-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GmHxofI+MwMN1kNXA5FKmBmTuaQrh7+2LH3JG5RHbKdl1kUMXL8rwh79TejN5SgM b0kBPopVKcEb3WY3LLkVaQ== 0000098677-97-000016.txt : 19971106 0000098677-97-000016.hdr.sgml : 19971106 ACCESSION NUMBER: 0000098677-97-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971105 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOOTSIE ROLL INDUSTRIES INC CENTRAL INDEX KEY: 0000098677 STANDARD INDUSTRIAL CLASSIFICATION: SUGAR & CONFECTIONERY PRODUCTS [2060] IRS NUMBER: 221318955 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01361 FILM NUMBER: 97707866 BUSINESS ADDRESS: STREET 1: 7401 S CICERO AVE CITY: CHICAGO STATE: IL ZIP: 60629 BUSINESS PHONE: 3128383400 FORMER COMPANY: FORMER CONFORMED NAME: SWEETS CO OF AMERICA INC DATE OF NAME CHANGE: 19660921 10-Q 1 TOOTSIE ROLL INDUSTRIES, INC 10-Q ENDING 09/27/97 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 27, 1997 Commission File Number 1 - 1361 TOOTSIE ROLL INDUSTRIES, INC. (Exact name of registrant as specified in its charter) VIRGINIA 22 - 1318955 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 7401 South Cicero Avenue Chicago, Illinois 60629 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (773) 838 - 3400 None Former name, former address and former fiscal year, if changed since last report. 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 (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 the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding Common Stock, $.69 4/9 par value 15,938,273 Class B Common Stock, $.69 4/9 par value 7,559,528 2
PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ASSETS Sept 27 Sept 28 Dec. 31 CURRENT ASSETS 1997 1996 1996 Cash & Cash Equiv. $ 74,478,364 $ 29,853,140 $ 45,658,799 Marketable Securities 33,774,830 64,173,247 98,498,317 Accounts Receivable Less Allowances of $3,090,000, $3,027,000 & $1,885,000 64,360,955 67,001,850 21,207,346 Inventories at Cost (Last-in,First-out): Finished Goods & Work in Process 20,876,234 19,470,662 20,358,811 Raw Material & Supplies 14,430,165 8,805,635 9,950,294 Prepaid Expenses 4,394,035 4,774,338 3,000,580 Deferred Income Taxes 2,839,000 2,923,000 2,839,000 Total Current Assets 215,153,583 197,001,872 201,513,147 PROPERTY, PLANT & EQUIPMENT, (at Cost) Land 6,898,131 6,906,496 6,895,126 Building 28,110,270 28,271,675 29,303,643 Machinery & Equipment 123,423,144 120,780,065 117,130,552 158,431,545 155,958,236 153,329,321 Less-Accumulated Depreciation and Amortization 78,188,442 70,337,509 71,642,018 80,243,103 85,620,727 81,687,303 OTHER ASSETS Intangibles 91,225,878 93,932,177 93,255,603 Investments 37,831,852 32,089 26,847 Misc. Other Assets 20,691,430 15,062,282 14,973,178 149,749,160 109,026,548 108,255,628 Total Assets $445,145,846 $391,649,147 $391,456,078
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(UNAUDITED) LIABILITIES AND SHAREHOLDERS( EQUITY Sept 27 Sept 28 Dec. 31 CURRENT LIABILITIES 1997 1996 1996 Accounts Payable $ 12,616,824 $ 11,933,589 $ 8,560,080 Dividends Payable 1,938,591 1,667,817 1,667,817 Accrued Liabilities 35,930,926 30,744,448 28,239,763 Fed. & State Income Taxes 16,138,903 15,070,759 9,716,422 Total Current Liabilities 66,625,244 59,416,613 48,184,082 NON-CURRENT LIABILITIES Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 5,876,858 5,553,315 5,636,085 Deferred Compensation 9,676,731 5,379,856 7,986,782 Deferred Fed.Inc.Taxes 9,487,123 9,461,662 9,268,550 Total Non-Current Liabilities 32,540,712 27,894,833 30,391,417 SHAREHOLDERS( EQUITY Common Stk., $.69-4/9 par value- 50,000,000 shares author. 15,938,273, 15,604,742 & 15,617,065 respectively, issued 11,068,106 10,836,487 10,845,044 Class B Common Stk., $.69-4/9 par value- 20,000,000 shares author. 7,559,528, 7,399,311 & 7,386,988 respectively, issued 5,249,606 5,138,344 5,129,787 Capital in Excess of Par Value 192,980,615 171,588,958 171,588,958 Retained Earnings 147,325,412 127,400,589 136,352,123 Cumulative Translation Adjustment (10,878,556) (10,626,677) (11,035,333) Unrealized Gain on Marketable Securities 234,707 -- -- Total Shareholders( Equity 345,979,890 304,337,701 312,880,579 Total Liabilities and Shareholders( Equity $445,145,846 $391,649,147 $ 391,456,078
