<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 July 1, 1995 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 15,083,204
Class B Common Stock, $.69 4/9 par value 7,259,460
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<TABLE>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<CAPTION> (UNAUDITED)
ASSETS July 1 July 2 Dec. 31
CURRENT ASSETS 1995 1994 1994
<S> <C> <C> <C>
Cash & Cash Equiv. $ 31,226,163 $ 4,772,098 $ 16,508,659
Marketable Securities 37,793,260 41,387,678 45,860,983
Accounts Receivable
Less Allowances of
$1,613,000,$1,885,000 & $1,466,000 23,993,098 25,673,195 22,086,591
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 36,483,179 31,300,487 16,704,078
Raw Material & Supplies 13,903,265 12,113,879 12,464,240
Prepaid Expenses 3,054,662 4,988,536 3,094,273
Deferred Income Taxes 2,479,395 2,094,000 2,168,000
Total Current Assets 148,933,022 122,329,873 118,886,824
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 6,936,880 4,230,667 6,671,973
Building 27,248,751 25,347,199 26,981,822
Machinery & Equip. 110,640,027 110,082,719 109,438,484
Leasehold Impvts. 5,641 5,641 5,641
144,831,299 139,666,226 143,097,920
Less-Accumulated Deprec.
and Amortization 61,091,319 54,430,006 57,449,897
83,739,980 85,236,220 85,648,023
OTHER ASSETS
Intangibles 97,315,052 100,021,351 98,668,201
Miscellaneous Invest. 52,535 90,977 90,977
Misc. Other Assets 6,833,724 3,931,127 6,788,773
104,201,311 104,043,455 105,547,951
Total Assets $336,874,313 $311,609,548 $310,082,798
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY July 1 July 2 Dec. 31
CURRENT LIABILITIES 1995 1994 1994
<S> <C> <C> <C>
Bank Loans Short Term $ 9,000,000 $ 20,000,000 $ --
Accounts Payable 7,373,663 5,351,379 6,124,104
Dividends Payable 1,423,193 1,218,577 1,219,291
Accrued Liabilities 17,124,566 15,211,094 17,045,884
Fed. & State Income Taxes 6,195,690 4,076,730 1,871,858
Total Current Liabilities 41,117,112 45,857,780 26,261,137
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 5,196,365 4,764,294 4,992,719
Deferred Compensation 3,525,794 2,691,704 3,151,564
Deferred Fed.Inc.Taxes 7,366,000 6,250,297 7,716,256
Total Non-Current Liabilities 43,588,159 41,206,295 43,360,539
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
15,083,204, 7,302,212 & 7,305,999
respectively, issued 10,474,308 5,070,845 5,073,475
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
7,259,460, 3,545,497 & 3,541,710
respectively issued 5,041,225 2,462,085 2,459,455
Capital in Excess of Par Value 146,171,411 132,997,160 132,997,160
Retained Earnings 99,546,976 87,039,699 107,762,823
Cumulative Translation Adjustment (9,064,878) (3,024,316) (7,831,791)
Total Shareholders' Equity 252,169,042 224,545,473 240,461,122
Total Liabilities and
Shareholders' Equity $336,874,313 $311,609,548 $ 310,082,798
</TABLE>
<PAGE> 4
<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 1, 1995 & July 2, 1994 July 1, 1995 & July 2, 1994
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET SALES (Note 2) $ 68,774,216 $ 62,891,164 $129,043,421 $119,261,207
Cost of goods sold 35,718,429 31,585,579 66,421,289 59,834,437
Gross Margin 33,055,787 31,305,585 62,622,132 59,426,770
Operating Expenses:
Marketing, Selling and Advertising 11,719,324 10,269,360 21,490,275 19,542,297
Distribution and Warehousing 5,427,140 4,972,464 10,214,423 9,083,120
General and Administrative 3,244,118 3,097,977 6,530,415 6,149,452
Goodwill amortization 676,575 676,575 1,353,150 1,353,150
21,067,157 19,016,376 39,588,263 36,128,019
Earnings from Operations 11,988,630 12,289,209 23,033,869 23,298,751
Other Income (Expense) Net 1,115,827 538,393 1,822,058 897,003
