-----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, LTUL9XpCafUJyL+vCV8Md48FE8d4u08Nd8I8fCqcp+WhkNQX41dc9z+3lrrzLW2r BWUazFs2yHO2jkgpYWksow== 0000098677-96-000011.txt : 19961111 0000098677-96-000011.hdr.sgml : 19961111 ACCESSION NUMBER: 0000098677-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961108 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: 96656647 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 09/28/96 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 September 28, 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 15,604,742 Class B Common Stock, $.69 4/9 par value 7,399,311 2 PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ASSETS SEPT 28 SEPT 30 Dec. 31 CURRENT ASSETS 1996 1995 1995 Cash & Cash Equiv. $ 29,853,140 $ 29,088,252 $ 47,523,986 Marketable Securities 64,173,247 37,851,060 55,925,732 Accounts Receivable Less Allowances of $3,027,000,$2,764,000 & $1,774,000 67,001,850 64,271,180 23,553,517 Inventories at Cost (Last-in,First-out): Finished Goods & Work in Process 19,470,662 19,966,604 19,584,849 Raw Material & Supplies 8,805,635 11,169,913 12,624,820 Prepaid Expenses 4,774,338 2,133,925 2,812,763 Deferred Income Taxes 2,923,000 2,473,557 2,923,000 Total Current Assets 197,001,872 166,954,491 164,948,667 PROPERTY, PLANT & EQUIPMENT, (at Cost) Land 6,906,496 6,955,770 6,899,832 Building 28,271,675 27,286,819 28,259,052 Machinery & Equip. 120,780,065 111,665,781 111,660,755 155,958,236 145,908,370 146,819,639 Less-Accumulated Deprec. and Amortization 70,337,509 63,120,497 64,820,354 85,620,727 82,787,873 81,999,285 OTHER ASSETS Intangibles 93,932,177 96,638,477 95,961,902 Miscellaneous Investment 32,089 52,535 52,535 Misc. Other Assets 15,062,282 10,737,240 10,853,931 109,026,548 107,428,252 106,868,368 Total Assets $391,649,147 $357,170,616 $353,816,320
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(UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY Sept 28 Sept 30 Dec. 31 CURRENT LIABILITIES 1996 1995 1995 Notes Payable to Banks $ -- $ 20,000,000 $ 20,000,000 Accounts Payable 11,933,589 8,603,221 5,911,910 Dividends Payable 1,667,817 1,423,604 1,424,014 Accrued Liabilities 30,744,448 24,452,689 21,531,891 Fed. & State Income Taxes 15,070,759 11,910,384 6,438,353 Total Current Liabilities 59,416,613 66,389,898 55,306,168 NON-CURRENT LIABILITIES Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 5,553,315 5,279,061 5,385,539 Deferred Compensation 5,379,856 3,755,075 4,526,936 Deferred Fed.Inc.Taxes 9,461,662 7,366,000 8,911,222 Total Non-Current Liabilities 27,894,833 23,900,136 26,323,697 SHAREHOLDERS' EQUITY Common Stk., $.69-4/9 par value- 25,000,000 shares author. 15,604,742, 15,095,659 & 15,108,790 respectively, issued 10,836,487 10,482,957 10,492,076 Class B Common Stk $.69-4/9 par value- 10,000,000 shares author. 7,399,311, 7,247,005 & 7,233,874 respectively issued 5,138,344 5,032,576 5,023,457 Capital in Excess of Par Value 171,588,958 146,171,411 146,171,411 Retained Earnings 127,400,589 114,382,977 121,476,879 Cumulative Translation Adjustment (10,626,677) (9,189,339) (10,977,368) Total Shareholders" Equity 304,337,701 266,880,582 272,186,455 Total Liabilities and Shareholders" Equity $391,649,147 $357,170,616 $353,816,320
4 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED)
13 Weeks Ended 39 Weeks Ended Sept. 28, 1996 & Sept. 30, 1995 Sept 28, 1996 & Sept. 30, 1995 1996 1995 1996 1995 NET SALES (Note 2) $128,657,228 $116,471,443 $264,433,417 $245,514,864 Cost of goods sold 68,241,866 63,954,938 138,039,632 130,376,227 Gross Margin 60,415,362 52,516,505 126,393,785 115,138,637 Operating Expenses: Marketing, Selling and Advertising 18,412,155 15,844,568 39,755,505 37,334,843 Distribution and Warehousing 7,506,993 7,508,843 17,719,217 17,723,266 General and Administrative 4,122,943 3,411,320 11,520,031 9,941,735 Goodwill amortization 676,575 676,575 2,029,725 2,029,725 30,718,666 27,441,306 71,024,478 67,029,569 Earnings from Operations 29,696,696 25,075,199 55,369,307 48,109,068 Other Income (Expense) Net 778,794 557,238 2,874,262 2,379,296 Earnings before Income Taxes 30,475,490 25,632,437 58,243,569 50,488,364 Provision for Income Taxes 11,333,000 9,400,000 21,656,000 18,611,000 Net Earnings (Note 5) 19,142,490 16,232,437 36,587,569 31,877,364 Retained Earnings at beginning of period 109,925,917 99,546,976 121,476,879 107,762,823 129,068,407 115,779,413 158,064,448 139,640,187 Deduct: Cash Dividends 1,667,818 1,396,436 4,703,673 3,986,119 Stock Dividends - 3% -- -- 25,960,186 21,271,091 1,667,818 1,396,436 30,663,859 25,257,210 Retained Earnings at end of period $127,400,589 $114,382,977 $127,400,589 $114,382,977 Net Earnings per Share (Note 3) $ .83 $ .71 $1.59 $1.39 Dividends Per Share * $ .0725 $ .0625 $ .2075 $ .18 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)
