<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 28, 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 15,604,742
Class B Common Stock, $.69 4/9 par value 7,399,311
<PAGE> 2
<TABLE>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(UNAUDITED)
ASSETS SEPT 28
SEPT 30 Dec. 31
CURRENT ASSETS 1996
1995 1995
<S> <C> <C>
<C>
Cash & Cash Equiv. $ 29,853,140 $
29,088,252 $ 47,523,986
Marketable Securities 64,173,247
37,851,060 55,925,732
Accounts Receivable
Less Allowances of
$3,027,000,$2,764,000 & $1,774,000 67,001,850
64,271,180 23,553,517
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 19,470,662
19,966,604 19,584,849
Raw Material & Supplies 8,805,635
11,169,913 12,624,820
Prepaid Expenses 4,774,338
2,133,925 2,812,763
Deferred Income Taxes 2,923,000
2,473,557 2,923,000
Total Current Assets 197,001,872
166,954,491 164,948,667
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 6,906,496
6,955,770 6,899,832
Building 28,271,675
27,286,819 28,259,052
Machinery & Equip. 120,780,065
111,665,781 111,660,755
155,958,236
145,908,370 146,819,639
Less-Accumulated Deprec.
and Amortization 70,337,509
63,120,497 64,820,354
85,620,727
82,787,873 81,999,285
OTHER ASSETS
Intangibles 93,932,177
96,638,477 95,961,902
Miscellaneous Investment 32,089
52,535 52,535
Misc. Other Assets 15,062,282
10,737,240 10,853,931
109,026,548
107,428,252 106,868,368
Total Assets $391,649,147
$357,170,616 $353,816,320
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY Sept 28
Sept 30 Dec. 31
CURRENT LIABILITIES 1996
1995 1995
<S> <C> <C>
<C>
Notes Payable to Banks $ -- $
20,000,000 $ 20,000,000
Accounts Payable 11,933,589
8,603,221 5,911,910
Dividends Payable 1,667,817
1,423,604 1,424,014
Accrued Liabilities 30,744,448
24,452,689 21,531,891
Fed. & State Income Taxes 15,070,759
11,910,384 6,438,353
Total Current Liabilities 59,416,613
66,389,898 55,306,168
NON-CURRENT LIABILITIES
Ind.Dev.Bonds Ser.1992 7,500,000
7,500,000 7,500,000
Post Retirement Benefits 5,553,315
5,279,061 5,385,539
Deferred Compensation 5,379,856
3,755,075 4,526,936
Deferred Fed.Inc.Taxes 9,461,662
7,366,000 8,911,222
Total Non-Current Liabilities 27,894,833
23,900,136 26,323,697
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
15,604,742, 15,095,659 & 15,108,790
respectively, issued 10,836,487
10,482,957 10,492,076
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
7,399,311, 7,247,005 & 7,233,874
respectively issued 5,138,344
5,032,576 5,023,457
Capital in Excess of Par Value 171,588,958
146,171,411 146,171,411
Retained Earnings 127,400,589
114,382,977 121,476,879
Cumulative Translation Adjustment (10,626,677)
(9,189,339) (10,977,368)
Total Shareholders" Equity 304,337,701
266,880,582 272,186,455
Total Liabilities and
Shareholders" Equity $391,649,147
$357,170,616 $353,816,320
</TABLE>
<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. 28, 1996 & Sept.
30, 1995 Sept 28, 1996 & Sept. 30, 1995
1996
1995 1996 1995
<S> <C> <C>
<C> <C>
NET SALES (Note 2) $128,657,228
$116,471,443 $264,433,417 $245,514,864
Cost of goods sold 68,241,866
63,954,938 138,039,632 130,376,227
Gross Margin 60,415,362
52,516,505 126,393,785 115,138,637
Operating Expenses:
Marketing, Selling and Advertising 18,412,155
15,844,568 39,755,505 37,334,843
Distribution and Warehousing 7,506,993
7,508,843 17,719,217 17,723,266
General and Administrative 4,122,943
3,411,320 11,520,031 9,941,735
Goodwill amortization 676,575
676,575 2,029,725 2,029,725
30,718,666
27,441,306 71,024,478 67,029,569
Earnings from Operations 29,696,696
25,075,199 55,369,307 48,109,068
Other Income (Expense) Net 778,794
557,238 2,874,262 2,379,296
Earnings before Income Taxes 30,475,490
25,632,437 58,243,569 50,488,364
Provision for Income Taxes 11,333,000
9,400,000 21,656,000 18,611,000
Net Earnings (Note 5) 19,142,490
16,232,437 36,587,569 31,877,364
Retained Earnings at beginning of period 109,925,917
99,546,976 121,476,879 107,762,823
129,068,407
115,779,413 158,064,448 139,640,187
Deduct:
Cash Dividends 1,667,818
1,396,436 4,703,673 3,986,119
Stock Dividends - 3% --
-- 25,960,186 21,271,091
1,667,818
1,396,436 30,663,859 25,257,210
Retained Earnings at end of period $127,400,589
$114,382,977 $127,400,589 $114,382,977
Net Earnings per Share (Note 3) $ .83
$ .71 $1.59 $1.39
Dividends Per Share * $ .0725
$ .0625 $ .2075 $ .18
Average Number of Shares Outstanding
(Notes 3 & 4) 23,004,053
23,004,053 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>
<PAGE> 5
<TABLE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(UNAUDITED)
<CAPTION>
39 Weeks
Ended
September 28, 1996 &
September 30, 1995
1996
1995
<S> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $36,587,569
$31,877,364
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 8,723,849
7,689,966
(Increase) decrease in assets:
Accounts receivable (43,297,611)
(41,634,505)
Inventories 4,112,483
(2,509,585)
Prepaid expenses and other assets (6,120,105)
(3,336,164)
Increase in liabilities:
Accounts payable and accrued liabilities 15,175,400
8,489,531
Income taxes payable and deferred 9,193,294
9,752,490
Postretirement health care and life
insurance benefits 167,776
286,342
Other long term liabilities 852,920
603,511
Other 69,246
--
Net cash provided by
operating activities 25,464,821
11,218,950
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,344,941)
(2,914,955)
Investment purchases (37,673,985)
(24,110,791)
Investment maturities 29,426,470
32,282,432
Net cash provided by (used in)
investing activities (18,592,456)
5,256,686
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable (20,000,000)
--
Dividends paid in cash (4,543,211)
(3,896,043)
Net cash used in
financing activities (24,543,211)
(3,896,043)
Increase (decrease)in cash and
cash equivalents (17,670,846)
12,579,593
Cash and cash equivalents-beginning of year 47,523,986
16,508,659
Cash and cash equivalents end of quarter $29,853,140
$29,088,252
Supplemental cash flow information:
Income taxes paid $12,608,000
$ 9,073,000
Interest paid $ 944,000
$ 1,171,000
</TABLE>
<PAGE> 6
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 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 September 28, 1996
amounted to $22,500,000.
