<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 September 30, 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 15,095,659
Class B Common Stock, $.69 4/9 par value 7,247,005<PAGE>
<PAGE> 2
<TABLE>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
<CAPTION>
ASSETS September 30 October 1 Dec. 31
CURRENT ASSETS 1995 1994 1994
<S> <C> <C> <C>
Cash & Cash Equiv. $ 29,088,252 $ 30,247,142 $ 16,508,659
Marketable Securities 37,851,060 20,531,799 45,860,983
Accounts Receivable
Less Allowances of
$2,764,000,$2,738,000 & $1,466,000 64,271,180 61,280,500 22,086,591
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 19,966,604 17,954,994 16,704,078
Raw Material & Supplies 11,169,913 11,051,436 12,464,240
Prepaid Expenses 2,133,925 4,180,915 3,094,273
Deferred Income Taxes 2,473,557 2,208,682 2,168,000
Total Current Assets 166,954,491 147,455,468 118,886,824
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 6,955,770 4,230,667 6,671,973
Building 27,281,178 25,347,199 26,981,822
Machinery & Equip. 111,665,781 112,179,487 109,438,484
Leasehold Impvts. 5,641 5,641 5,641
145,908,370 141,762,994 143,097,920
Less-Accumulated Deprec.
and Amortization 63,120,497 56,522,400 57,449,897
82,787,873 85,240,594 85,648,023
OTHER ASSETS
Intangibles 96,638,477 99,344,777 98,668,201
Miscellaneous Invest. 52,535 90,977 90,977
Misc. Other Assets 10,737,240 6,947,148 6,788,773
107,428,252 106,382,902 105,547,951
Total Assets $357,170,616 $339,078,964 $310,082,798
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY September 30 October 1 Dec. 31
CURRENT LIABILITIES 1995 1994 1994
<S> <C> <C> <C>
Bank Loans Short Term $ -- $ 20,436,148 $ --
E.T.I. Term Loan 20,000,000 -- --
Accounts Payable 8,603,221 8,657,842 6,124,104
Dividends Payable 1,423,604 1,218,934 1,219,291
Accrued Liabilities 24,452,689 20,277,399 17,045,884
Fed. & State Income Taxes 11,910,384 8,275,205 1,871,858
Total Current Liabilities 66,389,898 58,865,528 26,261,137
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 5,279,061 4,882,464 4,992,719
Deferred Compensation 3,755,075 2,871,550 3,151,564
Deferred Fed.Inc.Taxes 7,366,000 6,195,761 7,716,256
Total Non-Current Liabilities 23,900,136 41,449,775 43,360,539
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
15,095,659, 7,304,163 & 7,305,999
respectively, issued 10,482,957 5,072,200 5,073,475
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
7,247,005, 3,543,546 & 3,541,710
respectively issued 5,032,576 2,460,730 2,459,455
Capital in Excess of Par Value 146,171,411 132,997,160 132,997,160
Retained Earnings 114,382,977 101,232,905 107,762,823
Cumulative Translation Adjustment (9,189,339) (2,999,334) (7,831,791)
Total Shareholders' Equity 266,880,582 238,763,661 240,461,122
Total Liabilities and
Shareholders' Equity $357,170,616 $339,078,964 $ 310,082,798
/TABLE
<PAGE>
<PAGE> 4
<TABLE>
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS AND RETAINED EARNINGS (NOTE 1)
(UNAUDITED)
<CAPTION>
13 Weeks Ended 39 Weeks Ended
Sept. 30, 1995 & Oct. 1, 1994 Sept 30, 1995 & Oct. 1, 1994
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET SALES (Note 2) $116,471,443 $111,013,575 $245,514,864 $230,274,782
Cost of goods sold 63,954,938 59,818,297 130,376,227 119,652,734
Gross Margin 52,516,505 51,195,278 115,138,637 110,622,048
Operating Expenses:
Marketing, Selling and Advertising 15,844,568 15,860,153 37,334,843 35,402,450
Distribution and Warehousing 7,508,843 6,539,884 17,723,266 15,623,004
General and Administrative 3,411,320 3,365,960 9,941,735 9,515,412
Goodwill amortization 676,575 676,575 2,029,725 2,029,725
27,441,306 26,442,572 67,029,569 62,570,591
Earnings from Operations 25,075,199 24,752,706 48,109,068 48,051,457
Other Income (Expense) Net 557,238 98,748 2,379,296 995,751
Earnings before Income Taxes 25,632,437 24,851,454 50,488,364 49,047,208
Provision for Income Taxes 9,400,000 9,465,000 18,611,000 18,839,000
Net Earnings (Note 5) 16,232,437 15,386,454 31,877,364 30,208,208
Retained Earnings at beginning of period 99,546,976 87,039,699 107,762,823 96,646,704
115,779,413 102,426,153 139,640,187 126,854,912
Deduct:
Cash Dividends 1,396,436 1,193,248 3,986,119 3,387,205
Stock Dividends - 3% -- -- 21,271,091 22,234,802
1,396,436 1,193,248 25,257,210 25,622,007
Retained Earnings at end of period $114,382,977 $101,232,905 $114,382,977 $101,232,905
Net Earnings per Share (Note 3) $ .73 $ .69 $1.43 $1.35
Dividends Per Share * $ .0625 $ .055 $ .18 $ .1575
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
<PAGE>
<PAGE> 5
<TABLE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
39 Weeks Ended
September 30, 1995 & October 1, 1994
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $31,877,364 $30,208,208
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 7,689,966 8,710,542
(Increase) decrease in assets:
Accounts receivable (41,634,505) (40,624,494)
Inventories (2,509,585) 287,721
Prepaid expenses and other assets (3,336,164) (4,587,550)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 8,489,531 4,757,242
Income taxes payable and deferred 9,752,490 4,935,108
Postretirement health care and life
insurance benefits 286,342 384,630
Other long term liabilities 603,511 498,096
Other -- (272,918)
Net cash provided by
operating activities 11,218,950 4,296,585
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,914,955) (5,094,014)
Investment purchases (24,110,791) (36,478,612)
Investment sales 32,282,432 70,958,208
Net cash provided by
investing activities 5,256,686 29,385,582
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings net of repayments
under lines of credit agreements -- (2,164,525)
Dividends paid in cash (3,896,043) (3,321,391)
Other, net -- 65,082
Net cash used in
financing activities (3,896,043) (5,420,834)
Increase in cash and cash equivalents 12,579,593 28,261,333
Cash and cash equivalents-beginning of year 16,508,659 1,985,809
Cash and cash equivalents end of quarter $29,088,252 $30,247,142
Supplemental cash flow information:
Income taxes paid $ 9,073,000 $12,029,000
Interest paid $ 1,171,000 $ 1,407,000
</TABLE>
<PAGE> 6
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 September 30, 1995 amounted
to $18,000,000.
