<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 March 30, 1996 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 15,574,428
Class B Common Stock, $.69 4/9 par value 7,429,625
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PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
<CAPTION>
ASSETS March 30 April 1 Dec. 31
CURRENT ASSETS 1996 1995 1995
<S> <C> <C> <C>
Cash & Cash Equiv. $ 30,835,259 $ 22,411,874 $ 47,523,986
Marketable Securities 72,343,386 40,130,450 55,925,732
Accounts Receivable
Less Allowances of
$1,962,000,$1,476,000 & $1,774,000 23,195,231 22,606,310 23,553,517
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 24,802,427 23,582,547 19,584,849
Raw Material & Supplies 14,750,274 14,647,277 12,624,820
Prepaid Expenses 4,638,565 3,077,542 2,812,763
Deferred Income Taxes 2,923,000 2,455,583 2,923,000
Total Current Assets 173,488,142 128,911,583 164,948,667
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 6,906,137 6,936,880 6,899,832
Building 28,270,993 27,254,752 28,259,052
Machinery & Equip. 117,799,121 109,437,699 111,660,755
152,976,251 143,629,331 146,819,639
Less-Accumulated Deprec.
and Amortization 66,586,207 59,146,475 64,820,354
86,390,044 84,482,856 81,999,285
OTHER ASSETS
Intangibles 95,285,327 97,991,627 95,961,902
Miscellaneous Investment 52,535 52,535 52,535
Misc. Other Assets 10,946,532 6,836,845 10,853,931
106,284,394 104,881,007 106,868,368
Total Assets $366,162,580 $318,275,446 $353,816,320
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<TABLE>
<CAPTION>
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY March 30 April 1 Dec. 31
CURRENT LIABILITIES 1996 1995 1995
<S> <C> <C> <C>
Notes Payable to Banks $ 20,000,000 $ -- $ 20 000 000
Accounts Payable 8,675,287 6,303,796 5,911,910
Dividends Payable 1,479,368 1,333,885 1,424,014
Accrued Liabilities 19,482,384 16,426,836 21,531,891
Fed. & State Income Taxes 10,918,211 6,452,654 6,438,353
Total Current Liabilities 60,555,250 30,517,171 55,306,168
NON-CURRENT LIABILITIES
E.T.I. Term Loan -- 20,000,000 --
Ind.Dev.Bonds Ser.1992 7,500,000 7,500,000 7,500,000
Post Retirement Benefits 5,479,722 5,096,401 5,385,539
Deferred Compensation 4,435,990 3,296,721 4,526,936
Deferred Fed.Inc.Taxes 9,053,268 7,366,000 8,911,222
Total Non-Current Liabilities 26,468,980 43,259,122 26,323,697
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
15,574,428, 7,535,142 & 15,108,790
respectively, issued 10,815,436 5,232,602 10,492,076
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
7,429,625, 3,636,190 & 7,233,874
respectively issued 5,159,395 2,525,067 5,023,457
Capital in Excess of Par Value 171,588,958 153,929,275 146,171,411
Retained Earnings 102,266,617 92,616,954 121,476,879
Cumulative Translation Adjustment (10,692,056) (9,804,745) (10,977,368)
Total Shareholders' Equity 279,138,350 244,499,153 272,186,455
Total Liabilities and
Shareholders' Equity $366,162,580 $318,275,446 $ 353,816,320
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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
March 30, 1996 & April 1, 1995
1996 1995
<S> <C> <C>
NET SALES (Note 2) $ 63,264,854 $ 60,269,205
Cost of goods sold 32,578,259 30,702,860
Gross Margin 30,686,595 29,566,345
Operating Expenses:
Marketing, Selling and Advertising 9,620,514 9,770,951
Distribution and Warehousing 4,831,342 4,787,283
General and Administrative 3,620,941 3,286,297
Goodwill amortization 676,575 676,575
18,749,372 18,521,106
Earnings from Operations 11,937,223 11,045,239
Other Income (Expense) Net 1,057,739 706,231
Earnings before Income Taxes 12,994,962 11,751,470
Provision for Income Taxes 4,877,000 4,433,000
Net Earnings (Note 5) 8,117,962 7,318,470
Retained Earnings at beginning of period 121,476,879 107,762,823
129,594,841 115,081,293
Deduct:
Cash Dividends 1,368,038 1,193,248
Stock Dividends - 3% 25,960,186 21,271,091
27,328,224 22,464,339
Retained Earnings at end of period $102,266,617 $ 92,616,954
Net Earnings per Share (Note 3) $ .35 $ .32
Dividends Per Share * $ .0625 $ .055
Average Number of Shares Outstanding
(Notes 3 & 4) 23,004,053 23,004,053
*Does not include 3% Stock Dividend to Shareholders of Record on 3/11/96 and 3/10/95 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>
13 Weeks Ended
March 30, 1996 & April 1, 1995
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 8,117,962 $ 7,318,470
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 2,772,611 2,332,863
(Increase) decrease in assets:
Accounts receivable 422,191 (2,733,373)
Inventories (7,241,236) (8,858,292)
Prepaid expenses and other assets (118,206) 47,453
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 686,722 (431,464)
Income taxes payable and deferred 2,933,948 3,972,551
Postretirement health care and life
insurance benefits 94,183 103,682
Other long term liabilities (90,946) 145,157
Other 119,150 --
Net cash provided by operating activities 7,696,379 1,897,047
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,571,427) (531,411)
Investment purchases (21,625,851) (4,760,586)
Investment sales 5,208,198 10,491,056
Net cash provided by (used in)
investing activities (22,989,080) 5,199,059
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid in cash (1,396,026) (1,192,891)
Net cash used in financing activities (1,396,026) (1,192,891)
Increase (decrease) in cash and
cash equivalents (16,688,727) 5,903,215
Cash and cash equivalents-beginning of year 47,523,986 16,508,659
Cash and cash equivalents end of quarter $30,835,259 $22,411,874
Supplemental cash flow information:
Income taxes paid $ 301,000 $ 308,000
Interest paid $ 372,000 $ 459,000
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TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 30, 1996
(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 March 30, 1996 amounted to
$13,200,000.