Earnings before Income Taxes 13,104,457 12,827,602 24,855,927 24,195,754
Provision for Income Taxes 4,778,000 4,968,000 9,211,000 9,374,000
Net Earnings (Note 5) 8,326,457 7,859,602 15,644,927 14,821,754
Retained Earnings at beginning of period 92,616,954 80,373,345 107,762,823 96,646,704
100,943,411 88,232,947 123,407,750 111,468,458
Deduct:
Cash Dividends 1,396,435 1,193,248 2,589,683 2,193,957
Stock Dividends - 3% -- -- 21,271,091 22,234,802
1,396,435 1,193,248 23,860,774 24,428,759
Retained Earnings at end of period $ 99,546,976 $ 87,039,699 $ 99,546,976 $ 87,039,699
Net Earnings per Share (Note 3) $ .37 $ .35 $ .70 $ .66
Dividends Per Share * $ .0625 $ .055 $ .1175 $ .1025
Average Number of Shares Outstanding
(Notes 3 & 4) 22,342,664 22,342,664 22,342,664 22,342,664
*Does not include 3% Stock Dividend to Shareholders of Record on 3/10/95 and 3/11/94 and has been
restated for the 2 for 1 Stock Split to Shareholders of Record 6/22/95.
</TABLE>
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<TABLE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
26 Weeks Ended
July 1, 1995 & July 2, 1994
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $15,644,927 $14,821,754
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 4,916,995 5,853,913
(Increase) decrease in assets:
Accounts receivable (3,666,715) (5,017,189)
Inventories (20,647,175) (14,120,215)
Prepaid expenses and other assets (51,062) (1,483,800)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 1,281,954 (3,615,526)
Income taxes payable and deferred 3,664,638 905,851
Postretirement health care and life
insurance benefits 203,646 266,460
Other long term liabilities 374,230 318,250
Other -- (297,900)
Net cash provided by (used in)
operating activities 1,721,438 (2,368,402)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,733,379) (2,997,246)
Investment purchases (14,853,613) (30,180,887)
Investment sales 23,083,076 42,996,915
Net cash provided by investing activities 6,496,084 9,818,782
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings net of repayments
under lines of credit agreements 9,000,000 (2,600,673)
Dividends paid in cash (2,500,018) (2,128,500)
Other, net -- 65,082
Net cash provided by (used in)
financing activities 6,499,982 (4,664,091)
Increase in cash and cash equivalents 14,717,504 2,786,289
Cash and cash equivalents-beginning of year 16,508,659 1,985,809
Cash and cash equivalents-end of quarter $31,226,163 $ 4,772,098
Supplemental cash flow information:
Income taxes paid $ 5,356,000 $ 6,060,000
Interest paid $ 877,000 $ 1,105,000
</TABLE>
<PAGE> 6
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 1, 1995
(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 July 1, 1995 amounted to
$22,000,000.
Note 3 - Based on Average Shares outstanding adjusted for Stock Dividends
and the 2 for 1 Stock Split in 1995.
Note 4 - Includes 3% Stock Dividends distributed on April 21, 1995 and
April 22, 1994 and the 2 for 1 Stock Split effective on
July 11, 1995.
Note 5 - Results of operations for the period ended July 1, 1995 are not
necessarily indicative of results to be expected for the year to
end December 31, 1995 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 1995.
Note 7 - Sales of unregistered Securities - None.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
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:
Second Quarter, 1995
Second Quarter vs.
1995 1994 Second Quarter, 1994
$68,774,216 $62,891,164 +9.4%
First Half, 1995
First Half vs.
1995 1994 First Half, 1994
$129,043,421 $119,261,207 +8.2%
Second Quarter 1995 net sales of $68,774,216, a record, were up 9.4%
from the Second Quarter 1994 net sales of $62,891,164.
