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 March 31, 1996
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 March 31,
1996 1995 Common Stock
$0.30 Par Value 519,170 Shares 519,170 Shares
Page 1
PARADISE, INC. COMMISSION FILE NO. 0-3026
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) (1) CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31,
1996 1995
ASSETS
CURRENT ASSETS
Cash and Unrestricted Demand Deposits $ 11,389 $ 130,436
Accounts and Notes Receivable, Less
Allowances of $-0- (1996 and 1995) 770,475 804,086
Inventories:
Raw Materials 1,685,268 2,110,516
Work in Process 57,639 11,454
Finished Goods 4,958,921 3,760,100
Deferred Income Tax Asset 202,042 201,367
Income Tax Refund Receivable 99,914
Prepaid Expenses and Other Current Assets 371,118 431,869
TOTAL CURRENT ASSETS 8,056,852 7,549,742
Real Estate Investment, at Cost 261,849 261,849
Property, Plant and Equipment, Less
Accumulated Depreciation of $11,684,001
(1996) and $11,489,704 (1995) 5,292,262 5,604,473
Deferred Charges and Other Assets 291,833 160,494
TOTAL ASSETS $13,902,796 $13,576,558
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and Trade Acceptances Payable $ 543,651 $ 2,492,752
Current Portion of Long-Term Debt 844,721 2,058,227
Accounts Payable 1,884,062 1,551,882
Accrued Liabilities 674,286 694,406
Federal and State Income Taxes Payable 85,081 0
TOTAL CURRENT LIABILITIES 4,031,800 6,797,267
LONG-TERM DEBT, NET OF CURRENT PORTION 2,736,709 64,901
DEFERRED INCOME TAX LIABILITY 446,858 605,862
STOCKHOLDERS' EQUITY
Common Stock: Auth; 2,000,000 shs. @ $.30
Par Value; Issued 582,721 (1996 and 1995) 174,926 174,926
Capital in Excess of Par Value 1,288,793 1,288,793
Retained Earnings 5,497,915 4,919,014
Less 63,551 (1996 and 1995) shares at cost
Held in Treasury ( 274,205) ( 274,205)
Total Stockholders' Equity 6,687,429 6,108,528
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $13,902,796 $13,576,558
Page 2
PARADISE, INC. COMMISSION FILE NO. 0-3026
ITEM 1. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
MARCH 31,
1996 1995
Net Sales $ 1,175,051 $ 1,256,491
Costs and Expenses:
Cost of Goods Sold 784,474 791,889
Selling, General and Admin. Expense 563,428 497,220
Depreciation and Amortization 175,202 193,873
Interest Expense - Long Term 83,351 59,620
Interest Expense - Short Term 0 40,363
Total Expenses 1,606,455 1,582,965
Other Income 22,212 9,594
Earnings (Loss) from Operations Before
Provision for Income Taxes ( 409,191) ( 316,880)
Provision for Income Taxes 0 0
Net Earnings (Loss) $( 409,191) $( 316,880)
Earnings (Loss) per Common Share $(0.79) $(0.61)
Page 3
PARADISE, INC. COMMISSION FILE NO. 0-3026
Item 1. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings (Loss) $( 409,191) $( 316,880)
Adjustments to Reconcile Net Earnings (Loss) to Net
Cash Used in Operating Activities
Depreciation and Amortization 175,202 193,873
Decrease (Increase) in:
Accounts Receivable 361,842 1,107,356
Inventories (2,596,331) (2,077,802)
Prepaid Expenses 110,664 200,245
Increase (Decrease) in:
Accounts Payable 1,135,064 974,842
Accrued Expense (1,016,773) ( 766,015)
Income Taxes Payable ( 93,865)
Net Cash Used in Operating Activities (2,333,388) ( 684,381)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment ( 199,992) ( 147,081)
Net Cash Used in Investing Activities ( 199,992) ( 147,081)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Proceeds of Short-Term Debt 155,344 321,115
Principal Payments of Long-Term Debt ( 281,130) ( 117,799)
Increase in Common Stock 110
Decrease in Dividends Payable ( 4,655)
Decrease (Increase) in Other Assets ( 52,888) 16,803
Net Cash Provided by (Used in)
Financing Activities ( 178,674) 215,574
Net Decrease in Cash (2,712,054) ( 615,888)
CASH AT BEGINNING OF PERIOD 2,723,443 746,324
CASH AT END OF PERIOD $ 11,389 $ 130,436
Page 4
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
(1996 and 1995).
(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 in all interim financial statements, this discussion begins with the
caveat that, due to the extreme seasonality of the Company's core
business, glace' (candied) fruit, only a full year's reporting offers a
reliable basis for judging operating results.
Glace' fruit and related products, which accounted for approximately 88%
of the Company's total sales during 1995, is primarily used as an
ingredient for fruit cakes and other Thanksgiving and Christmas holiday
confections. Demand peaks just prior to this season, and about 80% of
total annual sales in this category is sold between the second week of
September and the first week in November each year.
However, in order to make timely deliveries of these products, the Company
manufactures and builds inventories for more than ten months during the
year. In addition, the availability of certain raw materials is
contingent on harvest cycles, which often dictates the accumulation of
these fruit products as much as eighteen months before their anticipated
sales.
