-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kYbIQG7tcZud4iiqNHRN2fszK+nUacYekqMTWEHLlzCvTf4wggJkGtPWAd02yGUt s7xtLEp8QfUfBYLw/40shA== 0000098677-94-000003.txt : 19940822 0000098677-94-000003.hdr.sgml : 19940822 ACCESSION NUMBER: 0000098677-94-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940702 FILED AS OF DATE: 19940809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOOTSIE ROLL INDUSTRIES INC CENTRAL INDEX KEY: 0000098677 STANDARD INDUSTRIAL CLASSIFICATION: 2060 IRS NUMBER: 221318955 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01361 FILM NUMBER: 94542389 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 07/02/94 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 July 2, 1994 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 (312) 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 7,302,212 Class B Common Stock, $.69 4/9 par value 3,545,497 2 PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
ASSETS July 2 July 3 Dec. 31 CURRENT ASSETS 1994 1993 1993 Cash & Cash Equiv. $ 4,772,098 $ 1,919,756 $ 1,985,809 Marketable Securities 41,387,678 74,991,507 54,217,079 Accounts Receivable Less Allowances of $1,885,000,$1,629,000 & $2,075,000 25,673,195 13,434,852 20,656,006 Inventories at Cost (Last-in,First-out): Finished Goods & Work in Process 31,300,487 30,314,558 17,186,423 Raw Material & Supplies 12,113,879 13,842,822 12,107,728 Prepaid Expenses 4,988,536 7,420,677 3,666,901 Deferred Income Taxes 2,094,000 1,992,000 2,094,000 Total Current Assets 122,329,873 143,916,172 111,913,946 PROPERTY, PLANT & EQUIPMENT, (at Cost) Land 4,230,667 230,667 4,230,667 Building 25,347,199 4,929,368 25,347,199 Machinery & Equip. 110,082,719 79,382,366 107,685,361 Leasehold Impvts. 5,641 4,840,902 9,641 139,666,226 89,383,303 137,272,868 Less-Accumulated Deprec. and Amortization 54,430,006 47,253,129 50,573,679 85,236,220 42,130,174 86,699,189 OTHER ASSETS Intangibles 100,021,351 44,569,416 101,374,501 Miscellaneous Invest. 90,977 107,169 90,977 Misc. Other Assets 3,931,127 6,806,235 3,861,219 104,043,455 51,482,820 105,326,697 Total Assets $311,609,548 $237,529,166 $303,939,832
3
LIABILITIES AND SHAREHOLDERS' EQUITY July 2 July 3 Dec. 31 CURRENT LIABILITIES 1994 1993 1993 Bank Loans Short Term $ 20,000,000 $ 3,557,088 $22,600,673 Accounts Payable 5,351,379 5,383,942 6,259,252 Dividends Payable 1,218,577 1,024,819 1,025,428 Accrued Liabilities 15,211,094 10,870,011 17,918,747 Fed. & State Income Taxes 4,076,730 2,686,073 3,057,290 Total Current Liabilities 45,857,780 23,521,933 50,861,390 NON-CURRENT LIABILITIES E.T.I. Term Loan 20,000,000 -- 20,000,000 Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 4,764,294 4,230,780 4,497,834 Deferred Compensation 2,691,704 3,250,041 2,373,454 Deferred Fed.Inc.Taxes 6,250,297 5,825,301 6,363,886 Total Non-Current Liabilities 41,206,295 20,806,122 40,735,174 SHAREHOLDERS' EQUITY Common Stk., $.69-4/9 par value- 25,000,000 shares author. 7,302,212, 7,054,125 & 7,068,561 respectively, issued 5,070,845 4,898,563 4,908,588 Class B Common Stk $.69-4/9 par value- 10,000,000 shares author. 3,545,497, 3,479,451 & 3,465,015 respectively issued 2,462,085 2,416,219 2,406,194 Capital in Excess of Par Value 132,997,160 111,108,198 111,108,198 Retained Earnings 87,039,699 77,247,559 96,646,704 Cumulative Translation Adjustment (3,024,316) (2,469,428) (2,726,416) Total Shareholders' Equity 224,545,473 193,201,111 212,343,268 Total Liabilities and Shareholders' Equity $311,609,548 $237,529,166 $303,939,832
4 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED)
