UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year Ended December 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
TELEPHONE NO. 813-752-1155
Securities Registered Under Section 12 (b) of the Exchange Act:
None
Securities Registered Under Section 12 (g) of the Exchange Act:
Name of Each Exchange
Title of Each Class On Which Registered
Common Stock,
$.30 Par Value None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, and
(2) has been subject to such filing requirements for the past
90 days. Yes x No___
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's knowledge
, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. Yes x No___
Issuer's revenues for its most recent fiscal year: $20,377,066
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant, $2,361,139 (as of January 31, 1997
, bid price $8.50)
Class Outstanding at December 31, 1996
Common Stock,
$.30 Par Value 519,170 Shares
PARADISE, INC.
1996 FORM 10-KSB ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1. Description of Business I-1 - I-5
Item 2. Description of Property I-5 - I-6
Item 3. Legal Proceedings I - 6
Item 4. Submission of Matters to a Vote of
Security Holders I - 6
PART II
Item 5. Market for Common Equity and
Related Stockholder Matters II-1 - II-2
Item 6. Management's Discussion and Analysis or
Plan of Operation II-2 - II-5
Item 7. Financial Statements II-6 - II-27
Item 8. Changes In and Disagreements with Accountants
On Accounting and Financial Disclosure II - 28
PART III
Item 9. Directors, Executive Officers, Promoters and
Control Persons, Compliance with Section 16(a) of
The Exchange Act III-1 - III-2
Item 10. Executive Compensation III-2 - III-4
Item 11. Security Ownership of Certain Beneficial Owners
And Management III-4 - III-5
Item 12. Certain Relationships and Related Transactions III - 6
Item 13. Exhibits and Reports on Form 8-K III-6 - III-7
SIGNATURES
PART I
Item 1. Description of Business
(a) Business Development
Paradise, Inc., was incorporated under the laws of the State of
Florida in September, 1961 as Canaveral Utilities and Development
Corporation. After the acquisition and merger of several other
assets, the Corporation was renamed Paradise Fruit Company, Inc. in
February, 1964, and the corporate name was changed again to
Paradise, Inc. during July, 1993. There have been no bankruptcies,
receiverships, or similar proceedings during the corporation's
history. There have been no material reclassifications, mergers,
consolidations, purchases or sales of a significant amount
of assets not in the ordinary course of business during the past
three years.
(b) The Company's operations are conducted through two business
segments. These segments, and the primary operations of each,
are as follows:
BUSINESS SEGMENT OPERATION
Candied Fruit Production of candied fruit, a
basic fruitcake ingredient, sold
to manufacturing bakers,
institutional users, and
retailers for use in home
baking. Also, the processing
of frozen strawberry products,
for sale to commercial and
institutional users such as
preservers, dairies, drink
manufacturers, etc., and the
repackaging and sale of edible
nuts.
Molded Plastics Production of plastic containers,
for the Company's products,
and other molded plastics for
sale to packaging
and various food processors and
others.
I-1
Item 1. Description of Business (Continued)
The Company knows of no other manufacturer in the Western Hemisphere
whose sales of glace' (candied) fruit is equal to, or even approaches,
those of Paradise, Inc. While there are no industry statistics
published, from the generally reliable sources available,
management believes that Company brands account for 75-80% of all
candied fruit sold in supermarkets and other grocery outlets in the
USA.
This marketing dominance was reinforced by the acquisition, during
1994, of exclusive use of the customer lists, trademark and rights
for the sale of "Pennant Brand" candied fruit products at the
supermarket retail level. Through a newly formed, wholly-owned
subsidiary, these rights added $2.8 million to Company net
sales during 1996.
"Pennant Brand" glace' fruit products were formerly manufactured and
sold by a competitor, who maintained rights for the sale of these
products at the institutional level, and who has a preeminent
market share in the sale of both candied and maraschino cherries.
Total cost for these "Pennant" rights was a payment of 20% in
royalties on the net sales of that brand during 1994, and payment
of 5% in royalties of brand net sales during the following four
years.
In terms of candied fruit dollar sales, during 1996, approximately
23% were shipped to manufacturing bakers and other institutional
users, with the balance being sold through supermarkets and other
retail outlets for ultimate use in the home.
Sales to retail outlets are usually generated through registered
food brokers operating in exclusively franchised territories.
This method of distribution is widely accepted in the food
industry because of its efficiency and economy. Other fruit
sales, and almost all plastics sales, are made directly by the
Company's own personnel.
The principal raw materials used by the Company are fruits, fruit
peels, corn syrups, nuts, both raw and roasted and salted, and
plastic resins. Most of these materials are readily accessible
from a number of competitive suppliers. The supply and prices
may fluctuate with growing and crop conditions, factors common
to all agricultural products. Edible nut pricing is particularly
volatile, and subject to typical commodity fluctuations based
on supply, demand, and future expectations. Feed stocks for some
plastic resins are petroleum related and may be subject to supply
and demand fluctuations in this market.
The trademarks "Paradise", "Dixie", "Mor-Fruit" and "Sun-Ripe" are
registered with the appropriate Federal and State authorities for
use on the Company's candied fruit. These registrations are kept
current, as required, and have a value in terms of customer
recognition. The Company is also licensed to use the trademarks
"White Swan", "Queen Anne", "Palm Beach", "Golden Crown," and
"Pennant" in the sale of candied fruit.
I-2
Item 1. Description of Business (Continued)
The demand for fruit cake materials is highly seasonal, with over
86% of sales in these items occurring during the months of
September, October and November. However, in order to meet delivery
requirements during this relatively short period, the Company
must process candied fruit and peels for approximately ten months
during the year. Also, the Company must acquire the fruits used
as raw materials during their seasonal growing periods. These
factors result in large inventories, which require financing to
meet relatively large short-term working capital needs.
The packaging and sale of edible nuts began during 1993. The
Company's marketing strategy for these new products was to sell
edible nuts, particularly those used in home baking, in the same
type of packaging, and together with, candied fruit. It is
customary for most supermarkets to display all items related to
holiday baking in close proximity to one another.
While edible nuts are sold on a more year-round basis, given the
Company's selling strategy of combining nut with candied fruit,
this category is seasonal also. This factor becomes increasingly
significant as management attempts to coordinate buying and/or
positioning of nut deliveries at advantageous pricing, while
filling the anticipated needs for seasonally concentrated shipments
to customers. In certain varieties of nuts, there is as much as
a ten month interval between harvest and the time the Company
requires deliveries for packing and shipment. Net sales in this
category totaled $265,290 during 1996.
Also during 1993, and through another wholly owned subsidiary, the
Company launched an enterprise for the growing and selling of
strawberries, both fresh and frozen. Plant City, Florida, the
location of the Company's manufacturing facilities and main
office, styles itself as the "The Winter Strawberry Capital"
because of the relatively large volume of fruit that is grown and
harvested locally, mostly from December through April of each
season. However, once competing fresh berries from the West
Coast of the USA begin finding their way to market, the price of
Florida fruit begins to diminish, and local growers had no other
market for their product.
Originally, management discerned a market niche to be exploited,
both for the Company and for local growers, by beginning to
freeze strawberries no longer competitive in the fresh fruit
market, and offer them for sale to commercial and institutional
consumers in the eastern U.S., where a distinct freight cost
advantage existed. After a modest start during 1993, sales
aggregated more than $1.6 million during 1994. However, a
number market conditions changed, including the NAFTA
international trade agreement. This increased the volatility and
the exposure to risk, so, during 1995, the Company produced only
that for which they had firm purchase commitments, and sales
declined to almost $667,000 during the year. During 1996,
there existed an industry-wide excess carryover inventory of
frozen product, which
I-3
Item 1. Description of Business (Continued)
materially depressed selling prices. Therefore, the Company elected
to neither grow or process strawberries during the year, and sell
only that inventory of frozen products which had been carried
over from the prior season. During 1996, these sales totaled
$320,000.
