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EXCEL - IDEA: XBRL DOCUMENT - PARADISE INC | Financial_Report.xls |
EX-31.2 - EXHIBIT 31.2 - PARADISE INC | v320243_ex31-2.htm |
EX-31.1 - EXHIBIT 31.1 - PARADISE INC | v320243_ex31-1.htm |
EX-32.2 - EXHIBIT 32.2 - PARADISE INC | v320243_ex32-2.htm |
EX-32.1 - EXHIBIT 32.1 - PARADISE INC | v320243_ex32-1.htm |
FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
x | Quarterly report pursuant to section 13 or 15(d) of the Securities Act of 1934. |
For the quarterly period ended June 30, 2012
or
¨ | Transition report pursuant to section 13 or 15(d) of the Securities Act of 1934. |
Commission File No. 0-3026
PARADISE, INC.
INCORPORATED IN FLORIDA
I.R.S. EMPLOYER IDENTIFICATION NO. 59-1007583
1200 DR. MARTIN LUTHER KING, JR. BLVD.,
PLANT CITY, FLORIDA 33563
(813) 752-1155
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 and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer | ¨ | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x
The number of shares outstanding of each of the issuer’s classes of common stock as of August 13, 2012 was 519,600 shares.
PARADISE, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012
INDEX
PAGE | ||
PART I. | FINANCIAL INFORMATION | |
ITEM 1. | ||
CONSOLIDATED BALANCE SHEETS: | ||
Assets | ||
As of June 30, 2012 (Unaudited), December 31, 2011 and June 30, 2011 (Unaudited) | 2 | |
Liabilities and Stockholders’ Equity | ||
As of June 30, 2012 (Unaudited), December 31, 2011 and June 30, 2011 (Unaudited) | 3 | |
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED): | ||
For the three-month periods ended June 30, 2012 and 2011 | 4 | |
For the six-month periods ended June 30, 2012 and 2011 | 5 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED): | ||
For the six-month periods ended June 30, 2012 and 2011 | 6 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 7 – 9 | |
ITEM 2. | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL | ||
CONDITION AND RESULTS OF OPERATIONS | 10 – 13 | |
ITEM 3. | ||
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK – N/A 13 | ||
ITEM 4. | ||
CONTROLS AND PROCEDURES | 13 | |
PART II. | OTHER INFORMATION | |
ITEMS 1 – 6. | 14 | |
SIGNATURES | 15 |
PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF | AS OF | |||||||||||
JUNE 30, | AS OF | JUNE 30, | ||||||||||
2012 | DECEMBER 31, | 2011 | ||||||||||
(UNAUDITED) | 2011 | (UNAUDITED) | ||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash | $ | 1,053,707 | $ | 7,468,908 | $ | 932,937 | ||||||
Accounts Receivable, | ||||||||||||
Less, Allowances of $0 (06/30/12), | ||||||||||||
$1,003,779 (12/31/11) and $0 (06/30/11) | 1,500,421 | 2,579,362 | 1,196,578 | |||||||||
Inventories: | ||||||||||||
Raw Materials | 4,465,783 | 2,214,455 | 3,311,930 | |||||||||
Work in Process | 417,867 | 558,899 | 506,921 | |||||||||
Finished Goods | 8,624,074 | 3,423,163 | 8,385,301 | |||||||||
Deferred Income Tax Asset | 260,325 | 234,912 | 417,271 | |||||||||
Prepaid Expenses and Other Current Assets | 585,437 | 295,413 | 667,065 | |||||||||
Total Current Assets | 16,907,614 | 16,775,112 | 15,418,003 | |||||||||
Property, Plant and Equipment, | ||||||||||||
Less, Accumulated Depreciation of | ||||||||||||
$18,744,791 (06/30/12), $18,505,964 (12/31/11) | ||||||||||||
and $18,260,361 (06/30/11) | 4,046,628 | 4,184,046 | 4,326,558 | |||||||||
Goodwill | 413,280 | 413,280 | 413,280 | |||||||||
Customer Base and Non-Compete Agreement | 502,690 | 565,632 | 628,575 | |||||||||
Other Assets | 236,269 | 222,663 | 240,968 | |||||||||
