-----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, MJvu/IQw0hMPSyXoEhW9UvBhkzTjFHiL5HQO/SKVmVNCgk3d+D4ydzGAsiKLjQ+D FTLWviizM3Jp8mN8dAWYhA== 0000098677-00-000004.txt : 20000512 0000098677-00-000004.hdr.sgml : 20000512 ACCESSION NUMBER: 0000098677-00-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000511 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: 625692 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 04/01/00 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 April 1, 2000 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 No Changes 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 latest practible date. Class Outstanding Common Stock, $.69 4/9 par value 33,374,436 Class B Common Stock, $.69 4/9 par value 16,157,754 PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ASSETS April 1, April 3, Dec. 31, CURRENT ASSETS 2000 1999 1999 Cash & Cash Equiv. $ 67,000,271 $ 76,565,908 $ 88,503,731 Investments 90,552,973 74,227,270 71,002,420 Trade Accounts Receivable, Less Allowances of $2,115,000,$2,082,000 & $2,032,000 19,745,812 18,424,094 19,031,958 Other Receivables 4,583,469 7,882,608 5,716,150 Inventories, at Cost (Last-in,First-out): Finished Goods & Work in Process 29,758,001 29,546,106 20,688,894 Raw Material & Supplies 16,517,252 14,856,605 14,395,996 Prepaid Expenses 5,683,560 6,158,831 3,123,428 Deferred Income Taxes 2,069,000 2,584,000 2,069,000 Total Current Assets 235,910,338 230,245,422 224,531,577 PROPERTY, PLANT & EQUIPMENT, (at cost) Land 7,981,419 7,773,504 7,981,419 Buildings 29,210,324 22,226,017 30,329,791 Machinery & Equipment 152,353,231 138,638,705 145,789,056 189,544,974 168,638,226 184,100,266 Less-Accumulated Depreciation 90,425,212 82,631,283 88,202,899 99,119,762 86,006,943 95,897,367 OTHER ASSETS Intangible assets, net of accumulated amortization of $24,229,000, $21,467,000 & $23,497,000 89,385,448 87,166,429 85,136,703 Investments 70,656,634 68,507,383 87,166,551 Cash surrender value of Life Insurance and Other Assets 38,174,893 30,229,651 36,683,965 198,216,975 185,903,463 208,987,219 Total Assets $533,247,075 $502,155,828 $529,416,163 (The accompanying notes are an integral part of the statements)
(UNAUDITED) LIABILITIES AND SHAREHOLDERS( EQUITY April 1, April 3, Dec. 31, CURRENT LIABILITIES 2000 1999 1999 Accounts Payable $ 13,299,139 $ 12,732,737 $ 12,845,180 Dividends Payable 3,150,603 2,693,837 3,035,496 Accrued Liabilities 30,611,016 27,997,577 31,944,769 Income Taxes Payable 14,925,203 13,396,027 8,283,501 Total Current Liabilities 61,985,961 56,820,178 56,108,946 NON-CURRENT LIABILITIES Ind.Dev.Bonds 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 6,638,699 6,240,390 6,556,860 Deferred Compensation and Other Liabilities 19,994,501 15,844,932 19,084,505 Deferred Income Taxes 9,790,160 8,885,136 9,519,818 Total Non-Current Liabilities 43,923,360 38,470,458 42,661,183 SHAREHOLDERS( EQUITY Common Stk., $.69-4/9 par value- 120,000,000 shares author. 33,374,436, 33,446,257 & 32,853,761 respectively, issued 23,176,489 23,226,358 22,814,906 Class B Common Stk., $.69-4/9 par value- 40,000,000 shares author. 16,157,754, 15,846,841 & 15,706,907 respectively, issued 11,220,564 11,004,651 10,907,476 Capital in Excess of Par Value 275,362,077 274,577,472 249,236,182 Retained Earnings 127,793,886 108,775,945 158,619,140 Accumulated Other Comprehensive Earnings (8,223,859) (9,746,646) (8,940,267) Treasury Stock (at cost)- 51,500, 25,750 & 51,500, shares respectively (1,991,403) (972,588) (1,991,403) Total Shareholders( Equity 427,337,754 406,865,192 430,646,034 Total Liabilities and Shareholders( Equity $533,247,075 $502,155,828 $529,416,163
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED) 13 Weeks Ended April 1, 2000 & April 3, 1999 Net Sales (Note 2) $ 78,014,809 $ 74,199,514 Cost of Goods Sold 36,948,005 35,384,255 Gross Margin 41,066,804 38,815,259 Selling, Marketing and Administrative Expense 22,209,419 20,655,403 Amortization of Intangible Assets 732,084 676,575 Earnings from Operations 18,125,301 17,483,281 Other Income, Net 2,252,818 1,865,487 Earnings before Income Taxes 20,378,119 19,348,768 Provision for Income Taxes 7,315,000 7,024,000 Net Earnings (Note 5) $ 13,063,119 $ 12,324,768 Net Earnings $ 13,063,119 $ 12,324,768 Other Comprehensive Earnings, Net of Tax 716,408 776,120 Comprehensive Earnings $ 13,779,527 $ 13,100,888 Retained Earnings at Beginning of