Some molded plastics container demand is seasonal, by virtue of the
fact that a substantial portion of sales are made to packers of
food items and horticultural interests, with well defined growing
and/or harvest seasons.
In the opinion of management, the seasonal nature of some plastics
sales does not have a significant impact upon the working capital
requirements of the Company.
During the first three months of the year, the Company does contract
with certain commercial bakers for future delivery of quantities
representing a substantial portion of the sales of fruit cake
materials to institutional users. Deliveries against these
contracts are completed prior to the close of the fiscal year
ending December 31.
Many of the commercial bakers and other institutional accounts
face the same seasonal demands as the Company, and must contend
with similar short-term working capital needs. The Company
accommodates some of these customers with extended payment terms
of up to ninety days.
By the same token, many suppliers offer similar extended payment
terms to the Company.
It is a trade practice to allow some supermarket chains to return
candied fruit products that remain unsold at year-end, an option
for which they normally pay an up-charge. A provision for the
estimated losses on retail returns is included in the Company's
financial statements, for the year during which the sales are
made, under accrued expenses.
During 1996, the Company sold nearly 11% of its consolidated
revenues to the affiliated companies, Wal-Mart Stores, Inc. and
Sam's Club. These affiliated companies are not related to
Paradise, Inc. Sales to each of these affiliates were
made separately, and each is shipped a different brand of fruit
products, and is invoiced by a separate Paradise subsidiary.
In addition, slightly more than 5% of consolidated revenues was
sold to various divisions of Winn-Dixie Stores, Inc. In
this case, also, sales of a specific subsidiary brand to each of
the divisions were made individually, and shipments were made
and invoiced accordingly. While there is no industry-wide data
available, management estimates that the Company sold approximately
60-70% of all candied fruits and peels consumed in the U.S. during
1996. The Company knows of two competitors; however, it estimates
that none of these has as large a share of the market as the
Company's.
I-4
Item 1. Description of Business (Continued)
Edible nuts are packaged in a variety of ways by a large number of
suppliers, many of whom are major U.S. corporations. Management
is not able to estimate the total value of the market, but is
certain that the Company's share is extremely small.
The molded plastics industry is very large and diverse, and
management has no reasonable estimate of its total size. Many
products produced by the Company are materials for its own use
in the packaging of candied fruits for sale at the retail level.
Outside sales represent approximately 70% of the Company's total
plastics production at cost, and, in terms of the overall market,
are insignificant.
In the above business segments, it is the opinion of management that
price, which is to include the cost of delivery, is the largest
single competitive factor, followed by product quality and customer
service.
Given the above competitive criteria, it is the opinion of
management, that the Company is in a favorable position.
During recent years, the Company has made capital investments
approaching $1 million in order to comply with the growing body
of environmental regulations. These have included the building
of screening and pretreatment facilities for water effluent,
installation of devices for controlling the quality of air
emissions, and removing underground fuel storage tanks to
approved above ground locations. All of these facilities are
permitted by governmental authorities at various levels, and are
subjected to periodic testing as a condition of permit maintenance
and renewal. All required permitting is currently in effect,
and the Company is in full compliance with all terms and conditions
stated therein.
By local ordinance, it is required that all water effluent is
metered, tested and discharged into a municipal industrial waste
treatment plant. During 1996, costs for this discharge exceeded
$218,000, and management estimates that all expenses directly
related to compliance with environmental regulations total well over
$275,000 annually.
The Company employs between 140 and 275 people, depending upon the
season.
The Company conducts operations principally within the United
States. Foreign activities are not material.
Item 2. Description of Property
(a) Built in 1961, the plant is located in a modern industrial
subdivision at Plant City, Florida, approximately 20 miles east
of the City of Tampa. It is served by three railroad sidings,
and has paved road access to three major state and national
highways. It has productive and warehouse facilities of nearly
350,000 sq. ft.
I-5
Item 2. Description of Property (Continued)
During 1985, the Company acquired approximately 5.2 acres
immediately adjacent to, and to the West of, its main plant
building. Several buildings and a truck weight scale existed
on the property. Some of these facilities have been significantly
updated, remodeled, and/or rebuilt and are used for the strawberry
processing and some plastics molding operations. Other facilities,
in excess of the Company's current needs, are leased to others.
The Company owns its plant facilities and other properties subject
to a secured note and real estate mortgages.
Because of the unique processing methods employed for candied
fruit, much of the equipment used by the Company is designed,
built and assembled by the Company's employees. The Company
considers its plant one of the most modern, automated plants in
the industry. The equipment consists of vats, dehydrators, tanks,
giant evaporators, carbon filter presses, syrup pumps and other
scientifically designed processing equipment. Finished retail
packages are stored in air-conditioned warehouses, if required.
Regarding molded plastic manufacturing, most equipment is normally
available from a number of competitive sources. The molds used
for specialized plastic products must be individually designed
and manufactured, requiring substantial investment, and are
considered proprietary.
(b) Included in the balance sheet, carried as "Investment", is
approximately 4,785 acres of unimproved real estate in Brevard
County, Florida, shown at its cost of $261,848.
Because of a long-standing agreement with the U.S. Army Corp of
Engineers and the appropriate water management district of the
State of Florida, there were virtually no real estate taxes on
this property from the date of that agreement through 1988.
During 1989 an assessment of taxes was declared by Brevard County,
Florida, a negotiated settlement of this assessment was reached
and paid during 1992, 1993 and 1994, and is included in the
Company's expenses during those years. The Company has indicated
that it would entertain any reasonable offers for the purchase of
this property, but, to date, no offers acceptable to the Company
have been made.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
None
I-6
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
(a) The following table shows the range of closing bid prices for the
Company's Common Stock in the over-the-counter market for the
calendar quarters indicated. The quotations represent prices in
the over-the-counter market between dealers in securities, do
not include retail mark-up, mark-down, or commissions and do not
necessarily represent actual transactions.
BID PRICES
High Low
1996
First Quarter 8 3/4 7 3/8
Second Quarter 8 3/4 8 1/4
Third Quarter 8 1/2 8 1/4
Fourth Quarter 8 7 1/2
1995
First Quarter 6 1/2 6 1/2
Second Quarter 6 1/2 6 1/2
Third Quarter 6 1/2 6 1/2
Fourth Quarter 6 3/4 6 1/2
(b) Approximate Number of Equity Security Holders
As of December 31, 1996, the approximate number of holders of record
of each class of equity securities of the Registrant were:
NUMBER OF
TITLE OF CLASS HOLDERS OF RECORD
Common Stock, $.30 Par Value 303
C Dividend History and Policy
The Company has declared dividends of $.10 (1996) and (1995) and
$.00 (1994). Dividends have been declared and paid annually,
only when warranted by profitability and permitted by lending
agreements.
The Company does not have a standard policy in regards to the
declaration and payment of dividends. Each year dividend
payments, if any, are determined upon consideration of the
current profitability, cash flow requirements, investment outlook
and other pertinent factors.
II-1
Item 5. Market for Common Equity and Related Stockholder Matters (Continued)
C Dividend History and Policy (Continued)
According to the covenents of a loan agreement, dated May 29, 1986,
amended several times thereafter, and in effect until June 8, 1995,
the declaration of dividends was specifically limited by certain
financial parameters. That agreement was modified in 1995, and
while still requiring the attainment of certain balance sheet
ratios, specific references to dividends were omitted. For the
year ended December 31, 1994, no dividends could be decalared.