TOTAL ASSETS | $ | 22,106,481 | $ | 22,160,733 | $ | 21,027,384 |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
2 |
AS OF | AS OF | |||||||||||
JUNE 30, | AS OF | JUNE 30, | ||||||||||
2012 | DECEMBER 31, | 2011 | ||||||||||
(UNAUDITED) | 2011 | (UNAUDITED) | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Letter of Credit | $ | 731,698 | $ | 313,246 | $ | 720,151 | ||||||
Accounts Payable | 1,353,224 | 358,851 | 1,315,330 | |||||||||
Accrued Liabilities | 268,075 | 1,218,289 | 476,898 | |||||||||
Income Taxes Payable | - | 370,678 | - | |||||||||
Total Current Liabilities | 2,352,997 | 2,261,064 | 2,512,379 | |||||||||
DEFERRED INCOME TAX LIABILITY | 165,891 | 165,891 | 147,355 | |||||||||
Total Liabilities | 2,518,888 | 2,426,955 | 2,659,734 | |||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||
Common Stock: $0.30 Par Value, | ||||||||||||
2,000,000 Shares Authorized, | ||||||||||||
583,094 Shares Issued, | ||||||||||||
519,600 Shares Outstanding | 174,928 | 174,928 | 174,928 | |||||||||
Capital in Excess of Par Value | 1,288,793 | 1,288,793 | 1,288,793 | |||||||||
Retained Earnings | 18,678,336 | 18,824,521 | 17,458,393 | |||||||||
Accumulated Other Comprehensive Loss | (281,245 | ) | (281,245 | ) | (281,245 | ) | ||||||
Treasury Stock, at Cost, | ||||||||||||
63,494 Shares | (273,219 | ) | (273,219 | ) | (273,219 | ) | ||||||
Total Stockholders’ Equity | 19,587,593 | 19,733,778 | 18,367,650 | |||||||||
TOTAL LIABILITIES AND | ||||||||||||
STOCKHOLDERS’ EQUITY | $ | 22,106,481 | $ | 22,160,733 | $ | 21,027,384 |
3 |
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED | ||||||||
JUNE 30, | ||||||||
2012 | 2011 | |||||||
Net Sales | $ | 2,584,521 | $ | 2,151,697 | ||||
Costs and Expenses: | ||||||||
Cost of Goods Sold | 2,014,406 | 1,487,986 | ||||||
Selling, General and Administrative Expense | 811,562 | 705,566 | ||||||
Amortization Expense | 35,972 | 35,972 | ||||||
Total Costs and Expenses | 2,861,940 | 2,229,524 | ||||||
Loss from Operations | (277,419 | ) | (77,827 | ) | ||||
Other (Loss) Income | (6,179 | ) | 44,532 | |||||
Loss Before Income Taxes | (283,598 | ) | (33,295 | ) | ||||
Income Tax Benefit | 112,101 | 12,651 | ||||||
Net Loss | $ | (171,497 | ) | $ | (20,644 | ) | ||
Loss per Common Share (Basic and Diluted) | $ | (0.33 | ) | $ | (0.04 | ) | ||
Dividend per Common Share | $ | 0.20 | $ | 0.10 |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
4 |
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED | ||||||||
JUNE 30, | ||||||||
2012 | 2011 | |||||||
Net Sales | $ | 5,853,391 | $ | 4,770,636 | ||||
Costs and Expenses: | ||||||||
Cost of Goods Sold | 4,301,901 | 3,600,156 | ||||||
Selling, General and Administrative Expense | 1,617,087 | 1,511,426 | ||||||
Amortization Expense | 71,943 | 71,943 | ||||||
Total Costs and Expenses | 5,990,931 | 5,183,525 | ||||||
Loss from Operations | (137,540 | ) | (412,889 | ) | ||||
Other Income | 70,665 | 198,601 | ||||||
Loss Before Income Taxes | (66,875 | ) | (214,288 | ) | ||||
Income Tax Benefit | 25,413 | 81,430 | ||||||
Net Loss | $ | (41,462 | ) | $ | (132,858 | ) | ||
Loss per Common Share (Basic and Diluted) | $ | (0.08 | ) | $ | (0.26 | ) | ||
Dividend per Common Share | $ | 0.20 | $ | 0.10 |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
5 |
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED | ||||||||
JUNE 30, | ||||||||
2012 | 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Loss | $ | (41,462 | ) | $ | (132,858 | ) | ||
Adjustments to Reconcile Net Loss to | ||||||||
Net Cash Used in Operating Activities: | ||||||||
