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 April 2, 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 7,292,008
Class B Common Stock, $.69 4/9 par value 3,555,701
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
ASSETS April 2 April 3 Dec. 31
CURRENT ASSETS 1994 1993 1993
<S> <C> <C> <C>
Cash & Cash Equiv. $ 7,076,593 $ 1,930,248 $ 1,985,809
Marketable Securities 45,810,891 84,431,959 54,217,079
Accounts Receivable
Less Allowances of
$1,856,000,$1,581,000 & $2,075,000 24,104,898 13,585,991 20,656,006
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 26,300,333 23,611,207 17,186,423
Raw Material & Supplies 11,294,067 11,762,990 12,107,728
Prepaid Expenses 4,518,666 2,822,383 3,666,901
Deferred Income Taxes 2,094,000 1,992,000 2,094,000
Total Current Assets 121,199,448 140,136,778 111,913,946
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 4,250,667 230,667 4,230,667
Building 25,347,199 4,861,047 25,347,199
Machinery & Equip. 107,900,222 79,460,759 107,685,361
Leasehold Impvts. 5,641 4,840,902 9,641
137,503,729 89,393,375 137,272,868
Less-Accumulated Deprec.
and Amortization 52,230,589 46,067,539 50,573,679
85,273,140 43,325,836 86,699,189
OTHER ASSETS
Intangibles 100,697,927 44,882,343 101,374,501
Miscellaneous Invest. 90,977 107,169 90,977
Misc. Other Assets 3,786,750 5,837,293 3,861,219
104,575,654 50,826,805 105,326,697
Total Assets $311,048,242 $234,289,419 $303,939,832
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY April 2 April 3 Dec. 31
CURRENT LIABILITIES 1994 1993 1993
<S> <C> <C> <C>
Bank Loans Short Term $ 20,000,000 $ -- $22 600,673
Accounts Payable 6,840,051 5,358,308 6,259,252
Dividends Payable 1,153,426 943,810 1,025,428
Accrued Liabilities 17,112,955 13,414,888 17,918,747
Fed. & State Income Taxes 6,920,753 6,624,335 3,057,290
Total Current Liabilities 52,027,185 26,341,341 50,861,390
NON-CURRENT LIABILITIES
E.T.I. Term Loan 20,000,000 -- 20,000,000
Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000
Post Retirement Benefits 4,630,487 4,101,280 4,497,834
Deferred Compensation 2,494,603 2,940,850 2,373,454
Deferred Fed.Inc.Taxes 6,263,422 5,925,453 6,363,886
Total Non-Current Liabilities 40,888,512 20,467,583 40,735,174
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
7,292,008, 7,044,098 & 7,068,561
respectively, issued 5,063,759 4,891,600 4,908,588
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
3,555,701, 3,489,478 & 3,465,015
respectively issued 2,469,171 2,423,182 2,406,194
Capital in Excess of Par Value 132,997,160 111,108,198 111,108,198
Retained Earnings 80,373,345 70,903,247 96,646,704
Cumulative Translation Adjustment (2,770,890) (1,845,732) (2,726,416)
Total Shareholders' Equity 218,132,545 187,480,495 212,343,268
Total Liabilities and
Shareholders' Equity $311,048,242 $234,289,419 $303,939,832
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS AND RETAINED EARNINGS (NOTE 1)
(UNAUDITED)
13 Weeks Ended
April 2, 1994 & April 3, 1993
1994 1993
<S> <C> <C>
NET SALES (Note 2) $ 56,370,043 $ 50,016,955
Cost of goods sold 28,248,858 24,736,353
Gross Margin 28,121,185 25,280,602
Operating Expenses:
Marketing, Selling and Advertising 9,272,937 8,391,471
Distribution and Warehousing 4,110,656 3,780,765
General and Administrative 3,051,475 3,129,243
Goodwill amortization 676,575 312,927
17,111,643 15,614,406
Earnings from Operations 11,009,542 9,666,196
Other Income (Expense) Net 358,610 1,186,764
Earnings before Income Taxes 11,368,152 10,852,960
Provision for Income Taxes 4,406,000 4,157,000
Net Earnings (Note 5) 6,962,152 6,695,960
Retained Earnings at beginning of period 96,646,704 90,285,436
103,608,856 96,981,396
Deduct:
Cash Dividends 1,000,709 767,168
Stock Dividends - 3% 22,234,802 25,310,981
23,235,511 26,078,149
Retained Earnings at end of period $ 80,373,345 $ 70,903,247
Net Earnings per Share (Note 3) $ .64 $ .62
Dividends Per Share * $ .095 $ .075
Average Number of Shares Outstanding
(Notes 3 & 4) 10,847,709 10,847,709
<FN>
*Does not include 3% Stock Dividend to Shareholders of Record on 3/11/94 and 3/18/93.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
13 Weeks Ended
April 2, 1994 & April 3, 1993
