Tootsie Roll Industries Inc 10-Q for FY2021 Q1

Tootsie Roll Industries Inc (TR)

10-Q 2021-05-05 For: 2021-03-31

Added on April 07, 2026

About this 10-Q

Tootsie Roll Industries Inc filed this 10-Q on May 5, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $103.23M; down 0.5% from $103.76M a year earlier
Net income: $10.77M; down 10.1% from net income of $11.98M a year earlier

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Virginia		22-1318955
(State of Incorporation)		(I.R.S. Employer Identification No.)


7401 South Cicero Avenue, Chicago, Illinois		60629
(Address of Principal Executive Offices)		(Zip Code)


Class		Outstanding

Common Stock, $0.69-4/9 par value		40,002,011
Class B Common Stock, $0.69-4/9 par value		27,821,488


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, par value $0.69-4/9 per share	TR	New York Stock Exchange


		Page No.

Part I —	Financial Information

Item 1.	Financial Statements꞉

	Condensed Consolidated Statements of Financial Position	3-4

	Condensed Consolidated Statements of Earnings and Retained Earnings	5

	Condensed Consolidated Statements of Comprehensive Earnings	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8-15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21

Part II —	Other Information

Item 1.	Legal Proceedings	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 6.	Exhibits	22

Signatures		23



	March 31, 2021		December 31, 2020		March 31, 2020

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	136,291	$	166,841	$	139,067
Restricted cash		399		415		373
Investments		42,396		42,090		77,510
Accounts receivable trade, less allowances of $1,672, $1,694 and $1,887		34,620		41,209		36,006
Other receivables		3,183		3,894		3,446
Inventories:
Finished goods and work-in-process		42,166		35,583		46,683
Raw materials and supplies		26,111		23,996		24,974
Prepaid expenses		7,166		6,844		6,231
Total current assets		292,332		320,872		334,290

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,711		21,738		21,627
Buildings		123,836		123,883		122,598
Machinery and equipment		421,364		422,506		414,526
Construction in progress		19,575		14,347		7,669
Operating lease right-of-use assets		653		858		1,388
		587,139		583,332		567,808
Less - accumulated depreciation		399,566		396,004		381,850
Net property, plant and equipment		187,573		187,328		185,958

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		243,749		220,020		153,287
Split dollar officer life insurance		2,514		2,514		26,042
Prepaid expenses and other assets		3,557		4,525		7,555
Deferred income taxes		1,005		1,038		534
Total other assets		499,086		476,358		435,679
Total assets	$	978,991	$	984,558	$	955,927



	Quarter Ended
	March 31, 2021		March 31, 2020

Net product sales	$	101,795	$	102,803
Rental and royalty revenue		1,434		958
Total revenue		103,229		103,761
Product cost of goods sold		65,565		66,443
Rental and royalty cost		445		302
Total costs		66,010		66,745
Product gross margin		36,230		36,360
Rental and royalty gross margin		989		656
Total gross margin		37,219		37,016
Selling, marketing and administrative expenses		26,809		16,272
Earnings from operations		10,410		20,744
Other income (loss), net		3,816		(5,494)
Earnings before income taxes		14,226		15,250
Provision for income taxes		3,463		3,274
Net earnings		10,763		11,976
Less: net earnings (loss) attributable to noncontrolling interests		(4)		(6)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	10,767	$	11,982

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.16	$	0.17
Dividends per share *	$	0.09	$	0.09

Average number of shares outstanding		67,852		68,845

Retained earnings at beginning of period	$	32,312	$	40,809
Net earnings attributable to Tootsie Roll Industries, Inc.		10,767		11,982
Cash dividends		(5,925)		(5,841)
Stock dividends		(34,033)		(43,753)
Retained earnings at end of period	$	3,121	$	3,197


										Capital in
				Class B						Excess
	Common Stock			Common Stock			Treasury Stock			of Par
	Shares	Amount		Shares	Amount		Shares	Amount		Value
	(000’s)			(000’s)			(000’s)
Balance at December 31, 2020	39,073	$	27,134	27,012	$	18,758	93	$	(1,992)	$	706,930
Issuance of 3% stock dividend	1,163		808	809		562	3		—		32,495
Conversion of Class B common shares to common shares	—		—	—		—	—		—		—
Purchase and retirement of common shares and other	(234)		(163)	—		—	—		—		(7,260)
Balance at March 31, 2021	40,002	$	27,779	27,821	$	19,320	96	$	(1,992)	$	732,165

Balance at December 31, 2019	38,836	$	26,969	26,287	$	18,254	90	$	(1,992)	$	696,059
Issuance of 3% stock dividend	1,157		803	786		547	3		—		42,243
Conversion of Class B common shares to common shares	36		25	(36)		(25)	—		—		—
Purchase and retirement of common shares and other	(260)		(180)	—		—	—		—		(8,629)
Balance at March 31, 2020	39,769	$	27,617	27,037	$	18,776	93	$	(1,992)	$	729,673



