Tootsie Roll Industries Inc. (TR, Financial) filed Quarterly Report for the period ended 2010-10-02.
Tootsie Roll Industries Inc. has a market cap of $1.54 billion; its shares were traded at around $27.07 with a P/E ratio of 29.2 and P/S ratio of 3.1. The dividend yield of Tootsie Roll Industries Inc. stocks is 1.2%.TR is in the portfolios of John Keeley of Keeley Fund Management, Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates, Manning & Napier Advisors, Inc, Jim Simons of Renaissance Technologies LLC.
Selling, marketing and administrative expenses were $31,242 in third quarter 2010 compared to $30,877 in third quarter 2009, and nine months 2010 selling, marketing and administrative expenses were $79,112 compared to $78,738 in nine months 2009. Selling, marketing and administrative expenses in third quarter and nine months 2010 reflect an increase of $240 and a decrease of $1,403, respectively, in deferred compensation expense compared to the corresponding periods in the prior year. These changes principally result from the increase or decrease in the market value of investments in trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned changes in deferred compensation expense, selling, marketing and administrative expenses increased from $29,235 in third quarter 2009 to $29,360 in third quarter 2010, an increase of $125 or 0.4%, and increased from $76,400 in nine months 2009 to $78,177 in nine months 2010, an increase of $1,777 or 2.3%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses decreased from 15.9% in third
Earnings from operations were $31,588 in third quarter 2010 compared to $35,549 in third quarter 2009, and were $56,082 in nine months 2010 compared to $61,438 in nine months 2009. Earnings from operations include changes in deferred compensation liabilities relating to corresponding changes in the market value of trading securities that hedge these liabilities as discussed above. Adjusting for the aforementioned, operating earnings were $33,995 and $37,656 in third quarter 2010 and 2009, respectively, a decrease of $3,661 or 9.7%; and operating earnings were $57,303 and $64,426 in nine months 2010 and 2009, respectively, a decrease of $7,123 or 11.1%. As a percentage of net product sales, these adjusted operating earnings were 17.8% and 20.5% in third quarter 2010 and 2009, respectively, a decrease of 2.7% as a percentage of net product sales; and these adjusted operating earnings were 14.4% and 16.7% in nine months 2010 and 2009, respectively, a decrease of 2.3% as a percentage of net product sales. The above discussed decreases principally reflect the adverse impact of higher ingredient costs, primarily sugar and cocoa, as well as higher freight, distribution and warehousing expenses as discussed above. Management believes that the discussion and presentation above in this and in the preceding two paragraphs of amounts and percentages adjusted for deferred compensation expense provide additional insight of the underlying operations of the Company for the quarter and nine months ended October 2, 2010 as compared to the quarter and nine months ended October 3, 2009.
Other income (expense), net, was $4,618 in third quarter 2010 compared to $3,083 in third quarter 2009, an increase of $1,535. Other income (expense), net, was $5,976 in nine months 2010 compared to $4,524 in nine months 2009, an increase of $1,452. The third quarter increase principally reflects a $300 favorable net increase in the fair value of trading securities investments used to hedge deferred compensation liabilities and a $1,373 favorable net gain in foreign exchange transactions. The nine months increase principally reflects a $3,326 favorable net gain in foreign exchange transactions which was partially offset by a $1,767 unfavorable net decrease in the fair value of trading securities investments used to hedge deferred compensation liabilities. The income on such trading securities was $2,407 and $2,107 in third quarter 2010 and 2009, respectively, and $1,221 and $2,988 in nine months 2010 and 2009, respectively. This income was substantially offset by a like amount of expense in aggregate product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above. The third quarter and nine months 2010 and 2009 income relating to trading securities principally reflect market appreciation in the equity markets in the respective periods.
Net earnings were $27,351 in third quarter 2010 compared to $27,247 in third quarter 2009, and earnings per share were $0.48 and $0.47 in third quarter 2010 and third quarter 2009, respectively, an increase of $.01 or 2.1%. Nine months 2010 net earnings were $44,907 compared to nine months 2009 net earnings of $45,905 and net earnings per share were $0.79 in both nine months 2010 and 2009. Earnings per share for third quarter and nine months 2010 did benefit from the reduction in average shares outstanding resulting from Common Stock purchases in the open market by the Company. Average shares outstanding decreased from 57,461 in third quarter 2009 to 56,909 in third quarter 2010, and from 57,863 in nine months 2009 to 57,108 in nine months 2010.
In addition, long term investments, principally debt securities comprising municipal bonds, were $60,480 (including $5,960 of Jefferson County auction rate securities (ARS) discussed below) as of the end of third quarter 2010, as compared to $58,136 and $49,674 as of the end of fourth quarter 2009 and third quarter 2009, respectively. Aggregate cash and cash equivalents and short and long-term investments were $128,183, $157,789, $99,219, for third quarter 2010, fourth quarter 2009 and third quarter 2009, respectively. Investments in municipal bonds and other debt securities that matured during third quarters 2010 and 2009 were generally used to purchase the Companys Common Stock or were replaced with debt securities of similar maturities.
