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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 July 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 7,302,212
Class B Common Stock, $.69 4/9 par value 3,545,497
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<TABLE>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
<CAPTION>
ASSETS July 2 July 3 Dec. 31
CURRENT ASSETS 1994 1993 1993
<S> <C> <C> <C>
Cash & Cash Equiv. $ 4,772,098 $ 1,919,756 $ 1,985,809
Marketable Securities 41,387,678 74,991,507 54,217,079
Accounts Receivable
Less Allowances of
$1,885,000,$1,629,000 & $2,075,000 25,673,195 13,434,852 20,656,006
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 31,300,487 30,314,558 17,186,423
Raw Material & Supplies 12,113,879 13,842,822 12,107,728
Prepaid Expenses 4,988,536 7,420,677 3,666,901
Deferred Income Taxes 2,094,000 1,992,000 2,094,000
Total Current Assets 122,329,873 143,916,172 111,913,946
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 4,230,667 230,667 4,230,667
Building 25,347,199 4,929,368 25,347,199
Machinery & Equip. 110,082,719 79,382,366 107,685,361
Leasehold Impvts. 5,641 4,840,902 9,641
139,666,226 89,383,303 137,272,868
Less-Accumulated Deprec.
and Amortization 54,430,006 47,253,129 50,573,679
85,236,220 42,130,174 86,699,189
OTHER ASSETS
Intangibles 100,021,351 44,569,416 101,374,501
Miscellaneous Invest. 90,977 107,169 90,977
Misc. Other Assets 3,931,127 6,806,235 3,861,219
104,043,455 51,482,820 105,326,697
Total Assets $311,609,548 $237,529,166 $303,939,832
</TABLE>
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY July 2 July 3 Dec. 31
CURRENT LIABILITIES 1994 1993 1993
<S> <C> <C> <C>
Bank Loans Short Term $ 20,000,000 $ 3,557,088 $22,600,673
Accounts Payable 5,351,379 5,383,942 6,259,252
Dividends Payable 1,218,577 1,024,819 1,025,428
Accrued Liabilities 15,211,094 10,870,011 17,918,747
Fed. & State Income Taxes 4,076,730 2,686,073 3,057,290
Total Current Liabilities 45,857,780 23,521,933 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 4,764,294 4,230,780 4,497,834
Deferred Compensation 2,691,704 3,250,041 2,373,454
Deferred Fed.Inc.Taxes 6,250,297 5,825,301 6,363,886
Total Non-Current Liabilities 41,206,295 20,806,122 40,735,174
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
7,302,212, 7,054,125 & 7,068,561
respectively, issued 5,070,845 4,898,563 4,908,588
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
3,545,497, 3,479,451 & 3,465,015
respectively issued 2,462,085 2,416,219 2,406,194
Capital in Excess of Par Value 132,997,160 111,108,198 111,108,198
Retained Earnings 87,039,699 77,247,559 96,646,704
Cumulative Translation Adjustment (3,024,316) (2,469,428) (2,726,416)
Total Shareholders' Equity 224,545,473 193,201,111 212,343,268
Total Liabilities and
Shareholders' Equity $311,609,548 $237,529,166 $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 26 Weeks Ended
July 2, 1994 & July 3, 1993 July 2, 1994 & July 3, 1993
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET SALES (Note 2) $ 62,891,164 $ 53,923,098 $119,261,207 $103,940,053
Cost of goods sold 31,585,579 26,691,400 59,834,437 51,427,753
Gross Margin 31,305,585 27,231,698 59,426,770 52,512,300
Operating Expenses:
Marketing, Selling and Advertising 10,269,360 9,422,429 19,542,297 17,813,900
Distribution and Warehousing 4,972,464 4,054,406 9,083,120 7,835,171
General and Administrative 3,097,977 2,933,865 6,149,452 6,063,108
Goodwill amortization 676,575 312,927 1,353,150 625,854
19,016,376 16,723,627 36,128,019 32,338,033
Earnings from Operations 12,289,209 10,508,071 23,298,751 20,174,267
Other Income (Expense) Net 538,393 1,326,950 897,003 2,513,714
Earnings before Income Taxes 12,827,602 11,835,021 24,195,754 22,687,981
Provision for Income Taxes 4,968,000 4,490,000 9,374,000 8,647,000
Net Earnings (Note 5) 7,859,602 7,345,021 14,821,754 14,040,981
Retained Earnings at beginning of period 80,373,345 70,903,247 96,646,704 90,285,436
88,232,947 78,248,268 111,468,458 104,326,417
Deduct:
Cash Dividends 1,193,248 1,000,709 2,193,957 1,767,877
Stock Dividends - 3% -- -- 22,234,802 25,310,981
1,193,248 1,000,709 24,428,759 27,078,858
Retained Earnings at end of period $ 87,039,699 $ 77,247,559 $ 87,039,699 $ 77,247,559
Net Earnings per Share (Note 3) $ .72 $ .68 $1.37 $1.29
Dividends Per Share * $ .11 $ .095 $ .205 $ .17
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>
26 Weeks Ended
July 2, 1994 & July 3, 1993
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $14,821,754 $14,040,981
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,853,913 3,234,710
(Increase) decrease in assets:
Accounts receivable (5,017,189) (546,001)
Inventories (14,120,215) (19,311,774)
Prepaid expenses and other assets (1,483,800) (3,880,963)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (3,615,526) (2,081,535)
Income taxes payable and deferred 905,851 (594,187)
Postretirement health care and life
insurance benefits 266,460 255,007
Other long term liabilities 318,250 444,352
Other (297,900) (623,696)
Net cash used in operating activities (2,368,402) (9,063,106)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,997,246) (4,508,230)
Investment purchases (30,180,887) (7,602,360)
Investment sales 42,996,915 20,454,672
Net cash provided by investing activities 9,818,782 8,344,082
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing under lines of credit agreements -- 3,250,000
Repayment under lines of credit agreements (2,600,673) --
Dividends paid in cash (2,128,500) (1,686,630)
Other, net 65,082 80,924
Net cash provided by (used in)
financing activities (4,664,091) 1,644,294
Increase in cash and cash equivalents 2,786,289 925,270
Cash and cash equivalents-beginning of year 1,985,809 994,486
Cash and cash equivalents end of quarter $ 4,772,098 $ 1,919,756
Supplemental cash flow information:
Income taxes paid $ 6,060,000 $ 9,150,000
Interest paid $ 1,105,000 $ 156,000
</TABLE>
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TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 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 July 2, 1994 amounted to
$32,025,000.
