|
Broadening Your Perspective 8-2
The financial statements of The Hershey Company and Tootsie Roll are presented below.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME |
| For the years ended December 31, |
2011 |
2010 |
2009 |
| In thousands of dollars except per share amounts |
| Net Sales |
$6,080,788 |
|
$5,671,009 |
$5,298,668 |
| Costs and Expenses: |
| Cost of sales |
3,548,896 |
3,255,801 |
3,245,531 |
| Selling, marketing and administrative |
1,477,750 |
1,426,477 |
1,208,672 |
| Business realignment and impairment (credits) charges, net |
(886 |
) |
83,433 |
82,875 |
| Total costs and expenses |
5,025,760 |
|
4,765,711 |
4,537,078 |
| Income before Interest and Income Taxes |
1,055,028 |
|
905,298 |
761,590 |
| Interest expense, net |
92,183 |
|
96,434 |
90,459 |
| Income before Income Taxes |
962,845 |
|
808,864 |
671,131 |
| Provision for income taxes |
333,883 |
|
299,065 |
235,137 |
| Net Income |
$628,962 |
|
$509,799 |
$435,994 |
| Net Income Per Share—Basic—Class B Common Stock |
$2.58 |
|
$2.08 |
$1.77 |
| Net Income Per Share—Diluted—Class B Common Stock |
$2.56 |
|
$2.07 |
$1.77 |
| Net Income Per Share—Basic—Common Stock |
$2.85 |
|
$2.29 |
$1.97 |
| Net Income Per Share—Diluted—Common Stock |
$2.74 |
|
$2.21 |
$1.90 |
| Cash Dividends Paid Per Share: |
| Common Stock |
$1.3800 |
$1.2800 |
$1.1900 |
| Class B Common Stock |
1.2500 |
1.1600 |
1.0712 |
| The notes to consolidated financial statements are an integral part of these statements and are included in the Hershey’s 2011 Annual Report, available at www.thehersheycompany.com. |
THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS |
| December 31, |
2011 |
2010 |
| In thousands of dollars |
| ASSETS |
| Current Assets: |
| Cash and cash equivalents |
$693,686 |
$884,642 |
| Accounts receivable—trade |
399,499 |
390,061 |
| Inventories |
648,953 |
533,622 |
| Deferred income taxes |
136,861 |
55,760 |
| Prepaid expenses and other |
167,559 |
|
141,132 |
|
| Total current assets |
2,046,558 |
2,005,217 |
| Property, Plant and Equipment, Net |
1,559,717 |
1,437,702 |
| Goodwill |
516,745 |
524,134 |
| Other Intangibles |
111,913 |
123,080 |
| Deferred Income Taxes |
38,544 |
21,387 |
| Other Assets |
138,722 |
|
161,212 |
|
| Total assets |
$4,412,199 |
|
$4,272,732 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| Current Liabilities: |
| Accounts payable |
$420,017 |
$410,655 |
| Accrued liabilities |
612,186 |
593,308 |
| Accrued income taxes |
1,899 |
9,402 |
| Short-term debt |
42,080 |
24,088 |
| Current portion of long-term debt |
97,593 |
|
261,392 |
|
| Total current liabilities |
1,173,775 |
1,298,845 |
| Long-term Debt |
1,748,500 |
1,541,825 |
| Other Long-term Liabilities |
617,276 |
|
494,461 |
|
| Total liabilities |
3,539,551 |
|
3,335,131 |
|
| Commitments and Contingencies |
— |
— |
| Stockholders’ Equity: |
| The Hershey Company Stockholders’ Equity |
| Preferred Stock, shares issued: none in 2011 and 2010 |
— |
— |
| Common Stock, shares issued: 299,269,702 in 2011 and 299,195,325 in 2010 |
299,269 |
299,195 |
| Class B Common Stock, shares issued: 60,632,042 in 2011 and 60,706,419 in 2010 |
60,632 |
60,706 |
| Additional paid-in capital |
490,817 |
434,865 |
| Retained earnings |
4,699,597 |
4,374,718 |
| Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and 132,871,512 in 2010 |
(4,258,962 |
) |
(4,052,101 |
) |
| Accumulated other comprehensive loss |
(442,331 |
) |
(215,067 |
) |
| The Hershey Company stockholders’ equity |