For the years ended December 31, 1995 and 1996, dividends of
$.10 per share were declared.
Item 6. Management's Discussion and Analysis or Plan of Operation
Summary
The following tables set forth for the periods indicated (I)
percentages which certain items in the financial data bear to
net sales of the Company and (ii) percentage increase of such
item as compared to the indicated prior period.
RELATIONSHIP TO PERIOD TO PERIOD
TOTAL REVENUE INCREASE (DECREASE)
YEAR ENDED DECEMBER 31, YEARS ENDED
1996 1995 1994 1996-95 1995-94
NET SALES:
Candied Fruit
and Nuts 85.9% 88.0% 85.08% - .7% - 5.6%
Molded Plastics 14.1 11.9 15.0 20.8 - 28.0
100.0 100.0 100.0 1.8 - 8.9
Cost of Sales 67.5 66.7 70.2 3.0 - 13.4
Selling, General and
Administrative
Expense 19.6 20.6 20.5 - 3.0 - 13.4
Depreciation and Amorti-
zation 3.7 4.0 3.8 - 5.1 - 6.0
Interest Expense 3.3 3.7 3.4 - 9.1 - 2.5
Earnings from
Operations 5.9 5.0 2.1 18.6 129.1
Other Income .9 .8 .4 24.7 61.2
Earnings Before Pro-
vision for Income
Taxes 6.8 5.8 2.5 19.4 117.4
II-2
Item 6. Management's discussion and analysis or plan of Operation
(Continued)
Provision for Income
Taxes 2.6 2.2 .9 22.8 136.6
Net Earnings 4.2% 3.6% 1.6% 17.3% 106.3%
(1) Liquidity
Management is not aware of any demands, commitments, events or
uncertainties that will result in, or are reasonable likely to
result in, a material increase or decrease in the Company's
liquidity. One trend to be noted is the Company's ability over the
past three years to materially decrease its short-term debt
position while maintaining a consistent level of inventory. As
discussed in footnote 4 of the Company's financial statements, a
line of credit is available to the Company to finance short-term
working capital needs.
(2) Capital Resources
The Company does not have any material outstanding commitments for
capital expenditures. Management is not aware of any material
trends either favorable or unfavorable in the Company's capital
resources.
(3) Results of Operations
1996 Compared to 1995
Operating results during 1996 further validated changes in policy
and business strategies initiated during 1994, and in which focus
was shifted to concentration on core products, increasing net
cash flow, and aversion of risk in growth and expansion efforts.
These shifts in emphasis, while leading to greater profitability
and balance sheet stability, have also resulted in a slow growth,
and in some cases, a decline in total sales. However this slow
growth results from the continuation of the management mandated
reductions and/or eliminations in the sale of low profit or profit
erroding line items.
During 1996, total sales in all business segments grew approxi-
mately 2%. Sales in the Plastics segment grew by more than 20%,
as newly acquired machinery and equipment was put into production,
and despite the elimination of some high volume, but net loss,
line items.
II-3
Item 6. Management's Discussion and Analysis or Plan of Operation
(Continued)
(3) Results of Operations (Continued)
1996 Compared to 1995 (Continued)
Sales in the Fruit segment of business declined nearly 1%, but this
does not reflect a reduction in sales of the Company's core
product line of glace' (candied) fruit sold through supermarkets.
It was, rather, a reduction of more than 50% in the sales of
strawberry products. Since there continued to be an industry wide
oversupply of frozen strawberry inventory carried over from the
prior year, the Company elected not to enter production during
1996, thereby materially limiting product available for sale.
Sales in the edible nut category remained relatively unchanged.
Expressed as a percentage of sales, cost of sales increased by
less than 1%. This was due to a general inflation of the costs
in several categories, the reduction of costs in others, but
none of these were of a really significant nature. Again as a
percentage of sales, General and Administrative expenses
declined slightly, also as a result of increases and decreases
in a variety of expense line items, none of which would be
considered noteworthy. Interest expense was reduced by about 10%,
reflecting both improved rates granted by principal lender, and
lower average short-term monthly borrowings and a reduction of
term debt.
Depreciation and amortization likewise decreased slightly, as the
value of expiring schedules exceeded the value of additions to
fixed assets.
The above operating results more than satisfied all of the
covenants of the loan agreement with the Company's major lender,
increased earnings by 17%, to $1.63 from $1.39 per share, and
were followed by a Director's resolution to pay a dividend
of $0.10 per share.
1995 Compared to 1994
1995 was a watershed year for Paradise, Inc.; a year during which
a number of policies and directions were changed. During 1994,
the directors and management carefully assessed corporate policies,
objectives and operating procedures. They were motivated by
operating results during 1993, the only loss year in the
Company's then thirty-three year history.
After painstaking analysis, a new, or renewed, management
philosophy emerged. Simple in its goals and profound in its
effect, this new philosophy incorporated greater focus on core
products, elevating net cash flow objectives to a level almost
equal to profitability, making risk aversion one of the primary
criteria in planning growth strategies, and "right sizing" the
balance sheet by achieving a better balance between long and short
term debt, and improving the overall relationship between total
liabilities and equity.
II-4
Item 6. Management's Discussion and Analysis or Plan of Operation
(Continued)
(3) Results of Operations (Continued)
1995 Compared to 1994 (Continued)
The successful execution of these policies is amply demonstrated by
comparing the Company's 1995 Financial Statements with those of
the prior year, both of which are included as part of this report.
Total sales declined by slightly more than $1.96 Million, or
nearly 9%. However, almost all of this decrease was by design,
as the Company withdrew from unprofitable markets that heretofore
had eroded profits from other operations and/or resulted in
substantial inventory write-downs. These markets include, but are
not limited to, the growing, processing and sale of fresh and
frozen strawberry products, the manufacture and sale of some
injection molded plastics, and the repackaging and sale of edible
nuts.
In the strawberry market, there was an overabundance at harvest
and a carryover of frozen product in the very large growing areas
on the west coast of the U.S. Therefore, the Company produced and
sold only that for which it had confirmed purchase orders from
customers at the time of harvest. As to injected molded plastics,
at one time the Company generated nearly $1.5 Million in profitable
sales by manufacturing the one-pint baskets used in the distribu-
tion of fresh produce. Shrinking profits and the substantial
investment required for retooling to meet technological advances
resulted in abandonment of that market. And, due to the
extreme volatility of the commodity aspects of the edible nut
business the Company took a very conservative approach in the
marketing of these products.
Expressed as a percentage of sales, the costs of goods sold
declined to 66.7% during 1995, as compared to 70.2% a year earlier.
Significant expenses were saved in the withdrawal from the markets,
discussed above. Selling, general and administrative expenses
were reduced by approximately $387,000, in large part due to the
lower percentage paid in royalties on licensed sales. Some of
these reductions were offset by higher administrative and sales
salaries, and increased costs for brokerage, commissions, freight
and outside warehousing.
Depreciation and amortization were reduced by about 6%, as some
expiring schedules were not replaced by new investments. Interest
expense was reduced slightly, mostly due to lower rates on short-
term borrowings. Other income increased somewhat because the
Company sold some fully depreciated and obsolete plastics molding
equipment.
Net earnings more than doubled to $1.39 per share from $.67 per
share, due to the cost reductions and improved efficiencies
reported above.
II-5
Item 7. Financial Statements
INDEPENDENT AUDITORS' REPORT
March 14, 1997
To The Board of Directors
and Shareholders of
Paradise, Inc.
