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, 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 June 30,
Common Stock 1996 1995
$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 JUNE 30,
1996 1995*
ASSETS
CURRENT ASSETS
Cash and Unrestricted Demand Deposits $ 18,059 $ 190,965
Accounts and Notes Receivable, Less
Allowances of $-0- (1996 and 1995) 695,026 847,280
Inventories:
Raw Materials 2,125,382 1,927,891
Work in Process 300,301 311,200
Finished Goods 8,563,747 8,035,687
Deferred Income Tax Asset 202,042 201,367
Income Tax Refund Receivable 99,914
Prepaid Expenses and Other Current Assets 563,202 570,752
TOTAL CURRENT ASSETS 12,467,758 12,185,057
Real Estate Investment, at Cost 261,848 261,848
Property, Plant and Equipment, Less
Accumulated Depreciation of $11,869,232
(1996) and $11,677,123 (1995) 5,706,814 5,560,603
Deferred Charges and Other Assets 335,276 346,453
TOTAL ASSETS $18,771,696 $18,353,961
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and Trade Acceptances Payable $ 4,502,053 $ 4,669,042
Current Portion of Long-Term Debt 918,584 844,407
Accounts Payable 3,861,882 2,979,460
Accrued Liabilities 672,700 850,342
Federal and State Income Taxes Payable 0 0
TOTAL CURRENT LIABILITIES 9,955,219 9,343,251
LONG-TERM DEBT, NET OF CURRENT PORTION 2,942,083 3,370,337
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 4,238,022 3,844,998
Less 63,551 (1996 and 1995) shares at cost
Held in Treasury ( 274,205) ( 274,205)
Total Stockholders' Equity 5,427,536 5,034,512
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $18,771,696 $18,353,961
*Restated for Comparative PurposesPage 2
PARADISE, INC. COMMISSION FILE NO. 0-3026
ITEM 1. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
JUNE 30,
1996 1995*
Net Sales $ 981,179 $ 1,118,553
Costs and Expenses:
Cost of Goods Sold 1,327,294 1,362,127
Selling, General and Admin. Expense 532,620 631,008
Depreciation and Amortization 195,165 133,248
Interest Expense - Long Term 86,309 63,501
Interest Expense - Short Term 119,433 119,736
Total Expenses 2,260,820 2,309,621
Other Income 19,749 117,052
Earnings (Loss) from Operations Before
Provision for Income Taxes (1,259,892) (1,074,015)
Provision for Income Taxes 0 0
Net Earnings (Loss) $(1,259,892) $(1,074,015)
Earnings (Loss) per Common Share $(2.43) $(2.07)
* Restated for Comparative Purposes
Page 3
PARADISE, INC. COMMISSION FILE NO. 0-3026
Item 1. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED
JUNE 30,
1996 1995*
Net Sales $ 2,156,230 $ 2,375,044
Cost s and Expenses:
Cost of Goods Sold 2,111,768 2,154,016
Selling, General & Administrative Expense 1,096,048 1,128,228
Depreciation and amortization 370,367 327,121
Interest Expense - Long Term 169,660 123,121
Interest Expense - Short Term 119,433 160,099
Total Expense 3,867,275 3,892,586
Other Income 41,961 126,646
Earnings (Loss) from Operations
Before Provision for Income Taxes (1,669,084) (1,390,895)
Provision for Income Taxes 0 0
Net Earnings (Loss) $(1,669,084) $(1,390,895)
Earnings (Loss) per Common Share $(3.21) $(2.68)
*Restated for Comparative Purposes
Page 4
PARADISE, INC. COMMISSION FILE NO. 0-3026
Item 1. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 30,
1996 1995*
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,669,084) $(1,390,895)
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities
Depreciation and Amortization 370,367 327,121
Gain on Sale of Assets ( 102,500)
Decrease (Increase) in:
Accounts Receivable 437,291 1,064,162
Inventories (6,883,933) (6,470,509)
Prepaid Expenses ( 72,636) 61,362
Increase (Decrease) in:
Accounts Payable 3,112,884 2,402,420
Accrued Expense (1,055,652) ( 614,735)
Income Taxes Payable ( 93,865) 0
Net Cash Used in Operating Activities (5,854,628) (4,723,576)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment ( 302,751) ( 208,423)
Proceeds from Sale of Assets 0 102,500
Net Cash Used in Investing Activities ( 302,751) ( 105,923)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Proceeds of Short-Term Debt 4,113,747 4,497,407
Proceeds from Issuance of Long-Term Debt 0 136,932
Principal Payments of Long-Term Debt ( 498,915) ( 163,116)
Dividends Paid ( 56,572)
Increase in Other Assets ( 106,265) ( 197,083)
Net Cash Provided by Financing Activities 3,451,995 4,274,140
Net Decrease in Cash (2,705,384) ( 555,359)
CASH AT BEGINNING OF PERIOD 2,723,443 746,324
CASH AT END OF PERIOD $ 18,059 $ 190,965
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
Purchase Equipment 497,022
$ 497,022 $4,063,068
*Restated for Comparative Purposes
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
(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
Long term investors and other observers of the Company's progress
through the years know that it is a firmly-held opinion of Management
that interim financial data do not provide a reliable basis
for measuring performance, and that only a full year's accounting should
be used for interpreting operating results.