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 6,962,152 $ 6,695,960
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 2,893,329 1,614,077
(Increase) decrease in assets:
Accounts receivable (3,448,892) (697,140)
Inventories (8,300,249) (10,528,591)
Prepaid expenses and other assets (851,765) 162,863
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (224,993) 437,708
Income taxes payable and deferred 3,762,999 3,444,227
Postretirement health care and life
insurance benefits 132,653 125,507
Other long term liabilities 121,149 135,161
Other (44,474) --
Net cash used in operating activities 1,001,909 1,389,772
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (778,678) (2,815,313)
Investment purchases (5,748,525) (1,636,942)
Investment sales 14,154,181 5,017,745
Net cash provided by investing activities 7,626,978 565,490
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment under lines of credit agreements (2,600,673) --
Dividends paid in cash (1,000,403) (766,931)
Other, net 62,973 (252,569)
Net cash provided by (used in)
financing activities (3,538,103) (1,019,500)
Increase (decrease) in cash equivalents 5,090,784 935,762
Cash and cash equivalents-beginning of year 1,985,809 994,486
Cash and cash equivalents end of quarter $ 7,076,593 $ 1,930,248
Supplemental cash flow information:
Income taxes paid $ 460,000 $ 472,000
Interest paid $ 693,000 $ 60,000
</TABLE>
<PAGE>
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 2, 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.
Note 2 - The Company's unshipped orders at April 2, 1994 amounted to
$6,884,000.
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 April 2, 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 First
Quarter of 1994.
Note 7 - Sales of unregistered Securities - None.
<PAGE>
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:
First Quarter, 1994
First Quarter vs.
1994 1993 First Quarter, 1993
$56,370,043 $50,016,955 +12.7%
First Quarter 1994 net sales of $56,370,043, a record, were up 12.7%
from the First Quarter 1993 net sales of $50,016,955. Sales rose
principally as a result of the inclusion of the former Warner Lambert
Chocolate/Caramel Division acquired in the fourth quarter of 1993.
Excluding the former Warner Lambert Brands, sales would have decreased
by approximately 2%. This decrease is largely due to general softness
in the candy industry as well as the effects of consolidation in the
warehouse club class of trade which particularly affected the Charm's
brands.
First Quarter 1994 net sales of $56,370,043 were down from Fourth
Quarter 1993 net sales of $62,413,610. This is not considered unusual
as the First Quarter of the year is normally the company's lowest
quarter in sales.
COST OF SALES:
Cost of Sales as a
First Quarter Percentage of Net Sales
1994 1993 1st Qtr. 1994 1st Qtr. 1993
$28,248,858 $24,736,353 50.1% 49.5%
Cost of sales as a percentage of net sales increased slightly from
49.5% for the First Quarter of 1993 to 50.1% for the First Quarter of
1994. This increase reflects some changes in the sales mix of products,
increases in certain raw material costs, and minor increases in overall
manufacturing overhead costs, principally depreciation and equipment
leasing.
NET EARNINGS:
First Quarter, 1994
First Quarter vs.
1994 1993 First Quarter, 1993
$6,962,152 $6,695,960 +4.0%
First Quarter 1994 net earnings of $6,962,152 or $0.64 per share, a
record, were up 4.0% from net earnings of $6,695,960 or $0.62 per share
for the First Quarter of 1993. Net earnings increased principally as a
result of a 14% increase in earnings from operations which is
principally attributable to the additional profit contribution from the
former Warner Lambert Chocolate/Caramel Division. As a percentage of
sales these earnings for the First Quarter, decreased from 13.4% in
1993 to 12.4% in 1994. The aforementioned reflects 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.
Net earnings for the First Quarter of 1994 of $6,962,152 decreased
$58,352 or 0.8% from Fourth Quarter of 1993 net earnings of $7,020,504.
<PAGE>
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: April 28, 1994 BY:
Melvin J. Gordon
Chairman of the Board
BY:
G. Howard Ember
Vice President - Finance