Plant City, FL 33566
We have audited the accompanying consolidated balance sheets of Paradise,
Inc., and subsidiaries as of December 3l, l996, 1995, and l994, and the
related consolidated statements of earnings, changes in stockholders' equity,
and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Paradise,
Inc., and subsidiaries as of December 3l, l996, 1995, and l994, and the
consolidated results of their operations and their cash flows for the years
then ended in conformity with generally accepted accounting principles.
Respectfully submitted,
BELLA, HERMIDA, GILLMAN, HANCOCK & MUELLER
Certified Public Accountants
Plant City, Florida
PARADISE, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
1996 1995 1994
CURRENT ASSETS:
Cash $ 2,426,929 $ 2,723,443 $ 746,324
Accounts Receivable, Net
of Allowance for Doubtful
Accounts of $ -0- 1,507,965 1,132,317 1,911,442
Inventories 4,039,846 4,105,497 3,804,268
Prepaid Expenses and Other
Current Assets 340,035 481,782 632,114
Deferred Income Tax Asset 264,006 202,041 200,173
Income Tax Refund Receivable 832 8,783 99,914
Total Current Assets 8,579,613 8,653,863 7,394,235
INVESTMENTS:
Real Estate, at Cost 261,848 261,848 261,848
PROPERTY, PLANT AND EQUIPMENT:
Net of Accumulated Depreciation of
$12,145,174 (1996), $11,514,234
(1995) and $11,304,633 (1994) 5,432,539 5,257,538 5,651,267
OTHER ASSETS 350,888 248,772 177,297
TOTAL ASSETS $14,624,888 $14,422,021 $13,484,647
LIABILITIES AND STOCKHOLDERS' EQUITY
DECEMBER 31,
1996 1995 1994
CURRENT LIABILITIES:
Short-Term Debt $ 257,500 $ 388,306 $ 2,171,636
Accounts Payable 667,606 748,998 577,040
Accrued Expenses 1,597,752 1,634,487 1,460,421
Dividends Payable 56,572 56,572 4,655
Accrued Taxes on Income 176,958 93,864
Current Portion of Long-Term Debt 931,748 844,679 2,142,270
Total Current Liabilities 3,688,136 3,766,906 6,356,022
LONG-TERM DEBT, NET OF CURRENT
PORTION 2,536,163 3,017,881 98,658
DEFERRED INCOME TAX LIABILITY 507,722 540,723 604,668
Total Liabilities 6,732,021 7,325,510 7,059,348
STOCKHOLDERS' EQUITY:
Common Stock, $.30 Par Value,
2,000,000 Shares Authorized,
582,721 Shares Issued, 519,170
Shares Outstanding 174,816 174,816 174,816
Capital in Excess of Par Value 1,288,793 1,288,793 1,288,793
Retained Earnings 6,703,463 5,907,107 5,235,895
Less: Common Stock in Treasury,
at Cost, 63,551 Shares ( 274,205) ( 274,205) ( 274,205)
Total Stockholders' Equity 7,892,867 7,096,511 6,425,299
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 14,624,888 $ 14,422,021 $ 13,484,647
PARADISE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994
NET SALES $20,377,066 $20,013,900 $21,976,182
COSTS AND EXPENSES:
Cost of Goods Sold 13,735,235 13,309,577 15,419,318
Loss on Write-Down of Inventory to Market 24,175 44,445 7,885
Selling, General and Administrative
Expenses 3,994,378 4,116,155 4,503,412
Depreciation and Amortization 758,286 798,918 850,200
Interest Expense 669,468 736,613 755,303
Total Costs and Expenses 19,181,542 19,005,708 21,536,118
EARNINGS FROM OPERATIONS 1,195,524 1,008,192 440,064
OTHER INCOME, NET 184,779 148,205 91,948
EARNINGS BEFORE PROVISION FOR INCOME
TAXES 1,380,303 1,156,397 532,012
PROVISION FOR INCOME TAXES 531,993 433,268 181,550
NET EARNINGS $ 848,310 $ 723,129 $ 350,462
EARNINGS PER SHARE:
Primary Earnings Per Share $ 1.63 $ 1.39 $ .67
Assuming Full Dilution $ 1.63 $ 1.39 $ .67
PARADISE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
CAPITAL IN
COMMON EXCESS OF RETAINED TREASURY
STOCK PAR VALUE EARNINGS STOCK TOTAL
Balance, December 31,
1994 $174,816 $1,288,793 $ 5,235,895 $(274,205) $6,425,299
Cash Dividends
Declared, $.10 per
Share ( 51,917) ( 51,917)
Net Earnings 723,129 723,129
Balance, December 31,
1995 174,816 1,288,793 5,907,107 (274,205) 7,096,511
Cash Dividends
Declared, $.10 per
Share ( 51,954) ( 51,954)
Net Earnings 848,310 848,310
Balance, December 31,
1996 $174,816 $1,288,793 $ 6,703,463 $(274,205) $7,892,867
PARADISE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 3l,
1996 l995 l994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 848,310 $ 723,129 $ 350,462
Adjustments to Reconcile Net Earnings
to Net Cash Provided by
Operating Activities:
Increase (Decrease) in Net Deferred
Income Tax Liability ( 94,966) ( 63,945) 267,021
Depreciation and Amortization 758,286 798,918 850,200
Gain on Sale of Assets ( 6,935) ( 67,888) ( 8,023)
Decrease (Increase) in:
Accounts Receivable ( 375,648) 779,115 ( 254,992)
Inventories 65,651 ( 301,229) 1,383,201
Prepaid Expenses 141,745 150,351 ( 81,921)
Refund Receivable 7,951 91,131 ( 99,914)
Other Assets ( 117,909)
Increase (Decrease) in:
Accounts Payable ( 81,392) 171,958 202,704
Accrued Expenses ( 36,735) 174,066 558,187
Accrued Taxes on Income 83,094 93,864
Net Cash Provided by Operating
Activities 1,191,452 2,549,470 3,166,925
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property, Plant and
Equipment ( 409,286) ( 452,793) ( 274,521)
Proceeds From Sale of Assets 17,000 165,532 10,000
Net Cash Used in Investing
Activities ( 392,286) ( 287,261) ( 264,521)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds (Repayments) of
Short-term Debt ( 130,806) 216,670 (2,232,840)
Proceeds from Issuance of
Long-term Debt 136,932
Principal Payments on Long-term
Debt ( 891,670) ( 515,300) ( 577,714)
Dividends ( 51,954) ( 51,917)
Increase in Other Assets ( 21,250) ( 71,475) ( 19,380)
Net Cash Used in Financing
Activities (1,095,680) ( 285,090) (2,829,934)
Net Increase (Decrease) in Cash ( 296,514) 1,977,119 72,470
CASH, at Beginning of Year 2,723,443 746,324 673,854
CASH, at End of Year $ 2,426,929 $ 2,723,443 $ 746,324
PARADISE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
1996 l995 l994
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid During the Year for:
Interest $664,680 $699,304 $ 713,644
Income Taxes (Refund) $535,914 $414,000 $( 78)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Long-Term Debt Issued:
Equipment Purchases $497,022 $ $
Refinancing of Long-Term Debt $2,063,068
Refinancing of Short-Term Debt $2,000,000
DISCLOSURE OF ACCOUNTING POLICY:
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to
be cash equivalents.
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE l: PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, after elimination of all
material inter- company transactions and profits.
NOTE 2: INVENTORIES
1996 1995 l994
Supplies $ 104,448 $ 84,416 $ 85,040
Raw Materials 799,289 877,943 978,961
Work in Progress 224,031 248,894 281,936
Finished Goods 2,912,078 2,894,244 2,458,331
TOTAL $4,039,846 $4,105,497 $3,804,268
Inventories are valued at the lower of cost (first-in, first-out) or
market. Cost includes material, labor and factory overhead.
