<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 June 29, 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 15,596,753
Class B Common Stock, $.69 4/9 par value 7,407,300
<TABLE> <PAGE 2>
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(UNAUDITED)
<CAPTION>
ASSETS June 29
July 1 Dec. 31
CURRENT ASSETS 1996
1995 1995
<S> <C> <C>
<C>
Cash & Cash Equiv. $ 36,984,898 $
31,226,163 $ 47,523,986
Marketable Securities 62,914,374
37,793,260 55,925,732
Accounts Receivable
Less Allowances of
$1,994,000,$1,613,000 & $1,774,000 22,599,033
23,993,098 23,553,517
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 36,804,424
36,483,179 19,584,849
Raw Material & Supplies 14,880,942
13,903,265 12,624,820
Prepaid Expenses 4,983,613
3,054,662 2,812,763
Deferred Income Taxes 2,923,000
2,479,395 2,923,000
Total Current Assets 182,090,284
148,933,022 164,948,667
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 6,905,066
6,936,880 6,899,832
Building 28,268,965
27,254,392 28,259,052
Machinery & Equip. 118,391,385
110,640,027 111,660,755
153,565,416
144,831,299 146,819,639
Less-Accumulated Deprec.
and Amortization 67,887,372
61,091,319 64,820,354
85,678,044
83,739,980 81,999,285
OTHER ASSETS
Intangibles 94,608,752
97,315,052 95,961,902
Miscellaneous Investment 33,307
52,535 52,535
Misc. Other Assets 11,152,556
6,833,724 10,853,931
105,794,615
104,201,311 106,868,368
Total Assets $373,562,943
$336,874,313 $353,816,320
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY June 29
July 1 Dec. 31
CURRENT LIABILITIES 1996
1995 1995
<S> <C> <C>
<C>
Notes Payable to Banks $ 20,000,000 $
9,000,000 $ 20,000,000
Accounts Payable 8,209,789
7,373,663 5,911,910
Dividends Payable 1,667,817
1,423,193 1,424,014
Accrued Liabilities 20,703,103
17,124,566 21,531,891
Fed. & State Income Taxes 9,347,906
6,195,690 6,438,353
Total Current Liabilities 59,928,615
41,117,112 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 5,532,061
5,196,365 5,385,539
Deferred Compensation 4,787,349
3,525,794 4,526,936
Deferred Fed.Inc.Taxes 9,050,931
7,366,000 8,911,222
Total Non-Current Liabilities 26,870,341
43,588,159 26,323,697
SHAREHOLDERS' EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
15,596,753, 15,083,204 & 15,108,790
respectively, issued 10,830,939
10,474,308 10,492,076
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
7,407,300, 7,259,460 & 7,233,874
respectively issued 5,143,892
5,041,225 5,023,457
Capital in Excess of Par Value 171,588,958
146,171,411 146,171,411
Retained Earnings 109,925,917
99,546,976 121,476,879
Cumulative Translation Adjustment (10,725,719)
(9,064,878) (10,977,368)
Total Shareholders' Equity 286,763,987
252,169,042 272,186,455
Total Liabilities and
Shareholders' Equity $373,562,943
$336,874,313 $ 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
26 Weeks Ended
June 29, 1996 & July
1, 1995 June 29, 1996 & July 1, 1995
1995
1995 1996 1995
<S> <C> <C>
<C> <C>
NET SALES (Note 2) $ 72,511,335 $
68,774,216 $135,776,189 $129,043,421
Cost of goods sold 37,219,507
35,718,429 69,797,766 66,421,289
Gross Margin 35,291,828
33,055,787 65,978,423 62,622,132
Operating Expenses:
Marketing, Selling and Advertising 11,722,836
11,719,324 21,343,350 21,490,275
Distribution and Warehousing 5,380,882
5,427,140 10,212,224 10,214,423
General and Administrative 3,776,147
3,244,118 7,397,088 6,530,415
Goodwill amortization 676,575
676,575 1,353,150 1,353,150
21,556,440
21,067,157 40,305,812 39,588,263
Earnings from Operations 13,735,388
11,988,630 25,672,611 23,033,869
Other Income (Expense) Net 1,037,729
1,115,827 2,095,468 1,822,058
Earnings before Income Taxes 14,773,117
13,104,457 27,768,079 24,855,927
Provision for Income Taxes 5,446,000
4,778,000 10,323,000 9,211,000
Net Earnings (Note 5) 9,327,117
8,326,457 17,445,079 15,644,927
Retained Earnings at beginning of period 102,266,617
92,616,954 121,476,879 107,762,823
111,593,734
100,943,411 138,921,958 123,407,750
Deduct:
Cash Dividends 1,667,817
1,396,435 3,035,855 2,589,683
Stock Dividends - 3% --
-- 25,960,186 21,271,091
1,667,817
1,396,435 28,996,041 23,860,774
Retained Earnings at end of period $109,925,917 $
99,546,976 $109,925,917 $ 99,546,976
Net Earnings per Share (Note 3) $ .41 $
.36 $ .76 $ .68
Dividends Per Share * $ .0725 $
.0625 $.135 $ .1175
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:
26 Weeks
Ended
June 29, 1996 &
July 1, 1995
1996
1995
<S> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $17,445,079
$15,644,927
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 5,674,757
4,916,995
(Increase) decrease in assets:
Accounts receivable 1,006,455
(3,666,715)
Inventories (19,354,582)
(20,647,175)
Prepaid expenses and other assets (2,279,560)
(51,062)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 1,440,466
1,281,954
Income taxes payable and deferred 3,073,598
3,664,638
Postretirement health care and life
insurance benefits 146,522
203,646
Other long term liabilities 260,413
374,230
Other 82,852
--
Net cash provided by
operating activities 7,496,000
1,721,438
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,171,053)
(1,733,379)
Investment purchases (28,130,232)
(14,853,613)
Investment sales 21,141,590
23,083,076
Net cash provided by (used in)
investing activities (15,159,695)
6,496,084
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings net of repayments
under lines of credit agreements --
9,000,000
Dividends paid in cash (2,875,393)
(2,500,018)
Net cash provided by (used in)
financing activities (2,875,393)
6,499,982
Increase (decrease) in cash
and cash equivalents (10,539,088)
14,717,504
Cash and cash equivalents-beginning of year 47,523,986
16,508,659
Cash and cash equivalents-end of quarter $36,984,898
$31,226,163
Supplemental cash flow information:
Income taxes paid $ 7,410,000
$ 5,356,000
Interest paid $ 670,000
$ 877,000
</TABLE>
<PAGE> 6
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 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 June 29, 1996
amounted to $5,300,000.