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 23, 1996 and April
21, 1995 and the 2 - for 1 - Stock Split effective on July 11,
1995.
Note 5 - Results of operations for the period ended March 30, 1996 are not
necessarily indicative of results to be expected for the year to
end December 31, 1996 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
1996.
Note 7 - Sales of unregistered Securities - None.
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<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:
First Quarter, 1996
First Quarter vs.
1996 1995 First Quarter, 1995
$63,264,854 $60,269,205 +5.0%
First Quarter 1996 net sales of $63,264,854, a record, were up 5.0% from
First Quarter 1995 net sales of $60,269,205. Sales rose as a result of
successful promotional programs, product line extensions and the introduction
of new products into the distribution channels. Consolidated sales were also
favorably affected by improved results in Mexico.
First Quarter 1996 net sales of $63,264,854 were down from Fourth Quarter
1995 net sales of $67,145,159. This is not considered unusual as the First
Quarter of the year is normally the company's lowest quarter in sales and is
consistent with the historical trend.
COST OF SALES:
Cost of Sales as a
First Quarter Percentage of Net Sales
1996 1995 1st Qtr. 1996 1st Qtr. 1995
$32,578,259 $30,702,860 51.5% 50.9%
Cost of sales as a percentage of net sales increased slightly from 50.9% for
First Quarter 1995 to 51.5% for First Quarter 1996. This increase principally
reflects increases in certain ingredients costs.
NET EARNINGS:
First Quarter, 1996
First Quarter vs.
1996 1995 First Quarter, 1995
$8,117,962 $7,318,470 +10.9%
First Quarter 1996 net earnings of $8,117,962 or $0.35 per share, a record,
were up 10.9% from net earnings of $7,318,470 or $0.32 per share for the
First Quarter 1995. The increase in net earnings reflects higher sales,
control of operating expenses resulting in improved margins from operations
and increased net investment income.
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<PAGE>
First Quarter 1996 net earnings of $8,117,962 decreased $372,377 or 4.4% from
Fourth Quarter of 1995 net earnings of $8,490,339, which reflects the lower
level of sales in the First Quarter 1996 compared to the Fourth Quarter 1995.
This is consistent with historical trends.
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<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: May 1, 1996 BY:
Melvin J. Gordon
Chairman of the Board
BY:
G. Howard Ember
Vice President - Finance
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<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-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-30-1996
<PERIOD-TYPE> 3-MOS
<CASH> 30,835
<SECURITIES> 72,343
<RECEIVABLES> 25,157
<ALLOWANCES> 1,962
<INVENTORY> 39,553
<CURRENT-ASSETS> 173,488
<PP&E> 152,976
<DEPRECIATION> 66,586
<TOTAL-ASSETS> 366,163
<CURRENT-LIABILITIES> 60,555
<BONDS> 7,500
00
00
<COMMON> 15,975
<OTHER-SE> 263,164
<TOTAL-LIABILITY-AND-EQUITY> 366,163
<SALES> 63,265
<TOTAL-REVENUES> 63,265
<CGS> 32,578
<TOTAL-COSTS> 18,749
<OTHER-EXPENSES> (1,058)
<LOSS-PROVISION> 130
<INTEREST-EXPENSE> 369
<INCOME-PRETAX> 12,995
<INCOME-TAX> 4,877
<INCOME-CONTINUING> 8,118
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,118
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