Substantially all inventories are pledged as collateral for certain
short-term obligations.
NOTE 3: PROPERTY, PLANT AND EQUIPMENT
1996 l995 l994
Land and Improvements $ 830,806 $ 830,806 $ 825,006
Buildings and Improvements 4,599,861 4,476,937 4,364,623
Machinery and Equipment 12,147,046 11,464,029 11,766,271
Total 17,577,713 16,771,772 16,955,900
Less: Accumulated Depreciation 12,145,174 11,514,234 11,304,633
NET $ 5,432,539 $ 5,257,538 $ 5,651,267
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 3: PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Property, plant and equipment are stated at cost. Generally, the
straightline method is used in computing depreciation. Estimated
useful lives of plant and equipment are:
Years
Buildings and Improvements 10-30
Machinery and Equipment 3-10
Expenditures which significantly increase values or extend useful
lives are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred. Upon sale or retirement of property,
plant and equipment, the cost and related accumulated depreciation
are eliminated from the respective accounts and the resulting gain
or loss is included in the current earnings.
All of the real property and machinery and equipment are pledged as
collateral for certain short-term and long-term obligations.
NOTE 4: SHORT-TERM DEBT
1996 l995 1994
Note payable, bank, collateralized by
accounts receivable, inventories,
and real and personal property. $ $ $2,125,000
Trade acceptances, letters of credit
and other short-term debt. 257,500 199,696 46,636
Note payable, bank, collateralized
by equipment. 188,610
TOTAL $257,500 $388,306 $2,171,636
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 4: SHORT-TERM DEBT (CONTINUED)
The average monthly borrowings and weighted average interest rates were
determined by month-end balances. Non-interest bearing letters of
credit were included in the aggregate figures.
WEIGHTED AVERAGE
l996 AMOUNT INTEREST RATE
Average bank short-term borrowings
(monthly) $2,070,833 9.49%
Average aggregate short-term
borrowings (monthly) $3,938,713 7.34%
Maximum aggregate short-term
borrowings (at any month-end) $9,136,852
WEIGHTED AVERAGE
l995 AMOUNT ITEREST RATE
Average bank short-term borrowings
(monthly) $ 3,155,220 8.90%
Average aggregate short-term
borrowings (monthly) $ 4,798,769 7.69%
Maximum aggregate short-term
borrowings (at any month-end) $ 9,647,115
WEIGHTED AVERAGE
1994 AMOUNT INTEREST RATE
Average bank short-term borrowings
(monthly) $ 5,148,583 9.30%
Average aggregate short-term
borrowings (monthly) $ 6,447,638 8.19%
Maximum aggregate short-term
borrowings (at any month-end) $ 9,633,719
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995, AND 1994
NOTE 4: SHORT-TERM DEBT (CONTINUED)
Pursuant to a loan agreement, a bank has agreed to advance the Company
80% of the Company's eligible receivables and 50% of the Company's
eligible inventory. Interest is payable monthly and is computed at
prime plus 1/2%. Principal is due the earlier of on demand or May 31,
1997.
This agreement is subject to certain conditions which must be met for
the Company to continue borrowing including debt service coverage and
debt to equity ratios, a resting period provision, and other financial
covenants.
The amount available to be drawn down based on the available collateral
at December 31, 1996 was $2,848,704, at December 31, 1995, was
$2,551,335, and at December 31, 1994, was $1,538,770.
NOTE 5: LONG-TERM DEBT
1996 1995 1994
Prime plus 2% note, collateralized
by accounts receivable, inventories,
and real and personal property.
Monthly payments of $21,528 plus
interest. $ $ $1,959,028
Prime plus 2% note, collateralized by
accounts receivable, inventories and
equipment. Monthly payments of $8,333
plus interest. 116,667
Prime plus 2% note, collateralized
by accounts receivable, inventories
and equipment. Monthly payments of
$3,721 plus interest. 14,885
Prime plus 1% note, collateralized
by accounts receivable, inventories and
equipment. Monthly payments of $70,000
plus interest. 3,010,000 3,850,000
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995, AND 1994
NOTE 5: LONG-TERM DEBT (CONTINUED)
1996 1995 1994
Prime plus 2% note, collateral
ized by accounts receivable,
inventories and equipment.
Monthly payments of $5,341
plus interest. 133,522
9.168% obligation under capital
lease. Monthly payments of
$10,358 including interest,
collateralized by equipment. 450,031
9.26% obligation under capital
lease. Monthly payments of $471,
including interest. 7,880 12,560 16,826
Total Debt 3,467,911 3,862,560 2,240,928
Less Current Portion 931,748 844,679 2,142,270
LONG-TERM DEBT $2,536,163 $3,017,881 $ 98,658
The aggregate principal amounts maturing in each of the five
subsequent years are:
1997 $ 931,748
1998 937,648
1999 943,975
2000 603,918
2001 50,622
Total $3,467,911
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 6: LEASES
The Company has certain equipment leases which are classified as
capital leases. At December 3l, l996, 1995, and 1994, the amount
capitalized was $519,551, $22,529, and $22,529, respectively, and
the accumulated amortization was $62,229 (1996), $11,264 (1995)
and $6,759 (1994). The amount recognized as an obligation was
$457,912, $12,560, and $16,826, respectively, which has been included
in long-term debt shown in Note 5. Amortization expense is included
in depreciation.
The Company leases automobiles under operating leases ranging in
length from thirty to sixty months. Lease payments charged to
operations amounted to $56,645 (1996), $48,852 (1995), and $52,446
(1994).
At December 31, 1996, future minimum payments required under leases
with terms greater than one year, and the present value of minimum
capital lease payments, were as follows:
OPERATING
YEARS ENDING DECEMBER 3l, CAPITAL LEASES LEASES
1997 $129,942 $ 56,065
1998 127,119 40,238
1999 124,295 21,369
2000 124,295
2001 51,790
Total Minimum Lease Payments 557,441 $117,672
Less Amount Representing Interest 99,530
PRESENT VALUE OF FUTURE MINIMUM
CAPITAL LEASE PAYMENTS $457,911
NOTE 7: ACCRUED EXPENSES
1996 l995 l994
Accrued Payroll and Bonuses $ 321,719 $ 297,849 $ 124,310
Accrued Brokerage Payable 319,720 328,281 286,545
Accrued Pension Cost (Note 8) 128,074 188,502 286,683
Provision for Unrealized Profit
on Retail Returns 435,000 356,000 316,000
Accrued Royalties and Other 95,999 147,843 146,186
Accrued Credit Due to Customers 180,030 186,181 181,816
Accrued Insurance Payable 117,210 129,831 118,881
TOTAL $1,597,752 $1,634,487 $1,460,421
As a part of its normal sales policy, the Company allows some customers
to return unsold, retail packed, candied fruit after the holiday season.
A provision for the unrealized profit on these estimated returns is
shown above under "provision for unrealized profit on retail returns".
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 8: RETIREMENT PLAN
The Company and its subsidiaries have a defined benefit pension plan
covering all employees who become eligible for participation in the
plan on the semiannual date following one year of service (l,000 hours
worked) and the attainment of age 21. The total pension cost for
l996, 1995, and l994 was $17,846, $20,318, and $120,464, respectively,
which includes amortization of past service cost over 10 years. The
Company makes annual contributions to fund the plan equal to the
amounts deductible for Federal Income Tax purposes. The benefit
formula being used is known as the frozen initial liability cost
method. The plan's assets consist of both fixed income assets
and whole life insurance contracts. The plan has no significant
nonbenefit liabilities.
