<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 29, 1997 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 16,018,418
Class B Common Stock, $.69 4/9 par value 7,596,383
<TABLE> <PAGE> 2
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
<CAPTION> (UNAUDITED)
ASSETS March 29
March 30 Dec. 31
CURRENT ASSETS 1997
1996 1996
<S> <C> <C>
<C>
Cash & Cash Equiv. $ 37,487,705 $
30,835,259 $ 45,658,799
Marketable Securities 105,068,687
72,343,386 98,498,317
Accounts Receivable
Less Allowances of
$2,074,000,$1,962,000 & $1,885,000 19,026,063
23,195,231 21,207,346
Inventories at Cost
(Last-in,First-out):
Finished Goods & Work in Process 27,939,041
24,802,427 20,358,811
Raw Material & Supplies 12,348,294
14,750,274 9,950,294
Prepaid Expenses 4,205,972
4,638,565 3,000,580
Deferred Income Taxes 2,839,000
2,923,000 2,839,000
Total Current Assets 208,914,762
173,488,142 201,513,147
PROPERTY, PLANT & EQUIPMENT,
(at Cost)
Land 6,897,457
6,906,137 6,895,126
Building 28,643,304
28,270,993 29,303,643
Machinery & Equip. 118,949,136
117,799,121 117,130,552
154,489,897
152,976,251 153,329,321
Less-Accumulated Deprec.
and Amortization 73,820,803
66,586,207 71,642,018
80,669,094
86,390,044 81,687,303
OTHER ASSETS
Intangibles 92,579,027
95,285,327 93,255,603
Miscellaneous Investment 26,847
52,535 26,847
Misc. Other Assets 16,666,584
10,946,532 14,973,178
109,272,458
106,284,394 108,255,628
Total Assets $398,856,314
$366,162,580 $391,456,078
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS( EQUITY March 29
March 30 Dec. 31
CURRENT LIABILITIES 1997
1996 1996
<S> <C> <C>
<C>
Notes Payable to Banks $ -- $
20,000,000 $ --
Accounts Payable 9,834,673
8,675,287 8,560,080
Dividends Payable 1,756,365
1,479,368 1,667,817
Accrued Liabilities 25,732,281
19,482,384 28,239,763
Fed. & State Income Taxes 12,869,580
10,918,211 9,716,422
Total Current Liabilities 50,192,899
60,555,250 48,184,082
NON-CURRENT LIABILITIES
Ind.Dev.Bonds Ser.1992 7,500,000
7,500,000 7,500,000
Post Retirement Benefits 5,708,379
5,479,722 5,636,085
Deferred Compensation 8,405,886
4,435,990 7,986,782
Deferred Fed.Inc.Taxes 9,212,680
9,053,268 9,268,550
Total Non-Current Liabilities 30,826,945
26,468,980 30,391,417
SHAREHOLDERS( EQUITY
Common Stk., $.69-4/9 par value-
25,000,000 shares author.
16,018,418,15,574,428 & 15,617,065
respectively, issued 11,123,762
10,815,436 10,845,044
Class B Common Stk $.69-4/9 par value-
10,000,000 shares author.
7,596,383, 7,429,625 & 7,386,988
respectively issued 5,275,200
5,159,395 5,129,787
Capital in Excess of Par Value 198,571,051
171,588,958 171,588,958
Retained Earnings 114,002,206
102,266,617 136,352,123
Cumulative Translation Adjustment (11,135,749)
(10,692,056) (11,035,333)
Total Shareholders( Equity 317,836,470
279,138,350 312,880,579
Total Liabilities and
Shareholders( Equity $398,856,314
$366,162,580 $ 391,456,078
</TABLE>
<PAGE> 4
<TABLE>
TOOTSIE ROLL INDUSTRIES,
INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF
EARNINGS AND
RETAINED EARNINGS (NOTE 1)
(UNAUDITED)
13 Weeks Ended
March
29, 1997 & March 30, 1996
1997 1996
<S> <C>
<C>
NET SALES (Note 2) $
66,257,600 $ 63,264,854
Cost of goods sold
32,934,937 32,578,259
Gross Margin
33,322,663 30,686,595
Operating Expenses:
Marketing, Selling and Advertising
9,894,191 9,620,514
Distribution and Warehousing
5,160,233 4,831,342
General and Administrative
3,865,905 3,620,941
Goodwill amortization
676,575 676,575
19,596,904 18,749,372
Earnings from Operations
13,725,759 11,937,223
Other Income (Expense) Net
1,658,038 1,057,739
Earnings before Income Taxes
15,383,797 12,994,962
Provision for Income Taxes
5,633,000 4,877,000
Net Earnings (Note 5)
9,750,797 8,117,962
Retained Earnings at beginning of period
136,352,123 121,476,879
146,102,920 129,594,841
Deduct:
Cash Dividends
1,662,380 1,368,038
Stock Dividends - 3%
30,438,334 25,960,186
32,100,714 27,328,224
Retained Earnings at end of period
$114,002,206 $102,266,617
Net Earnings per Share (Note 3)
$ .41 $ .34
Dividends Per Share *
$ .0725 $ .0625
Average Number of Shares Outstanding
(Notes 3 & 4)
23,633,551 23,689,801
*Does not include 3% Stock Dividend to Shareholders of Record on
3/11/97 and 3/11/96.
