-----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, rEvFV91/kKY8GQ7jOIYZkbRvZXRRdHVqsUJI62R19JQjpYAn0xCCMGbmQzrvECDt i2pc7Hy8L7LU7WBxLuOfpw== 0000912057-94-001001.txt : 19940323 0000912057-94-001001.hdr.sgml : 19940323 ACCESSION NUMBER: 0000912057-94-001001 CONFORMED SUBMISSION TYPE: 8-K/A CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19931015 ITEM INFORMATION: 7 FILED AS OF DATE: 19940322 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: 8-K/A SEC ACT: 34 SEC FILE NUMBER: 001-01361 FILM NUMBER: 00000000 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 8-K/A 1 8-K/A COVER THIS DOCUMENT IS A CONFIRMING COPY OF AMENDMENT NO. 1 TO THE REPORT ON FORM 8-K/A FILED ON DECEMBER 28, 1993. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 8-K/A AMENDMENT TO CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 _________________ OCTOBER 15, 1993 Date of Report (date of earliest event reported) TOOTSIE ROLL INDUSTRIES, INC. (Exact name of registrant as specified in its charter) VIRGINIA 1-1361 22 131 8955 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation or organization) 7401 SOUTH CICERO AVENUE CHICAGO, ILLINOIS 60629 (Address of principal executive offices, including Zip Code) (312) 838-3400 Registrant's telephone number, including area code Page 1 of 15 Sequentially Numbered Pages Exhibit Index at page 4 Item 7. Financial Statements, Pro Form Financial Information and Exhibits (a) Financial statements of business acquired (the "Business"). (i) The balance sheets of the Business at December 31, 1992 and October 15, 1993, and the related statements of operations and changes in divisional equity and statements of cash flows for the year ended December 31, 1992 and the period ended October 15, 1993, including the notes thereto, together with the related Accountant's Report, attached hereto as Exhibit 28(a), are hereby incorporated by reference. (b) Pro forma financial information (i) The unaudited pro forma income statements of Tootsie Roll Industries, Inc. ("Tootsie Roll") and the Business for the year ended December 31, 1992 and the nine months ended September 30, 1993, and the unaudited pro forma condensed balance sheet of Tootsie Roll and the Business as at September 30, 1993 attached hereto as Exhibit 28(b) are hereby incorporated by reference. (c) Exhibits EXHIBIT NO. DESCRIPTION OF DOCUMENT 28(a) The balance sheets of the Business at December 31, 1992 and October 15, 1993, and the related statements of operations and changes in divisional equity and statements of cash flows for the year ended December 31, 1992 and the period ended October 15, 1993, including the notes thereto, together with the related Accountant's Report. 28(b) The unaudited pro forma income statements of Tootsie Roll Industries, Inc. ("Tootsie Roll") and the Business for the year ended December 31, 1992 and the nine months ended September 30, 1993 and the unaudited pro forma condensed balance sheet of Tootsie Roll and the Business as at September 30, 1993 attached hereto as Exhibit 28(b). -2- 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 hereunto duly authorized. TOOTSIE ROLL INDUSTRIES, INC. Dated: December 28, 1993 By: /s/ G. HOWARD EMBER, JR. --------------------------------- G. Howard Ember, Jr. Vice President, Finance -3- Exhibit Index Description of Sequential Exhibit No. Document Page Nos. - ----------- -------------- ---------- 28(a) The balance sheets of the Business at December 31, 1992 and October 15, 1993, and the related statements of operations and changes in divisional equity and statements of cash flows for the year ended December 31, 1992 and the period ended October 15, 1993, including the notes thereto, together with the related Accountant's Report. 28(b) The unaudited pro forma income statements of Tootsie Roll Industries, Inc. ("Tootsie Roll") and the Business for the year ended December 31, 1992 and the nine months ended September 30, 1993, and the unaudited pro forma condensed balance sheet of Tootsie Roll and the Business as at September 30, 1993. -4- EX-28 2 EXHIBIT 18(A) EXHIBIT 28(a) CAMBRIDGE BRANDS DIVISION OF WARNER-LAMBERT COMPANY FINANCIAL STATEMENTS DECEMBER 31, 1992 AND OCTOBER 15, 1993 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Tootsie Roll Industries, Inc. In our opinion, the accompanying balance sheets and the related statements of operations and changes in divisional equity and of cash flows present fairly, in all material respects, the financial position of Cambridge Brands Division (a business unit of Warner-Lambert) at December 31, 1992 and October 15, 1993, and the results of its operations and its cash flows for the year ended December 31, 1992 and the period ended October 15, 1993 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Cambridge Brands Division is a member of a group of affiliated companies and, as disclosed in Notes 1 and 4 to the financial statements, has extensive transactions and relationships with members of the group. Because of these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among wholly unrelated parties. PRICE WATERHOUSE Chicago, Illinois December 10, 1993 CAMBRIDGE BRANDS DIVISION OF WARNER-LAMBERT COMPANY BALANCE SHEETS (dollars in thousands)
December 31, October 15, 1992 1993 ---- ---- ASSETS Current Assets: Cash $ 67 $ 61 Accounts receivable trade, net of allowance 2,635 7,083 Inventories 2,021 2,074 Prepaid expenses and deferred charges 751 864 ------- ------- Total current assets 5,474 10,082 ------- ------- Property, Plant and Equipment: Buildings and improvements 5,129 5,468 Machinery and equipment 13,748 14,140 ------- ------- 18,877 19,608 Less - accumulated depreciation (5,782) (6,778) Land 2,475 2,475 ------- ------- Total property, plant and equipment 15,570 15,305 ------- ------- Intangible assets, net of accumulated amortization of $13,229 and $14,397 49,320 48,152 ------- ------- Total Assets $70,364 $73,539 ------- ------- ------- ------- LIABILITIES AND DIVISIONAL EQUITY Current liabilities: Accounts payable $ 599 $ 587 Accrued salary and wages 463 481 Other accrued expenses 1,098 1,401 ------- ------- Total current liabilities 2,160 2,469 ------- ------- Divisional equity 68,204 71,070 ------- ------- Total Liabilities and Divisional Equity $70,364 $73,539 ------- ------- ------- -------
The accompanying notes are an integral part of this statement. -2- CAMBRIDGE BRANDS DIVISION OF WARNER-LAMBERT COMPANY STATEMENTS OF OPERATIONS AND CHANGES IN DIVISIONAL EQUITY (dollars in thousands)
For the year For the ended period ended December 31, 1992 October 15, 1993 ----------------- ---------------- Gross sales $60,560 $48,562 Less - discounts and returns 2,408 1,571 ------- ------- Net sales 58,152 46,991 Cost of goods sold 31,093 22,959 ------- ------- Gross profit 27,059 24,032 ------- ------- Operating expenses: Distribution 3,054 2,478 Selling, advertising and promotion 16,261 14,016 Administrative 1,986 1,861 Amortization of intangible assets 1,402 1,169 ------- ------- Total operating expenses 22,703 19,524 ------- ------- Income before income taxes 4,356 4,508 Income tax provision 2,217 2,236 ------- ------- Net income 2,139 2,272 Net transfers (to) from Warner-Lambert (4,311) 594 Divisional Equity at beginning of period 70,376 68,204 ------- ------- Divisional Equity at end of period $68,204 $71,070 ------- ------- ------- -------
The accompanying notes are an integral part of this statement. -3- CAMBRIDGE BRANDS DIVISION OF WARNER-LAMBERT COMPANY STATEMENTS OF CASH FLOWS (dollars in thousands)
For the year For the ended period ended December 31, 1992 October 15, 1993 ----------------- ---------------- Cash flows from operating activities: Net Income $ 2,139 $ 2,272 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 2,887 2,163 ------- ------- 5,026 4,435 Changes in operating assets and liabilities: Accounts receivable (567) (4,448) Prepaid expenses (61) (53) Inventories 1,344 (113) Accounts payable (665) (12) Accrued expenses 283 321 ------- ------- Net cash from operating activities 5,360 130 ------- ------- Cash flows from financing activities: Net transfers (to) from Warner-Lambert (4,311) 594 ------- ------- Net cash (used by) from financing activities (4,311) 594 ------- ------- Cash flows from investing activities: Purchase of property, plant and equipment (1,052) (730) ------- ------- Net cash used by investing activities (1,052) (730) ------- ------- Net decrease in cash (3) (6) Cash at beginning of period 70 67 ------- ------- Cash at end of period $ 67 $ 61 ------- ------- ------- -------