Net pension cost for 1996, 1995 and 1994 included the following
components:
1996 1995 1994
Service Cost - Benefits Earned
During the Period $ 87,319 $ 75,040 $ 174,990
Interest Cost on Projected
Benefit Obligation 188,549 178,703 181,433
Actual Return on Plan Assets (253,416) (450,255) 261,708
Net Amortization and Deferral ( 4,606) 216,830 (497,667)
Net Periodic Pension Cost $ 17,846 $ 20,318 $ 120,464
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated financial statements at
December 31, 1996, 1995 and 1994:
Actuarial present value of benefit obligations:
1996 1995 1994
Accumulated Benefit Obligation,
Including Vested Benefits of
$1,675,359, $2,524,011, and
$2,001,269, respectively $1,770,738 $2,624,116 $2,095,655
Projected Benefit Obligation for
Service Rendered to Date $(2,129,059) $(3,029,472) $(2,466,978)
Plan Assets at Fair Value 2,509,894 3,161,796 2,737,723
(Projected Benefit Obligation in
Excess of Plan Assets) Plan Assets
in Excess of Projected Benefit
Obligation 380,835 132,324 270,745
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 8: RETIREMENT PLAN (CONTINUED)
Unrecognized Net (Gain) Loss From
Past Experience Different From
That Assumed and Effects of
Changes in Assumptions ( 184,126) 25,796 ( 188,967)
Prior Service Cost ( 400,430) ( 437,218) ( 474,006)
Unrecognized Net Obligation at
October 1, 1987, Amortized Over
15 Years, Net of Amortization 75,647 90,596 105,545
Accrued Pension Cost Included
in Accrued Expenses $( 128,074) $( 188,502) $( 286,683)
The following economic assumptions are used:
1996 1995 1994
Weighted Average Discount Rate 7.25% 6.25% 7.25%
Rate of Increase in Future Compensation 4.66% 4.62% 4.66%
Expected Long-Term Rate of Return 7.50% 7.50% 7.50%
In amortizing prior service costs, a straight-line amortization of the
cost over the average remaining service period of employees expected
to receive benefits under the plan is used. A settlement took place
during 1996 as a result of a lump-sum cash payment. The resulting
recognized gain was $78,274.
NOTE 9: PROVISION FOR FEDERAL AND STATE INCOME TAXES
The provisions for income taxes are comprised of the following amounts:
YEAR ENDED DECEMBER 31
1996 1995 1994
CURRENT:
Federal $ 535,824 $ 460,864 $ 230,086
State 91,135 38,217
626,959 499,081 230,086
DEFERRED:
Federal ( 81,086) ( 69,987) 250,856
State ( 13,880) 4,174 16,165
( 94,966) ( 65,813) 267,021
REFUND FROM NOL CARRYBACK (315,557)
TOTAL PROVISION FOR INCOME
TAXES $ 531,993 $ 433,268 $ 181,550
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 9: PROVISION FOR FEDERAL AND STATE INCOME TAXES (CONTINUED)
A reconciliation of the differences between the effective income tax
rate and the statutory Federal income tax rate follows:
YEAR ENDED DECEMBER 31
1996 1995 1994
Income Taxes Computed at Statutory
Rate $469,302 $393,175 $180,884
State Income Tax, Net of Federal
Income Tax Benefit 50,987 27,978
Other, Net 11,704 12,115 666
PROVISION FOR INCOME TAXES $531,993 $433,268 $181,550
EFFECTIVE TAX RATE 38.5% 37.5% 34.1%
NOTE l0: EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common share are based on the
weighted average number of shares outstanding and assumed to be
outstanding during the year (519,170 shares in 1996 and l995 and
519,508 shares in l994 for primary) and (519,170 shares in 1996 and
1995 and 519,747 shares in 1994 for fully diluted). Refer to note 12
for discussion of stock options.
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 11: BUSINESS SEGMENT DATA
The Company's operations are conducted through four business
segments. These segments, and the primary operations of each, are as
follows:
BUSINESS SEGMENT OPERATION
Candied Fruit Production of candied fruit,
a basic fruitcake ingredient,
sold to manufacturing bakers,
institutional users, and
retailers for use in home
baking.
Molded Plastics Production of plastic
containers and other molded
plastics for sale to various
food processors and others.
*Edible Nuts Packaging and distribution
of bulk and retail packaged
edible nuts.
*Frozen Strawberry Products Growing and processing of
and Fresh Strawberries
strawberries and frozen
strawberry products for
preservers, dairies and drink
manufacturers.
* For purposes of segment disclosure for 1996 and 1995, edible nuts
and strawberry product information will be included in candied fruit.
YEAR ENDED YEAR ENDED YEAR ENDED
NET SALES IN EACH SEGMENT 1996 l995 l994
Candied Fruit:
Sales to Unaffiliated
Customers $17,511,519 $17,641,613 $16,441,601
Molded Plastics:
Sales to Unaffiliated
Customers 2,865,547 2,372,287 3,294,672
Edible Nuts:
Sales to Unaffiliated Customers 615,079
Strawberry Products:
Sales to Unaffiliated Customers 1,624,830
NET SALES $20,377,066 $20,013,900 $21,976,182
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 11: BUSINESS SEGMENT DATA (CONTINUED)
YEAR ENDED YEAR ENDED YEAR ENDED
1996 1995 l994
THE OPERATING PROFIT OF
EACH SEGMENT IS LISTED BELOW
Candied Fruit $ 5,457,526 $ 5,354,892 $ 5,179,973
Molded Plastics 516,733 602,056 382,885
Edible Nuts 4,444
Strawberry Products 222,453
OPERATING PROFIT OF SEGMENTS 5,974,259 5,956,948 5,789,755
General Corporate Expenses,
Net (4,109,267) (4,212,143) (4,594,388)
Interest Expense ( 669,468) ( 736,613) ( 755,303)
Other Income 184,779 148,205 91,948
EARNINGS BEFORE PROVISION
FOR INCOME TAXES $ 1,380,303 $ 1,156,397 $ 532,012
Operating profit is composed of net sales, less direct costs and
overhead costs associated with each segment. Due to the high degree
of integration between the segments of the Company, it is not practical
to allocate general corporate expenses, interest, and other income
between the various segments.
IDENTIFIABLE ASSETS OF EACH YEAR ENDED YEAR ENDED YEAR ENDED
SEGMENT ARE LISTED BELOW 1996 l995 l994
Candied Fruit $ 6,991,752 $ 7,002,360 $ 7,401,801
Molded Plastics 2,871,027 2,361,566 2,355,067
Edible Nuts 40,145
Strawberry Products 716,653
Identifiable Assets 9,862,779 9,363,926 10,513,666
General Corporate Assets 4,762,109 5,058,095 2,970,981
TOTAL ASSETS $14,624,888 $14,422,021 $13,484,647
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995, AND 1994
NOTE 11: BUSINESS SEGMENT DATA (CONTINUED)
Identifiable assets by segment are those assets that are principally
used in the operations of each segment. General corporate assets
are principally cash, land and building, and investments.
DEPRECIATION AND AMORTIZATION
EXPENSE OF EACH SEGMENT IS YEAR ENDED YEAR ENDED YEAR ENDED
LISTED BELOW 1996 l995 l994
Candied Fruit $382,796 $472,691 $486,876
Molded Plastics 297,644 280,278 291,535
Strawberry Product 15,381
Segment Depreciation and
Amortization Expense 680,440 752,969 793,792
General Corporate Depreciation
and Amortization Expense 77,846 45,949 56,408
TOTAL DEPRECIATION AND
AMORTIZATION EXPENSE $758,286 $798,918 $850,200
CAPITAL EXPENDITURES OF EACH YEAR ENDED YEAR ENDED YEAR ENDED
SEGMENT ARE LISTED BELOW 1996 l995 l994
Candied Fruit $278,409 $292,460 $117,082
Molded Plastics 592,328 130,959 107,640
Strawberry Products 32,040
Segment Capital Expenditures 870,737 423,419 256,762
General Corporate Capital
Expenditures 42,974 29,374 17,759
TOTAL CAPITAL EXPENDITURES $913,711 $452,793 $274,521
The Company conducts operations only within the United States.