Depreciation and Amortization | 310,771 | 333,302 | ||||||
Provision for Deferred Income Taxes | (25,413 | ) | (191,330 | ) | ||||
Decrease (Increase) in: | ||||||||
Accounts Receivable | 1,078,941 | 2,423,157 | ||||||
Inventories | (7,311,207 | ) | (6,157,568 | ) | ||||
Prepaid Expenses | (290,024 | ) | (318,656 | ) | ||||
Other Assets | (22,606 | ) | (65,898 | ) | ||||
Increase (Decrease) in: | ||||||||
Accounts Payable | 993,571 | 1,010,673 | ||||||
Accrued Expense | (950,214 | ) | (758,625 | ) | ||||
Income Taxes Payable | (370,678 | ) | (152,009 | ) | ||||
Net Cash Used in Operating Activities | (6,628,321 | ) | (4,009,812 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of Property and Equipment | (101,412 | ) | (249,662 | ) | ||||
Net Cash Used in Investing Activities | (101,412 | ) | (249,662 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Net Proceeds from Letter of Credit | 418,452 | 472,315 | ||||||
Dividends Paid | (103,920 | ) | (51,960 | ) | ||||
Net Cash Provided by Financing Activities | 314,532 | 420,355 | ||||||
NET DECREASE IN CASH | (6,415,201 | ) | (3,839,119 | ) | ||||
CASH, AT BEGINNING OF PERIOD | 7,468,908 | 4,772,056 | ||||||
CASH, AT END OF PERIOD | $ | 1,053,707 | $ | 932,937 | ||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
Cash paid for: | ||||||||
Income Tax | $ | 410,000 | $ | 259,900 |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
6 |
PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 | BASIS OF PRESENTATION |
The accompanying unaudited consolidated financial statements of Paradise, Inc. (the “Company”) have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
The information furnished herein reflects all adjustments and accruals that management believes is necessary to fairly state the operating results for the respective periods. The notes to the unaudited consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, 2011. The Company’s management believes that the disclosures are sufficient for interim financial reporting purposes.
Consumer demand for glace’ fruit product is traditionally strongest during the Thanksgiving and Christmas season. Almost 80% of glace’ fruit product sales are recorded during an eight to ten week period beginning in mid September. Therefore, the operating results for the six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the current year.
Certain minor reclassifications have been made to the consolidated unaudited statements of operations for the quarter ended June 30, 2011 to conform to the classifications used for the quarter ended June 30, 2012.
NOTE 2 | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
In May 2011, the FASB issued ASU 2011-04 Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The ASU expands ASC Topic 820’s existing disclosure requirements for fair value measurements and makes other amendments that could change how the fair value measurement guidance in ASC Topic 820 is applied. The ASU is effective for the Company for the interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements or disclosures.
In June 2011, the FASB issued ASU 2011-05 Presentation of Comprehensive Income, which revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU is effective for the Company for the interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements or disclosures.
Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE3 | LOSS PER COMMON SHARE |
Basic and diluted loss per common share are based on the weighted average number of shares outstanding and assumed to be outstanding of 519,600. There are no dilutive securities outstanding.