For these reasons, the Company borrows relatively large amounts of interim
working capital, and, typically, accrues losses well into the third fiscal
quarter, even during years of relatively high earnings.
Also for these reasons, the magnitude of operations varies materially from
one quarter to the next, and, in the opinion of management, analysis of
the comparison between quarters in not productive. Therefore, this
discussion is limited to comparing the current year-to-date with a like
period during the prior year.
Total net sales during the first quarter of 1996 were equal to less than 6%
of total net sales during 1995, which did not vary materially with the
first quarter of 1995, and its relationship to 1994 totals. Certain
changes in the components of these totals are of interest, although, in
the opinion of management, not significant to total anticipated
performance.
The first of these was in strawberries, a category consolidated with the
fruit segment of business. During late 1995, there was a large carryover
of frozen strawberry inventories, which depressed selling prices. For
that reason, management elected not to plant crops for harvest during
early 1996, and, as a result, had no fresh strawberries for sale during
the current quarter. These sales had amounted to $274,000 during the
first quarter of the prior year. Offsetting this was an increase in
the sales of frozen strawberry products from the Company's own carryover
inventory.
Page 5
PARADISE, INC. COMMISSION FILE 0-3026
The other sales development of note concerned the trade practice of
allowing some customers to return unsold, retail-packed candied fruit
products after the holiday season. It has been the Company policy
through the years to set aside a provision for unrealized profits on
estimated returns when calculating operating results at year-end,
thereby reducing the impact of such returns on operating profits during
the ensuing year. At the end of the quarter, there was an indication
that a slightly higher percentage of prior year sales might be returned.
Management was gratified to note a sales increase of 11% in the plastics
segment of business, which accounted for approximate 12% of total net
sales during 1995. While this is not yet conclusive, it is an
indication that the change in the marketing focus of this segment,
developed over the past two years, would be a positive step towards
growth.
As a percentage of sales, costs of goods sold increased slightly as
compared to the same period last year, most of which was in purchases
and other make ready expenses in anticipation of an earlier start of
production activities during the current year. Selling expenses
increased largely because of the change in the rates of credit to
royalty expenses on returned merchandise. (Royalties are paid, on a net
sales basis, to the owner of a brand, the rights to which Paradise
acquired during 1994. During that first year, such royalties were
accrued at 20%, and at 5% during ensuing years. Therefore, deductions of
20% were made on accrued royalties for 1995 returns of 1994 sales, while
deductions of 5% were made on 1996 returns of 1995 sales.)
Depreciation and amortization expenses continued to trend downward, as
capital expenditures during the past two years have been minimized in
order to conserve cash.
General and administrative expenses were slightly higher, with a general
wage increase given to management as well as all other full time
employees early in the year, and small variations in other sundry accounts.
Total interest expense declined by 16%. While prevailing rates were lower
, it is also of note that, due to restructuring of debt and improved
cash flow during 1995, the Company required no short-term borrowings
from banks to finance operations during the first quarter of 1996.
The small increase in other income is relatively insignificant, but
reflects the accrual of some interest income from the cash carryover at
year-end, 1995.
In conclusion, management is unable to discern trends or forecast annual
results from the information at hand. There are indications that 1996
sales and earnings will replicate 1995 performance, but it is far too
early to make predictions with any degree of certainty.
Page 6
PARADISE, INC. COMMISSION FILE NO. 0-3026
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: May 10, 1996 PARADISE, INC.
s/ Melvin S. Gordon
Melvin S. Gordon, President
s/ Eugene L. Weiner
Eugene L. Weiner, Executive
Vice President, Secretary-Treasurer
Page 7
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<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> $11,389 $130,436
<SECURITIES> $0 $0
<RECEIVABLES> $770,475 $804,086
<ALLOWANCES> $0 $0
<INVENTORY> $6,701,828 $5,882,070
<CURRENT-ASSETS> $8,056,852 $7,549,742
<PP&E> $16,976,263 $17,094,177
<DEPRECIATION> $11,684,001 $11,489,704
<TOTAL-ASSETS> $13,902,796 $13,576,558
<CURRENT-LIABILITIES> $4,031,800 $6,797,267
<BONDS> $3,581,430 $2,123,128
<COMMON> $174,926 $174,926
$0 $0
$0 $0
<OTHER-SE> $6,512,503 $5,933,601
<TOTAL-LIABILITY-AND-EQUITY> $13,902,796 $13,576,558
<SALES> $1,175,051 $1,256,491
<TOTAL-REVENUES> $1,197,263 $1,266,085
<CGS> $784,474 $791,889
<TOTAL-COSTS> $784,474 $791,889
<OTHER-EXPENSES> $175,202 $193,873
<LOSS-PROVISION> $0 $0
<INTEREST-EXPENSE> $83,351 $99,983
<INCOME-PRETAX> $(409,191) $(316,880)
<INCOME-TAX> $0 $0
<INCOME-CONTINUING> $(409,191) $(316,880)
<DISCONTINUED> $0 $0
<EXTRAORDINARY> $0 $0
<CHANGES> $0 $0
<NET-INCOME> $(409,191) $(316,880)
<EPS-PRIMARY> $(.79) $(.61)
<EPS-DILUTED> $(.79) $(.61)
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