Foreign sales are insignificant; primarily all sales are to domestic
companies.
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 12: STOCK OPTION
On August 23, 1990, the Company granted to a member of the Board of
Directors an option to purchase 5,000 shares of the Company's common
stock. The option was exercisable at any time over a five year period
at $5.75 per share, the market bid price on the date the option was
granted. This stock option expired on August 23, 1995 without being
exercised.
NOTE 13: DIVIDEND RESTRICTION
Under the terms of a loan agreement, declaration of dividends had
been limited. For December 31, 1994, no dividends could be declared.
A $.10 per share dividend was declared for December 31, 1995 and
December 31, 1996, as dividend restrictions were eliminated.
NOTE 14: MAJOR CUSTOMER
The Company sells more than 11% of its consolidated revenues to the
affiliated companies Wal-Mart Stores, Inc. and Sam's Club. These
affiliated companies are not related to Paradise, Inc. in any way.
Sales to each of these affiliates are made separately, and each is
shipped a different brand of fruit products and invoiced by a separate
Paradise, Inc. subsidiary. The loss of sales to either or both of
these affiliated companies could have a material effect on operating
earnings. In addition, slightly more than 5% of consolidated revenues
were sales to various divisions of Winn-Dixie Stores, Inc. In this
case, also, sales of a specific subsidiary brand to each of the
divisions were made individually, and shipments were made and invoiced
accordingly.
NOTE 15: CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of cash equivalents
and unsecured trade receivables. The Company's cash equivalents are
maintained with several financial institutions located in Florida.
Accounts at each institution are secured by the Federal Deposit
Insurance Corporation up to $100,000. Uninsured balances aggregate
to $2,698,517 at December 31, 1996. The Company grants credit to
customers, substantially all of whom are located in the United States.
The Company's ability to collect these receivables is dependent upon
economic conditions in the United States and the financial condition
of its customers.
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 3l, l996, 1995, AND 1994
NOTE 16: DEFERRED INCOME TAXES
The Company recognizes deferred tax assets and liabilities for future
tax consequences of events that have been previously recognized in the
Company's financial statements or tax returns. The measurement of
deferred tax assets and liabilities is based on provisions of the
enacted tax law; the effects of future changes in tax laws or rates
are not anticipated.
As of December 31, 1994, the Company had a net tax operating loss
(NOL) carryforward of approximately $278,000 available to offset its
1995 State income tax liability.
Significant components of the Company's deferred tax assets and
liabilities at December 31, 1996, 1995 and 1994 were:
1996 1995 1994
Deferred Tax Assets resulting from:
Net Operating Loss Carryforward $ $ $ 10,075
Inventory Valuation 100,315 67,482 71,187
Book Provision for Loss of Profits 163,691 133,963 118,911
Other 596 1,194
Total Deferred Tax Assets 264,006 202,041 201,367
Deferred Tax Liabilities Resulting from:
Tax over Book Depreciation 507,722 540,723 605,862
Total Deferred Tax Liabilities 507,722 540,723 605,862
Net Deferred Tax Liability $243,716 $ 338,682 $ 404,495
The Net Deferred Tax Liability is
Reflected in the Balance Sheet Under
These Captions:
Deferred Income Tax Asset $(264,006)$(202,041) $(200,173)
Deferred Income Tax Liability 507,722 540,723 604,668
$ 243,716 $338,682 $ 404,495
PARADISE, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
NOTE 17: QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data is summarized as follows:
QUARTER ENDED
1996 March 31 June 30 September 30 December 31
NET SALES $ 1,175,051 $ 981,179 $9,163,889 $9,056,947
GROSS PROFIT 390,577 ( 346,115) 3,783,203 2,814,166
NET EARNINGS
(LOSS) ( 409,191) ( 1,259,892) 1,973,795 543,598
EARNINGS (LOSS)
PER COMMON
SHARE $( .79) $(2.43) $3.79 $1.05
QUARTER ENDED
1995 March 31 June 30 September 30 December 31
NET SALES $ 1,256,491 $ 1,118,553 $9,399,067 $8,239,789
GROSS PROFIT 464,602 195,313 4,018,711 2,025,697
NET EARNINGS
(LOSS) ( 316,880) (1,153,857) 1,945,926 247,940
EARNINGS (LOSS)
PER COMMON
SHARE $(0.61) $(2.22) $3.74 $0.48
QUARTER ENDED
1994 March 31 June 30 September 30 December 31
NET SALES $ 2,328,496 $ 1,896,208 $9,587,673 $8,163,805
GROSS PROFIT 516,908 193,443 4,105,504 1,733,124
NET EARNINGS
(LOSS) ( 438,600) ( 771,529) 1,616,865 ( 56,274)
EARNINGS (LOSS)
PER COMMON
SHARE $(0.84) $(1.49) $3.10 $0.67
II-27
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
II-28
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16 (a) of the Exchange Act
(a) Directors of the Registrant
Frank A. Weaner - Chairman of the Board of Directors
of Registrant, 88 years old.Term of
office will expire at next stockholders'
meeting. Officer with the Registrant
for past 35 years except for period
during 1972 and 1973 when he served as a
management consultant to the Registrant.
Melvin S. Gordon - President of the Registrant, 63 years
old. Term of office will expire at
next stockholders' meeting. Officer
with Registrant past 32 years.
Eugene L. Weiner - Director and Executive Vice-President,
Secretary and Treasurer
of the Registrant, 65 years old.
Term of office will expire at next
stockholders' meeting. Officer with
Registrant past 31 years.
Randy S. Gordon - Vice President for Plastics Sales of
the Registrant, 41 years old. Term
of office will expire at next
stockholders' meeting. Employee
of Registrant past 18 years.
Tracy W. Schulis - Vice President for Fruit Sales of the
Registrant, 40 years old. Term of
office will expire at next
stockholders' meeting. Employee
of Registrant past 17 years.
Mark H. Gordon - Vice President, Manager of Fruit
Manufacturing. 34 years old. Term
of office will expire at next
stockholders' meeting. Employee
of Registrant past 11 years.
(a) Executive Officers of the Registrant
Frank A. Weaner - Chairman of the Board of Directors,
88 years old. Term of office will
expire at next annual directors'
meeting. Officer with the
Registrant for past 35 years except
for period during 1972 and 1973
when he served as a management
consultant to the Registrant.
Melvin S. Gordon - President, 63 years old. Term of
office will expire at next annual
directors' meeting. Officer with
Registrant past 32 years.
Eugene L. Weiner - Executive Vice-President,
Secretary, Treasurer, 65 years old.
In charge of operations. Term of
office will expire at next annual
directors' meeting. Officer with
Registrant past 31 years.
III-1
Item 9. Directors and Executive Officers of the Registrant (Continued)
(b) Not Applicable
(c) Family Relationships
Melvin S. Gordon is son-in-law to Frank A. Weaner, Parent of
Registrant.
Frank A. Weaner, Parent of Registrant, is uncle to Eugene L. Weiner.
Melvin S. Gordon is first cousin by marriage to Eugene L. Weiner.
Melvin S. Gordon is the father of Randy S. Gordon and Mark H. Gordon
and the father-in-law of Tracy W. Schulis.
