-----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, IVR10IBR4MzAhkkudFhjaG0XebZn17gp6H0Ym4mP1Ibcdj6wr2ys3kgEmu6f6u2x sB/Mk7P49do51ATWUAgF6g== 0000098677-96-000008.txt : 19960808 0000098677-96-000008.hdr.sgml : 19960808 ACCESSION NUMBER: 0000098677-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960807 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: 1934 Act SEC FILE NUMBER: 001-01361 FILM NUMBER: 96604872 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 06/29/96 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 June 29, 1996 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 15,596,753 Class B Common Stock, $.69 4/9 par value 7,407,300 PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
ASSETS June 29 July 1 Dec. 31 CURRENT ASSETS 1996 1995 1995 Cash & Cash Equiv. $ 36,984,898 $ 31,226,163 $ 47,523,986 Marketable Securities 62,914,374 37,793,260 55,925,732 Accounts Receivable Less Allowances of $1,994,000,$1,613,000 & $1,774,000 22,599,033 23,993,098 23,553,517 Inventories at Cost (Last-in,First-out): Finished Goods & Work in Process 36,804,424 36,483,179 19,584,849 Raw Material & Supplies 14,880,942 13,903,265 12,624,820 Prepaid Expenses 4,983,613 3,054,662 2,812,763 Deferred Income Taxes 2,923,000 2,479,395 2,923,000 Total Current Assets 182,090,284 148,933,022 164,948,667 PROPERTY, PLANT & EQUIPMENT, (at Cost) Land 6,905,066 6,936,880 6,899,832 Building 28,268,965 27,254,392 28,259,052 Machinery & Equip. 118,391,385 110,640,027 111,660,755 153,565,416 144,831,299 146,819,639 Less-Accumulated Deprec. and Amortization 67,887,372 61,091,319 64,820,354 85,678,044 83,739,980 81,999,285 OTHER ASSETS Intangibles 94,608,752 97,315,052 95,961,902 Miscellaneous Investment 33,307 52,535 52,535 Misc. Other Assets 11,152,556 6,833,724 10,853,931 105,794,615 104,201,311 106,868,368 Total Assets $373,562,943 $336,874,313 $353,816,320
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(UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY June 29 July 1 Dec. 31 CURRENT LIABILITIES 1996 1995 1995 Notes Payable to Banks $ 20,000,000 $ 9,000,000 $ 20,000,000 Accounts Payable 8,209,789 7,373,663 5,911,910 Dividends Payable 1,667,817 1,423,193 1,424,014 Accrued Liabilities 20,703,103 17,124,566 21,531,891 Fed. & State Income Taxes 9,347,906 6,195,690 6,438,353 Total Current Liabilities 59,928,615 41,117,112 55,306,168 NON-CURRENT LIABILITIES E.T.I. Term Loan -- 20,000,000 -- Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 5,532,061 5,196,365 5,385,539 Deferred Compensation 4,787,349 3,525,794 4,526,936 Deferred Fed.Inc.Taxes 9,050,931 7,366,000 8,911,222 Total Non-Current Liabilities 26,870,341 43,588,159 26,323,697 SHAREHOLDERS' EQUITY Common Stk., $.69-4/9 par value- 25,000,000 shares author. 15,596,753, 15,083,204 & 15,108,790 respectively, issued 10,830,939 10,474,308 10,492,076 Class B Common Stk $.69-4/9 par value- 10,000,000 shares author. 7,407,300, 7,259,460 & 7,233,874 respectively issued 5,143,892 5,041,225 5,023,457 Capital in Excess of Par Value 171,588,958 146,171,411 146,171,411 Retained Earnings 109,925,917 99,546,976 121,476,879 Cumulative Translation Adjustment (10,725,719) (9,064,878) (10,977,368) Total Shareholders' Equity 286,763,987 252,169,042 272,186,455 Total Liabilities and Shareholders' Equity $373,562,943 $336,874,313 $ 353,816,320
4 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED)
13 Weeks Ended 26 Weeks Ended June 29, 1996 & July 1, 1995 June 29, 1996 & July 1, 1995 1995 1995 1996 1995 NET SALES (Note 2) $ 72,511,335 $ 68,774,216 $135,776,189 $129,043,421 Cost of goods sold 37,219,507 35,718,429 69,797,766 66,421,289 Gross Margin 35,291,828 33,055,787 65,978,423 62,622,132 Operating Expenses: Marketing, Selling and Advertising 11,722,836 11,719,324 21,343,350 21,490,275 Distribution and Warehousing 5,380,882 5,427,140 10,212,224 10,214,423 General and Administrative 3,776,147 3,244,118 7,397,088 6,530,415 Goodwill amortization 676,575 676,575 1,353,150 1,353,150 21,556,440 21,067,157 40,305,812 39,588,263 Earnings from Operations 13,735,388 11,988,630 25,672,611 23,033,869 Other Income (Expense) Net 1,037,729 1,115,827 2,095,468 1,822,058 Earnings before Income Taxes 14,773,117 13,104,457 27,768,079 24,855,927 Provision for Income Taxes 5,446,000 4,778,000 10,323,000 9,211,000 Net Earnings (Note 5) 9,327,117 8,326,457 17,445,079 15,644,927 Retained Earnings at beginning of period 102,266,617 92,616,954 121,476,879 107,762,823 111,593,734 100,943,411 138,921,958 123,407,750 Deduct: Cash Dividends 1,667,817 1,396,435 3,035,855 2,589,683 Stock Dividends - 3% -- -- 25,960,186 21,271,091 1,667,817 1,396,435 28,996,041 23,860,774 Retained Earnings at end of period $109,925,917 $ 99,546,976 $109,925,917 $ 99,546,976 Net Earnings per Share (Note 3) $ .41 $ .36 $ .76 $ .68 Dividends Per Share * $ .0725 $ .0625 $.135 $ .1175 Average Number of Shares Outstanding (Notes 3 & 4) 23,004,053 23,004,053 23,004,053 23,004,053 *Does not include 3% Stock Dividend to Shareholders of Record on 3/11/96 and 3/10/95 and has been restated for the 2-for-1 Stock Split to Shareholders of Record 6/22/95.