Period $158,619,140 $164,652,120 Net Earnings 13,063,119 12,324,768 Cash Dividends (3,005,218) (2,511,411) Stock Dividends - 3% (40,883,155) (65,689,532) Retained Earnings at End of Period $127,793,886 $108,775,945 Net Earnings Per Share (Note 3) $.26 $ .24 Dividends Per Share * $.0625 $ .0525 Average Number of Shares Outstanding (Notes 3 & 4) 49,730,915 50,704,820 *Does not include 3% Stock Dividend to Shareholders of Record on 3/07/00 and 3/09/99. (The accompanying notes are an integral part of the statements)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) 13 Weeks Ended April 1, 2000 & April 3, 1999 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $13,063,119 $12,324,768 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 2,854,396 2,680,685 (Increase) decrease in assets: Accounts receivable (664,005) 768,921 Other receivables 1,132,681 (4,558,463) Inventories (11,090,575) (7,724,917) Prepaid expenses and other assets (4,557,455) (4,099,897) Increase (decrease) in liabilities: Accounts payable and accrued liabilities (902,429) (3,041,243) Income taxes payable and deferred 6,936,522 6,180,958 Postretirement health care and life insurance benefits 81,839 95,447 Deferred compensation and other liabilities 909,996 922,035 Other 159,817 140,138 Net cash provided by operating activities 7,923,906 3,688,432 CASH FLOWS FROM INVESTING ACTIVITIES: Business acquisition, net of cash and cash equivalents acquired (6,475,419) -- Capital expenditures (3,950,117) (5,047,473) Purchase of held to maturity securities (40,756,173) (41,033,294) Maturity of held to maturity securities 39,569,558 40,024,101 Purchase of available for sale securities (12,771,357) (55,899,440) Sale and maturity of available for sale securities 11,928,842 56,602,453 Net cash used in investing activities (12,454,666) (5,353,653) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid in cash (3,032,371) (2,512,462) Shares repurchased and retired (13,940,329) -- Net cash used in financing activities (16,972,700) (2,512,462) Decrease in cash and cash equivalents (21,503,460) (4,177,683) Cash and cash equivalents-beginning of year 88,503,731 80,743,591 Cash and cash equivalents end of quarter $67,000,271 $76,565,908 Supplemental cash flow information: Income taxes paid $ 475,000 $ 1,265,000 Interest paid $ 172,000 $ 170,000 (The accompanying notes are an integral part of the statements)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS APRIL 1, 2000 (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. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company's 1999 Annual Report on Form 10-K. Note 2 - The Company's unshipped orders at April 1, 2000 amounted to $14,800,000. Note 3 - Based on Average Shares outstanding adjusted for Stock Dividends. Note 4 - Includes 3% stock dividends distributed on April 19, 2000 and April 21, 1999. Note 5 - Results of operations for the period ended April 1, 2000 are not necessarily indicative of results to be expected for the year to end December 31, 2000 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 First Quarter of 2000. Note 7 - Sales of unregistered Securities - None. Note 8 - In February 2000 the Company acquired the assets of a confectionery company for cash. The acquisition was accounted for as a purchase. The operating results of the acquired business have been included in the consolidated financial statements since the date of acquisition. On April 18, 2000, the Company announced that it entered into an agreement to purchase the assets of Andes Candies, Inc. from Brach's Confections Inc. (the "Transaction"). The agreement is subject to certain customary conditions, and has received approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Tootsie Roll expects the Transaction to close in the second quarter of 2000. Andes Candies, Inc. had 1999 sales of approximately $34 million. The acquisition of Andes Candies, Inc. will be accounted for as a purchase MANAGEMENT'S DISCUSSION AND ANALYSIS OF 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. This discussion, the information contained in the preceding notes to the financial statements and the information contained in "Quantitative and Qualitative Disclosures About Market Risk," contain certain forward-looking statements that are based largely on the Company's current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. Such risks, trends and uncertainties, which in