7 |
PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4 | BUSINESS SEGMENT DATA |
The Company’s operations are conducted through two business segments. These segments, and the primary operations of each, are as follows:
Business Segment | Operation | |
Fruit | Production of candied fruit, a basic fruitcake ingredient, sold to manufacturing bakers, institutional users, and retailers for use in home baking. Also, based on market conditions, the processing of frozen strawberry products, for sale to commercial and institutional users such as preservers, dairies, drink manufacturers, etc. | |
Molded Plastics | Production of plastics containers and other molded plastics for sale to various food processors and others. |
June 30, | June 30, | |||||||
2012 | 2011 | |||||||
Net Sales in Each Segment | ||||||||
Fruit: | ||||||||
Sales to Unaffiliated Customers | $ | 1,234,522 | $ | 931,841 | ||||
Molded Plastics: | ||||||||
Sales to Unaffiliated Customers | 4,618,869 | 3,838,795 | ||||||
Net Sales | $ | 5,853,391 | $ | 4,770,636 |
For the six month period ended June 30, 2012 and 2011, sales of frozen strawberry products totaled $521,952 and $322,533, respectively.
The Company does not account for intersegment transfers as if the transfers were to third parties.
The Company does not prepare operating profit or loss information on a segment basis for internal use, until the end of each year. Due to the seasonal nature of the fruit segment, management believes that it is not practical to prepare this information for interim reporting purposes. Therefore, reporting is not required by accounting principles generally accepted in the United States of America.
8 |
PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4 | BUSINESS SEGMENT DATA (CONTINUED) |
June 30, | June 30, | |||||||
2012 | 2011 | |||||||
Identifiable Assets of Each Segment | ||||||||
are Listed Below: | ||||||||
Fruit | $ | 14,092,137 | $ | 12,856,977 | ||||
Molded Plastics | 5,141,204 | 5,159,847 | ||||||
Identifiable Assets | 19,233,341 | 18,016,824 | ||||||
General Corporate Assets | 2,873,140 | 3,010,560 | ||||||
Total Assets | $ | 22,106,481 | $ | 21,027,384 |
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 buildings.
9 |
PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
PART I. | FINANCIAL INFORMATION |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Forward–Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact should be considered “forward-looking statements” for the purpose of these provisions, including statements that include projections of, or expectations about, earnings, revenues or other financial items, statements about our plans and objectives for future operations, statements concerning proposed new products or services , statements regarding future economic conditions or performance, statements concerning our expectations regarding the attraction and retention of customers, statements about market risk and statements underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of such terminology as “may”, “will”, “expects”, “potential”, or “continue”, or the negative thereof or other similar words. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Actual results and developments are likely to be different from, and may be materially different from, those expressed or implied by our forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties.
Overview
Paradise, Inc.’s main business segment, glace’ fruit, a prime ingredient of fruitcakes and other holiday confections, represented 68.9% of total net sales for the previous year of 2011. These products are sold to manufacturing bakers, institutional users, supermarkets and other retailers throughout the country. Consumer demand for glace’ fruit product is traditionally strongest during the Thanksgiving and Christmas season. Almost 80% of glace’ fruit product sales are recorded from the eight to ten weeks beginning in mid September.
Since the majority of the Company’s customers require delivery of glace’ candied fruit products during this relatively short period of time, Paradise, Inc. must operate at consistent levels of production from as early as January through the middle of November of each year in order to meet peak demands. Furthermore, the Company must make substantial borrowings of short-term working capital to cover the cost of raw materials, factory overhead and labor expense associated with production for inventory. This combination of building and financing inventories during the year, without the opportunity to record any significant fruit product income, results in the generation of operating losses well into the third quarter of each year. Therefore, it is the opinion of management that meaningful forecasts of annual net sales or profit levels require analysis of a full year’s operations.
In addition, comparison of current quarterly results to the preceding quarter produces an incomplete picture on the Company’s performance due to year-to-year changes in production schedules, seasonal harvests and availability of raw materials, and in the timing of customer orders and shipments. Thus, the discussion of information presented within this report is focused on the review of the Company’s current year-to-date results as compared to the similar period last year.
Paradise, Inc.’s other business segment, Paradise Plastics, Inc., a wholly owned subsidiary of Paradise, Inc. produces custom molding products, is not subject to the seasonality of the glace’ fruit business. This segment represents all injection molding and thermoforming operations, including the packaging for the Company’s fruit products. Only sales to unaffiliated customers are reported.