13 Weeks Ended 26 Weeks Ended July 2, 1994 & July 3, 1993 July 2, 1994 & July 3, 1993 1994 1993 1994 1993 NET SALES (Note 2) $ 62,891,164 $ 53,923,098 $119,261,207 $103,940,053 Cost of goods sold 31,585,579 26,691,400 59,834,437 51,427,753 Gross Margin 31,305,585 27,231,698 59,426,770 52,512,300 Operating Expenses: Marketing, Selling and Advertising 10,269,360 9,422,429 19,542,297 17,813,900 Distribution and Warehousing 4,972,464 4,054,406 9,083,120 7,835,171 General and Administrative 3,097,977 2,933,865 6,149,452 6,063,108 Goodwill amortization 676,575 312,927 1,353,150 625,854 19,016,376 16,723,627 36,128,019 32,338,033 Earnings from Operations 12,289,209 10,508,071 23,298,751 20,174,267 Other Income (Expense) Net 538,393 1,326,950 897,003 2,513,714 Earnings before Income Taxes 12,827,602 11,835,021 24,195,754 22,687,981 Provision for Income Taxes 4,968,000 4,490,000 9,374,000 8,647,000 Net Earnings (Note 5) 7,859,602 7,345,021 14,821,754 14,040,981 Retained Earnings at beginning of period 80,373,345 70,903,247 96,646,704 90,285,436 88,232,947 78,248,268 111,468,458 104,326,417 Deduct: Cash Dividends 1,193,248 1,000,709 2,193,957 1,767,877 Stock Dividends - 3% -- -- 22,234,802 25,310,981 1,193,248 1,000,709 24,428,759 27,078,858 Retained Earnings at end of period $ 87,039,699 $ 77,247,559 $ 87,039,699 $ 77,247,559 Net Earnings per Share (Note 3) $ .72 $ .68 $1.37 $1.29 Dividends Per Share * $ .11 $ .095 $ .205 $ .17 Average Number of Shares Outstanding (Notes 3 & 4) 10,847,709 10,847,709 10,847,709 10,847,709 *Does not include 3% Stock Dividend to Shareholders of Record on 3/11/94 and 3/18/93.
5 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
26 Weeks Ended July 2, 1994 & July 3, 1993 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $14,821,754 $14,040,981 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,853,913 3,234,710 (Increase) decrease in assets: Accounts receivable (5,017,189) (546,001) Inventories (14,120,215) (19,311,774) Prepaid expenses and other assets (1,483,800) (3,880,963) Increase (decrease) in liabilities: Accounts payable and accrued liabilities (3,615,526) (2,081,535) Income taxes payable and deferred 905,851 (594,187) Postretirement health care and life insurance benefits 266,460 255,007 Other long term liabilities 318,250 444,352 Other (297,900) (623,696) Net cash used in operating activities (2,368,402) (9,063,106) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (2,997,246) (4,508,230) Investment purchases (30,180,887) (7,602,360) Investment sales 42,996,915 20,454,672 Net cash provided by investing activities 9,818,782 8,344,082 CASH FLOWS FROM FINANCING ACTIVITIES: Borrowing under lines of credit agreements -- 3,250,000 Repayment under lines of credit agreements (2,600,673) -- Dividends paid in cash (2,128,500) (1,686,630) Other, net 65,082 80,924 Net cash provided by (used in) financing activities (4,664,091) 1,644,294 Increase in cash and cash equivalents 2,786,289 925,270 Cash and cash equivalents-beginning of year 1,985,809 994,486 Cash and cash equivalents end of quarter $ 4,772,098 $ 1,919,756 Supplemental cash flow information: Income taxes paid $ 6,060,000 $ 9,150,000 Interest paid $ 1,105,000 $ 156,000
6 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 2, 1994 (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. Note 2 - The Company's unshipped orders at July 2, 1994 amounted to $32,025,000. Note 3 - Based on Average Shares outstanding adjusted for Stock Dividends. Note 4 - Includes 3% Stock Dividends distributed on April 22, 1994 and April 22, 1993. Note 5 - Results of operations for the period ended July 2, 1994 are not necessarily indicative of results to be expected for the year to end December 31, 1994 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 Second Quarter of 1994. Note 7 - Sales of unregistered Securities - None. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION NET SALES: Second Quarter, 1994 Second Quarter vs. 1994 1993 Second Quarter, 1993 $62,891,164 $53,923,098 +16.6% First Half, 1994 First Half vs. 1994 1993 First Half, 1993 $119,261,207 $103,940,053 +14.7% Second Quarter 1994 net sales of $62,891,164, a record, were up 16.6% from the Second Quarter 1993 net sales of $53,923,098. First Half of 1994 net sales of $119,261,207 were up 14.7% from First Half of 1993 net sales of $103,940,053. Second Quarter 1994 net sales of $62,891,164 were up 11.6% from First Quarter 1994 net sales of $56,370,043. Record sales for the Second Quarter and First Half of 1994 were up principally as a result of the inclusion of the former Warner Lambert Chocolate/Caramel Division acquired in the fourth quarter of 1993. Excluding the former Warner Lambert Brands, sales would have decreased in the First Half by approximately 2%. This decrease is largely due to general softness in the candy industry as well as the effects of consolidation in the warehouse club class of trade which particularly affected the Charms' brands. However, some Tootsie Roll core products achieved sales increases in the Second Quarter and First Half compared to the prior year 1993 periods. COST OF SALES: Cost of Sales as a Second Quarter Percentage of Net Sales 1994 1993 2nd Qtr. 1994 2nd Qtr. 1993 $31,585,579 $26,691,400 50.2% 49.5% Cost of Sales as a First Half Percentage of Net Sales 1994 1993 1st Half 1994 1st Half 1993 $59,834,437 $51,427,753 50.2% 49.5% 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED STATEMENTS OF EARNINGS Cost of sales as a percentage of net sales increased slightly from 49.5% for the Second Quarter of 1993 to 50.2% for the Second Quarter of 1994. First Half cost of sales also increased from 49.5% in 1993 to 50.2% for the same period in 1994. These increases reflect increases in certain raw material costs and a minor increase in overall manufacturing overhead costs, principally depreciation and equipment leasing. NET EARNINGS: Second Quarter, 1994 Second Quarter vs. 1994 1993 Second Quarter, 1993 $7,859,602 $ 7,345,021 +7.0% First Half, 1994 First Half vs. 1994 1993 First Half, 1993 $14,821,754 $14,040,981 +5.6% Second Quarter 1994 net earnings of $7,859,602 or $.72 per share, a record, were up 7.0% from net earnings of $7,345,021 or $.68 per share for the Second Quarter of 1993. As a percentage of sales, net earnings for the Second Quarter decreased from 13.6% in 1993 to 12.5% in 1994; however, earnings from operations held steady at 19.5% of sales in the Second Quarter of 1993 and 1994. First Half 1994 net earnings of $14,821,754 or $1.37 per share, also a new record, were up 5.6% from the prior year's First Half net earnings of $14,040,981 or $1.29 per share. Net earnings as a percentage of sales for the First Half declined from 13.5% in 1993 to 12.4% in 1994; however, earnings from operations increased from 19.4% in 1993 to 19.5% in 1994. Net earnings for the Second Quarter of 1994 of $7,859,602 increased $897,450 or 12.9% from First Quarter of 1994 net earnings of $6,962,152, and earnings from operations increased by $1,279,667 or 11.6%. The increase in net earnings principally results from higher earnings from operations, which on a comparative basis were up 17.0% for the Quarter and 15.5% for the First Half. These improved results are principally attributable to the additional profit contribution arising from the integration of the former Warner Lambert Chocolate/Caramel Division as well as the benefits of ongoing expense control programs. Net earnings as a percent of sales for the Quarter and First Half declined slightly reflecting anticipated lower investment income, net of interest expense, due to the purchase of the former Warner Lambert Chocolate/Caramel Division in the Fourth Quarter of 1993. 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: August 2, 1994 BY: Melvin J. Gordon Chairman of the Board BY: G. Howard Ember Vice President - Finance -----END PRIVACY-ENHANCED MESSAGE-----