849,022 |
|
902,316 |
|
| Noncontrolling interests in subsidiaries |
23,626 |
|
35,285 |
|
| Total stockholders’ equity |
872,648 |
|
937,601 |
|
| Total liabilities and stockholders’equity |
$4,412,199 |
|
$4,272,732 |
|
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the years ended December 31, |
2011 |
2010 |
2009 |
| In thousands of dollars |
| Cash Flows Provided from (Used by) Operating Activities |
| Net income |
$628,962 |
$509,799 |
$435,994 |
| Adjustments to reconcile net income to net cash provided from operations: |
| Depreciation and amortization |
215,763 |
197,116 |
182,411 |
| Stock-based compensation expense, net of tax of $15,127, $17,413 and $19,223, respectively |
28,341 |
32,055 |
34,927 |
| Excess tax benefits from stock-based compensation |
(13,997 |
) |
(1,385 |
) |
(4,455 |
) |
| Deferred income taxes |
33,611 |
(18,654 |
) |
(40,578 |
) |
| Gain on sale of trademark licensing rights, net of tax of $5,962 |
(11,072 |
) |
— |
— |
| Business realignment and impairment charges, net of tax of $18,333, $20,635 and $38,308, respectively |
30,838 |
77,935 |
60,823 |
| Contributions to pension plans |
(8,861 |
) |
(6,073 |
) |
(54,457 |
) |
| Changes in assets and liabilities, net of effects from business acquisitions and divestitures: |
| Accounts receivable—trade |
(9,438 |
) |
20,329 |
46,584 |
| Inventories |
(115,331 |
) |
(13,910 |
) |
74,000 |
| Accounts payable |
7,860 |
90,434 |
37,228 |
| Other assets and liabilities |
(205,809 |
) |
13,777 |
293,272 |
| Net Cash Provided from Operating Activities |
580,867 |
|
901,423 |
|
1,065,749 |
|
| Cash Flows Provided from (Used by) Investing Activities |
| Capital additions |
(323,961 |
) |
(179,538 |
) |
(126,324 |
) |
| Capitalized software additions |
(23,606 |
) |
(21,949 |
) |
(19,146 |
) |
| Proceeds from sales of property, plant and equipment |
312 |
2,201 |
10,364 |
| Proceeds from sales of trademark licensing rights |
20,000 |
— |
— |
| Business acquisitions |
(5,750 |
) |
— |
(15,220 |
) |
| Net Cash (Used by) Investing Activities |
(333,005 |
) |
(199,286 |
) |
(150,326 |
) |
| Cash Flows Provided from (Used by) Financing Activities |
| Net change in short-term borrowings |
10,834 |
1,156 |
(458,047 |
) |
| Long-term borrowings |
249,126 |
348,208 |
— |
| Repayment of long-term debt |
(256,189 |
) |
(71,548 |
) |
(8,252 |
) |
| Proceeds from lease financing agreement |
47,601 |
— |
— |
| Cash dividends paid |
(304,083 |
) |
(283,434 |
) |
(263,403 |
) |
| Exercise of stock options |
184,411 |
92,033 |
28,318 |
| Excess tax benefits from stock-based compensation |
13,997 |
1,385 |
4,455 |
| Contributions from noncontrolling interests in subsidiaries |
— |
10,199 |
7,322 |
| Repurchase of Common Stock |
(384,515 |
) |
(169,099 |
) |
(9,314 |
) |
| Net Cash (Used by) Financing Activities |
(438,818 |
) |
(71,100 |
) |
(698,921 |
) |
| (Decrease) Increase in Cash and Cash Equivalents |
(190,956 |
) |
631,037 |
216,502 |
| Cash and Cash Equivalents as of January 1 |
884,642 |
253,605 |
37,103 |
| Cash and Cash Equivalents as of December 31 |
$693,686 |
|
$884,642 |
|
$253,605 |
|
| Interest Paid |
$97,892 |
$97,932 |
$91,623 |
| Income Taxes Paid |
292,315 |
350,948 |
252,230 |
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) |
| For the year ended December 31, |
| 2011 |
2010 |
2009 |
| Net product sales |
$528,369 |
$517,149 |
$495,592 |
| Rental and royalty revenue |
4,136 |
4,299 |
3,739 |
| Total revenue |
532,505 |
|
521,448 |
|
499,331 |
|