39 Weeks Ended September 28, 1996 & September 30, 1995 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $36,587,569 $31,877,364 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 8,723,849 7,689,966 (Increase) decrease in assets: Accounts receivable (43,297,611) (41,634,505) Inventories 4,112,483 (2,509,585) Prepaid expenses and other assets (6,120,105) (3,336,164) Increase in liabilities: Accounts payable and accrued liabilities 15,175,400 8,489,531 Income taxes payable and deferred 9,193,294 9,752,490 Postretirement health care and life insurance benefits 167,776 286,342 Other long term liabilities 852,920 603,511 Other 69,246 -- Net cash provided by operating activities 25,464,821 11,218,950 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (10,344,941) (2,914,955) Investment purchases (37,673,985) (24,110,791) Investment maturities 29,426,470 32,282,432 Net cash provided by (used in) investing activities (18,592,456) 5,256,686 CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of note payable (20,000,000) -- Dividends paid in cash (4,543,211) (3,896,043) Net cash used in financing activities (24,543,211) (3,896,043) Increase (decrease)in cash and cash equivalents (17,670,846) 12,579,593 Cash and cash equivalents-beginning of year 47,523,986 16,508,659 Cash and cash equivalents end of quarter $29,853,140 $29,088,252 Supplemental cash flow information: Income taxes paid $12,608,000 $ 9,073,000 Interest paid $ 944,000 $ 1,171,000
6 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 28, 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 September 28, 1996 amounted to $22,500,000. 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 September 28, 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 Third Quarter of 1996. Note 7 - Sales of unregistered Securities - None. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED STATEMENTS OF EARNINGS 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, 1996 Third Quarter vs. 1996 1995 Third Quarter, 1995 $128,657,228 $116,471,443 10.5% Nine Months, 1996 Nine Months vs. 1996 1995 Nine Months, 1995 $264,433,417 $245,514,864 7.7% Third Quarter 1996 net sales of $128,657,228, were up 10.5% from Third Quarter 1995 net sales of $116,471,443. Nine Months of 1996 net sales of $264,433,417 were up 7.7% from Nine Months of 1995 net sales of $245,514,864. Third Quarter 1996 net sales of $128,657,228 were up 77.4% from Second Quarter 1996 net sales of $72,511,335. 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 1996 are principally attributable to volume increases. Sales rose primarily as a result of successful product line extensions and promotional programs, including pre-Halloween sales programs. The Company's public relations program that resulted in various media coverage of Tootsie Roll 100th anniversary also facilitated the Company's sales efforts. 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 1996 1995 3rd Qtr. 1996 3rd Qtr. 1995 $68,241,866 $63,954,938 53.0% 54.9% Cost of Sales as a Nine Months Percentage of Net Sales 1996 1995 9 Months 1996 9 Months 1995 $138,039,632 $130,376,227 52.2% 53.1% Cost of sales as a percentage of net sales decreased from 54.9% for the Third Quarter of 1995 to 53.0% in the Third Quarter of 1996. Nine Months cost of sales also decreased from 53.1% in 1995 to 52.2% for the same period in 1996. This improvement reflects lower prices in certain ingredients and packaging material costs and the benefits of higher sales volumes against relatively fixed factory overhead costs. NET EARNINGS: Third Quarter, 1996 Third Quarter vs. 1996 1995 Third Quarter, 1995 $19,142,490 $16,232,437 17.9% Nine Months, 1996 Nine Months vs 1996 1995 Nine Months, 1995 $36,587,569 $31,877,364 14.8% Third Quarter 1996 net earnings of $19,142,490 or $.83 per share were up 17.9% from net earnings of $16,232,437 or $.71 per share for the Third Quarter of 1995 Nine Months 1996 net earnings of $36,587,569 or $1.59 per share, also a new record, were up 14.8% from the prior year's Nine Months net earnings of $31,877,364 or $1.39 per share. Net earnings for the Third Quarter of 1996 of $19,142,490 increased $9,815,373 or 105.2% from Second Quarter of 1996 net earnings of $9,327,117. The increase in net earnings reflects higher sales, as historically the third quarter includes pre-Halloween sales and is the company's largest quarterly sales period of the year, 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: October 29, 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 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-31-1996 Jan-01-1996 Sep-28-1996 9-MOS 29,853 64,173 70,029 3,027 28,277 197,022 155,958 70,338 391,649 59,417 7,500 0 0 15,975 288,363 391,649 264,433 264,433 138,040 71,024 (3,793) 419 919 58,244 21,656 36,588 0 0 0 36,588 1.59 1.59
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