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Broadening Your Perspective 81
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ACC/291 49575374 / Copy of Assignment: Week 1 Assignment
Broadening Your Perspective 81
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The financial statements of Tootsie Roll are presented below.
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
$43,938
$53,063
$53,157
Net earnings
Net earnings
Other comprehensive earnings (loss)
Comprehensive earnings
Retained earnings at beginning of year.
Net earnings
Cash dividends
Stock dividends
Retained earnings at end of year
Earnings per share
$43,938
(8,740)
$35,198
$135,866
43,938
(18,360)
(47,175)
$114,269
$0.76
$53,063
1,183
$54,246
$53,157
2,845
$56,002
$147,687
53,063
(18,078)
(46,806)
$135,866
$144,949
53,157
(17,790)
(32,629)
$147,687
$0.90
Average Common and Class B Common shares
57,892
58,685
outstanding
(The accompanying notes are an integral part of these statements.)
$0.89
59,425
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
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Accounts receivable trade, less allowances of $1,731 and $1,531
Other receivables
Inventories:
Finished goods and workinprocess
Raw materials and supplies
Prepaid expenses
Deferred income taxes
Total current assets
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land
Buildings
Machinery and equipment
Construction in progress
Less—Accumulated depreciation
Net property, plant and equipment
OTHER ASSETS:
Goodwill
Trademarks
Investments
Split dollar officer life insurance
Prepaid expenses
Equity method investment
Deferred income taxes
Total other assets
Total assets
Liabilities and Shareholders’ Equity
CURRENT LIABILITIES:
Accounts payable
Dividends payable
Accrued liabilities
Total current liabilities
NONCURRENT LIABILITES:
Deferred income taxes
Postretirement health care and life insurance benefits
Industrial development bonds
Liability for uncertain tax positions
Deferred compensation and other liabilities
Total noncurrent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $.694/9 par value—120,000 shares authorized—
36,479 and 36,057 respectively, issued
Class B common stock, $.694/9 par value—40,000 shares
authorized—21,025 and 20,466 respectively, issued
Capital in excess of par value
Retained earnings, per accompanying statement
Accumulated other comprehensive loss
Treasury stock (at cost)—71 shares and 69 shares, respectively
Total shareholders’ equity
Total liabilities and shareholders’ equity
41,895
3,391
37,394
9,961
42,676
29,084
5,070
578
212,201
35,416
21,236
6,499
689
235,167
21,939
107,567
322,993
2,598
455,097
242,935
212,162
21,696
102,934
307,178
9,243
440,974
225,482
215,492
73,237
73,237
175,024
175,024
96,161
64,461
74,209
74,441
3,212
6,680
3,935
4,254
7,715
9,203
433,493
407,300
$857,856
$857,959
December 31,
2011
2010
$10,683
4,603
43,069
58,355
$9,791
4,529
44,185
58,505
43,521
26,108
7,500
8,345
48,092
133,566
47,865
20,689
7,500
9,835
46,157
132,046
25,333
25,040
14,601
14,212
533,677
114,269
(19,953)
(1,992)
665,935
$857,856
505,495
135,866
(11,213)
(1,992)
667,408
$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:
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Net earnings
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation
Impairment charges
Impairment of equity method investment
Loss from equity method investment
Amortization of marketable security premiums
Changes in operating assets and liabilities:
Accounts receivable
Other receivables
Inventories
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Income taxes payable and deferred
Postretirement health care and life insurance benefits
Deferred compensation and other liabilities
Others
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
Net purchase of trading securities
Purchase of available for sale securities
Sale and maturity of available for sale securities
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares repurchased and retired
Dividends paid in cash
Net cash used in financing activities
$43,938
$53,063
$53,157
19,229
—
—
194
1,267
18,279
—
—
342
522
17,862
14,000
4,400
233
320
(5,448)
3,963
(15,631)
5,106
84
(5,772)
2,022
2,146
(708)
50,390
717
(2,373)
(1,447)
4,936
2,180
2,322
1,429
2,525
310
82,805
(5,899)
(2,088)
455
5,203
(2,755)
(12,543)
1,384
2,960
305
76,994
(16,351)
(3,234)
(39,252)
7,680
(51,157)
(12,813)
(2,902)
(9,301)
8,208
(16,808)
(20,831)
(1,713)
(11,331)
17,511
(16,364)
(18,190)
(18,407)
(36,597)
(22,881)
(18,130)
(41,011)
(20,723)
(17,825)
(38,548)
Increase (decrease) in cash and cash equivalents
(37,364)
24,986
22,082
115,976
90,990
$78,612
$115,976
Cash and cash equivalents at end of year
Supplemental cash flow information
Income taxes paid
$16,906
$20,586
Interest paid
$38
$49
Stock dividend issued
$47,053
$46,683
(The accompanying notes are an integral part of these statements.)
