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, 2000
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,
2000 1999
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,
2000 1999 *
ASSETS
CURRENT ASSETS:
Cash and Unrestricted Demand Deposits $ 38,882$ 68,914
Accounts and Notes Receivable, Less
Allowances of $-0- (2000 and 1999) 655,137 95,118
Inventories:
Raw Materials 2,477,713 2,163,589
Work in Process 34,605 0
Finished Goods 6,133,728 6,340,570
Deferred Income Tax Asset 436,616 517,085
Income Tax Refund Receivable 116,062 290,988
Prepaid Expenses and Other Current Assets 258,915 233,338
TOTAL CURRENT ASSETS 10,151,658 9,709,602
Property, Plant and Equipment, Less
Accumulated Depreciation of $14,275,947
(2000) and $13,601,636 (1999) 5,771,400 5,805,182
Deferred Charges and Other Assets 685,388 699,175
TOTAL ASSETS $ 16,608,446 $ 16,213,959
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and Trade Acceptances Payable $ 1,181,174$ 1,026,139
Current Portion of Long-Term Debt 502,645 1,114,079
Accounts Payable 1,953,791 1,243,129
Accrued Liabilities 685,061 770,439
Federal and State Income Taxes Payable 0 0
TOTAL CURRENT LIABILITIES 4,322,671 4,153,786
LONG-TERM DEBT, NET OF CURRENT PORTION 773,327 1,295,254
DEFERRED INCOME TAX LIABILITY 411,370 451,689
STOCKHOLDERS' EQUITY:
Common Stock: Auth; 2,000,000 shs. @ $.30
Par Value; Issued 582,721 (2000 AND 1999) 174,926 174,926
Capital in Excess of Par Value 1,288,793 1,288,793
Retained Earnings 9,911,564 9,123,716
Less 63,551 (2000 and 1999) shares at cost
Held in Treasury ( 274,205)( 274,205)
Total Stockholders' Equity 11,101,078 10,313,230
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 16,608,446 $16,213,959
* Restated for Comparative Purposes
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
2000 1999 *
Net Sales $ 1,384,984 $ 1,269,380
Costs and Expenses:
Cost of Goods Sold 1,444,031 1,127,290
Selling, General and Administrative Expense 643,424 605,782
Depreciation and Amortization 169,633 179,295
Interest Expense - Long Term 28,156 40,975
Total Expenses 2,285,244 1,953,342
Other Income 20,454 17,322
Earnings (loss) from Operations
Before Provision for Income Taxes ( 879,806) ( 666,640)
Provision for Income Taxes 0 0
Net Earnings (Loss) $ ( 879,806) $ ( 666,640)
Earnings (Loss) per Common Share $ (1.69) $ (1.28)
* Restated for Comparative Purposes
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,
2000 1999 *
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $( 879,806) $ ( 666,640 )
Adjustments to Reconcile Net Earnings to Net
Cash Used in Operating Activities:
Depreciation and Amortization 169,633 179,295
Decrease (Increase) in:
Accounts Receivable 2,025,645 658,354
Inventories ( 2,929,833 ) ( 2,839,254 )
Prepaid Expenses 57,159 45,040
Other Assets ( 34,212 ) ( 39,281 )
Income Tax Receivable ( 12,470 )
Increase (Decrease) in:
Accounts Payable 1,487,760 339,338
Accrued Expense ( 1,107,999 ) ( 1,201,905 )
Income Taxes Payable ( 136,530 )
Net Cash Used in Operating Activities ( 1,360,653 ) ( 3,525,053 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment ( 147,461 ) ( 567,266 )
Net Cash Used in Investing Activities ( 147,461 ) ( 567,266 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds of Short-Term Debt 980,714 813,561
Principal Payments of Long-Term Debt ( 633,379 ) ( 205,974 )
Proceeds from Issuance of Long-Term Debt 825,000
Net Cash Provided by Financing Activities 347,335 1,432,587
Net Decrease in Cash ( 1,160,779 ) ( 2,659,732 )
CASH AT BEGINNING OF PERIOD 1,199,661 2,728,646
CASH AT END OF PERIOD $ 38,882 $ 68,914
* Restated for Comparative Purposes
Page 4
PARADISE, INC. COMMISSION FILE NO. 0-3026
Item 1. Financial Statements (continued)
Earnings per common share, assuming no dilution, are based on the weighted
average number of shares outstanding during the period: 519,170 (2000 and
1999).
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 of the period reported.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Paradise, Inc. reports two major segments of business: (i) the core business
of glace'(candied) fruit, which includes all fruit-related operations and
accounted for more than 83% of total net sales during 1999, and (ii) plastics,
which represents the balance of sales, and includes all injection molding and
thermoforming operations, including the manufacture of packaging for the
Company's fruit products. Only sales to unaffiliated customers are reported.
Sales in the glace' fruit segment are highly seasonal, with approximately 80%
of total annual sales made during the period beginning the second week in
September, and ending in early November each year. However, in order to make
timely deliveries during this period of peak demand, the Company must
manufacture products for approximately ten to eleven months each year,
building large inventories and accruing expenses without significant
offsetting income, which requires large borrowings for short term working
capital. Therefore, it is normal for relatively large losses to accrue
well into the third quarter, even during years in which relatively high
earnings are reported at year-end.
