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EXCEL - IDEA: XBRL DOCUMENT - PARADISE INC | Financial_Report.xls |
EX-31.2 - EXHIBIT 31.2 - PARADISE INC | v343651_ex31-2.htm |
EX-31.1 - EXHIBIT 31.1 - PARADISE INC | v343651_ex31-1.htm |
EX-32.1 - EXHIBIT 32.1 - PARADISE INC | v343651_ex32-1.htm |
EX-32.2 - EXHIBIT 32.2 - PARADISE INC | v343651_ex32-2.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 March 31, 2013
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 May 15, 2013 was 519,600 shares.
PARADISE, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
INDEX
PAGE | ||
PART I. | FINANCIAL INFORMATION | |
ITEM 1. | ||
CONSOLIDATED BALANCE SHEETS: | ||
Assets | ||
As of March 31, 2013 (Unaudited), December 31, 2012 and March 31, 2012 (Unaudited) | 2 | |
Liabilities and Stockholders’ Equity | ||
As of March 31, 2013 (Unaudited), December 31, 2012 and March 31, 2012 (Unaudited) | 3 | |
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED): | ||
For the three-month periods ended March 31, 2013 and 2012 | 4 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED): | ||
For the three-month periods ended March 31, 2013 and 2012 | 5 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 6 8 | |
ITEM 2. | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 9 12 | |
ITEM 3. | ||
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK N/A | 12 | |
ITEM 4. | ||
CONTROLS AND PROCEDURES | 12 | |
PART II. | OTHER INFORMATION | |
ITEMS 1 6. | 13 | |
SIGNATURES | 14 |
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 | | |||
| | MARCH 31, | | AS OF | | MARCH 31, | | |||
| | 2013 | | DECEMBER 31, | | 2012 | | |||
| | (UNAUDITED) | | 2012 | | (UNAUDITED) | | |||
| | | | | | | | | | |
ASSETS | | | | | | | | | | |
| | | | | | | | | | |
CURRENT ASSETS: | | | | | | | | | | |
| | | | | | | | | | |
Cash | | $ | 4,816,706 | | $ | 6,384,087 | | $ | 5,532,943 | |
Accounts Receivable, Less, Allowances of $0 (03/31/13),$1,562,556 (12/31/12) and $0 (03/31/12) | | | 1,742,535 | | | 1,893,160 | | | 1,926,687 | |
Inventories: | | | | | | | | | | |
Raw Materials and supplies | | | 4,304,019 | | | 2,499,430 | | | 3,766,404 | |
Work in Process | | | 108,946 | | | 561,043 | | | 7,449 | |
Finished Goods | | | 6,978,282 | | | 5,795,906 | | | 4,951,215 | |
Income Tax Receivable | | | 150,219 | | | 225,794 | | | - | |
Deferred Income Tax Asset | | | 152,250 | | | 152,250 | | | 234,912 | |
Prepaid Expenses and Other Current Assets | | | 150,948 | | | 296,728 | | | 195,868 | |
| | | | | | | | | | |
Total Current Assets | | | 18,403,905 | | | 17,808,398 | | | 16,615,478 | |
| | | | | | | | | | |
Property, Plant and Equipment, Less, Accumulated Depreciation of $18,569,676 (03/31/13), $18,454,410 (12/31/12)and $18,628,310 (03/31/12) | | | 3,984,192 | | | 3,946,124 | | | 4,072,874 | |
Goodwill | | | 413,280 | | | 413,280 | | | 413,280 | |
Customer Base and Non-Compete Agreement | | | 408,276 | | | 439,747 | | | 534,161 | |
Other Assets | | | 253,477 | | | 281,935 | | | 269,622 | |
| | | | | | | | | | |
TOTAL ASSETS | | $ | 23,463,130 | | $ | 22,889,484 | | $ | 21,905,415 | |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
2
| | AS OF | | | | AS OF | | |||
| | MARCH 31, | | AS OF | | MARCH 31, | | |||
| | 2013 | | DECEMBER 31, | | 2012 | | |||
| | (UNAUDITED) | | 2012 | | (UNAUDITED) | | |||
| | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | |
| | | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | | | |
| | | | | | | | | | |
Short term debt | | $ | 799,786 | | $ | 515,866 | | $ | 631,230 | |
Accounts Payable | | | 1,324,236 | | | 375,067 | | | 769,648 | |
Accrued Liabilities | | | 385,953 | | | 1,093,698 | | | 531,387 | |
Income Taxes Payable | | | - | | | - | | | 47,366 | |
| | | | | | | | | | |
Total Current Liabilities | | | 2,509,975 | | | 1,984,631 | | | 1,979,631 | |
| | | | | | | | | | |
DEFERRED INCOME TAX LIABILITY | | | 272,063 | | | 272,063 | | | 165,891 | |
| | | | | | | | | | |
Total Liabilities | | | 2,782,038 | | | 2,256,694 | | | 2,145,522 | |
