CURRENT-LIABILITIES> $9,423,091 $10,965,433
<BONDS> $4,214,744 $2,476,583
<COMMON> $174,926 $174,916
$0 $0
$0 $0
<OTHER-SE> $4,779,745 $4,689,889
<TOTAL-LIABILITY-AND-EQUITY> $18,353,961 $18,457,947
<SALES> $1,118,553 $1,896,208
<TOTAL-REVENUES> $1,235,604 $1,918,147
<CGS> $1,313,866 $1,641,815
<TOTAL-COSTS> $1,313,866 $1,641,815
<OTHER-EXPENSES> $133,248 $208,845
<LOSS-PROVISION> $0 $0
<INTEREST-EXPENSE> $183,238 $164,352
<INCOME-PRETAX> ($1,153,857) ($771,529)
<INCOME-TAX> $0 $0
<INCOME-CONTINUING> ($1,153,857) ($771,529)
<DISCONTINUED> $0 $0
<EXTRAORDINARY> $0 $0
<CHANGES> $0 $0
<NET-INCOME> ($1,153,857) ($771,529)
<EPS-PRIMARY> ($2.22) ($1.49)
<EPS-DILUTED> ($2.22) ($1.49)
</TABLE>