10 |
PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
PART I. | FINANCIAL INFORMATION |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) |
The First Six Months
Paradise, Inc.’s fruit segment net sales for the first six months of 2012 increased 32.5% to $1,234,522 from $931,841 for the similar reporting period of 2011. Paradise, Inc.’s fruit segment sales are very seasonal in nature as net sales for the first six months of the year have historically represented less than 10% of annual net sales. The primary sales activity within this segment for the first six months of the year relates to bulk fruit orders received and shipped to supermarkets and manufacturing bakeries. The remaining volume of sales activity consists of the sale of finished strawberry products produced exclusively for a local Plant City, Florida distributor during late March and early April of each year. For a tolling fee, Paradise, Inc. will receive and process fresh strawberries on behalf of this distributor. Tolling charges earned during the first six months of 2012 were $521,952 compared to $322,533 for the similar reporting period of 2011.
Paradise Plastics, Inc.’s net sales to unaffiliated customers during the first six months of 2012 increased 20.3% to $4,618,869 from $3,838,795 compared to the similar reporting period of 2011. This increase is related to two long term customers who have received a greater demand for their products during the first two quarters of 2012. This increase in Paradise Plastics, Inc.’s net sales as of June 30, 2012 is also directly responsible for the $303,843 increase in Accounts Receivable as of June 30, 2012 compared to the similar reporting period of June 30, 2011. Management has reviewed all receivable balances as of the date of this filing and considers all accounts to be fully collectible.
Consolidated cost of sales, as a percentage of net sales, decreased 2.0% during the first six months of 2012 compared to the similar reporting period of 2011 as the Company has benefited from the stabilization of utilities cost for natural gas and other fuels during the first six months of 2012 compared to 2011. However, it is important to note that with less than 30% of Paradise, Inc.’s retail glace’ fruit inventory produced as of June 30, 2012, it still too early to forecast with any reasonable certainty cost of sales as it relates to a percentage of consolidated sales until a full year’s inventory production cycle is completed.
Selling, general and administrative expenses for the first six months of 2012 increased 7.0% compared to the previous year’s reporting period of 2011. The increase in expenses such as advertising, brokerage and freight out expenses can be directly attributable to the growth reflected above in net sales for Paradise, Inc.’s fruit and plastics segment during the first six months of 2012.
Paradise, Inc.’s interest expense for the six months ended June 30, 2012 was $0. This was the same as of June 30, 2011. As reported in previous filings, Paradise, Inc. renewed its revolving line of credit on June 30, 2011 for a two year period. Terms of the renewal are similar to the previous agreement. Paradise, Inc.’s revolving line of credit has a maximum limit of $12,000,000 with a borrowing base of 80% of the Company’s eligible receivables plus up to 50% of the Company’s eligible inventory. Interest is payable monthly at the bank’s LIBOR rate plus 1.9% or a floor rate of 3%, whichever is greater.
Other Significant Items
Other Income for the six months ended June 30, 2012 was $70,665 compared to $198,601 for the six months ended June 30, 2011. As mentioned in previous filings, on February 22, 2011, Paradise, Inc. received $150,000 from a former supplier to settle a dispute dating back to September, 2004. This amount is reflected as part of Other Income on the Company’s income statement. All legal expenses incurred by Paradise, Inc. as a result of this settlement have been paid.
Inventory as of June 30, 2012 totaled $13,507,724 compared to $12,204,152 as of June 30, 2011. This increase is primarily due to timing differences as the receipt of various raw fruit materials received during the first six months of 2012 outpaced deliveries of raw fruit materials received during the comparable period of 2011.
