-----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, Fnl3wgA9XJa9lt5BUipbXtknaTnZn1GE2qkkpbyTIWuYDrLbeecsgtAgPN+zqg+0 RYB57062BKMLwBSKzkhxjg== 0000098677-94-000008.txt : 19950608 0000098677-94-000008.hdr.sgml : 19950608 ACCESSION NUMBER: 0000098677-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941104 SROS: NYSE 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: 94557692 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 10/01/94 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 October 1, 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 7,304,163 Class B Common Stock, $.69 4/9 par value 3,543,546 2 PART I - FINANCIAL INFORMATION TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
ASSETS October 1 October 2 Dec. 31 CURRENT ASSETS 1994 1993 1993 Cash & Cash Equiv. $ 30,247,142 $ 5,161,517 $ 1,985,809 Marketable Securities 20,531,799 71,250,658 54,217,079 Accounts Receivable Less Allowances of $2,738,000,$2,263,000 & $2,075,000 61,280,500 44,561,142 20,656,006 Inventories at Cost (Last-in,First-out): Finished Goods & Work in Process 17,954,994 18,232,198 17,186,423 Raw Material & Supplies 11,051,436 10,576,866 12,107,728 Prepaid Expenses 4,180,915 10,085,841 3,666,901 Deferred Income Taxes 2,208,682 1,992,000 2,094,000 Total Current Assets 147,455,468 161,860,222 111,913,946 PROPERTY, PLANT & EQUIPMENT, (at Cost) Land 4,230,667 2,230,667 4,230,667 Building 25,347,199 13,138,646 25,347,199 Machinery & Equip. 112,179,487 91,199,025 107,685,361 Leasehold Impvts. 5,641 4,840,902 9,641 141,762,994 111,409,240 137,272,868 Less-Accumulated Deprec. and Amortization 56,522,400 48,597,162 50,573,679 85,240,594 62,812,078 86,699,189 OTHER ASSETS Intangibles 99,344,777 44,247,488 101,374,501 Miscellaneous Invest. 90,977 107,169 90,977 Misc. Other Assets 6,947,148 8,677,668 3,861,219 106,382,902 53,032,325 105,326,697 Total Assets $339,078,964 $277,704,625 $303,939,832
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LIABILITIES AND SHAREHOLDERS' EQUITY October 1 October 2 Dec. 31 CURRENT LIABILITIES 1994 1993 1993 Bank Loans Short Term $ 20,436,148 $ 303,656 $22,600,673 Accounts Payable 8,657,842 6,065,422 6,259,252 Dividends Payable 1,218,934 1,025,123 1,025,428 Accrued Liabilities 20,277,399 15,783,040 17,918,747 Fed. & State Income Taxes 8,275,205 8,153,405 3,057,290 Total Current Liabilities 58,865,528 31,330,646 50,861,390 NON-CURRENT LIABILITIES E.T.I. Term Loan 20,000,000 20,000,000 20,000,000 Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000 Post Retirement Benefits 4,882,464 4,362,823 4,497,834 Deferred Compensation 2,871,550 2,065,672 2,373,454 Deferred Fed.Inc.Taxes 6,195,761 5,808,345 6,363,886 Total Non-Current Liabilities 41,449,775 39,736,840 40,735,174 SHAREHOLDERS' EQUITY Common Stk., $.69-4/9 par value- 25,000,000 shares author. 7,304,163, 7,062,474 & 7,068,561 respectively, issued 5,072,200 4,904,361 4,908,588 Class B Common Stk $.69-4/9 par value- 10,000,000 shares author. 3,543,546, 3,471,102 & 3,465,015 respectively issued 2,460,730 2,410,421 2,406,194 Capital in Excess of Par Value 132,997,160 111,108,198 111,108,198 Retained Earnings 101,232,905 90,626,909 96,646,704 Cumulative Translation Adjustment (2,999,334) (2,412,750) (2,726,416) Total Shareholders' Equity 238,763,661 206,637,139 212,343,268 Total Liabilities and Shareholders' Equity $339,078,964 $277,704,625 $303,939,832
4 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (NOTE 1) (UNAUDITED)
13 Weeks Ended 39 Weeks Ended Oct. 1, 1994 & Oct. 2, 1993 Oct. 1, 1994 & Oct. 2, 1993 1994 1993 1994 1993 NET SALES (Note 2) $111,013,575 $ 93,239,055 $230,274,782 $197,179,108 Cost of goods sold 59,818,297 47,920,587 119,652,734 99,348,340 Gross Margin 51,195,278 45,318,468 110,622,048 97,830,768 Operating Expenses: Marketing, Selling and Advertising 15,860,153 13,768,589 35,402,450 31,582,489 Distribution and Warehousing 6,539,884 5,487,594 15,623,004 13,322,765 General and Administrative 3,365,960 2,958,748 9,515,412 9,021,856 Goodwill amortization 676,575 321,928 2,029,725 947,782 26,442,572 22,536,859 62,570,591 54,874,892 Earnings from Operations 24,752,706 22,781,609 48,051,457 42,955,876 Other Income (Expense) Net 98,748 1,155,450 995,751 3,669,164 Earnings before Income Taxes 24,851,454 23,937,059 49,047,208 46,625,040 Provision for Income Taxes 9,465,000 9,557,000 18,839,000 18,204,000 Net Earnings (Note 5) 15,386,454 14,380,059 30,208,208 28,421,040 Retained Earnings at beginning of period 87,039,699 77,247,559 96,646,704 90,285,436 102,426,153 91,627,618 126,854,912 118,706,476 Deduct: Cash Dividends 1,193,248 1,000,709 3,387,205 2,768,586 Stock Dividends - 3% -- -- 22,234,802 25,310,981 1,193,248 1,000,709 25,622,007 28,079,567 Retained Earnings at end of period $101,232,905 $ 90,626,909 $101,232,905 $ 90,626,909 Net Earnings per Share (Note 3) $1.42 $1.33 $2.78 $2.62 Dividends Per Share * $ .11 $ .095 $ .315 $ .265 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)
