-----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, Jqdff9jbO+O/fDfsaCK5NjW+sQpsHiPWZ6iUHE6slbfAPFGqUQW+sPe3InPXNgBA vhV9cdXPq53fHggsLkH/YQ== 0000098677-98-000004.txt : 19980507 0000098677-98-000004.hdr.sgml : 19980507 ACCESSION NUMBER: 0000098677-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980328 FILED AS OF DATE: 19980506 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: 98611233 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 03/28/98 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 March 28, 1998 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 16,315,044 Class B Common Stock, $.69 4/9 par value 7,761,366 PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED) ASSETS March 28, March 29, Dec. 31, CURRENT ASSETS 1998 1997 1997 Cash & Cash Equiv. $ 34,384,760 $ 37,487,705 $ 60,432,573 Marketable Securities 92,450,294 105,068,687 81,847,537 Accounts Receivable Less Allowances of $2,238,000,$2,074,000 & $2,085,000 25,001,428 19,026,063 23,319,189 Inventories at Cost (Last-in,First-out): Finished Goods & Work in Process 31,228,297 27,939,041 22,937,821 Raw Material & Supplies 15,550,639 12,348,294 13,721,292 Prepaid Expenses 5,795,280 4,205,972 2,910,043 Deferred Income Taxes 1,793,000 2,839,000 1,793,000 Total Current Assets 206,203,698 208,914,762 206,961,455 PROPERTY, PLANT & EQUIPMENT, (at cost) Land 6,895,114 6,897,457 6,895,124 Building 22,082,109 28,643,304 22,099,681 Machinery & Equipment 126,300,215 118,949,136 122,429,737 155,277,438 154,489,897 151,424,542 Less-Accumulated Depreciation and Amortization 75,234,907 73,820,803 73,060,644 80,042,531 80,669,094 78,363,898 OTHER ASSETS Intangibles 89,872,728 92,579,027 90,549,303 Investments 51,519,053 - 39,737,566 Other Assets 22,525,607 16,693,431 21,129,874 163,917,388 109,272,458 151,416,743 Total Assets $450,163,617 $398,856,314 $436,742,096
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(UNAUDITED) LIABILITIES AND SHAREHOLDERS( EQUITY March 28, March 29, Dec. 31, CURRENT LIABILITIES 1998 1997 1997 Accounts Payable $ 11,654,609 $ 9,834,673 $ 11,623,404 Dividends Payable 2,179,102 1,756,365 1,930,339 Accrued Liabilities 29,611,543 25,732,281 32,793,347 Fed. & State Income Taxes 13,060,208 12,869,580 7,259,040 Total Current Liabilities 56,505,462 50,192,899 53,606,130 NON-CURRENT LIABILITIES Ind.Dev.Bonds 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 5,991,768 5,708,379 5,904,593 Deferred Compensation 12,325,480 8,405,886 9,918,664 Deferred Income Taxes 8,617,653 9,212,680 8,650,156 Total Non-Current Liabilities 34,434,901 30,826,945 31,973,413 SHAREHOLDERS( EQUITY Common Stk., $.69-4/9 par value- 50,000,000 shares author. 16,315,044, 16,018,418 & 15,851,296 respectively, issued 11,329,753 11,123,762 11,007,706 Class B Common Stk $.69-4/9 par value- 20,000,000 shares author. 7,761,366, 7,596,383 & 7,546,505 respectively, issued 5,389,772 5,275,200 5,240,563 Capital in Excess of Par Value 237,614,188 198,571,051 187,259,058 Retained Earnings 115,896,720 114,002,206 159,123,991 Cumulative Translation Adjustment (11,044,831) (11,135,749) (11,051,961) Unrealized gain (loss) on investments 37,652 - (416,804) Total Shareholders( Equity 359,223,254 317,836,470 351,162,553 Total Liabilities and Shareholders( Equity $450,163,617 $398,856,314 $436,742,096
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED) 13 Weeks Ended March 28, 1998 & March 29, 1997 1998 1997 Net Sales (Note 2) $ 69,700,843 $ 66,257,600 Cost of Goods Sold 32,734,862 32,934,937 Gross Margin 36,965,981 33,322,663 Operating Expenses: Marketing, Selling and Advertising 10,856,893 9,894,191 Distribution and Warehousing 4,871,415 5,160,233 General and Administrative 4,053,343 3,865,905 Goodwill Amortization 676,575 676,575 20,458,226 19,596,904 Earnings from Operations 16,507,755 13,725,759 Other Income (Expense), Net 1,162,762 1,658,038 Earnings before Income Taxes 17,670,517 15,383,797 Provision for Income Taxes 6,454,000 5,633,000 Net Earnings (Note 5) 11,216,517 9,750,797 Retained Earnings at beginning of period 159,123,991 136,352,123 170,340,508 146,102,920 Deduct: Cash Dividends 1,930,339 1,662,380 Stock Dividends - 3% 52,513,449 30,438,334 54,443,788 32,100,714 Retained Earnings at end of period $115,896,720 $114,002,206 Net Earnings per Share (Note 3) $.47 $ .40 Dividends Per Share * $.0825 $ .0725 Average Number of Shares Outstanding (Notes 3 & 4) 24,091,410 24,332,160 *Does not include 3% Stock Dividend to Shareholders of Record on 3/10/98 and 3/11/97.