| | | | | | | | | | |
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 | | | 19,490,590 | | | 19,442,288 | | | 18,569,391 | |
Treasury Stock, at Cost, 63,494 Shares | | | (273,219) | | | (273,219) | | | (273,219) | |
| | | | | | | | | | |
Total Stockholders’ Equity | | | 20,681,092 | | | 20,632,790 | | | 19,759,893 | |
| | | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 23,463,130 | | $ | 22,889,484 | | $ | 21,905,415 | |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
3
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| | FOR THE THREE MONTHS ENDED | | ||||
| | MARCH 31, | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
Net Sales | | $ | 3,061,604 | | $ | 3,268,870 | |
| | | | | | | |
Costs and Expenses: | | | | | | | |
Cost of Goods Sold | | | 2,040,555 | | | 2,287,495 | |
Selling, General and Administrative Expense | | | 884,858 | | | 805,525 | |
Amortization Expense | | | 35,971 | | | 35,971 | |
| | | | | | | |
Total Costs and Expenses | | | 2,961,384 | | | 3,128,991 | |
| | | | | | | |
Income from Operations | | | 100,220 | | | 139,879 | |
| | | | | | | |
Other Income | | | 101,600 | | | 76,844 | |
| | | | | | | |
Income Before Income Taxes | | | 201,820 | | | 216,723 | |
| | | | | | | |
Income Tax Expense | | | 75,575 | | | 86,688 | |
| | | | | | | |
Net Income | | $ | 126,245 | | $ | 130,035 | |
| | | | | | | |
Income per Common Share (Basic and Diluted) | | $ | 0.24 | | $ | 0.25 | |
| | | | | | | |
Dividend per Common Share | | $ | 0.15 | | $ | 0.20 | |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
4
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | FOR THE THREE MONTHS ENDED | | ||||
| | MARCH 31, | | ||||
| | 2013 | | 2012 | | ||
| | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | |
Net Income | | $ | 126,245 | | $ | 130,035 | |
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities: | | | | | | | |
Depreciation and Amortization | | | 151,237 | | | 158,315 | |
Decrease (Increase) in: | | | | | | | |
Accounts Receivable | | | 150,625 | | | 652,675 | |
Inventories | | | (2,534,868) | | | (2,528,551) | |
Prepaid Expenses and Other Current Assets | | | 145,778 | | | 99,545 | |
Income Tax Receivable | | | 75,575 | | | - | |
Other Assets | | | 23,958 | | | (51,459) | |
Increase (Decrease) in: | | | | | | | |
Accounts Payable | | | 949,169 | | | 410,798 | |
Accrued Liabilities | | | (785,685) | | | (790,822) | |
Income Taxes Payable | | | - | | | (323,312) | |
| | | | | | | |
Net Cash Used in Operating Activities | | | (1,697,966) | | | (2,242,776) | |
| | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | |
Purchase of Property and Equipment | | | (153,335) | | | (11,173) | |
| | | | | | | |
Net Cash Used in Investing Activities | | | (153,335) | | | (11,173) | |
| | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | |
Net Proceeds from Short term Debt | | | 283,920 | | | 317,984 | |
| | | | | | | |
Net Cash Provided by Financing Activities | | | 283,920 | | | 317,984 | |
| | | | | | | |
NET DECREASE IN CASH | | | (1,567,381) | | | (1,935,965) | |
| | | | | | | |
CASH, AT BEGINNING OF PERIOD | | | 6,384,087 | | | 7,468,908 | |
| | | | | | | |
CASH, AT END OF PERIOD | | $ | 4,816,706 | | $ | 5,532,943 | |
| | | | | | | |
SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | |
Cash paid for: | | | | | | | |
Income Tax | | $ | - | | $ | 410,000 | |
| | | | | | | |
Noncash financing activity: | | | | | | | |
Dividends Declared | | $ | 77,940 | | $ | 103,920 | |
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
5
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 only the adjustments and accruals of a normal recurring nature 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, 2012. 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 three months ended March 31, 2013 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 financial statements for the quarter ended March 31, 2012 to conform to the classifications used for the quarter ended March 31, 2013.