39 Weeks Ended October 1, 1994 & October 2, 1993 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $30,208,208 $28,421,040 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 8,710,542 6,203,880 (Increase) decrease in assets: Accounts receivable (40,624,494) (31,672,291) Inventories 287,721 (3,963,458) Prepaid expenses and other assets (4,587,550) (9,645,635) Increase (decrease) in liabilities: Accounts payable and accrued liabilities 4,757,242 3,512,974 Income taxes payable and deferred 4,935,108 4,856,189 Postretirement health care and life insurance benefits 384,630 387,050 Other long term liabilities 498,096 (740,017) Other (272,918) (567,018) Net cash provided by (used in) operating activities 4,296,585 (3,207,286) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (5,094,014) (26,578,437) Investment purchases (36,478,612) (16,071,960) Investment sales 70,958,208 32,634,259 Net cash provided by (used in) investing activities 29,385,582 (10,016,138) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowing under lines of credit agreements 436,148 3,250,000 Repayment under lines of credit agreements (2,600,673) (3,250,000) Borrowing under note payable -- 20,000,000 Dividends paid in cash (3,321,391) (2,687,036) Other, net 65,082 77,491 Net cash provided by (used in) financing activities (5,420,834) 17,390,455 Increase in cash and cash equivalents 28,261,333 4,167,031 Cash and cash equivalents-beginning of year 1,985,809 994,486 Cash and cash equivalents end of quarter $30,247,142 $ 5,161,517 Supplemental cash flow information: Income taxes paid $12,029,000 $13,251,000 Interest paid $ 1,407,000 $ 275,000
6 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 1, 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. All adjustments were of a normal and recurring nature. Note 2 - The Company's unshipped orders at October 1, 1994 amounted to $19,000,000. 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 October 1, 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 Third Quarter of 1994. Note 7 - Sales of unregistered Securities - None. Note 8 - As of January 1, 1994, the Company adopted the provisions of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" which requires the Company to classify each of its debt and equity securities into one of three categories: held-to-maturity, available-for-sale or trading. The Company has concluded that its investments should be classified as held-to-maturity due to the existence of positive intent and ability to hold these securities to maturity. Accordingly, all investments have been measured at amortized cost in the statement of financial position. 7 A summary of the aggregate fair value, gross unrealized holding gains, gross unrealized losses and amortized cost basis by major security type is as follows:
October 1, 1994 Amortized Fair Unrealized Cost Value Gains Losses Unit Investment Trusts of Preferred Stocks $ 8,483,269 $ 9,274,931 $ 823,642 $ -31,980 Tax-Free Commercial Paper Municipal Bonds 5,292,555 5,291,709 767 -1,613 Unit Investment Trusts of Municipal Bonds 4,995,449 5,528,754 581,000 -47,695 Other Private Export Funding Securities 1,760,526 1,760,526 -- -- $ 20,531,799 $ 21,855,920 $ 1,405,409 $ -81,288
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October 2, 1993 Amortized Fair Unrealized Cost Value Gains Losses Unit Investment Trusts of Preferred Stocks $ 11,901,172 $13,360,582 $1,480,770 $ -21,360 Tax-Free Commercial Paper 26,550,395 26,550,999 7,223 -6,619 Municipal Bonds 21,969,068 22,144,230 176,192 -1,030 Unit Investment Trusts of Municipal Bonds 9,129,696 9,635,799 657,764 -151,661 Other Private Export Funding Securities 1,700,327 1,700,327 -- -- $ 71,250,658 $ 73,391,937 $ 2,321,949 $-180,670 December 31, 1993 Amortized Fair Unrealized Cost Value Gains Losses Unit Investment Trusts of Preferred Stocks $ 11,249,582 $12,697,609 $1,481,620 $ -33,593 Tax-Free Commercial Paper 19,802,590 19,802,256 5,173 -5,507 Municipal Bonds 14,314,539 14,427,682 113,143 -- Unit Investment Trusts of Municipal Bonds 7,139,231 7,633,204 650,463 -156,490 Other Private Export Funding Securities 1,711,137 1,711,137 -- -- $ 54,217,079 $ 56,271,888 $ 2,250,399 $-195,590 There were no sales of securities classified as held-to-maturity. With the exception of the unit investment trusts, all securities are expected to mature within the succeeding twelve months.