First Half of 1995 net sales of $129,043,421 were up 8.2% from First
Half of 1994 net sales of $119,261,207.
Second Quarter 1995 net sales of $68,774,216 were up 14.1% from First
Quarter 1995 net sales of $60,269,205.
Record sales for the Second Quarter and First Half of 1995 are
principally attributable to volume increases. Sales rose primarily
as a result of successful product line extensions and promotional
programs. Consolidated sales were adversely affected by the
devaluation of the Mexican peso. Although sales in Mexico increased
significantly due to price increases and volume improvements, the
translated U.S. dollar sales in Mexico were substantially lower in
1995 compared to 1994 as a result of exchange rate changes.
COST OF SALES:
Cost of Sales as a
Second Quarter Percentage of Net Sales
1995 1994 2nd Qtr. 1995 2nd Qtr. 1994
$35,718,429 $31,585,579 51.9% 50.2%
Cost of Sales as a
First Half Percentage of Net Sales
1995 1994 1st Half 1995 1st Half 1994
$66,421,289 $59,834,437 51.5% 50.2%
-6-<PAGE>
Cost of sales as a percentage of net sales increased from 50.2% for
the Second Quarter of 1994 to 51.9% for the Second Quarter of 1995.
First Half cost of sales also increased from 50.2% in 1994 to 51.5%
for the same period in 1995. This increase reflects increases in
certain ingredients and packaging material costs and some changes in
the sales mix of products.
NET EARNINGS:
Second Quarter, 1995
Second Quarter vs.
1995 1994 Second Quarter, 1994
$8,326,457 $ 7,859,602 +5.9%
First Half, 1995
First Half vs.
1995 1994 First Half, 1994
$15,644,927 $14,821,754 +5.6%
Second Quarter 1995 net earnings of $8,326,457 or $.37 per share, a
record, were up 5.9% from net earnings of $7,859,602 or $.35 per
share for the Second Quarter of 1994.
First Half 1995 net earnings of $15,644,927 or $.70 per share, also a
new record, were up 5.6% from the prior year's First Half net
earnings of $14,821,754 or $.66 per share.
Net earnings for the Second Quarter of 1995 of $8,326,457 increased
$1,007,987 or 13.8% from First Quarter of 1995 net earnings of
$7,318,470.
The increase in net earnings reflects higher sales and increased net
investment income, due to an overall increase in cash equivalents and
marketable securities, and reduced levels of debt outstanding.
Earnings increased in spite of increased ingredient and packaging
costs.
In addition to the above, net earnings were aided by a slight
reduction in the overall effective tax rate reflecting various
federal, state and foreign tax benefits, including increased tax-
exempt investment income.
<PAGE> 8
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 1, 1995 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: August 1, 1995 G. Howard Ember, Jr.
Principal Financial Officer
Ellen R. Gordon
Date: August 1, 1995 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-31-1995
<PERIOD-START> Jan-01-1995
<PERIOD-END> Jul-01-1995
<PERIOD-TYPE> 6-MOS
<CASH> 31,226
<SECURITIES> 37,793
<RECEIVABLES> 25,606
<ALLOWANCES> 1,613
<INVENTORY> 50,386
<CURRENT-ASSETS> 148,933
<PP&E> 144,831
<DEPRECIATION> 61,091
<TOTAL-ASSETS> 336,874
<CURRENT-LIABILITIES> 41,117
<BONDS> 7,500
0
0
<COMMON> 15,516
<OTHER-SE> 236,654
<TOTAL-LIABILITY-AND-EQUITY> 336,874
<SALES> 129,043
<TOTAL-REVENUES> 129,043
<CGS> 66,421
<TOTAL-COSTS> 39,588
<OTHER-EXPENSES> (2,558)
<LOSS-PROVISION> 235
<INTEREST-EXPENSE> 736
<INCOME-PRETAX> 24,856
<INCOME-TAX> 9,211
<INCOME-CONTINUING> 15,645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,645
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
