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 September 30, 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 September 30,
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 SEPTEMBER 30,
1997 1996*
ASSETS
CURRENT ASSETS
Cash and Unrestricted Demand Deposits $ 859,293 $ 32,569
Accounts and Notes Receivable, Less
Allowances of $-0- (1997 and 1996) 7,444,688 7,129,438
Inventories:
Raw Materials 1,400,984 1,497,398
Work in Process 267,592 306,756
Finished Goods 6,905,084 7,158,994
Deferred Income Tax Asset 264,006 202,042
Prepaid Expenses and Other Current Assets 279,321 395,708
TOTAL CURRENT ASSETS 17,420,968 16,722,905
Real Estate Investment, at Cost 261,848 261,848
Property, Plant and Equipment, Less
Accumulated Depreciation of $12,688,767
(1997) and $11,976,001 (1996) 5,567,688 5,620,854
Deferred Charges and Other Assets 421,072 325,690
TOTAL ASSETS $23,671,576 $22,931,297
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and Trade Acceptances Payable $ 6,744,531 $ 7,268,063
Current Portion of Long-Term Debt 959,429 920,558
Accounts Payable 3,095,539 2,897,539
Accrued Liabilities 1,339,417 990,924
Federal and State Income Taxes Payable 495,480 297,004
TOTAL CURRENT LIABILITIES 12,634,396 12,374,088
LONG-TERM DEBT, NET OF CURRENT PORTION 1,873,703 2,709,022
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 7,466,241 6,211,815
Less 63,551 (1997 and 1996) shares at cost
Held in Treasury ( 274,205) ( 274,205)
Total Stockholders' Equity 8,655,755 7,401,329
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $23,671,576 $22,931,297
*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
SEPTEMBER 30,
1997 1996*
Net Sales $9,332,654 $ 9,163,889
Costs and Expenses:
Cost of Goods Sold 5,183,417 5,357,821
Selling, General and Admin. Expense 1,311,149 1,174,477
Depreciation and Amortization 193,626 199,594
Interest Expense - Long Term 67,644 89,349
Interest Expense - Short Term 158,365 179,975
Total Expenses 6,914,201 7,001,216
Other Income 21,794 37,136
Earnings from Operations Before
Provision for Income Taxes 2,440,247 2,199,809
Provision for Income Taxes 508,522 203,140
Net Earnings $1,931,725 $1,996,669
Earnings per Common Share $3.72 $3.85
* 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 NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996*
Net Sales $12,217,141 $11,320,119
Cost s and Expenses:
Cost of Goods Sold 7,450,825 7,483,499
Selling, General and Admin. Expense 2,571,410 2,279,480
Depreciation and amortization 553,398 569,961
Interest Expense - Long Term 217,203 259,009
Interest Expense - Short Term 209,456 299,418
Total Expense 11,002,292 10,891,367
Other Income 56,456 79,097
Earnings from Operations
Before Provision for Income Taxes 1,271,305 507,849
Provision for Income Taxes 508,522 203,140
Net Earnings $ 762,783 $ 304,709
Earnings per Common Share $1.47 $0.59
*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 NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996*
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 762,783 $ 304,709
Adjustments to Reconcile Net Earnings to Net
Cash Used in Operating Activities
Depreciation and Amortization 553,398 569,961
Gain on Sale of Assets ( 6,935)
Decrease (Increase) in:
Accounts Receivable (5,936,723) (5,997,121)
Inventories (4,533,814) (4,857,651)
Prepaid Expenses 61,546 94,857
Increase (Decrease) in:
Accounts Payable 2,427,933 2,148,541
Accrued Expense ( 262,953) ( 643,563)
Income Taxes Payable 318,522 109,274
Net Cash Used in Operating Activities (6,609,308) (8,277,928)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment ( 539,390) ( 406,451)
Proceeds from Sale of Property & Equipment 6,935
Net Cash Used in Investing Activities ( 539,390) ( 399,516)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds of Short-Term Debt 6,487,030 6,879,757
Principal Payments of Long-Term Debt ( 774,132) ( 730,002)
Dividends Paid ( 51,954) ( 56,572)
Increase in Other Assets ( 79,882) ( 106,613)
Net Cash Provided by Financing Activ. 5,581,062 5,986,570
Net Decrease in Cash (1,567,636) ( 2,690,874)
CASH AT BEGINNING OF PERIOD 2,426,929 2,723,443
CASH AT END OF PERIOD $ 859,293 $ 32,569
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Issuance of Debt to Purchase Equipment $ 139,352 $ 497,022
*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
(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
The Company's primary segment of business, glace' (candied) fruit, a
Thanksgiving and Christmas holiday confection which accounted for
approximately 86% of total sales during 1996, is extremely seasonal,
with about 80% of sales in this segment being made in a 10-12 week
period during the late third quarter and early fourth quarter each year.
Therefore, as stated in all interim financial statements, it is the
opinion of management that only a full year's reporting offers a
reliable basis for the analysis of operating results.
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.
Net sales for the first nine months were about 8% higher than during the
same period of the prior year. In the core segment of business, glace'
(candied) fruit, increases were due both to a reduction of returns
of prior years sales during the current year, and the addition of
several large chain stores to the customer list. Selling prices were
increased only slightly.
Also contributing to higher sales was a nearly 12% increase in revenues
of the plastics segment of business, as the strategy of pursuing higher
technology production capabilities was continued.
The only decline in sales occurred in the frozen strawberry products
area, in which the Company elected not to produce during the last
harvest season (mid-December thru mid-April) because of lingering
carryover inventories on the West Coast, which depressed selling prices.
Therefore, there was little product available for sale.
Costs of goods sold, expressed as a percentage of sales, declined to 61%
from 66%, with reductions in unit costs of certain raw materials,
insurance and maintenance expenses, and greater production over which to
allocate some fixed expenses. These savings were partially offset by
higher costs for labor, taxes and licenses, utilities, and mandated
environmental protection measures.
Page 6
PARADISE, INC. COMMISSION FILE 0-3026
Comparatively speaking, selling, general and administrative expenses
increased about 13% over a wide range of line items, including payroll,
brokerage, freight, warehousing, legal and audit, and pension fund
accruals. Depreciation and amortization remained relatively stable.
Interest expense was reduced by more than 23%, reflecting smaller
average short term borrowings,lower term debt, and improved interest
rates.
Other income, generated mostly from the leasing to others of assets not
currently required for Company operations, declined by nearly 30%, but
in relation to overall income, the amount is not considered significant.
After tax earnings were two and one-half times those reported for the
first nine months of 1996. This fact gives cause for optimism, but with
an estimated more than 40% of anticipated annual sales yet to be made,
it is the opinion of management that it is far too early to forecast the
year's final outcome 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: October 31, 1997 PARADISE, INC.
Melvin S. Gordon, President
Eugene L. Weiner, Executive Vice
President, Secretary-Treasurer
Page 7
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<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-END> SEP-30-1997 SEP-30-1996
<CASH> $859,293 $32,569
<SECURITIES> $0 $0
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<INVENTORY> $8,573,660 $8,963,148
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<DEPRECIATION> $12,688,767 $11,976,001
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<CURRENT-LIABILITIES> $12,634,396 $12,374,088
<BONDS> $2,833,132 $3,629,580
<COMMON> $174,926 $174,926
$0 $0
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<OTHER-SE> $8,480,829 $7,226,403
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<LOSS-PROVISION> $0 $0
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<INCOME-PRETAX> $1,271,305 $507,849
<INCOME-TAX> $508,522 $203,140
<INCOME-CONTINUING> $762,783 $304,709
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