(d) Not Applicable
Item 10. Executive Compensation
(a) and (b) The following information is set forth with respect to all
remuneration paid or accrued by the Company and its
subsidiaries during the year ended December 31, 1996 to its
officers and directors as a group. Pursuant to regulation
S-B Item 402 (a)(2)(I) and (ii) the Company's six most
highly paid executive officers or directors, included in
the group total, whose total remuneration exceeds $100,000
are separately listed.
III-2
Item 10. Executive Compensation (Continued)
COMPENSATION
SALARIES, FEES,
NAME OF INDIVIDUAL DIRECTORS' FEES, ESTIMATED PROJECTED
AND CAPACITY COMMISSIONS AND ANNUAL BENEFITS
IN WHICH SERVED BONUSES (1) (2) PAYABLE (3) (6)
All Directors and
Officers as a Group
(6 Persons) $1,342,159
Frank A. Weaner,
Chairman of the
Board and Director $ 318,781 (4) (5)
Melvin S. Gordon,
President and
Director $ 336,234 $66,960
Eugene L. Weiner,
Executive Vice-
President and
Director $ 303,584 (7)
Randy S. Gordon,
Vice-President
and Director $ 136,752 $51,480
Tracy W. Schulis,
Vice-President
and Director $ 130,685 $51,108
Mark H. Gordon,
Vice-President
and Director $ 116,123 $48,468
NOTES TO THE ABOVE TABLE
1. Personal benefits consist of charges for the personal use of
Company automobiles and PS-58 Costs.
2. A deferred compensation plan was approved by The Board of Directors
during 1995 to be funded beginning in 1996..
III-3
Item 10. Executive Compensation (Continued)
3. These amounts are computed actuarially according to the Retirement
Plan of the Company assuming certain facts as follows: a) that the
participant remains in the service of the Company until his normal
retirement date at age 65; b) that the participant's earnings
increase 4.66% annually during the remainder of his service until
retirement age subject to the maximum annual compensation limits
established by law; and c) that the plan be continued without
substantial modification.
4. Includes $21,600 paid to Mr. Weaner for monthly rental on that part of
his home used by Mr. Weaner as an office.
5. Withdrew from the retirement plan during the year ended December
31, 1984.
6. As of the latest available actuarial valuation date.
7. Received a lump-sum distribution in 1996.
S.D. Fuller, who resigned for health reasons in June, 1995, in
recognition of his 30 years of service, was awarded an annual
stipend of $10,000 for five years, or until his demise.
C (d) Options, Warrants, or Rights
On August 23, 1990, the Company granted to Director Fuller an option
to purchase 5,000 shares of the Company's treasury stock. The
option is exersiable at any time over a five year period at $5.75
per share, the bid price on the date the option was granted. This
option expired August 23, 1995 without being exercised.
(e) Long-Term Incentive Plan Awards Table
Not Applicable
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) The following table sets forth as of December 31, 1996, information
concerning the beneficial ownership of the common stock of the
Company by the persons who own, are known by the company to own,
or who the Company has been advised have filed with the S.E.C.
declarations of beneficial ownership, of more than 5% of the
outstanding common stock.
III-4
Item 11. Security Ownership of Certain Beneficial Owners and Management
(Continued)
AMOUNT & NATURE
NAME AND ADDRESS OF TITLE OF OF BENEFICIAL PERCENT
BENEFICIAL OWNER CLASS OWNERSHIP(1) OF CLASS
Frank A. Weaner Common
4901 Lyford Cay Road
Tampa, Florida Stock 146,460 28.2%
Melvin S. Gordon Common
13603 Waterfall Way
Tampa, Florida Stock 60,892 11.7
TOTAL 207,352 39.9%
(b) Beneficial ownership of common stock held by all directors and
officers of the Company as a group:
AMOUNT
AND NATURE
TITLE OF OF BENEFICIAL PERCENT
CLASS OWNERSHIP (1) OF CLASS
Directors and
Officers
As a Group Common 241,389 46.5
Frank A. Weaner Common 146,460 28.2
Melvin S. Gordon Common 60,892 11.7
Eugene L. Weiner Common 19,300 3.7
Randy S. Gordon Common 6,104 1.2
Tracy W. Schulis Common 4,571 .9
Mark H. Gordon Common 4,062 .8
(1) The nature of the beneficial ownership for all shares is sole
voting and investment power.
C The Company knows of no contractual arrangements which may at a
subsequent date result in a change in control of the Company.
III-5
Item 12. Certain Relationships and Related Transactions
None
Item 13. Exhibits and Reports on Form 8-K
PAGE
(a) Exhibit (3) - Articles of Incorporation and By-Laws Incorporated
By Reference
Exhibit (11) - Statement Re: Computation of Per
Share Earnings II - 22
Exhibit (21) - Subsidiaries of the Small Business
Issuer III - 7
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the
year ended December 31, 1996.
III-6
Item 13. Exhibit 21 - Subsidiaries of the Small Business Issuer
STATE OF
INCORPORATION
Fruit Traders, Inc. Florida
White Swan Products, Inc. Florida
Sun-Ripe Fruit Products, Inc. Florida
F.T. Properties, Inc. Florida
Paradise Growers, Inc. Florida
Pennant Fruit Products, Inc. Florida
Mor-Fruit Products, Inc. Florida
III-7
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
__________________________ PARADISE, INC.
Date
Melvin S. Gordon
President
In accordance with the Exchange Act this report has been signed below by the
following persons on behalf of the Registrant in the capacities and on the
dates indicated.
s/ Frank A. Weaner Chairman of the Board - ___________
Frank A. Weaner Principal Executive Officer Date
s/ Melvin S. Gordon President and Director ___________
Melvin S. Gordon Date
s/ Eugene L. Weiner Executive Vice President
Eugene L. Weiner And Director-Principal
Financial and Account-
ing Officer __________
Date
s/ Randy S. Gordon Vice President and
Randy S. Gordon Director ___________
Date
s/ Tracy W. Schulis Vice President and
Tracy W. Schulis Director __________
Date
s/ Mark H. Gordon Vice President and
Mark H. Gordon Director __________
Date
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> $2,426,929 $2,723,443
<SECURITIES> $0 $0
<RECEIVABLES> $1,507,965 $1,132,317
<ALLOWANCES> $0 $0
<INVENTORY> $4,039,846 $4,105,497
<CURRENT-ASSETS> $8,579,613 $8,635,863
<PP&E> $17,577,713 $16,771,772
<DEPRECIATION> $12,145,174 $11,514,234
<TOTAL-ASSETS> $14,624,888 $14,422,021
<CURRENT-LIABILITIES> $3,688,136 $3,766,906
<BONDS> $3,467,911 $3,862,560
<COMMON> $174,816 $174,816
$0 $0
$0 $0
<OTHER-SE> $7,718,051 $6,921,695
<TOTAL-LIABILITY-AND-EQUITY> $14,624,888 $14,422,021
<SALES> $20,377,066 $20,013,900
<TOTAL-REVENUES> $20,561,845 $20,162,105
<CGS> $13,735,235 $13,309,577
<TOTAL-COSTS> $13,759,410 $13,354,022
<OTHER-EXPENSES> $758,286 $798,918
<LOSS-PROVISION> $0 $0
<INTEREST-EXPENSE> $669,468 $736,613
<INCOME-PRETAX> $1,380,303 $1,156,397
<INCOME-TAX> $531,993 $433,268
<INCOME-CONTINUING> $848,310 $723,129
<DISCONTINUED> $0 $0
<EXTRAORDINARY> $0 $0
<CHANGES> $0 $0
<NET-INCOME> $848,310 $723,129
<EPS-PRIMARY> $1.63 $1.39
<EPS-DILUTED> $1.63 $1.39
</TABLE>