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 September
28, 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 Third
Quarter of 1996.
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, 1996
Third Quarter
vs.
1996 1995
Third Quarter, 1995
$128,657,228 $116,471,443
10.5%
Nine Months, 1996
Nine Months
vs.
1996 1995
Nine Months, 1995
$264,433,417 $245,514,864
7.7%
Third Quarter 1996 net sales of $128,657,228, were up 10.5% from
Third Quarter 1995 net sales of $116,471,443.
Nine Months of 1996 net sales of $264,433,417 were up 7.7% from
Nine Months of 1995 net sales of $245,514,864.
Third Quarter 1996 net sales of $128,657,228 were up 77.4% from
Second Quarter 1996 net sales of $72,511,335. Historically the
third quarter includes pre-Halloween sales and is the company's
largest quarterly sales period of the year.
Record sales for the Third Quarter and Nine Months of 1996 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.
The Company's public relations program that resulted in various
media coverage of Tootsie Roll 100th anniversary also
facilitated the Company's sales efforts. Consolidated sales were
also favorably affected by improved results in Mexico and Canada.
COST OF SALES:
Cost
of Sales as a
Third Quarter
Percentage of Net Sales
1996 1995 3rd Qtr.
1996 3rd Qtr. 1995
$68,241,866 $63,954,938 53.0%
54.9%
Cost
of Sales as a
Nine Months
Percentage of Net Sales
1996 1995 9 Months
1996 9 Months 1995
$138,039,632 $130,376,227 52.2%
53.1%
Cost of sales as a percentage of net sales decreased from 54.9%
for the Third Quarter of 1995 to 53.0% in the Third Quarter of
1996. Nine Months cost of sales also decreased from 53.1% in
1995 to 52.2% for the same period in 1996. This improvement
reflects lower prices in certain ingredients and packaging
material costs and the benefits of higher sales volumes against
relatively fixed factory overhead costs.
NET EARNINGS:
Third Quarter, 1996
Third Quarter
vs.
1996 1995
Third Quarter, 1995
$19,142,490 $16,232,437
17.9%
Nine
Months, 1996
Nine Months
vs
1996 1995 Nine
Months, 1995
$36,587,569 $31,877,364
14.8%
Third Quarter 1996 net earnings of $19,142,490 or $.83 per share
were up 17.9% from net earnings of $16,232,437 or $.71 per share
for the Third Quarter of 1995
Nine Months 1996 net earnings of $36,587,569 or $1.59 per share,
also a new record, were up 14.8% from the prior year's Nine
Months net earnings of $31,877,364 or $1.39 per share.
Net earnings for the Third Quarter of 1996 of $19,142,490
increased $9,815,373 or 105.2% from Second Quarter of 1996 net
earnings of $9,327,117.
The increase in net earnings reflects higher sales, as
historically the third quarter includes pre-Halloween sales and
is the company's largest quarterly sales period of the year, and
effective cost control programs that resulted in higher operating
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: October 29, 1996 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.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-28-1996
<PERIOD-TYPE> 9-MOS
<CASH> 29,853
<SECURITIES> 64,173
<RECEIVABLES> 70,029
<ALLOWANCES> 3,027
<INVENTORY> 28,277
<CURRENT-ASSETS> 197,022
<PP&E> 155,958
<DEPRECIATION> 70,338
<TOTAL-ASSETS> 391,649
<CURRENT-LIABILITIES> 59,417
<BONDS> 7,500
0
0
<COMMON> 15,975
<OTHER-SE> 288,363
<TOTAL-LIABILITY-AND-EQUITY> 391,649
<SALES> 264,433
<TOTAL-REVENUES> 264,433
<CGS> 138,040
<TOTAL-COSTS> 71,024
<OTHER-EXPENSES> (3,793)
<LOSS-PROVISION> 419
<INTEREST-EXPENSE> 919
<INCOME-PRETAX> 58,244
<INCOME-TAX> 21,656
<INCOME-CONTINUING> 36,588
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,588
<EPS-PRIMARY> 1.59
<EPS-DILUTED> 1.59
</TABLE>
