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, 1997
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,
1997 1996
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,
1997 1996
ASSETS
CURRENT ASSETS
Cash and Unrestricted Demand Deposits $ 36,793 $ 11,389
Accounts and Notes Receivable, Less
Allowances of $-0- (1997 and 1996) 930,640 770,475
Inventories:
Raw Materials 2,048,545 1,685,2668
Work in Process 85,596 57,639
Finished Goods 3,788,653 4,958,921
Deferred Income Tax Asset 264,006 202,042
Income Tax Refund Receivable
Prepaid Expenses and Other Current Assets 223,568 371,118
TOTAL CURRENT ASSETS 7,377,800 8,056,852
Real Estate Investment, at Cost 261,848 261,849
Property, Plant and Equipment, Less
Accumulated Depreciation of $12,312,013
(1997) and $11,869,232 (1996) 5,515,834 5,292,262
Deferred Charges and Other Assets 395,655 291,833
TOTAL ASSETS $13,551,137 $13,902,796
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and Trade Acceptances Payable $ 209,906 $ 543,651
Current Portion of Long-Term Debt 933,022 844,721
Accounts Payable 1,417,070 1,884,062
Accrued Liabilities 858,210 674,286
Federal and State Income Taxes Payable 0 85,081
TOTAL CURRENT LIABILITIES 3,470,208 4,031,800
LONG-TERM DEBT, NET OF CURRENT PORTION 2,232,780 2,736,709
DEFERRED INCOME TAX LIABILITY 507,722 446,858
STOCKHOLDERS' EQUITY
Common Stock: Auth; 2,000,000 shs. @ $.30
Par Value; Issued 582,721 (1997 and 1996) 174,926 174,926
Capital in Excess of Par Value 1,288,793 1,288,793
Retained Earnings 6,150,913 5,497,915
Less 63,551 (1997 and 1996) shares at cost
Held in Treasury ( 274,205) ( 274,205)
Total Stockholders' Equity 7,340,247 6,687,429
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $13,551,137 $13,902,796
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
1997 1996
Net Sales $ 1,403,244 $ 1,175,051
Costs and Expenses:
Cost of Goods Sold 1,138,574 775,519
Selling, General and Administrative Expense 588,159 572,383
Depreciation and Amortization 176,775 175,202
Interest Expense - Long Term 77,078 83,351
Interest Expense - Short Term 2,088 0
Total Expenses 1,980,673 1,606,455
Other Income 24 844 22,212
Earnings (Loss) from Operations Before
Provision for Income Taxes ( 552,545) ( 409,191)
Provision for Income Taxes 0 0
Net Earnings (Loss) $( 552,545) $( 409,191)
Earnings (Loss) per Common Share $(1.06) $(0.79)
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,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings (Loss) $( 552,545) $( 409,191)
Adjustments to Reconcile Net Earnings (Loss) to Net
Cash Used in Operating Activities
Depreciation and Amortization 176,775 175,202
Decrease (Increase) in:
Accounts Receivable 577,325 361,842
Inventories (1,882,948) (2,596,331)
Prepaid Expenses 117,405 110,664
Increase (Decrease) in:
Accounts Payable 803,464 1,135,064
Accrued Expense ( 798,114) (1,016,773)
Income Taxes Payable ( 176,958) ( 93,865)
Net Cash Used in Operating Activities (1,735,596) (2,333,388)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment ( 250,134) ( 199,992)
Net Cash Used in Investing Activities ( 250,134) ( 199,992)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds (Repayments) of Short-Term Debt( 47,594) 155,344
Principal Payments of Long-Term Debt ( 302,109) ( 281,130)
Decrease (Increase) in Other Assets ( 54,703) ( 52,888)
Net Cash Used in Financing Activities ( 404,406) ( 178,674)
Net Decrease in Cash (2,390,136) (2,712,054)
CASH AT BEGINNING OF PERIOD 2,426,929 2,723,443
CASH AT END OF PERIOD $ 36,793 $ 11,389
Page 4
PARADISE, INC. COMMISSION FILE No. 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
(1997 and 1996).
(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 stated in all interim financial statements, it is the opinion of
management 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 the analysis of operating results.
The fruit segment of business accounted for approximately 86% of the
Company's total sales during 1996. These products are used primarily as
ingredients for fruit cakes and other Thanksgiving and Christmas holiday
confections. Demand for shipment of orders peaks between the second
week of September and the first week of November, a period during which
about 80% of total annual sales in this category is sold.
In order to satisfy demand during this relatively short period, the
Company begins building inventories early in the year. Also, harvest
cycles for some of the fruits used as raw materials require that the
Company position supplies eighteen months, or more, prior to their use.
All of these factors dictate the need to borrow relatively large amounts
of interim working capital, and, since there is very little income to
offset ongoing expenses, operating losses are accrued well into the
third quarter, even during years of relatively high earnings.
For these same 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 is 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 1997 were approximately 19%
higher than those in the first quarter of 1996, but this not deemed to
be indicative of an annual trend for two reasons:
(1) Most of the net increase was due to a reduction in returns of prior
year sales during the quarter. It has been a long-standing industry
practice to allow certain customers to return a percentage of
purchases after the holiday season. However, during recent years a
number of supermarket chains have begun abusing this privilege by
converting returns and "reclamations" into profit centers, in and of
themselves. During 1996, Paradise limited orders for merchandise to
the prior year's net sales, plus a reasonable margin for growth. The
result of this policy was a reduction in returns of approximately 25%
(2) Total net sales during the quarter represent only 6 - 7% of total 1996
annual sales, a ratio fairly consistent with most prior years.
Further, most of the sales to date were not in the higher-margin
candied fruit sales.
Due to a continuing surplus of frozen inventory on the West Coast, the
company again elected not to process strawberries during the Florida
harvest season (mid-December through mid-April), and, therefore, had
little product available for sale.
5
PARADISE, INC. COMMISSION FILE NO. 0-3026
Sales in the plastics segment of business continued to improve, with a more
than 5% increase as compared to first quarter, 1996. After several
years of pruning unprofitable sales and redirecting efforts toward
higher technology products, it is the opinion of management that the
plastics division is in a much improved strategic position for
profitable growth.
Expressed as a percentage of sales, costs of goods sold increased
significantly. However, like sales, costs to date represent only a
fraction of the total costs anticipated for the year, and the cost
increases, other than factory labor expense (which was stimulated by
minimum wage increases), were due largely to the value of inventory,
which was relatively lower because a later production start-up resulted
in less inventory, manufactured at slightly higher fixed costs, as
compared to the same period in the preceding year.
Selling, general and administrative expenses remained relatively stable,
with small increases reflecting mostly higher payrolls, as did both
depreciation and amortization.
Net interest expense was slightly reduced as a result of favorable
rates, and better return on invested cash, carried over from 1996.
Earnings declined as compared to the first quarter of 1996. However,
earnings during the first quarter of 1996 were down as compared to the
same period during 1995; and 1996 turned out to be a near-record year in
profitability. Therefore, management issues its often repeated caveat:
It is far too early in the year to predict annual performance 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: May 9, 1997 PARADISE, INC.
s/ Melvin S. Gordon
Melvin S. Gordon, President
s/ Eugene L. Weiner
Eugene L. Weiner, Executive Vice
President, Secretary-Treasurer
Page 6
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<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> MAR-31-1997 MAR-31-1996
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<SECURITIES> $0 $0
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<LOSS-PROVISION> $0 $0
<INTEREST-EXPENSE> $79,166 $83,351
<INCOME-PRETAX> ($552,545) ($409,191)
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<INCOME-CONTINUING> ($552,545) ($409,191)
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