9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED STATEMENTS OF EARNINGS NET SALES: Third Quarter, 1994 Third Quarter vs. 1994 1993 Third Quarter, 1993 $111,013,575 $ 93,239,055 +19.1% Nine Months, 1994 Nine Months vs. 1994 1993 Nine Months, 1993 $230,274,782 $197,179,108 +16.8% Third Quarter 1994 net sales of $111,013,575, a record, were up 19.1% from Third Quarter 1993 net sales of $93,239,055. Nine months of 1994 net sales of $230,274,782 were up 16.8% from nine months of 1993 net sales of $197,179,108. Third Quarter 1994 net sales of $111,013,575 were up 76.5% from Second Quarter 1994 net sales of $62,891,164 because historically the third quarter includes pre-Halloween sales and is our largest quarterly sales period of the year. Record sales for the Third Quarter and Nine Months of 1994 were up principally as a result of the inclusion of the former Warner-Lambert Chocolate and Caramel Brands acquired in the fourth quarter of 1993. In addition to the increases in sales from these recently acquired brands, some core Tootsie Roll products also experienced increases. Successful promotional programs including pre-Halloween sales programs, contributed to these record sales results. COST OF SALES: Cost of Sales as a Third Quarter Percentage of Net Sales 1994 1993 3rd Qtr. 1994 3rd Qtr. 1993 $59,818,297 $47,920,587 53.9% 51.4% Cost of Sales as a Nine Months Percentage of Net Sales 1994 1993 9 Months 1994 9 Months 1993 $119,652,734 $99,348,340 52.0% 50.4% 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED STATEMENTS OF EARNINGS (Continued) Cost of sales as a percentage of net sales increased from 51.4% for the Third Quarter of 1993 to 53.9% in the Third Quarter of 1994. Nine Months cost of sales also increased from 50.4% in 1993 to 52.0% for the same period in 1994. These increases reflect increases in certain raw material costs and changes in product mix as well as manufacturing overhead costs, principally depreciation and equipment leasing. NET EARNINGS: Third Quarter, 1994 Third Quarter vs. 1994 1993 Third Quarter, 1993 $15,386,454 $14,380,059 +7.0% Nine Months, 1994 Nine Months vs. 1994 1993 Nine Months, 1993 $30,208,208 $28,421,040 +6.3% Third Quarter 1994 net earnings of $15,386,454 or $1.42 per share, a record, were up 7.0% from net earnings of $14,380,059 or $1.33 per share for the Third Quarter of 1993. As a percentage of sales, these earnings for the Third Quarter decreased from 15.4% in 1993 to 13.9% in 1994. Nine Months 1994 net earnings of $30,208,208 or $2.78 per share, also a new record, were up 6.3% from the prior year's Nine Months net earnings of $28,421,040 or $2.62 per share. Net earnings as a percentage of net sales for the Nine Months declined from 14.4% in 1993 to 13.1% in 1994. Net earnings for the Third Quarter of 1994 of $15,386,454 increased $7,526,852 or 95.8% from Second Quarter of 1994 net earnings of $7,859,602. The increase in net earnings principally results from higher earnings from operations, which on a comparative basis were up 8.7% for the Quarter and 11.9% for the Nine Months. These improved results are principally attributable to the additional profit contribution arising from the integration of the former Warner-Lambert division into the Company, as well as the benefits of ongoing expense control programs. Net earnings as a percentage of sales for the Quarter and Nine Months 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. 11 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: November 3, 1994 BY: Melvin J. Gordon Chairman of the Board BY: G. Howard Ember Vice President - Finance 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. Registrant G. Howard Ember, Jr. Date: November 3, 1994 G. Howard Ember, Jr. Principal Financial Officer Ellen R. Gordon Date: November 3, 1994 Ellen R. Gordon Principal Executive Officer 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-31-1994 Jan-01-1994 Oct-01-1994 9-MOS 30,247 20,532 64,019 2,738 29,006 147,455 141,763 56,522 339,079 58,866 7,500 0 0 7,533 231,231 339,079 230,275 230,275 119,652 62,571 (2,252) 663 1,256 49,047 18,839 30,208 0 0 0 30,208 2.78 2.78
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