The accompanying notes are an integral part of this statement. -4- CAMBRIDGE BRANDS DIVISION OF WARNER-LAMBERT COMPANY NOTES TO FINANCIAL STATEMENTS (dollars in thousands) NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION In October 1993, Tootsie Roll Industries, Inc. entered into an agreement to purchase certain assets of the Cambridge Brands Division (the Division), a business unit of Warner-Lambert Company (the Company). The Division, which operates a production facility located in Cambridge, Massachusetts, manufactures and markets confectionery products under the brand names Junior Mints, Sugar Daddies, Sugar Babies, Pom-Poms and Charleston Chews. The accompanying financial statements reflect the financial position and results of operations of the Division as if the Division had been operating as a separate company. The assets, liabilities and results of operations specifically related to the Division have been included in the financial statements. Certain corporate, general and administrative expenses of Warner- Lambert have been allocated to the Division (discussed in Note 4) on a basis, which in the opinion of management, is reasonable. However, such expenses are not necessarily indicative of, and it is not practical for management to estimate the level of, expenses which might have been incurred had the Division been operating as a separate company. REVENUE RECOGNITION Revenue is recognized upon shipment of product. The Division recognizes estimated discounts and product returns at the time of sale. INVENTORIES Inventories are recorded at the lower of cost or market using the first-in, first-out (FIFO) method. PREPAID EXPENSES AND DEFERRED CHARGES Prepaid expenses and deferred charges consist primarily of spare parts for the maintenance of production machinery. These are valued at cost and expensed when utilized. -5- PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost. Depreciation is computed over the estimated useful lives, generally ranging from 5 to 31.5 years, of the related asset on the straight line basis. Expenditures which substantially increase value or extend useful lives are capitalized. Expenditures for maintenance and repairs are expensed as incurred. INTANGIBLE ASSETS Intangible assets consist of goodwill and trademarks arising from Warner- Lambert's acquisition of the Cambridge Brands in 1985 and are amortized using the straight line basis over 40 years. INCOME TAXES For Federal and State income tax purposes, taxable income of the Division is included in the consolidated tax returns of Warner-Lambert. Income taxes have been provided herein in accordance with Statement of Financial Accounting Standards No. 109 - "Accounting for Income Taxes" as if the Division had filed separate federal and state income tax returns. The liabilities for current and deferred income taxes have been recognized as a component of divisional equity in the accompanying financial statements. EARNINGS PER SHARE Since there is no separate capitalization or shares of stock attributed to the Division upon which a per share calculation can be based, historical per share data has not been presented in the accompanying financial statements. NOTE 2 - ACCOUNTS RECEIVABLE: Accounts receivable primarily consist of trade balances due from customers other than Warner-Lambert. Accounts receivable consist of the following:
December 31, October 15, 1992 1993 ---- ---- Accounts receivable $2,771 $7,268 Allowance for doubtful accounts (136) (185) ------ ------ $2,635 $7,083 ------ ------ ------ ------
Interdivisional accounts receivable are settled through Warner-Lambert's interdivisional accounting system and, accordingly, the accounts receivable balance does not include interdivisional accounts receivable from or payable to other Warner-Lambert business units. -6- Accounts receivable from sales to substantially all customers are unsecured. The Company utilizes a centralized billing and accounts receivable. Accordingly, accounts receivable for the Division cannot be specifically identified. The accounts receivable balance in the accompanying financial statements represents an allocation based on the Company's overall ratio of accounts receivable to sales. NOTE 3 - INVENTORIES Inventories consist of the following:
December 31, October 15, 1992 1993 ---- ---- Raw materials $ 282 $ 293 Finishing supplies 288 293 Work in process 43 47 Finished goods 1,408 1,441 ------ ------ $2,021 $2,074 ------ ------ ------ ------