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Tootsie Roll Industries Inc. has a market cap of $1.54 billion; its shares were traded at around $27.07 with a P/E ratio of 29.2 and P/S ratio of 3.1. The dividend yield of Tootsie Roll Industries Inc. stocks is 1.2%.TR is in the portfolios of John Keeley of Keeley Fund Management, Mario Gabelli of GAMCO Investors, Chuck Royce of Royce& Associates, Manning & Napier Advisors, Inc, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Product cost of goods sold were $129,021 in third quarter 2010 compared to $117,707 in third quarter 2009, and nine months 2010 product cost of goods sold were $266,504 compared to $247,233 in nine months 2009. Product cost of goods sold in third quarter and nine months 2010 reflect an increase of $60 and a decrease of $364, respectively, in deferred compensation expense compared to the corresponding periods in the prior year. These changes principally result from the increase or decrease in the market value of investments in trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned changes in deferred compensation expense, product cost of goods sold increased from $117,242 in third quarter 2009 to $128,496 in third quarter 2010, an increase of $11,254 or 9.6%, and increased from $246,583 in nine months 2009 to $266,218 in nine months 2010, an increase of $19,635 or 8.0%. As a percentage of net product sales, this adjusted product cost of goods sold increased from 63.9% in third quarter 2009 to 67.3% in third quarter 2010, an increase of 3.4% as a percent of sales, and from 64.0% in nine months 2009 to 66.7% in nine months 2010, an increase of 2.7% as a percent of sales. These unfavorable increases principally reflect higher ingredient unit costs primarily relating to sugar and cocoa. The Company expects its ingredient costs, including sugar and cocoa, to continue to be significantly higher throughout the balance of 2010 compared to 2009. The Company also expects its aggregate ingredient unit costs to increase further during 2011.Selling, marketing and administrative expenses were $31,242 in third quarter 2010 compared to $30,877 in third quarter 2009, and nine months 2010 selling, marketing and administrative expenses were $79,112 compared to $78,738 in nine months 2009. Selling, marketing and administrative expenses in third quarter and nine months 2010 reflect an increase of $240 and a decrease of $1,403, respectively, in deferred compensation expense compared to the corresponding periods in the prior year. These changes principally result from the increase or decrease in the market value of investments in trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned changes in deferred compensation expense, selling, marketing and administrative expenses increased from $29,235 in third quarter 2009 to $29,360 in third quarter 2010, an increase of $125 or 0.4%, and increased from $76,400 in nine months 2009 to $78,177 in nine months 2010, an increase of $1,777 or 2.3%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses decreased from 15.9% in third
Earnings from operations were $31,588 in third quarter 2010 compared to $35,549 in third quarter 2009, and were $56,082 in nine months 2010 compared to $61,438 in nine months 2009. Earnings from operations include changes in deferred compensation liabilities relating to corresponding changes in the market value of trading securities that hedge these liabilities as discussed above. Adjusting for the aforementioned, operating earnings were $33,995 and $37,656 in third quarter 2010 and 2009, respectively, a decrease of $3,661 or 9.7%; and operating earnings were $57,303 and $64,426 in nine months 2010 and 2009, respectively, a decrease of $7,123 or 11.1%. As a percentage of net product sales, these adjusted operating earnings were 17.8% and 20.5% in third quarter 2010 and 2009, respectively, a decrease of 2.7% as a percentage of net product sales; and these adjusted operating earnings were 14.4% and 16.7% in nine months 2010 and 2009, respectively, a decrease of 2.3% as a percentage of net product sales. The above discussed decreases principally reflect the adverse impact of higher ingredient costs, primarily sugar and cocoa, as well as higher freight, distribution and warehousing expenses as discussed above. Management believes that the discussion and presentation above in this and in the preceding two paragraphs of amounts and percentages adjusted for deferred compensation expense provide additional insight of the underlying operations of the Company for the quarter and nine months ended October 2, 2010 as compared to the quarter and nine months ended October 3, 2009.
Other income (expense), net, was $4,618 in third quarter 2010 compared to $3,083 in third quarter 2009, an increase of $1,535. Other income (expense), net, was $5,976 in nine months 2010 compared to $4,524 in nine months 2009, an increase of $1,452. The third quarter increase principally reflects a $300 favorable net increase in the fair value of trading securities investments used to hedge deferred compensation liabilities and a $1,373 favorable net gain in foreign exchange transactions. The nine months increase principally reflects a $3,326 favorable net gain in foreign exchange transactions which was partially offset by a $1,767 unfavorable net decrease in the fair value of trading securities investments used to hedge deferred compensation liabilities. The income on such trading securities was $2,407 and $2,107 in third quarter 2010 and 2009, respectively, and $1,221 and $2,988 in nine months 2010 and 2009, respectively. This income was substantially offset by a like amount of expense in aggregate product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above. The third quarter and nine months 2010 and 2009 income relating to trading securities principally reflect market appreciation in the equity markets in the respective periods.
Net earnings were $27,351 in third quarter 2010 compared to $27,247 in third quarter 2009, and earnings per share were $0.48 and $0.47 in third quarter 2010 and third quarter 2009, respectively, an increase of $.01 or 2.1%. Nine months 2010 net earnings were $44,907 compared to nine months 2009 net earnings of $45,905 and net earnings per share were $0.79 in both nine months 2010 and 2009. Earnings per share for third quarter and nine months 2010 did benefit from the reduction in average shares outstanding resulting from Common Stock purchases in the open market by the Company. Average shares outstanding decreased from 57,461 in third quarter 2009 to 56,909 in third quarter 2010, and from 57,863 in nine months 2009 to 57,108 in nine months 2010.
In addition, long term investments, principally debt securities comprising municipal bonds, were $60,480 (including $5,960 of Jefferson County auction rate securities (ARS) discussed below) as of the end of third quarter 2010, as compared to $58,136 and $49,674 as of the end of fourth quarter 2009 and third quarter 2009, respectively. Aggregate cash and cash equivalents and short and long-term investments were $128,183, $157,789, $99,219, for third quarter 2010, fourth quarter 2009 and third quarter 2009, respectively. Investments in municipal bonds and other debt securities that matured during third quarters 2010 and 2009 were generally used to purchase the Companys Common Stock or were replaced with debt securities of similar maturities.
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