NOTE 2 | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
The Company’s management does not believe that any recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) (including its EITF), the AICPA or the Securities and Exchange Commission will have a material impact on the Company’s current or future consolidated financial statements.
NOTE 3 | INCOME PER COMMON SHARE |
Basic and diluted earnings 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.
6
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. |
| | March 31, | | March 31, | | ||
| | 2013 | | 2012 | | ||
| | | | | | | |
Net Sales in Each Segment | | | | | | | |
| | | | | | | |
Fruit: | | | | | | | |
Sales to Unaffiliated Customers | | $ | 824,737 | | $ | 876,809 | |
| | | | | | | |
Molded Plastics: | | | | | | | |
Sales to Unaffiliated Customers | | | 2,236,867 | | | 2,392,061 | |
| | | | | | | |
Net Sales | | $ | 3,061,604 | | $ | 3,268,870 | |
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.
7
PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4 | BUSINESS SEGMENT DATA (CONTINUED) |
| | March 31, | | March 31, | | ||
| | 2013 | | 2012 | | ||
| | | | | | | |
Identifiable Assets of Each Segment are Listed Below: | | | | | | | |
| | | | | | | |
Fruit | | $ | 11,667,364 | | $ | 9,739,581 | |
| | | | | | | |
Molded Plastics | | | 5,605,977 | | | 5,182,183 | |
| | | | | | | |
Identifiable Assets | | | 17,273,341 | | | 14,921,764 | |
| | | | | | | |
General Corporate Assets | | | 6,189,789 | | | 6,983,651 | |
| | | | | | | |
Total Assets | | $ | 23,463,130 | | $ | 21,905,415 | |
Identifiable assets by segment are those assets that are principally used in the operations of each segment. General corporate assets are principally cash and land and buildings.
NOTE 5 | OTHER ISSUES |
During 2012, the Company filed a settlement claim against BP Exploration & Production, Inc. and BP America Production Company (“BP”). The claim is subject to review by a claims board as well as a protest period by BP. An amount has not been recorded in the Company’s consolidated financial statements due to the inherent uncertainty in the claims process.
8
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 |
ForwardLooking 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 67.7% of total net sales during 2012. 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 during an eight to ten week period 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. producing 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.
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 (Continued) |
The First Quarter
Paradise, Inc.’s fruit segment net sales were $824,737 for the first quarter of 2013 compared to $876,809 for the similar reporting period of 2012, representing a 5.9% decrease. The primary reason for this decrease was a shortage of labor with regard to gathering strawberries from a local distributor for delivery to Paradise, Inc.’s facilities. For a negotiated fee, i.e. tolling charge, Paradise, Inc. will receive and process fresh strawberries through its facilities on behalf of this distributor. With the shortage in available labor during the first quarter of 2013, tolling charges earned as of March 31, 2013 were $195,763 compared to $465,887 as of March 31, 2012. Paradise, Inc.’s other fruit segment sales during the first quarter of 2013 primarily comprised of bulk fruit orders received and shipped to supermarkets and manufacturing bakeries leading up to and through the traditional Easter holiday season. Gross sales of bulk fruit orders received and shipped as of March 31, 2013 increased to $619,739 compared to $543,773 as of March 31, 2012.
Paradise Plastics, Inc.’s sales to unaffiliated customers for the first quarter of 2013 were $2,236,867 compared to $2,392,061 for the similar reporting period of 2012, representing a 6.5% decrease. Plastics sales to existing long-term customers within the commercial and home construction industry continued to increase offsetting a slight decline in injection molding customer orders received and shipped during the first quarter of 2013. However, with recent first quarter 2013 capital improvements to various production assets within the Plastics operations, management is confident these enhancements will provide increased capabilities to handle more efficiently existing customer orders as well as new orders moving forward.
Consolidated cost of sales as a percentage of net sales decreased 3.4% for the first quarter of 2013 compared to the similar reporting period of 2012. This decrease is related to the need to fulfill several new customer orders during the first quarter of 2013. Increased production of glace’ fruit over a relatively fixed level of overhead during the first quarter of 2013 will yield a lower percentage of cost of sales. However, with more than ninety percent (90%) of the Company’s glace’ annual production cycle yet to commence, it is too early to project or forecast any realistic changes in cost of sales for 2013. Only after factoring in such items as fluctuations in energy cost over the next six months and possible changes to labor cost associated with the implementation of the Affordable Heath Care Act, will management be able to report any meaningful information related to cost of sales.
