<PAGE> 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
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<TABLE>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
<CAPTION>
ASSETS October 1 October 2 Dec. 31
CURRENT ASSETS 1994 1993 1993
<S> <C> <C> <C>
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
</TABLE>
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY October 1 October 2 Dec. 31
CURRENT LIABILITIES 1994 1993 1993
<S> <C> <C> <C>
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
</TABLE>
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<TABLE>
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS AND RETAINED EARNINGS (NOTE 1)
(UNAUDITED)
<CAPTION>
13 Weeks Ended 39 Weeks Ended
Oct. 1, 1994 & Oct. 2, 1993 Oct. 1, 1994 & Oct. 2, 1993
1994 1993 1994 1993
<S> <C> <C> <C> <C>
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.
</TABLE>
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<TABLE>
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
39 Weeks Ended
October 1, 1994 & October 2, 1993
1994 1993
<S> <C> <C>
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
</TABLE>
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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.
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<TABLE>
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:
<CAPTION>
October 1, 1994
Amortized Fair Unrealized
Cost Value Gains Losses
<S> <C> <C> <C> <C>
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
</TABLE>
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<TABLE>
<CAPTION>
October 2, 1993
Amortized Fair Unrealized
Cost Value Gains Losses
<S> <C> <C> <C> <C>
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.
</TABLE>
<PAGE> 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%
<PAGE> 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.
<PAGE> 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-START> Jan-01-1994
<PERIOD-END> Oct-01-1994
<PERIOD-TYPE> 9-MOS
<CASH> 30,247
<SECURITIES> 20,532
<RECEIVABLES> 64,019
<ALLOWANCES> 2,738
<INVENTORY> 29,006
<CURRENT-ASSETS> 147,455
<PP&E> 141,763
<DEPRECIATION> 56,522
<TOTAL-ASSETS> 339,079
<CURRENT-LIABILITIES> 58,866
<BONDS> 7,500
0
0
<COMMON> 7,533
<OTHER-SE> 231,231
<TOTAL-LIABILITY-AND-EQUITY> 339,079
<SALES> 230,275
<TOTAL-REVENUES> 230,275
<CGS> 119,652
<TOTAL-COSTS> 62,571
<OTHER-EXPENSES> (2,252)
<LOSS-PROVISION> 663
<INTEREST-EXPENSE> 1,256
<INCOME-PRETAX> 49,047
<INCOME-TAX> 18,839
<INCOME-CONTINUING> 30,208
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,208
<EPS-PRIMARY> 2.78
<EPS-DILUTED> 2.78
</TABLE>