some instances are beyond the Company's control, include changes in demand; raw material prices; competition; the effect of acquisitions on the Company's results of operations and financial condition; and the Company's reliance on third-party vendors for various services. The words "believe," "expect," "anticipate," "estimate," "intend," and similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are as of the date of this filing. NET SALES: First Quarter, 2000 First Quarter vs. 2000 1999 First Quarter, 1990 $78,014,809 $74,199,514 +5.1% First Quarter 2000 net sales of $78,015,000, were up 5.1% from First Quarter 1999 net sales of $74,200,000. Sales rose as a result of successful marketing and promotional programs, as well as new products and product line extensions. These record sales principally reflect sales gains of the Company's core brands. First Quarter 2000 net sales of $78,015,000 were down from Fourth Quarter 1999 net sales of $81,618,000. This is not considered unusual as the First Quarter of the year is historically the company's lowest sales quarter. COST OF SALES: Cost of Sales as a First Quarter Percentage of Net Sales 2000 1999 1st Qtr. 2000 1st Qtr. 1999 $36,948,005 $35,384,255 47.4% 47.7% Cost of sales as a percentage of net sales decreased slightly from 47.7% for First Quarter 1999 to 47.4% for First Quarter 2000. NET EARNINGS: First Quarter, 2000 First Quarter vs. 2000 1999 First Quarter, 1999 $13,063,119 $12,324,768 +6.0% First Quarter 2000 net earnings were $13,063,000 compared to First Quarter 1999 net earnings of $12,325,000. First Quarter 2000 earnings per share were $0.26 an increase of $.02 or 8.0% over First Quarter 1999 earning per share of $.24. The increase in net earnings reflects higher sales and on-going cost control programs. Other income in First Quarter 2000 benefited from increased investment income. The consolidated effective income tax rate favorably decreased from 36.3% in the First Quarter of 1999 to 35.9% in the First Quarter of 2000. This improvement generally reflects increased tax-free investment income. First Quarter 2000 net earnings were $13,063,000 compared to Fourth Quarter of 1999 net earnings of $14,952,000, which reflects the lower level of sales in the First Quarter 2000 compared to the Fourth Quarter 1999. This is consistent with historical trends. As discussed in Note 8, the Company has acquired the assets of a confectionery business and has entered into an agreement to purchase the assets of Andes Candies, Inc. during the First Quarter. LIQUIDITY AND CAPITAL RESOURCES: The Company's current ratio (current assets divided by current liabilities) is in excess of 3.8 to 1 as of the end of the First Quarter 2000 as compared to 4.1 to 1 as of the First Quarter 1999 and 4.0 to 1 as of the Fourth Quarter 1999. Net working Capital was $173,924,000 as of the end of the First Quarter 2000 as compared to $173,425,000 as of the First Quarter 1999 and $168,423,000 at the end of the Fourth Quarter 1999. Capital expenditures for 2000 are anticipated to be generally in line with historical spending and are to be funded from the Company's cash flow from operations and internal sources. Debt securities that matured during the quarters ended April 1, 2000 and April 3, 1999 were replaced with debt securities of similar maturities. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK: The Company is exposed to various market risks, including fluctuations in sugar, corn, syrup, edible oils, cocoa and packaging costs. The Company also invests in securities with maturities of up to three years, the majority of which are held to maturity, which limits the Company's exposure to interest rate fluctuations. There has been no material change in the Company's market risks that would significantly affect the disclosures made in the Form 10-K for the year ended December 31, 1999. 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: May 8, 2000 BY: Melvin J. Gordon Chairman of the Board BY: G. Howard Ember Vice President - Finance EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 1ST 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-31-2000 Jan-01-2000 Apr-01-2000 3-MOS 67,000 90,553 26,444 2,115 36,275 235,910 189,545 90,425 533,247 61,986 7,500 0 0 34,397 392,941 533,247 78,015 78,015 36,948 22,942 2,423 57 171 20,378 7,315 13,063 0 0 0 13,063 .26 .26
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