11 |
PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
PART I. | FINANCIAL INFORMATION |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) |
Other Significant Items (Continued)
We finance our ongoing operations primarily with cash provided by our operating activities which are seasonal in nature. Our principal sources of liquidity are our cash flows provided by operating activities, our existing cash, and a line of credit facility. At June 30, 2012 and December 31, 2011, we had $1,053,707 and $7,468,908, respectively, in cash. Additionally, we have a revolving line of credit with a maximum limit of $12 million and a borrowing limit of 80% of the Company’s eligible receivables plus 50% of the Company’s eligible inventory, of which $0 was outstanding at June 30, 2012 and December 31, 2011. Within this agreement there are letters of credit with a limit of $1,200,000, of which $731,698 was outstanding at June 30, 2012 and $313,246 at December 31, 2011. Net cash used in operating activities increased from $4,009,812 for the six months ended June 30, 2011 compared to $6,628,321 for the six months ended June 30, 2012. The primary reasons for this increase are as follows; income tax payments made during the first six months for 2012 were $150,100 greater than the first six months of 2011; payments for the purchase of inventory increased $1,153,639 and Accounts Receivable payments received from Paradise, Inc.’s customers during the first six months of 2012 were $1,344,216 less than the similar reporting period of 2011.
Summary
Paradise Inc.’s consolidated net sales increased $1,082,755 representing an increase of 22.7% for the first six months of 2012 compared to the similar reporting period of 2011. The primary reason for this positive change has been an increase in demand from several long term customers within the Plastics segment. However, as mentioned and disclosed in all previous interim filings, due to the highly seasonal nature of the Company’s primary product, glace’ fruit, which accounts for approximately 70% of consolidated annual revenue, no meaningful financial analysis may be developed from Paradise, Inc.’s interim reporting results. Only a full year’s accounting of revenue and expenses will provide the necessary information to determine the Company’s financial performance.
Critical Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assessments, estimates and assumptions that affect the amounts reported in the consolidated financial statements. We evaluate the accounting policies and estimates used to prepare the consolidated financial statements on an ongoing basis. Critical accounting estimates are those that require management’s most difficult, complex, or subjective judgments and have the most potential to impact our financial position and operating results. For a detailed discussion of our critical accounting estimates, see our Annual Report on Form 10-K for the year ended December 31, 2011. There have been no material changes to our critical accounting estimates during the six months ended June 30, 2012.
12 |
PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
PART I. | FINANCIAL INFORMATION |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) |
Recently Issued Accounting Pronouncements
In May 2011, the FASB issued new guidance that expands existing disclosure requirements for fair value measurements and makes other amendments that could change how the fair value measurement guidance is applied. The guidance is effective for us for the interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have an impact on us.
In June 2011, the FASB issued new guidance that revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The guidance is effective for us for the interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have an impact on us.
We do not believe that other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the Securities and Exchange Commission will have a material impact on the Company’s present or future consolidated financial statements.
Item 3. | Quantitative and Qualitative Disclosure and Market Risk – N/A |
Item 4. | Controls and Procedures |
The Company’s Chief Executive Officer and Chief Financial Officer have, within 90 days of the filing date of this quarterly report, evaluated the Company’s disclosure controls and procedures. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded, as of June 30, 2012, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms. During the year ended December 31, 2010, the Company identified a weakness in internal control over the timing of issuing credit memos for products returned into inventory. Procedures were established during the six months ended June 30, 2011 to ensure the timeliness of issuing credit memos when products are returned. There were no other changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The most recent evaluation of these controls by the Company’s Chief Executive Officer and Chief Financial Officer did not identify any additional deficiencies or weaknesses in the Company’s internal controls over financial reporting; therefore, no corrective actions were taken.
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PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
PART II. | OTHER INFORMATION |
Item 1. | Legal Proceedings – N/A |
Item 1A. | Risk Factors – N/A |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds – N/A |
Item 3. | Defaults Upon Senior Securities – N/A |
Item 4. | Mine Safety Disclosures – N/A |
Item 5. | Other Information – N/A |
Item 6. | Exhibits and Reports on Form 8-K |
(a) | Exhibits |
Exhibit |
Description |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(b) | Reports on Form 8-K. |
None.
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PARADISE, INC. | COMMISSION FILE NO. 0-3026 |
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.
PARADISE, INC. | |||
A Florida Corporation | |||
/s/ Melvin S. Gordon | Date: August 13, 2012 | ||
Melvin S. Gordon | |||
Chief Executive Officer and Chairman | |||
/s/ Jack M. Laskowitz | Date: August 13, 2012 | ||
Jack M. Laskowitz | |||
Chief Financial Officer and Treasurer |
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