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Tootsie Roll Industries Inc. Reports Operating Results (10-Q)

August 13, 2009 | About:

Tootsie Roll Industries Inc. (TR) filed Quarterly Report for the period ended 2009-07-04.

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 $1.36 billion; its shares were traded at around $24.03 with a P/E ratio of 30.4 and P/S ratio of 2.7. The dividend yield of Tootsie Roll Industries Inc. stocks is 1.3%.

Highlight of Business Operations:



Second quarter 2009 net product sales were $107,812 compared to $101,591 in

second quarter 2008, an increase of $6,221 or 6.1%. First half 2009 net product

sales of $201,866 increased $9,934 or 5.2% from first half 2008 net product

sales of $191,932. Second quarter and first half 2009 net product sales

benefited from effective marketing programs and selective price increases as

well as the timing of certain customer orders shipped in second quarter 2009

which were shipped in third quarter 2008. Consolidated 2009 net product sales

advanced despite declines in sales outside of the U.S. reflecting lower foreign

sales when translated into a stronger U.S. dollar reporting currency.





Second quarter 2009 and 2008 selling, marketing and administrative expenses

were $25,728 and $23,188, respectively an increase of $2,540 or 11.0%; and

first half 2009 and 2008 selling, marketing and administrative expenses were

$47,861 and $43,238, respectively an increase of $4,623 or 10.7%. The

aforementioned expenses reflect increases of $895 and $2,102 related to

deferred compensation expense in second quarter and first half 2009,

respectively, compared to 2008. 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. Adjusting for the aforementioned, selling marketing and

administrative expenses increased by $1,645 or 7.1% and $2,521 or 5.6% in

second quarter and first half 2009, respectively, when compared to the

corresponding comparative periods.



Second quarter 2009 and 2008 earnings from operations were $13,926 and 10,451,

respectively; and first half 2009 and 2008 earnings from operations were

$25,889 and 20,923, respectively. Adjusting for the above discussed deferred

compensation expenses (including amounts included in product cost of goods

sold), second quarter 2009 earnings from operations were $15,134 compared to

$10,530 in second quarter 2008, an increase of $4,604 or 43.7%; and first half

2009 earnings from operations were $26,770 compared to $19,032 in first half

2009, an increase of $7,738 or 40.7%. Results for second quarter and first half

2009 were favorably impacted by higher sales and improved gross profit margins

as well as other factors discussed above.





Other income, net was $1,821 in second quarter 2009 compared to $653 in second

quarter 2008, a net increase of $1,168. For first half 2009 other income

(expense), net was $1,441 compared to $(587) for first half 2008, a net

increase of $2,028. 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 $1,209 and $80 in second quarter 2009 and 2008,

respectively, and $883 and $(1,889) in first half 2009 and 2008, respectively.

Such income or (expense) was substantially offset by a like amount of (expense)

or income in the aggregate product cost of goods sold and selling marketing and

administrative expenses in the respective periods. Other income, net also

includes decreases in investment income on available for sale securities and

cash balances reflecting lower interest rates in the investment markets.



Second quarter 2009 net earnings were $10,338 compared to second quarter 2008

net earnings of $7,246, a $3,092 or 42.7% increase. Second quarter 2009

earnings per share were $0.18, compared to $0.13 per share in second quarter

2008, an increase of $0.05 or 38.5%. First half 2009 net earnings were $18,658

compared to first half 2008 net earnings of $13,699, a $4,959 or 36.2%

increase. First half net earnings per share were $0.33 in 2009 compared to

$0.24 per share in first half 2008, an increase of $0.09 per share or 37.5%.

The Company\'s earning per share for both second quarter and first half 2009

reflect common stock purchases in the open market resulting in fewer shares

outstanding.



The Company\'s current ratio (current assets divided by current liabilities) was

3.3 to 1 as of the end of second quarter 2009 as compared to 2.7 to 1 as of the

end of second quarter 2008 and 3.2 to 1 as of the end of fourth quarter 2008.

Net working capital was $124,851 as of the end of second quarter 2009 as

compared to $114,331 and $128,727 as of the end of second quarter 2008 and

fourth quarter 2008, respectively. The aforementioned net working capital

amounts include total cash and cash equivalents and short-term investments which

aggregated $49,003 as of the end of second quarter 2009 compared to $47,029 and

$86,871, as of the end of second quarter 2008 and fourth quarter 2008,

respectively. In addition, long-term investments, principally debt securities

comprising municipal bonds, were $49,488 (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 second quarter 2009, as

compared to $73,217 and $49,809 as of the end of second quarter 2008 and

fourth quarter 2008, respectively. Aggregate cash and cash equivalents and short

and long-term investments were $98,491, $120,246 and $136,680, respectively for

second quarter ended 2009, second quarter 2008 and fourth quarter 2008,

respectively. Except for the Jefferson County auction rate securities referenced

above, investments in municipal bonds and other debt securities that matured

during first half 2009 and 2008 were generally used to purchase the Company\'s

common stock or were replaced with debt securities of similar maturities.



Read the The complete ReportTR is in the portfolios of John Keeley of Keeley Fund Management.

Rating: 3.0/5 (2 votes)

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