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TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED) 13 Weeks Ended 39 Weeks Ended Sept. 27, 1997 & Sept. 28, 1996 Sept 27, 1997 & Sept. 28, 1996 Net Sales (Note 2) $140,645,293 $128,657,228 $289,190,453 $264,433,417 Cost of goods sold 70,899,622 68,241,866 144,739,664 138,039,632 Gross Margin 69,745,671 60,415,362 144,450,789 126,393,785 Operating Expenses: Marketing, Selling and Advertising 18,243,872 18,412,155 40,542,380 39,755,505 Distribution and Warehousing 7,449,166 7,506,993 18,486,956 17,719,217 General and Administrative 4,819,617 4,122,943 12,906,867 11,520,031 Goodwill amortization 676,575 676,575 2,029,725 2,029,725 31,189,230 30,718,666 73,965,928 71,024,478 Earnings from Operations 38,556,441 29,696,696 70,484,861 55,369,307 Other Income (Expense) Net 749,651 778,794 3,839,387 2,874,262 Earnings before Income Taxes 39,306,092 30,475,490 74,324,248 58,243,569 Provision for Income Taxes 14,611,000 11,333,000 27,371,000 21,656,000 Net Earnings (Note 5) 24,695,092 19,142,490 46,953,248 36,587,569 Retained Earnings at beginning of period 124,568,911 109,925,917 136,352,123 121,476,879 149,264,003 129,068,407 183,305,371 158,064,448 Deduct: Cash Dividends 1,938,591 1,667,818 5,541,625 4,703,673 Stock Dividends - 3% -- -- 30,438,334 25,960,186 1,938,591 1,667,818 35,979,959 30,663,859 Retained Earnings at end of period $147,325,412 $127,400,589 $147,325,412 $127,400,589 Net Earnings per Share (Note 3) $1.05 $ .81 $1.99 $1.54 Dividends Per Share * $ .0825 $ .0725 $ .2375 $ .2075 Average Number of Shares Outstanding (Notes 3 & 4) 23,510,301 23,689,801 23,580,501 23,689,801 *Does not include 3% Stock Dividend to Shareholders of Record on 3/11/97 and 3/11/96.
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TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 39 Weeks Ended September 27, 1997 & September 28, 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $46,953,248 $36,587,569 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 8,764,738 8,723,849 (Increase) decrease in assets: Accounts receivable (43,089,094) (43,297,611) Inventories (4,915,195) 4,112,483 Prepaid expenses and other assets (11,468,168) (6,120,105) Increase in liabilities: Accounts payable and accrued liabilities 11,724,651 15,175,400 Income taxes payable and deferred 6,644,794 9,193,294 Other long term liabilities 1,689,949 852,920 Other 270,453 237,022 Net cash provided by operating activities 16,575,376 25,464,821 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (5,124,650) (10,344,941) Purchase of held to maturity securities (38,722,325) (37,673,985) Maturity of held to maturity securities 68,358,591 29,426,470 Purchase of available for sale securities (8,464,025) -- Sale and maturity of available for sale securities 10,171,246 -- Net cash provided by (used in) investing activities 26,218,837 (18,592,456) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of note payable -- (20,000,000) Shares repurchased and retired (8,609,811) -- Dividends paid in cash (5,364,837) (4,543,211) Net cash used in financing activities (13,974,648) (24,543,211) Increase (decrease)in cash and cash equivalents 28,819,565 (17,670,846) Cash and cash equivalents-beginning of year 45,658,799 47,523,986 Cash and cash equivalents end of quarter $74,478,364 $29,853,140 Supplemental cash flow information: Income taxes paid $20,676,000 $12,608,000 Interest paid $ 361,000 $ 944,000
6 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 27, 1997 (UNAUDITED) Note 1 - Foregoing data has been prepared from the unaudited financial records of the Company and in the opinion of Management all adjustments necessary for a fair statement of the results for the interim period have been reflected. All adjustments were of a normal and recurring nature. Note 2 - The Company's unshipped orders at September 27, 1997 amounted to $23,500,000. Note 3 - Based on Average Shares outstanding adjusted for Stock Dividends. Note 4 - Includes 3% Stock Dividends distributed on April 22, 1997 and April 23, 1996. Note 5 - Results of operations for the period ended September 27, 1997 are not necessarily indicative of results to be expected for the year to end December 31, 1997 because