</TABLE>
<PAGE> 5
<TABLE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION:
13 Weeks
Ended
March 29, 1997 &
March 30, 1996
1997
1996
<S> <C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings $ 9,750,797
$ 8,117,962
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 2,876,210
2,772,611
(Increase) decrease in assets:
Accounts receivable 2,157,902
422,191
Inventories (10,030,144)
(7,241,236)
Prepaid expenses and other assets (2,942,073)
(118,206)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities (1,225,562)
686,722
Income taxes payable and deferred 3,095,870
2,933,948
Postretirement health care and life
insurance benefits 72,294
94,183
Other long term liabilities 419,104
(90,946)
Other (31,030)
119,150
Net cash provided by operating activities 4,143,368
7,696,379
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,138,150)
(6,571,427)
Purchase of held to maturity securities (12,234,589)
(21,625,851)
Maturity of held to maturity securities 5,229,865
5,208,198
Purchase of available for sale securities (6,000,000)
--
Sale and maturity of available for
sale securities 6,434,354
--
Net cash used in investing activities ( 7,708,520)
(22,989,080)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid in cash (1,667,817)
(1,396,026)
Shares repurchased and retired (2,938,125)
--
Net cash used in financing activities (4,605,942)
(1,396,026)
Decrease in cash and cash equivalents (8,171,094)
(16,688,727)
Cash and cash equivalents-beginning of year 45,658,799
47,523,986
Cash and cash equivalents end of quarter $37,487,705
$30,835,259
Supplemental cash flow information:
Income taxes paid $ 2,420,000
$ 301,000
Interest paid $ 202,000
$ 372,000
</TABLE>
<PAGE> 6
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1997
(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 29, 1997
amounted to $13,700,000.
Note 3 - Based on Average Shares outstanding adjusted for Stock
Dividends.
Note 4 - Includes 3% Stock Dividends distributed on April 22,
1997 and April 23, 1996.
Note 5 - Results of operations for the period ended March 29,
1997 are not necessarily indicative of results to be
expected for the year to end December 31, 1997 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 1997.
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:
First Quarter, 1997
First Quarter vs.
1997 1996 First Quarter, 1996
$66,257,600 $63,264,854 +4.7%
First Quarter 1997 net sales of $66,257,600, a record, were up
4.7% from First Quarter 1996 net sales of $63,264,854. Sales
rose as a result of successful promotional programs, the
introduction of new products and product line extensions into the
distribution channels. The increase in net sales principally
reflects increases in volume.
First Quarter 1997 net sales of $66,257,600 were down from Fourth
Quarter 1996 net sales of $76,475,083. 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
1997 1996 1st Qtr. 1997 1st Qtr.
1996
$32,934,937 $32,578,259 49.7%
51.5%
Cost of sales as a percentage of net sales decreased slightly
from 51.5% for First Quarter 1996 to 49.7% for First Quarter
1997. 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:
First Quarter, 1997
First Quarter vs.
1997 1996 First Quarter, 1996
$9,750,797 $8,117,962 +20.1%
First Quarter 1997 net earnings of $9,750,797 or $0.41 per share,
a record, were up 20.1% from net earnings of $8,117,962 or $0.34
per share for the First Quarter 1996. The increase in net
earnings reflects higher sales, improved gross profit margins and
effective on-going cost control programs which resulted in higher
income from operations. Increased investment income and decreased
interest expense also contributed to the overall increase in
first quarter 1997 net earnings.
The consolidated effective income tax rate decreased from 37.5%
in the first quarter of 1996 to 36.6% in the first quarter of
1997. This favorable decrease reflect increased tax-free
investment income as well as certain other state and foreign tax
benefits.
First Quarter 1997 net earnings of $9,750,797 decreased $868,554
or 8.2% from Fourth Quarter of 1996 net earnings of $10,619,351,
which reflects the lower level of sales in the First Quarter 1997
compared to the Fourth Quarter 1996. This is consistent with
historical trends.
<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 7, 1997 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-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-29-1997
<PERIOD-TYPE> 3-MOS
<CASH> 37,488
<SECURITIES> 105,069
<RECEIVABLES> 21,100
<ALLOWANCES> 2,074
<INVENTORY> 40,287
<CURRENT-ASSETS> 208,915
<PP&E> 154,490
<DEPRECIATION> 73,821
<TOTAL-ASSETS> 398,856
<CURRENT-LIABILITIES> 50,193
<BONDS> 7,500
0
0
<COMMON> 16,399
<OTHER-SE> 301,438
<TOTAL-LIABILITY-AND-EQUITY> 398,856
<SALES> 66,258
<TOTAL-REVENUES> 66,258
<CGS> 32,935
<TOTAL-COSTS> 19,597
<OTHER-EXPENSES> (1,658)
<LOSS-PROVISION> 108
<INTEREST-EXPENSE> 253
<INCOME-PRETAX> 15,384
<INCOME-TAX> 5,633
<INCOME-CONTINUING> 9,751
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,751
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