68,908
$90,990
Cash and cash equivalents at beginning of year
$22,364
$182
$32,538
Five Year Summary of Earning and Financial Hightlights
TOOTISE ROLL. INDUSTRY, INC. AND SUBSIDIARIES
(Thousands of dollars except per share, percentage and ratio figures)
2011
2010
2009
2008
2007
Sales and Earnings
Data
Net product sales
$528,369
$517,149
$495,592
$492,051
$492,742
Product gross margin
163,144
167,815
175,817
158,055
165,456
Interest expenses
121
142
243
378
535
Provision for income
16,974
20,005
9,892
16,347
25,401
taxes
Net earnings
43,938
53,063
53,157
38,880
52,175
% of net product
8.3%
10.3%
10.7%
7.9%
10.6%
sales
% of shareholders’
6.6%
8.0%
8.1%
6.1%
8.1%
equity
Per Common Share
Data
Net earnings
Cash dvidends
$0.76
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$0.90
$0.89
$0.65
$0.85
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declared
0.32
Stock dividends
Additional Financial
Data
Working capital
Net cash provided by
opreating activities
Net cash provided by
(used by) investing
activities
Net cash used in
financing activities
Property, plant &
equipmentadditions
Net property, plant &
equipment
Total assets
Longterm debt
Shareholders’ equity
Average shares
outstanding
0.32
3%
0.32
3%
3%
0.32
0.32
3%
3%
$153,846
$176,662
$154,409
$129,694
$142,163
50,390
82,805
76,994
57,333
90,148
(51,157)
(16,808)
(16,364)
(7,565)
(43,429)
(36,597)
(41,011)
(38,548)
(38,666)
(44,842)
16,351
12,813
20,831
34,355
14,767
212,162
215,492
220,721
217,628
201,401
857,856
7,500
665,935
857,959
7,500
667,408
836,844
7,500
654,244
813,252
7,500
636,847
813,134
7,500
640,204
57,892
58,685
59,425
60,152
61,580
Notes to Consolidated Financial Statements ($ in thousands)
Revenue recognition:
Products are sold to customers based on accepted purchase orders which include quantity, sales
price and other relevant terms of sale. Revenue, net of applicable provisions for discounts,
returns, allowances and certain advertising and promotional costs, is recognized when products
are delivered to customers and collectability is reasonably assured. Shipping and handling costs of
$45,850, $43,034, and $38,628 in 2011, 2010 and 2009, respectively, are included in selling,
marketing and administrative expenses. Accounts receivable are unsecured. Revenues from a
major customer aggregated approximately 23.3%, 21.4% and 22.9% of net product sales during
the years ended December 31, 2011, 2010 and 2009, respectively.
SEGMENT AND GEOGRAPHIC INFORMATION:
The Company operates as a single reportable segments encompassing the manufacturing and
sale of confectionery products. Its principal manufacturing operations are located in the United
States and Canada, and its principal market is in the United States. The Company also
manufactures and sells confectionery products in Mexico, and exports products to Canada and
countries worldwide.
The following geographic data includes net product sales summarized on the basis of the
customer location and longlived assets based on their location:
2011
2010
2009
$487,185
$471,714
$455,517
41,184
45,435
40,075
$528,369
$517,149
$495,592
$170,173
$172,087
$176,044
41,989
43,405
44,677
$212,162
$215,492
$220,721
Net product sales:
United states
Foreign
Longlived assets:
United states
Foreign
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Calculate the accounts receivable turnover and average collection period for 2011. (Use “Net
Product Sales.” Assume all sales were credit sales.) (Round answers to 1 decimal place, e.g.
15.2.)
Accounts receivable turnover
6.1
times
Average collection period
60
days
Question Attempts: 2 of 3 used
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