5 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $17,445,079 $15,644,927 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 5,674,757 4,916,995 (Increase) decrease in assets: Accounts receivable 1,006,455 (3,666,715) Inventories (19,354,582) (20,647,175) Prepaid expenses and other assets (2,279,560) (51,062) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 1,440,466 1,281,954 Income taxes payable and deferred 3,073,598 3,664,638 Postretirement health care and life insurance benefits 146,522 203,646 Other long term liabilities 260,413 374,230 Other 82,852 -- Net cash provided by operating activities 7,496,000 1,721,438 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (8,171,053) (1,733,379) Investment purchases (28,130,232) (14,853,613) Investment sales 21,141,590 23,083,076 Net cash provided by (used in) investing activities (15,159,695) 6,496,084 CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings net of repayments under lines of credit agreements -- 9,000,000 Dividends paid in cash (2,875,393) (2,500,018) Net cash provided by (used in) financing activities (2,875,393) 6,499,982 Increase (decrease) in cash and cash equivalents (10,539,088) 14,717,504 Cash and cash equivalents-beginning of year 47,523,986 16,508,659 Cash and cash equivalents-end of quarter $36,984,898 $31,226,163 Supplemental cash flow information: Income taxes paid $ 7,410,000 $ 5,356,000 Interest paid $ 670,000 $ 877,000
6 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 29, 1996 (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 June 29, 1996 amounted to $5,300,000. Note 3 - Based on Average Shares outstanding adjusted for Stock Dividends and the 2-for-1 Stock Split in 1995. Note 4 - Includes 3% Stock Dividends distributed on April 23, 1996 and April 21, 1995 and the 2-for-1 Stock Split effective on July 11, 1995. Note 5 - Results of operations for the period ended June 29, 1996 are not necessarily indicative of results to be expected for the year to end December 31, 1996 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 1996. Note 7 - Sales of unregistered Securities - None. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 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: Second Quarter, 1996 Second Quarter vs. 1996 1995 Second Quarter, 1995 $72,511,335 $68,774,216 +5.4% First Half, 1996 First Half vs. 1996 1995 First Half, 1995 $135,776,189 $129,043,421 +5.2% Second Quarter 1996 net sales of $72,511,335, a record, were up 5.4% from the Second Quarter 1995 net sales of $68,774,216. First Half of 1996 net sales of $135,776,189 were up 5.2% from First Half of 1995 net sales of $129,043,421. Second Quarter 1996 net sales of $72,511,335 were up 14.6% from First Quarter 1996 net sales of $63,264,854. Record sales for the Second Quarter and First Half of 1996 are principally attributable to volume increases. Sales rose primarily as a result of successful promotional programs, product line extensions and the introduction of new products into distribution channels. Consolidated sales were also favorably affected by improved results in Mexico and Canada. COST OF SALES: Cost of Sales as a Second Quarter Percentage of Net Sales 1996 1995 2nd Qtr. 1996 2nd Qtr. 1995 $37,219,507 $35,718,429 51.3% 51.9% Cost of Sales as a First Half Percentage of Net Sales 1996 1995 1st Half 1996 1st Half 1995 $69,797,766 $66,421,289 51.4% 51.5% Cost of sales as a percentage of net sales decreased from 51.9% for the Second Quarter of 1995 to 51.3% for the Second Quarter of 1996. First Half cost of sales also decreased from 51.5% in 1995 to 51.4% for the same period in 1996. This improvement reflects lower prices in certain ingredients and packaging material costs and some changes in the sales mix of products. NET EARNINGS: Second Quarter, 1996 Second Quarter vs. 1996 1995 Second Quarter, 1995 $ 9,327,117 $ 8,326,457 12.0% First Half, 1996 First Half vs. 1996 1995 First Half, 1995 $17,445,079 $15,644,927 +11.5% Second Quarter 1996 net earnings of $9,327,117 or $.41 per share, a record, were up 12.0% from net earnings of $8,326,457 or $.36 per share for the Second Quarter of 1995. First Half 1996 net earnings of $17,445,079 or $.76 per share, also a new record, were up 11.5% from the prior year's First Half net earnings of $15,644,927 or $.68 per share. Net earnings for the Second Quarter of 1996 of $9,327,117 increased $1,209,155 or 14.9% from First Quarter of 1996 net earnings of $8,117,962. The increase in net earnings reflects higher sales and effective cost control programs that resulted in higher operating income. 8 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 1 , 1996 BY: Melvin J. Gordon Chairman of the Board BY: G. Howard Ember Vice President - Finance EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND 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-31-1996 Jan-01-1996 Jun-29-1996 6-MOS 36,985 62,914 24,593 1,994 51,685 182,090 153,565 67,887 373,563 59,928 7,500 0 0 15,975 270,789 373,563 135,776 135,776 69,798 40,306 (2,777) 222 682 27,768 10,323 17,445 0 0 0 17,445 .76 .76
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