Selling, general & administrative expenses totaled $884,858 for the first quarter of 2013 compared to $805,525 for the similar reporting period of 2012 primary as the Company’s sales force increased its commitments to attend various plastics and food trade shows during the first quarter of 2013.
Other Significant Items |
Other Income for the first quarter of 2013 totaled $101,600 compared to $76,844 for the similar reporting period of 2012. Other income is periodic sales of recycled plastics materials along with increases in the cash surrender value of two insurance policies owned by the company on behalf of two senior executives.
Inventory as of March 31, 2013 was $11,391,247 compared to $8,725,068 representing an increase of $2,666,179. This increase is twofold; first, as reported in the Company’s December 31, 2012 annual filing, Paradise, Inc. experienced an increase in returns of retail glace’ fruit from a long-term customer. Management provided an estimated impact for products returned by applying an allowance against accounts receivables for the invoiced price of these returns and a provision to recognize a related estimate of finished goods returns was added to inventory at December 31, 2012. Secondly, shipments from suppliers of raw fruit commodities, which may fluctuate based upon many factors common to agricultural products, were received in greater quantity during the first quarter of 2013 compared to the similar period of 2012.
Short term debt and Accounts Payable combined balances as of March 31, 2013 totaled $2,124,022 compared to $1,262,460 for the similar reporting period for 2012. This increase is directly related to the earlier receipt of various raw fruit inventory mentioned in the above paragraph.
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) |
Other Significant Items (Continued) |
We finance our ongoing operations primarily with cash provided by our operating activities. Our principal sources of liquidity are our cash flows provided by operating activities, our existing cash, and a line of credit facility. At March 31, 2013 and December 31, 2012, we had $4.8 million and $6.4 million, 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 from January 1 to May 31 and 60% from June 1 to December 31 of each year, of which $0 was outstanding at March 31, 2013 and December 31, 2012. Within this agreement, there are letters of credit with a limit of $1,200,000, of which $799,786 was outstanding at March 31, 2013 and $515,866 at December 31, 2012. The line of credit agreement expires in June 2013. Net cash used in operating activities decreased from $2,242,776 for the quarter ended March 31, 2012 to $1,697,964 for the quarter ended March 31, 2013. The primary reasons for this decrease are as follows; income tax payments made during the first quarter of 2013 were $410,000 less than the first quarter of 2012; Accounts Receivable payments received from Paradise, Inc.’s customers during the first quarter of 2013 were $502,050 less than the similar reporting period of 2012. Lastly, net cash provided by financing activities decreased from $317,984 for the quarter ended March 31, 2012 to $283,920 for the quarter ended March 31, 2013 due to timing of payments on letters of credit.
Summary |
Paradise, Inc.’s consolidated net sales for the three months ended March 31, 2013 totaled $3,061,604 compared to $3,268,870 for the similar reporting period of 2012, representing a decrease of 6.3%. However, as mentioned in all previous first quarter filings, with less than 5% of anticipated annual glace’ fruit net sales yet to be realized as of the date of this filing, no reasonable estimate or forecast of consolidated financial performance may be determined at this time.
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, 2012. There have been no material changes to our critical accounting estimates during the three months ended March 31, 2013.
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) |
Recently Issued Accounting Pronouncements |
The Company’s management does not believe that any recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) (including its EITF), the AICPA or the Securities and Exchange Commission will have a material impact on the Company’s current or future consolidated financial statements.
Item 3. | Quantitative and Qualitative Disclosure and Market Risk N/A |
Item 4. | Controls and Procedures |
As of March 31, 2013, our Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, and they have concluded that we maintain effective disclosure controls and procedures. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2013.
Disclosure controls and procedures mean the methods designed to ensure that information that the Company is required to disclose in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods required. Our controls and procedures are designed to ensure that all information required to be disclosed is accumulated and communicated to our management to allow timely decisions regarding disclosure. Our controls and procedures are also designed to provide reasonable assurance of the reliability of our financial reporting and accurate recording of our financial transactions.
A control system, however well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. There are inherent limitations in all control systems, and no evaluation of controls can provide absolute assurance that all control gaps or instances of fraud have been detected. These inherent limitations include the realities that the judgments in decision-making can be faulty, and that simple errors or mistakes can occur.
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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 | |||
Number | 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: | May 15, 2013 | ||
Melvin S. Gordon | ||||
Chief Executive Officer and Chairman | ||||
/s/ Jack M. Laskowitz | Date: | May 15, 2013 | ||
Jack M. Laskowitz | ||||
Chief Financial Officer and Treasurer |
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