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 July 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 Second
Quarter of 1994.
Note 7 - Sales of unregistered Securities - None.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
NET SALES:
Second Quarter, 1994
Second Quarter vs.
1994 1993 Second Quarter, 1993
$62,891,164 $53,923,098 +16.6%
First Half, 1994
First Half vs.
1994 1993 First Half, 1993
$119,261,207 $103,940,053 +14.7%
Second Quarter 1994 net sales of $62,891,164, a record, were up 16.6%
from the Second Quarter 1993 net sales of $53,923,098.
First Half of 1994 net sales of $119,261,207 were up 14.7% from First
Half of 1993 net sales of $103,940,053.
Second Quarter 1994 net sales of $62,891,164 were up 11.6% from First
Quarter 1994 net sales of $56,370,043.
Record sales for the Second Quarter and First Half of 1994 were up
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
in the First Half 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 Charms' brands. However, some Tootsie Roll core products
achieved sales increases in the Second Quarter and First Half compared
to the prior year 1993 periods.
COST OF SALES:
Cost of Sales as a
Second Quarter Percentage of Net Sales
1994 1993 2nd Qtr. 1994 2nd Qtr. 1993
$31,585,579 $26,691,400 50.2% 49.5%
Cost of Sales as a
First Half Percentage of Net Sales
1994 1993 1st Half 1994 1st Half 1993
$59,834,437 $51,427,753 50.2% 49.5%
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
THE CONSOLIDATED STATEMENTS OF EARNINGS
Cost of sales as a percentage of net sales increased slightly from
49.5% for the Second Quarter of 1993 to 50.2% for the Second Quarter
of 1994. First Half cost of sales also increased from 49.5% in 1993 to
50.2% for the same period in 1994. These increases reflect increases
in certain raw material costs and a minor increase in overall
manufacturing overhead costs, principally depreciation and equipment
leasing.
NET EARNINGS:
Second Quarter, 1994
Second Quarter vs.
1994 1993 Second Quarter, 1993
$7,859,602 $ 7,345,021 +7.0%
First Half, 1994
First Half vs.
1994 1993 First Half, 1993
$14,821,754 $14,040,981 +5.6%
Second Quarter 1994 net earnings of $7,859,602 or $.72 per share, a
record, were up 7.0% from net earnings of $7,345,021 or $.68 per share
for the Second Quarter of 1993. As a percentage of sales, net earnings
for the Second Quarter decreased from 13.6% in 1993 to 12.5% in 1994;
however, earnings from operations held steady at 19.5% of sales in the
Second Quarter of 1993 and 1994.
First Half 1994 net earnings of $14,821,754 or $1.37 per share, also a
new record, were up 5.6% from the prior year's First Half net earnings
of $14,040,981 or $1.29 per share. Net earnings
as a percentage of sales for the First Half declined from 13.5% in
1993 to 12.4% in 1994; however, earnings from operations increased
from 19.4% in 1993 to 19.5% in 1994.
Net earnings for the Second Quarter of 1994 of $7,859,602 increased
$897,450 or 12.9% from First Quarter of 1994 net earnings of
$6,962,152, and earnings from operations increased by $1,279,667 or
11.6%.
The increase in net earnings principally results from higher earnings
from operations, which on a comparative basis were up 17.0% for the
Quarter and 15.5% for the First Half. These improved results are
principally attributable to the additional profit contribution arising
from the integration of the former Warner Lambert Chocolate/Caramel
Division as well as the benefits of ongoing expense control programs.
Net earnings as a percent of sales for the Quarter and First Half
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.
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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: August 2, 1994 BY:
Melvin J. Gordon
Chairman of the Board
BY:
G. Howard Ember
Vice President - Finance