NOTE 4 - DIVISIONAL EQUITY, ALLOCATIONS AND TRANSACTIONS WITH WARNER-LAMBERT Warner-Lambert controls all aspects of cash management for the Division with respect to intercompany sales and receivables and accounts payable. The net cumulative interdivisional balances are presented as a component of divisional equity. Warner-Lambert does not impute interest on these balances or net divisional equity. In addition to intercompany cash transactions, divisional equity, as reported in the accompanying financial statements, includes the sum of accumulated net income for the Division and allocations from Warner-Lambert. Allocations from Warner-Lambert include costs incurred by Warner-Lambert on behalf of the Division and include, among other charges, general and administrative costs and advertising expenses. These charges are allocated to the Division based on a formula which utilizes certain measures of volume. In the opinion of management, the expense allocations were made on a reasonable and consistent basis; however, they are not necessarily indicative of the level of expenses which might have been incurred on a stand-alone basis. The amounts that would have been or will be incurred on a separate company basis could differ from the amounts allocated due to economies of scale, differences in management approach, or changes in the number of employees and related systems and expenses. -7- Warner-Lambert expense allocations are reported in the accompanying financial statements as follows:
For the year For the period ended ended December 31, October 15, 1992 1993 ------------ ------------ Discounts $1,139 $ 906 Distribution 697 544 Selling, advertising and promotion 5,394 4,552 Administrative 1,928 1,731 ------ ------ $9,158 $7,733 ------ ------ ------ ------
NOTE 5 - PENSION PLANS: PENSION BENEFITS Employees of the Division participate in a pension plan sponsored by Warner- Lambert. Funds are contributed to a trustee as necessary to provide for current service and for any unfunded projected benefit obligation over a reasonable period. Retirement benefits are based on years of service and generally on the average compensation earned in the last years of service. Total pension expense under this plan allocated to the Division was $47 and $58 for the periods ended December 31, 1992 and October 15, 1993, respectively. -8- EX-28 3 EXHIBIT 28(B) EXHIBIT 28(b) PRO FORMA FINANCIAL INFORMATION The Company acquired the Cambridge Brands Division of Warner-Lambert Company on October 15, 1993. The pro forma income statement data for the year ended December 31, 1992 and the nine months ended September 30, 1993 presented below have been prepared assuming the Company consummated the acquisition of Cambridge Brands at the beginning of the period presented and reflect estimated purchase accounting and other adjustments related to the acquisition. The pro forma balance sheet data as of September 30, 1993 assumes the Company consummated the acquisition of Cambridge Brands on September 30, 1993. The pro forma income statement and balance sheet data presented below is unaudited. The pro forma income statement data are not necessarily indicative of what the actual results of operations would have been had the transactions occurred at the beginning of the period presented, nor do the purport to indicate the results of future operations. All amounts are in thousands except per share data. INCOME STATEMENT DATA:
For the For the nine year ended months ended December 31, September 30, 1992 1993 ------------ ------------- Net sales $ 303,576 $ 244,170 Cost of goods sold 158,216 122,307 ------------ ------------- 145,360 121,863 Operating expenses: Marketing, selling and advertising 55,219 45,598 Distribution and ware- housing 20,013 15,801 General and administrative 17,828 13,000 ------------ ------------- Earnings from operations 52,300 47,464 Other income, net 3,978 3,669 Provision for income taxes (22,107) (20,441) ------------ ------------- Net earnings $ 34,171 $ 30,692 ------------ ------------- ------------ ------------- Net earnings per common share $ 3.34 $ 2.91 ------------ ------------- ------------ ------------- Average common shares outstanding 10,229 10,534
BALANCE SHEET DATA:
September 30, 1993 ------------- Assets - ------ Accounts receivable $ 51,644 Inventories 71,251 Other current assets 47,055 ------------- 169,950 Property, plant and equipment 78,118 Other assets 112,114 ------------- Total assets $ 360,182 ------------- ------------- Liabilities and Shareholders' Equity - ------------------------------------ Notes payable to banks $ 82,304 Other current liabilities 33,496 ------------- 115,800 Noncurrent liabilities 37,745 Shareholders' Equity Common stock 7,315 Capital in excess of par value 111,108 Retained earnings 90,627 Equity adjustment from foreign currency translation (2,413) ------------- 206,637 ------------- Total liabilities and shareholders' equity $ 360,182 ------------- -------------
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