It is for this reason that it is the opinion of management that only a full
year's reporting offers a reasonable basis for analysis of financial
performance. It is also the opinion of management that, due to seasonal
differences, the comparison of individual quarters is of little or no value.
Therefore, "Management's Discussion" is generally limited to comparisons of
the current year-to-date with the similar period in the preceding year.
The First Quarter
Total net sales increased in excess of 9% as compared to the first three
months during 1999. This increase occurred in the glace' fruit segment of
business, and represents a decrease in returns and "reclamation" charges for
merchandise sold during the previous year, as current period shipments
remained virtually unchanged. As reported in numerous filings and financial
statements, it is industry practice to allow return-for-full-credit of a
certain negotiated percentage of merchandise sold. It is Company practice to
estimate the magnitude of such charges, and establish a reserve for the
estimated gross profits lost. This amount is deducted from Company earnings
during the year that the sales are made.
Returns of 1998 sales during 1999 exceeded estimates. Therefore, in
contracting for 1999 sales, shipments to customers with excessive returns
during the prior year were limited by management.
Considering that only 6% of total anticipated annual sales were made during
the first quarter, the overall impact of financial performance during the
period is not considered to be of major significance.
Page 5
PARADISE, INC. COMMISSION FILE NO. 0-3026
The First Quarter (Continued)
In the plastics segment of business, sales were slightly higher (nearly 4%),
and management is optimistic that there will be a continuing upward trend in
the sale of these products.
Costs of Goods Sold increased by a higher proportion than net sales since the
net sales were affected by decreases in allowances, compared to the first
quarter of 1999, rather than increased shipments. Actually, gross margins
were reduced by some increases in factory expenses, mostly labor, utilities
and insurance. There were also some adjustments in inventory valuations
related to returned merchandise.
Selling, general and administrative expenses increased moderately, with most
of those increases reported in brokerage and sales discount expenses, which
were reduced less during the current period as a result of fewer returns,
rather than actually increased. Interest expense declined, mostly due to
average term debt being lower than that in the same period during the prior
year, and to borrowing rates continuing at favorable levels.
Our Independent Accountants' have reviewed our interim financial information and
their report, dated May 10, 2000 is included herewith on Page 7.
Summary
As a result of the above, the Company sustained a larger loss during the
period than during the first quarter of 1999. However, as outlined above,
there were very limited income producing activities during the period, and
only a very small percentage of the year's anticipated sales activities have
been recorded to date. In the opinion of management, it is far too early to
discern any trends or to forecast year-end results with any degree of accuracy.
PART II. OTHER INFORMATION
None of the item numbers on captions are applicable to this report and are,
therefore, omitted.
SIGNATURES
Pursuant to he 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 10, 2000 PARADISE, INC.
s/Melvin S. Gordon
Melvin S. Gordon, President
s/Eugene L. Weiner
Eugene L. Weiner, Executive
VicePresident,Secretary-Treasurer
Page 6
Independent Accountant's Review Report
We have reviewed the accompanying Consolidated Balance Sheets, Statements of
Income and Cash Flows of Paradise, Inc. and consolidated subsidiaries as of
March 31, 2000, and for the three-month period then ended. These financial
statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
s/Bella, Hermida, Gillman, Hancock & Mueller
BELLA, HERMIDA, GILLMAN, HANCOCK & MUELLER
May 10, 2000
Page 7
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<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> $38,882 $68,914
<SECURITIES> $0 $0
<RECEIVABLES> $655,137 $95,118
<ALLOWANCES> $0 $0
<INVENTORY> $8,646,046 $8,504,159
<CURRENT-ASSETS> $10,151,658 $9,709,602
<PP&E> $20,047,347 $19,406,818
<DEPRECIATION> $14,275,947 $13,601,636
<TOTAL-ASSETS> $16,608,446 $16,213,959
<CURRENT-LIABILITIES> $4,322,671 $4,153,786
<BONDS> $1,275,972 $2,409,333
$0 $0
$0 $0
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<OTHER-SE> $10,926,152 $10,138,304
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<SALES> $1,384,984 $1,269,380
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<CGS> $1,444,031 $1,127,290
<TOTAL-COSTS> $1,444,031 $1,127,290
<OTHER-EXPENSES> $169,633 $179,295
<LOSS-PROVISION> $0 $0
<INTEREST-EXPENSE> $28,156 $40,975
<INCOME-PRETAX> $(879,806) $(666,640)
<INCOME-TAX> $0 $0
<INCOME-CONTINUING> $(879,806) $(666,640)
<DISCONTINUED> $0 $0
<EXTRAORDINARY> $0 $0
<CHANGES> $0 $0
<NET-INCOME> $(879,806) $(666,640)
<EPS-BASIC> $(1.69) $(1.28)
<EPS-DILUTED> $(1.69) $(1.28)
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