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 June 29,
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 Second
Quarter of 1996.
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,
1996
Second Quarter vs.
1996 1995 Second Quarter,
1995
$72,511,335 $68,774,216 +5.4%
First Half,
1996
First Half vs.
1996 1995 First Half,
1995
$135,776,189 $129,043,421 +5.2%
Second Quarter 1996 net sales of $72,511,335, a record, were up
5.4% from the Second Quarter 1995 net sales of $68,774,216.
First Half of 1996 net sales of $135,776,189 were up 5.2% from
First Half of 1995 net sales of $129,043,421.
Second Quarter 1996 net sales of $72,511,335 were up 14.6% from
First Quarter 1996 net sales of $63,264,854.
Record sales for the Second Quarter and First Half of 1996 are
principally attributable to volume increases. Sales rose
primarily as a result of successful promotional programs, product
line extensions and the introduction of new products into
distribution channels. Consolidated sales were also favorably
affected by improved results in Mexico and Canada.
COST OF SALES:
Cost of Sales as a
Second Quarter Percentage of Net
Sales
1996 1995 2nd Qtr. 1996 2nd Qtr.
1995
$37,219,507 $35,718,429 51.3%
51.9%
Cost of Sales as a
First Half Percentage of Net
Sales
1996 1995 1st Half 1996 1st Half
1995
$69,797,766 $66,421,289 51.4% 51.5%
Cost of sales as a percentage of net sales decreased from 51.9%
for the Second Quarter of 1995 to 51.3% for the Second Quarter of
1996. First Half cost of sales also decreased from 51.5% in 1995
to 51.4% for the same period in 1996. This improvement reflects
lower prices in certain ingredients and packaging material costs
and some changes in the sales mix of products.
NET EARNINGS:
Second Quarter, 1996
Second Quarter vs.
1996 1995 Second Quarter, 1995
$ 9,327,117 $ 8,326,457 12.0%
First Half, 1996
First Half vs.
1996 1995 First Half, 1995
$17,445,079 $15,644,927 +11.5%
Second Quarter 1996 net earnings of $9,327,117 or $.41 per share,
a record, were up 12.0% from net earnings of $8,326,457 or $.36
per share for the Second Quarter of 1995.
First Half 1996 net earnings of $17,445,079 or $.76 per share,
also a new record, were up 11.5% from the prior year's First Half
net earnings of $15,644,927 or $.68 per share.
Net earnings for the Second Quarter of 1996 of $9,327,117
increased $1,209,155 or 14.9% from First Quarter of 1996 net
earnings of $8,117,962.
The increase in net earnings reflects higher sales 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: August 1 , 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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-29-1996
<PERIOD-TYPE> 6-MOS
<CASH> 36,985
<SECURITIES> 62,914
<RECEIVABLES> 24,593
<ALLOWANCES> 1,994
<INVENTORY> 51,685
<CURRENT-ASSETS> 182,090
<PP&E> 153,565
<DEPRECIATION> 67,887
<TOTAL-ASSETS> 373,563
<CURRENT-LIABILITIES> 59,928
<BONDS> 7,500
0
0
<COMMON> 15,975
<OTHER-SE> 270,789
<TOTAL-LIABILITY-AND-EQUITY> 373,563
<SALES> 135,776
<TOTAL-REVENUES> 135,776
<CGS> 69,798
<TOTAL-COSTS> 40,306
<OTHER-EXPENSES> (2,777)
<LOSS-PROVISION> 222
<INTEREST-EXPENSE> 682
<INCOME-PRETAX> 27,768
<INCOME-TAX> 10,323
<INCOME-CONTINUING> 17,445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,445
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
</TABLE>
