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, 1998
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,
1998 1997
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,
1998 1997
ASSETS
CURRENT ASSETS
Cash and Unrestricted Demand Deposits $ 416,016 $ 36,793
Accounts and Notes Receivable, Less
Allowances of $-0- (1998 and 1997) 884,927 930,640
Inventories:
Raw Materials 1,809,160 2,048,545
Work in Process 270,403 85,596
Finished Goods 4,297,632 3,788,653
Deferred Income Tax Asset 239,453 264,006
Income Tax Refund Receivable 68,403
Prepaid Expenses and Other Current Assets 154,527 223,567
TOTAL CURRENT ASSETS 8,140,521 7,377,800
Real Estate Investment, at Cost 261,848 261,848
Property, Plant and Equipment, Less
Accumulated Depreciation of $12,979,305
(1998) and $12,312,013 (1997) 5,502,628 5,515,834
Deferred Charges and Other Assets 468,544 395,655
TOTAL ASSETS $14,373,541 $13,551,137
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes and Trade Acceptances Payable $ 137,268 $ 209,906
Current Portion of Long-Term Debt 987,220 933,022
Accounts Payable 1,736,947 1,471,070
Accrued Liabilities 704,171 856,210
Federal and State Income Taxes Payable 0 0
TOTAL CURRENT LIABILITIES 3,567,606 3,470,208
LONG-TERM DEBT, NET OF CURRENT PORTION 1,575,916 2,232,780
DEFERRED INCOME TAX LIABILITY 493,656 507,722
STOCKHOLDERS' EQUITY
Common Stock: Auth; 2,000,000 shs. @ $.30
Par Value; Issued 582,721 (1998 and 1997) 174,926 174,926
Capital in Excess of Par Value 1,288,793 1,288,793
Retained Earnings 7,546,849 6,150,913
Less 63,551 (1998 and 1997) shares at cost
Held in Treasury ( 274,205) ( 274,205)
Total Stockholders' Equity 8,736,363 7,340,427
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $14,373,541 $13,551,137
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
1998 1997
Net Sales $ 1,326,374 $ 1,403,244
Costs and Expenses:
Cost of Goods Sold 877,220 1,136,574
Selling, General and Admin. Expense 550,377 588,158
Depreciation and Amortization 180,267 176,775
Interest Expense - Long Term 54,792 77,078
Interest Expense - Short Term 0 2,088
Total Expenses 1,662,656 1,980,673
Other Income 25,483 24,844
Earnings (Loss) from Operations
Before Provision for Income Taxes ( 310,799) ( 552,545)
Provision for Income Taxes 0 0
Net Earnings (Loss) $( 310,799) $( 552,545)
Earnings (Loss) per Common Share $(0.60) $(1.06)
Page 3
PARADISE, INC. COMMISSION FILE NO. 0-3026
Item1. Financial Statements (Continued)
(a) (1) CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings (Loss) $( 310,799) $( 552,545)
Adjustments to Reconcile Net Earnings (Loss) to Net
Cash Used in Operating Activities:
Depreciation and Amortization 180,254 176,775
Decrease (Increase) in:
Accounts Receivable 1,096,478 577,325
Inventories (2,861,682) (1,882,948)
Prepaid Expenses 44,698 117,405
Increase (Decrease) in:
Income Tax Receivable ( 67,084)
Accounts Payable 1,369,228 803,464
Accrued Expense (1,288,855) ( 798,114)
Income Taxes Payable ( 100,916) ( 176,958)
Net Cash Used in Operating Activities (1,938,678) (1,735,596)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment ( 196,196) ( 250,134)
Net Cash Used in Investing Activities ( 196,196) ( 250,134)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Repayments of Short-Term Debt ( 18,534) ( 47,594)
Principal Payments of Long-Term Debt ( 246,584) ( 302,109)
Decrease (Increase) in Other Assets ( 0) ( 54,703)
Net Cash Used in Financing Activities ( 265,118) ( 404,406)
Net Decrease in Cash (2,399,992) (2,390,136)
CASH AT BEGINNING OF PERIOD 2,816,008 2,426,929
CASH AT END OF PERIOD $ 416,016 $ 36,793
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
(1998 and 1997).
(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 87% of the
Company's total sales during 1997. 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 for relatively large amounts of
interim working capital, which are borrowed on a revolving bank credit
accomodation, 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.
Characteristically, operations were limited during the first quarter,
with net sales ($1.3+ Million) amounting to only 6% of total sales made
during 1997 ($22 Million). For the quarter only, this represents a 5%
decline from the first quarter of the prior year, and was due primarily
to a greater value of returns of prior year sales during the quarter.
It will be noted that these returns did not have a negative impact on
earnings (loss), due to reserves set aside in anticipation of these
returns during the year ended December 31, 1997. In the plastics
molding segment of business, which represented 13% of 1997 total net
sales, sales increased by 8%, compared to the same period last year.
During the period, costs pf goods sold were a smaller percentage of
sales (79%) than the similar period last year (92%), mostly because of
the adjustments made to inventory valuations from the reserve for
returns, mentioned above.
Page 5
PARADISE, INC. COMMISSION FILE NO. 0-3026
General, administrative and selling expenses were reduced by about 6%,
mostly by line items directly related to the decline in net sales.
Interest expense decreased by 31% because the larger availability
of cash at year-end eliminated the need for short term borrowings during
the quarter. Depreciation and amortization remained relatively unchanged.
Earnings (loss) show a positive trend, but as outlined above, are due
more to accounting transactions than to operating activity. As always,
management recommends examination of annual reporting, rather than
quarterly data, for comprehensive analysis of operating results.
PART II. OTHER INFORMATION
During 1997, the Securities and Exchange Commission issued new listing
requirements for companies listed on the NASDAQ Small Cap Market, which
became effective on February 23, 1998. The Company failed to meet the
new criteria relative to total shares outstanding, number of "round lot"
holders, and board of directors composition, and was delisted.
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 13, 1998 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-31-1998 DEC-31-1997
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