| Product cost of goods sold |
365,225 |
349,334 |
319,775 |
| Rental and royalty cost |
1,038 |
1,088 |
852 |
| Total costs |
366,263 |
|
350,422 |
|
320,627 |
|
| Product gross margin |
163,144 |
167,815 |
175,817 |
| Rental and royalty gross margin |
3,098 |
3,211 |
2,887 |
| Total gross margin |
166,242 |
|
171,026 |
|
178,704 |
|
| Selling, marketing and administrative expenses |
108,276 |
106,316 |
103,755 |
| Impairment charges |
— |
— |
14,000 |
| Earnings from operations |
57,966 |
|
64,710 |
|
60,949 |
|
| Other income (expense), net |
2,946 |
|
8,358 |
|
2,100 |
|
| Earnings before income taxes |
60,912 |
|
73,068 |
|
63,049 |
|
| Provision for income taxes |
16,974 |
|
20,005 |
|
9,892 |
|
| Net earnings |
$43,938 |
|
$53,063 |
|
$53,157 |
|
|
| Net earnings |
$43,938 |
$53,063 |
$53,157 |
| Other comprehensive earnings (loss) |
(8,740 |
) |
1,183 |
2,845 |
| Comprehensive earnings |
$35,198 |
|
$54,246 |
|
$56,002 |
|
|
| Retained earnings at beginning of year. |
$135,866 |
$147,687 |
$144,949 |
| Net earnings |
43,938 |
53,063 |
53,157 |
| Cash dividends |
(18,360 |
) |
(18,078 |
) |
(17,790 |
) |
| Stock dividends |
(47,175 |
) |
(46,806 |
) |
(32,629 |
) |
| Retained earnings at end of year |
$114,269 |
|
$135,866 |
|
$147,687 |
|
|
| Earnings per share |
$0.76 |
$0.90 |
$0.89 |
|
| Average Common and Class B Common shares outstanding |
57,892 |
58,685 |
59,425 |
| (The accompanying notes are an integral part of these statements.) |
CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data) |
| Assets |
December 31, |
| 2011 |
2010 |
| CURRENT ASSETS: |
| Cash and cash equivalents |
$78,612 |
$115,976 |
| Investments |
10,895 |
7,996 |
| Accounts receivable trade, less allowances of $1,731 and $1,531 |
41,895 |
37,394 |
| Other receivables |
3,391 |
9,961 |
| Inventories: |
| Finished goods and work-in-process |
42,676 |
35,416 |
| Raw materials and supplies |
29,084 |
21,236 |
| Prepaid expenses |
5,070 |
6,499 |
| Deferred income taxes |
578 |
689 |
| Total current assets |
212,201 |
|
235,167 |
|
| PROPERTY, PLANT AND EQUIPMENT, at cost: |
| Land |
21,939 |
21,696 |
| Buildings |
107,567 |
102,934 |
| Machinery and equipment |
322,993 |
307,178 |
| Construction in progress |
2,598 |
|
9,243 |
|
| 455,097 |
|
440,974 |
|
| Less—Accumulated depreciation |
242,935 |
|
225,482 |
|
| Net property, plant and equipment |
212,162 |
|
215,492 |
|
| OTHER ASSETS: |
| Goodwill |
73,237 |
73,237 |
| Trademarks |
175,024 |
175,024 |
| Investments |
96,161 |
64,461 |
| Split dollar officer life insurance |
74,209 |
74,441 |
| Prepaid expenses |
3,212 |
6,680 |
| Equity method investment |
3,935 |
4,254 |
| Deferred income taxes |
7,715 |
9,203 |
| Total other assets |
433,493 |
|
407,300 |
|
| Total assets |
$857,856 |
|
$857,959 |
|
| Liabilities and Shareholders’ Equity |
December 31, |
| 2011 |
2010 |
| CURRENT LIABILITIES: |
| Accounts payable |
$10,683 |
$9,791 |
| Dividends payable |
4,603 |
4,529 |
| Accrued liabilities |
43,069 |
44,185 |
| Total current liabilities |
58,355 |
|
58,505 |
|
| NONCURRENT LIABILITES: |
| Deferred income taxes |
43,521 |
47,865 |
| Postretirement health care and life insurance benefits |
26,108 |
20,689 |
| Industrial development bonds |
7,500 |
7,500 |
| Liability for uncertain tax positions |
8,345 |
9,835 |
| Deferred compensation and other liabilities |
48,092 |
46,157 |
| Total noncurrent liabilities |
133,566 |
|
132,046 |
|
| SHAREHOLDERS’ EQUITY: |
| Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and 36,057 respectively, issued |
25,333 |
25,040 |
| Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued |
14,601 |
14,212 |
| Capital in excess of par value |
533,677 |
505,495 |
| Retained earnings, per accompanying statement |
114,269 |
135,866 |
| Accumulated other comprehensive loss |
(19,953 |
) |
(11,213 |
) |
| Treasury stock (at cost)—71 shares and 69 shares, respectively |
(1,992 |
) |
(1,992 |
) |
| Total shareholders’ equity |
665,935 |
|
667,408 |
|
| Total liabilities and shareholders’ equity |
$857,856 |
|
$857,959 |
|
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands) |
| For the year ended December 31, |
| 2011 |
2010 |
2009 |
| CASH FLOWS FROM OPERATING ACTIVITIES: |
| Net earnings |
$43,938 |
$53,063 |
$53,157 |
| Adjustments to reconcile net earnings to net cash provided by operating activities: |
| Depreciation |
19,229 |
18,279 |
17,862 |
| Impairment charges |
— |
— |
14,000 |
| Impairment of equity method investment |
— |
— |
4,400 |
| Loss from equity method investment |
194 |
342 |
233 |
| Amortization of marketable security premiums |
1,267 |
522 |
320 |
| Changes in operating assets and liabilities: |
| Accounts receivable |
(5,448 |
) |
717 |
(5,899 |
) |
| Other receivables |
3,963 |
(2,373 |
) |
(2,088 |
) |
| Inventories |
(15,631 |
) |
(1,447 |
) |
455 |
| Prepaid expenses and other assets |
5,106 |
4,936 |
5,203 |
| Accounts payable and accrued liabilities |
84 |
2,180 |
(2,755 |
) |
| Income taxes payable and deferred |
(5,772 |
) |
2,322 |
(12,543 |
) |
| Postretirement health care and life insurance benefits |
2,022 |
1,429 |
1,384 |
| Deferred compensation and other liabilities |
2,146 |
2,525 |
2,960 |
| Others |
(708 |
) |
310 |
305 |
| Net cash provided by operating activities |
50,390 |
|
82,805 |
|
76,994 |
|
| CASH FLOWS FROM INVESTING ACTIVITIES: |
| Capital expenditures |
(16,351 |
) |
(12,813 |
) |
(20,831 |
) |
| Net purchase of trading securities |
(3,234 |
) |
(2,902 |
) |
(1,713 |
) |
| Purchase of available for sale securities |
(39,252 |
) |
(9,301 |
) |
(11,331 |
) |
| Sale and maturity of available for sale securities |
7,680 |
8,208 |
17,511 |
| Net cash used in investing activities |
(51,157 |
) |
(16,808 |
) |
(16,364 |
) |
| CASH FLOWS FROM FINANCING ACTIVITIES: |
| Shares repurchased and retired |
(18,190 |
) |
(22,881 |
) |
(20,723 |
) |
| Dividends paid in cash |
(18,407 |
) |
(18,130 |
) |
(17,825 |
) |
| Net cash used in financing activities |
(36,597 |
) |
(41,011 |
) |
(38,548 |
) |
| Increase (decrease) in cash and cash equivalents |
(37,364 |
) |
24,986 |
22,082 |
| Cash and cash equivalents at beginning of year |
115,976 |
90,990 |
68,908 |
| Cash and cash equivalents at end of year |
$78,612 |
$115,976 |
$90,990 |
| Supplemental cash flow information |
| Income taxes paid |
$16,906 |
$20,586 |
$22,364 |
| Interest paid |
$38 |
$49 |
$182 |
| Stock dividend issued |
$47,053 |
$46,683 |
$32,538 |
| (The accompanying notes are an integral part of these statements.) |
Based on the information contained in these financial statements, compute the following 2011 values for each company.(Round answers to 1 decimal place, e.g. 15.2.)
| (1) |
Accounts receivable turnover. (For Tootsie Roll, use “Net product sales.” Assume all sales were credit sales.) |
| (2) |
Average collection period for accounts receivable. |
| Tootsie Roll |
Hershey Company |
| Accounts receivable turnover |
|
times |
|
times |
| Average collection period |
|
days |
|
days |
|
|