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 September 30, 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 Third
Quarter of 1995.
Note 7 - Sales of unregistered Securities - None.
<PAGE> 7
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:
Third Quarter, 1995
Third Quarter vs.
1995 1994 Third Quarter, 1994
$116,471,443 $111,013,575 +4.9%
Nine Months, 1995
Nine Months vs.
1995 1994 Nine Months, 1994
$245,514,864 $230,274,782 +6.6%
Third Quarter 1995 net sales of $116,471,443, a record, were up 4.9% from
Third Quarter 1994 net sales of $111,013,575.
Nine Months of 1995 net sales of $245,514,864 were up 6.6% from Nine Months
of 1994 net sales of $230,274,782.
Third Quarter 1995 net sales of $116,471,443 were up 69.4% from Second
Quarter 1995 net sales of $68,774,216 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 1995 are principally
attributable to volume increases. Sales rose primarily as a result of
successful product line extensions and promotional programs, including pre-
Halloween sales programs. Consolidated sales were adversely affected by the
devaluation of the Mexican peso. Although sales in Mexico increased 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
Third Quarter Percentage of Net Sales
1995 1994 3rd Qtr. 1995 3rd Qtr. 1994
$63,954,938 $59,818,297 54.9% 53.9%
Cost of Sales as a
Nine Months Percentage of Net Sales
1995 1994 9 Months 1995 9 Months 1994
$130,376,227 $119,652,734 53.1% 52.0%
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
THE CONSOLIDATED STATEMENTS OF EARNINGS (Continued)
Cost of sales as a percentage of net sales increased from 53.9% for the Third
Quarter of 1994 to 54.9% in the Third Quarter of 1995. Nine Months cost of
sales also increased from 52.0% in 1994 to 53.1% for the same period in 1995.
This increase reflects increases in certain ingredients and packaging
material costs as well as some changes in the sales mix of products.
NET EARNINGS:
Third Quarter, 1995
Third Quarter vs.
1995 1994 Third Quarter, 1994
$16,232,437 $15,386,454 +5.5%
Nine Months, 1995
Nine Months vs.
1995 1994 Nine Months, 1994
$31,877,364 $30,208,208 +5.5%
Third Quarter 1995 net earnings of $16,232,437 or $.73 per share, a record,
were up 5.5% from net earnings of $15,386,454 or $.69 per share for the Third
Quarter of 1994
Nine Months 1995 net earnings of $31,877,364 or $1.43 per share, also a
new record, were up 5.5% from the prior year's Nine Months net earnings of
$30,208,208 or $1.35 per share.
Net earnings for the Third Quarter of 1995 of $16,232,437 increased
$7,905,980 or 95.0% from Second Quarter of 1995 net earnings of $8,326,457.
The increase in net earnings reflects higher sales and operating earnings, as
well as increased net investment income. Increased net investment income
results from 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: November 3,1995 BY:
Melvin J. Gordon
Chairman of the Board
BY:
G. Howard Ember
Vice President - Finance
<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> Sep-30-1995
<PERIOD-TYPE> 9-MOS
<CASH> 29,088
<SECURITIES> 37,851
<RECEIVABLES> 64,271
<ALLOWANCES> 2,764
<INVENTORY> 31,137
<CURRENT-ASSETS> 166,954
<PP&E> 145,908
<DEPRECIATION> 63,120
<TOTAL-ASSETS> 357,171
<CURRENT-LIABILITIES> 66,390
<BONDS> 7,500
0
0
<COMMON> 15,516
<OTHER-SE> 251,365
<TOTAL-LIABILITY-AND-EQUITY> 357,171
<SALES> 245,515
<TOTAL-REVENUES> 245,515
<CGS> 130,376
<TOTAL-COSTS> 67,030
<OTHER-EXPENSES> (3,550)
<LOSS-PROVISION> 280
<INTEREST-EXPENSE> 1,171
<INCOME-PRETAX> 50,488
<INCOME-TAX> 18,611
<INCOME-CONTINUING> 31,877
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,877
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.43
</TABLE>