of the seasonal nature of the Company's operations. Historically, the Third Quarter has been the Company's largest Sales Quarter due to Halloween Sales. Note 6 - Form 8-K was not required to be filed during the Third Quarter of 1997. Note 7 - Sales of unregistered Securities - None. -5- 7 MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is Management's discussion of the Company's operating results and analysis of factors which have affected the accompanying Statement of Earnings: NET SALES: Third Quarter, 1997 Third Quarter vs. 1997 1996 Third Quarter, 1996 $140,645,293 $128,657,228 9.3% Nine Months, 1997 Nine Months vs. 1997 1996 Nine Months, 1996 $289,190,453 $264,433,417 9.4% Third Quarter 1997 net sales of $140,645,293, were up 9.3% from Third Quarter 1996 net sales of $128,657,228. Nine Months of 1997 net sales of $289,190,453 were up 9.4% from Nine Months of 1996 net sales of $264,433,417. Third Quarter 1997 net sales of $140,645,293 were up 70.9% from Second Quarter 1997 net sales of $82,287,560. Historically the third quarter includes pre-Halloween sales and is the Company's largest quarterly sales period of the year. Record sales for the Third Quarter and Nine Months of 1997 are principally attributable to effective promotional programs, including pre-Halloween sales programs, as well as new products and product line extensions. Sales increases were achieved in all of the Company's core brands. Consolidated sales were also favorably affected by improved results in Mexico and Canada. COST OF SALES: Cost of Sales as a Third Quarter Percentage of Net Sales 1997 1996 3rd Qtr. 1997 3rd Qtr. 1996 $70,899,622 $68,241,866 50.4% 53.0% Cost of Sales as a Nine Months Percentage of Net Sales 1997 1996 9 Months 1997 9 Months 1996 $144,739,664 $138,039,632 50.0% 52.2% (6) 8 MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Cost of sales as a percentage of net sales decreased from 53.0% for the Third Quarter of 1996 to 50.4% in the Third Quarter of 1997. Nine Months cost of sales also decreased from 52.2% in 1996 to 50.0% for the same period in 1997. This improvement reflects lower prices in certain ingredients and packaging materials, and the benefits of higher sales volumes against relatively fixed factory overhead costs. NET EARNINGS: Third Quarter, 1997 Third Quarter vs. 1997 1996 Third Quarter, 1996 $24,695,092 $19,142,490 29.0% Nine Months, 1997 Nine Months vs. 1997 1996 Nine Months, 1996 $46,953,248 $36,587,569 28.3% Third Quarter 1997 net earnings were $24,695,092 compared to $19,142,490 for the Third Quarter of 1996, and third quarter earnings per share increased to $1.05 from $.81, a 30% increase. Nine Months 1997 net earnings were $46,953,248 compared to the prior year's Nine Months net earnings of $36,587,569 and nine month per share earnings increased to $1.99 from $1.54, a 29% increase. Net earnings for the Third Quarter of 1997 of $24,695,092 increased $12,187,733 or 97.4% from Second Quarter of 1997 net earnings of $12,507,359 The increase in net earnings for the Third Quarter and Nine Months of 1997 reflects higher sales, improved gross profit margins and effective on-going cost control programs which resulted in higher income from operations. Increased investment income and decreased interest expense also contributed to the overall increase in net earnings. The consolidated effective income tax rate decreased from 37.2% in the Nine Months of 1996 to 36.8% in the Nine Months of 1997. This favorable decrease reflects increased tax-free investment income as well as certain other state and foreign tax benefits. (6A) 9 PART II - OTHER INFORMATION TOOTSIE ROLL INDUSTRIES, INC AND SUBSIDIARIES - NONE - 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. TOOTSIE ROLL INDUSTRIES, INC. Date: November 4, 1997 BY: Melvin J. Gordon Chairman of the Board BY: G. Howard Ember, Jr. Vice President - Finance -7- EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 Dec-31-1997 Jan-01-1997 Sep-27-1997 9-MOS 74,478 33,775 67,451 3,090 35,306 215,154 158,432 78,188 445,146 66,625 7,500 0 0 16,318 329,662 445,146 289,190 289,190 144,740 73,966 (4,115) 245 276 74,324 27,371 46,953 0 0 0 46,953 1.99 1.99
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