This is because the glace' (candied) fruit segment of business, which
accounted for approximately 88% of the Company's total annual sales
during 1995, is extremely seasonal, and about 80% of this segment's
annual sales are made in an eight week period beginning in mid-September
of each year. However, in order to make timely deliveries during this
peak demand period, the Company must manufacture and build inventories
for more than ten months during the year.
Obviously, ongoing expenses with very little income leads to the
reporting of material losses during the interim periods leading up to
the concentrated shipping and selling period, and annual profits do not
begin to accrue until well into the third quarter, even during years
with relatively high earnings. This factor leads also to the need for
substantial borrowings of short-term working capital.
Also for reasons such as the varying seasonal availability of raw
materials, the volume of manufacturing activity and related expenses
differ significantly from quarter to quarter, which, in the opinion of
management, renders the comparison of quarters uninformative.
Therefore, this discussion is limited to comparing the current
year-to-date with the like period during the preceding year.
Total net sales for the first six months of 1996 were about 9% less than
for the same period during the prior year. However, by the same time
last year, less than 12% of the total net sales for 1995 had been made,
so that the reduction, as related to annual sales is not significant.
The largest reductions in sales during the first two quarters occurred
in the fresh and frozen strawberry segment of business. As reported in
earlier filings, because of large, industry-wide carryover of frozen
inventories, the Company elected not to grow or process strawberries
during the past season, and, therefore, had no fresh and very little
frozen product available for sale.
Net sales were also reduced by slightly higher returns of 1995 shipments
of glace' (candied) fruit. As reported in numerous filings, the Company
offers the privilege to return a certain percentage of purchases to
certain customers, who pay a premium for this privilege. At year-end,
the anticipated loss of gross profits on these returns is reserved, so
that one year's returns will have little impact on the ensuring year's
income.
In the plastics molding segment of business, sales increased by more
than 20%, which is significant, as plastics sales are fairly consistent
throughout the year. This development validates management's strategy
of withdrawing from several large volume, but low profit, markets in this
segment, in order to focus on higher technology, and more specialized
production with greater profit potential. After several periods of
decline in sales, the trend now seems to have reversed.
Page 6
PARADISE, INC. COMMISSION FILE 0-3026
Expressed as a percentage of sales, costs of goods sold increased somewhat
, reflecting some accounting adjustments to the reserve for returns,
mentioned above, to the extent that the volume of such returns was
underestimated at the end of 1995. In addition, part of the costs for
some major plant maintenance and an increase in expense for the
depreciation of certain capital investments were allocated to the cost
of inventories.
Selling, general, and administrative expenses were slightly lower, with
significant reductions in the costs for brokerage and commissions,
certain insurance, outside professional services and selling and
administrative expenses related to the strawberry segment of business.
These reductions were partially offset by modest increases in expenses
for payroll, warehouse, investor relations, and several other
miscellaneous items.
Interest expense remained fairly constant, although there was a shift in
allocations between long-term and short-term costs after the Company
restructured its debt in mid-1995.
Other income declined materially, as more than $100,000 was generated
during early 1995 from the sale of some fully depreciated capital
equipment. No such transactions took place during 1996.
As a consequence of all of the above, losses during the first six months
were greater than those during the same period, 1995. However, it bears
repeating that, as a percentage of anticipated annual activity, the
numbers are small, and management can discern no reliable indicators for
forecasting year end results, other than to postulate, with the
information now at hand, that 1996 operations will not differ greatly
from those during 1995.
Page 7
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: August 5, 1996 PARADISE, INC.
s/ Melvin S. Gordon
Melvin S. Gordon, President
s/ Eugene L. Weiner
Eugene L. Weiner, Executive Vice
President, Secretary-Treasurer
Page 8
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> QTR-2 QTR-2
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> $18,059 $190,965
<SECURITIES> $0 $0
<RECEIVABLES> $695,026 $847,280
<ALLOWANCES> $0 $0
<INVENTORY> $10,989,430 $10,274,778
<CURRENT-ASSETS> $12,467,758 $12,185,057
<PP&E> $17,576,046 $17,237,726
<DEPRECIATION> $11,869,232 $11,677,123
<TOTAL-ASSETS> $18,771,696 $18,353,961
<CURRENT-LIABILITIES> $9,955,219 $9,343,251
<BONDS> $3,860,667 $4,214,744
<COMMON> $174,926 $174,926
$0 $0
$0 $0
<OTHER-SE> $5,252,610 $4,859,586
<TOTAL-LIABILITY-AND-EQUITY> $18,771,696 $18,353,961
<SALES> $2,156,230 $2,375,044
<TOTAL-REVENUES> $2,198,191 $2,501,690
<CGS> $2,111,768 $2,154,016
<TOTAL-COSTS> $2,111,768 $2,154,016
<OTHER-EXPENSES> $370,367 $327,121
<LOSS-PROVISION> $0 $0
<INTEREST-EXPENSE> $289,093 $283,220
<INCOME-PRETAX> $(1,669,084) $(1,390,895)
<INCOME-TAX> $0 $0
<INCOME-CONTINUING> $(1,669,084) $(1,390,895)
<DISCONTINUED> $0 $0
<EXTRAORDINARY> $0 $0
<CHANGES> $0 $0
<NET-INCOME> $(1,669,084) $(1,390,895)
<EPS-PRIMARY> $(3.21) $(2.68)
<EPS-DILUTED> $(3.21) $(2.68)
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