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) 13 Weeks Ended March 28, 1998 & March 29, 1997 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $11,216,517 $ 9,750,797 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 2,850,838 2,921,062 (Increase) decrease in assets: Accounts receivable (1,680,685) 2,157,902 Inventories (10,117,321) (10,030,144) Prepaid expenses and other assets (4,388,669) (2,942,073) Increase (decrease) in liabilities: Accounts payable and accrued liabilities (1,189,185) (1,225,562) Income taxes payable and deferred 5,769,285 3,095,870 Other long term liabilities 2,406,816 419,104 Other 90,051 41,264 Net cash provided by operating 4,957,647 4,188,220 activities CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (5,814,732) (1,183,002) Purchase of held to maturity securities (51,490,774) (12,234,589) Maturity of held to maturity securities 30,483,669 5,229,865 Purchase of available for sale securities (45,885,963) (6,000,000) Sale and maturity of available for sale securities 45,070,979 6,434,354 Net cash used in investing activities (27,636,821) ( 7,753,372) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid in cash (1,930,339) (1,667,817) Shares repurchased and retired (1,438,300) (2,938,125) Net cash used in financing activities (3,368,639) (4,605,942) Decrease in cash and cash equivalents (26,047,813) ( 8,171,094) Cash and cash equivalents-beginning of year 60,432,573 45,658,799 Cash and cash equivalents end of quarter $34,384,760 $37,487,705 Supplemental cash flow information: Income taxes paid $ 788,000 $ 2,420,000 Interest paid $ 147,000 $ 202,000
PAGE <6> TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 28, 1998 (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 March 28, 1998 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 22, 1998 and April 22, 1997. Note 5 - Results of operations for the period ended March 28, 1998 are not necessarily indicative of results to be expected for the year to end December 31, 1998 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 1998. Note 7 - Sales of unregistered Securities - None. Note 8 - New Accounting Pronouncement Effective January 1, 1998, Tootsie Roll adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income." This Statement requires that all items recognized under accounting standards as components of comprehensive earnings be reported in an annual financial statement that is displayed with the same prominence as other annual financial statements. Such components may include foreign currency translation adjustments and unrealized gains and losses on marketable securities classified as available for sale. Annual financial statements for prior periods will be reclassified as required. The Company's total comprehensive income was as follows: (in thousands) 13 Weeks Ended March 28, 1998 March 29, 1997 Net earnings $11,217 $9,751 Other comprehensive gain(loss) 462 (101) Total comprehensive earnings $11,679 $9,650 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: First Quarter, 1998 First Quarter vs. 1998 1997 First Quarter, 1997 $69,700,843 $66,257,600 +5.2% First Quarter 1998 net sales of $69,701,000, a record, were up 5.2% from First Quarter 1997 net sales of $66,258,000. Sales rose as a result of successful marketing and promotional programs. These record sales principally reflect sales gains of the Company's core brands. First Quarter 1998 net sales of $69,701,000 were down from Fourth Quarter 1997 net sales of $86,403,000. 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 1998 1997 1st Qtr. 1998 1st Qtr. 1997 $32,734,862 $32,934,937 47.0% 49.7% Cost of sales as a percentage of net sales favorably decreased from 49.7% for First Quarter 1997 to 47.0% for First Quarter 1998. This improvement reflects lower costs in certain ingredients and packaging material costs as well as various manufacturing productivity improvements. NET EARNINGS: First Quarter, 1998 First Quarter vs. 1998 1997 First Quarter, 1997 $11,216,517 $9,750,797 +15.0% First Quarter 1998 net earnings of $11,217,000 a record, were up 15.0% from net earnings of $9,751,000 for the First Quarter 1997. The increase in net earnings reflects higher sales, improved gross profit margins and effective on-going cost control programs which resulted in higher income from operations. First Quarter 1998 income from operations was $16,508,000, an increase of 20% from First Quarter 1997 income from operations of $13,726,000. Other income was adversely affected by $835,000 of foreign exchange and translation losses in Mexico; based on the accounting rules that classify Mexico as hyper-inflationary, these translation losses were charged to expense in the current period. Increased investment income in the First Quarter of 1998 partially mitigated this loss. First Quarter 1998 earnings per share were $.47 compared to $.40 in 1997, a 17% increase reflecting the increase in net earnings discussed above as well as the stock repurchases during the last 12 months. The consolidated effective income tax rate decreased from 36.6% in the First Quarter of 1997 to 36.5% in the First Quarter of 1998. This improvement reflects increased tax-free investment income. First Quarter 1998 net earnings of $11,217,000 decreased $2,512,000 or 18.3% from Fourth Quarter of 1997 net earnings of $13,729,000, which reflects the lower level of sales in the First Quarter 1998 compared to the Fourth Quarter 1997. This is consistent with historical trends. 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 4, 1998 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-31-1998 Jan-01-1998 Mar-28-1998 3-MOS 34,385 92,450 27,239 2,238 46,779 206,204 155,277 75,235 450,164 56,505 7,500 0 0 16,720 342,504 450,164 69,701 69,701 32,735 20,458 (1,307) 61 144 17,671 6,454 11,217 0 0 0 11,217 .47 .47
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