Tootsie Roll Industries Inc. (TR) filed Quarterly Report for the period ended 2009-10-03.
Tootsie Roll Industries, Inc. and its consolidated subsidiaries are engaged in the manufacture and sale of candy. The company's products are marketed in a variety of packages designed to be suitable for display and sale in different types of retail outlets. The company's customers include wholesale distributors of candy and groceries, supermarkets, variety stores, chain grocers, drug chains, discount chains, cooperative grocery associations, warehouse and membership club stores, vending machine operators, and fund-raising charitable organizations. Tootsie Roll Industries Inc. has a market cap of $1.42 billion; its shares were traded at around $25.37 with and P/S ratio of 2.9. The dividend yield of Tootsie Roll Industries Inc. stocks is 1.3%.
Highlight of Business Operations:
Third quarter 2009 and 2008 selling, marketing and administrative expenses were
$30,877 and $29,669, respectively, an increase of $1,208; and nine months 2009
and 2008 selling, marketing and administrative expenses were $78,738 and
$72,907, respectively, an increase of $5,831. The third quarter 2009 expense
reflects an increase of $1,642 relating to deferred compensation expense,
whereas third quarter 2008 expense reflects a decrease of $950 for this
expense. These expenses for nine months 2009 reflect an increase of $2,338
relating to deferred compensation expense, whereas nine months 2008 expense
reflects a decrease of $2,356 for this expense. Such deferred compensation
expense principally results from changes in the market value of trading
securities used as an economic hedge of the Company's deferred compensation
liabilities as further discussed below under "Net Earnings." Excluding the
effects of the aforementioned deferred compensation changes, third quarter
selling, marketing and administrative expenses were $29,235 and $30,619 in 2009
and 2008, respectively, a decrease of $1,384 or 4.5%; and nine month selling,
marketing and administrative expenses were $76,400 and $75,263 in 2009 and
2008, respectively, an increase of $1,137 or 1.5%.
Third quarter 2009 and 2008 earnings from operations were $35,549 and $30,392,
respectively; and nine months 2009 and 2008 earnings from operations were
$61,438 and $51,315, respectively. Adjusting for the above discussed deferred
compensation expenses (including amounts included in product cost of goods
sold), third quarter 2009 earnings from operations were $37,656 compared to
$29,114 in third quarter 2008, an increase of $8,542 or 29.3%; and nine months
2009 earnings from operations were $64,426 compared to $48,146 in nine months
2008, an increase of $16,280 or 33.8%. Results for third quarter and nine
months 2009 were favorably impacted by higher sales in the United States and
improved gross profit margins, as well as other factors discussed above.
Other income (expense), net was $3,083 in third quarter 2009 compared to ($986)
in third quarter 2008, a net increase of $4,069. Nine months 2009 other income
(expense), net was $4,524 compared to $(1,573) for nine months 2008, a net
increase of $6,097. Other income, net includes the changes in the market value
in the Company's trading securities which are an economic hedge of the
Company's deferred compensation liabilities. The income (expense) on such
trading securities was $2,107 and ($1,278) in third quarter 2009 and 2008,
respectively, and $2,988 and $(3,169) in nine months 2009 and 2008,
respectively. Such income or (expense) was substantially offset by a like
amount of (expense) or income in aggregate product cost of goods sold and
selling marketing and administrative expenses in the respective periods. Other
income, net in third quarter and nine months 2009 reflects decreases of $571
and $1,460, respectively, in investment income on available for sale securities
and cash balances reflecting lower interest rates in the investment markets.
Other income, net in third quarter and nine months 2009 also includes favorable
increases of $1,086 and $1,429, respectively, in net changes in net foreign
exchange and transaction gains and losses.
Third quarter 2009 net earnings were $27,247 compared to third quarter 2008 net
earnings of $19,715, a $7,532 or 38.2% increase. Third quarter 2009 and 2008
earnings per share were $0.49 and $0.35, an increase of $0.14 or 40.0%. Nine
months 2009 net earnings were $45,905 compared to nine months 2008 net earnings
of $33,414, a $12,491 or 37.4% increase. Nine months 2009 and 2008 earnings
per share were $0.82 and $0.59, an increase of $0.23 or 39.0%. The Company's
earnings per share for both third quarter and nine months 2009 reflect common
stock purchases in the open market resulting in fewer shares outstanding.
$49,674 (includes $8,410 of Jefferson County auction rate securities discussed
in Note 5 to the accompanying Condensed Consolidated Financial Statements) as of
the end of third quarter 2009, as compared to $59,368 and $49,809 as of the end
of third quarter 2008 and fourth quarter 2008, respectively. Aggregate cash and
cash equivalents and short and long-term investments were $99,219, $102,832 and
$136,680, respectively for third quarter 2009, third quarter 2008 and fourth
quarter 2008, respectively. Investments in municipal bonds and other debt
securities that matured during nine months 2009 and 2008 were generally used to
purchase the Company's common stock or were replaced with debt securities of
similar maturities.
Net cash provided by operating activities was $9,681 for nine months 2009, as
compared to net cash used in operating activities of $6,422 for nine months
2008. The $16,103 change in net cash provided by (used in) operating activities
for the comparative nine month months periods principally reflects the $12,491
increase in net earnings and the timing of payments and cash flows relating to
operating assets and liabilities for the comparative periods. Capital
expenditures for nine months 2009 and 2008 were $17,918 and $15,540,
respectively. Capital expenditures for the 2009 year are anticipated to be
generally in line with historical annualized spending, and are to be funded
from the Company's cash flow from operations and internal sources.
TR is in the portfolios of John Keeley of Keeley Fund Management.
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