	Estimated Fair Value March 31, 2021
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	136,291	$	136,291	$	-	$	-
Available for sale securities		207,874		3,144		204,730		-
Foreign currency forward contracts		755		-		755		-
Commodity futures contracts		670		670		-		-
Trading securities		78,271		65,532		12,739		-
Total assets measured at fair value	$	423,861	$	205,637	$	218,224	$	-


	Estimated Fair Value December 31, 2020
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	166,841	$	166,841	$	-	$	-
Available for sale securities		188,282		3,149		185,133		-
Foreign currency forward contracts		778		-		778		-
Commodity futures contracts, net		941		941		-		-
Trading securities		73,828		61,431		12,397		-
Total assets measured at fair value	$	430,670	$	232,362	$	198,308	$	-


	Estimated Fair Value March 31, 2020
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	139,067	$	139,067	$	-	$	-
Available for sale securities		162,080		3,441		158,639		-
Foreign currency forward contracts		(93)		-		(93)		-
Commodity futures contracts		(480)		(480)		-		-
Trading securities		68,717		41,692		27,025		-
Total assets measured at fair value	$	369,291	$	183,720	$	185,571	$	-



	March 31, 2021
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	5,593	$	755	$	-
Commodity futures contracts		4,362		675		(5)
Total derivatives			$	1,430	$	(5)

	December 31, 2020
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	6,391	$	778	$	—
Commodity futures contracts		4,010		941		—
Total derivatives			$	1,719	$	-

	March 31, 2020
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	11,342	$	117	$	(210)
Commodity futures contracts		3,955		1		(481)
Total derivatives			$	118	$	(691)



	For Quarter Ended March 31, 2021
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	79	$	103	$	-
Commodity futures contracts		397		668		-
Total	$	476	$	771	$	-

	For Quarter Ended March 31, 2020
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(205)	$	(98)	$	-
Commodity futures contracts		(756)		(155)		-
Total	$	(961)	$	(253)	$	-



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2020	$	(24,581)	$	1,992	$	589	$	713	$	1,472	$	(19,815)
Other comprehensive earnings (loss) before reclassifications		(397)		(876)		61		301		-		(911)
Reclassifications from accumulated other comprehensive loss		-		-		(78)		(506)		(267)		(851)
Other comprehensive earnings (loss) net of tax		(397)		(876)		(17)		(205)		(267)		(1,762)
Balance at March 31, 2021	$	(24,978)	$	1,116	$	572	$	508	$	1,205	$	(21,577)

Balance at December 31, 2019	$	(23,368)	$	882	$	10	$	92	$	2,139	$	(20,245)
Other comprehensive earnings (loss) before reclassifications		(3,674)		(827)		(155)		(574)		-		(5,230)
Reclassifications from accumulated other comprehensive loss		-		-		74		118		(256)		(64)
Other comprehensive earnings (loss) net of tax		(3,674)		(827)		(81)		(456)		(256)		(5,294)
Balance at March 31, 2020	$	(27,042)	$	55	$	(71)	$	(364)	$	1,883	$	(25,539)


Details about Accumulated Other	Quarter Ended				Location of (Gain) Loss
Comprehensive Income Components	March 31, 2021		March 31, 2020		Recognized in Earnings
Investments	$	-	$	-	Other income, net
Foreign currency derivatives		(103)		98	Other income, net
Commodity derivatives		(668)		155	Product cost of goods sold
Postretirement and pension benefits		(351)		(338)	Other income, net
Total before tax		(1,122)		(85)
Tax (expense) benefit		271		21
Net of tax	$	(851)	$	(64)



					Approximate Dollar
	(a) Total			Shares	Value of Shares that
	Number of	(b) Average		Purchased as Part of	May Yet Be Purchased
	Shares	Price Paid per		Publicly Announced Plans	Under the Plans
Period	Purchased	Share		Or Programs	or Programs

Jan 1 to Jan 31	83,374	$	30.37	Not Applicable	Not Applicable

Feb 1 to Feb 28	37,500		30.94	Not Applicable	Not Applicable

Mar 1 to Mar 31	113,157		32.88	Not Applicable	Not Applicable

Total	234,031	$	31.67	Not Applicable	Not Applicable


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	May 5, 2021	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	May 5, 2021	BY:	/S/G. HOWARD EMBER, JR.

			G. Howard Ember, Jr.
			Vice President Finance and
			Chief Financial Officer



	March 31, 2021		December 31, 2020		March 31, 2020

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	14,275	$	13,025	$	15,991
Bank loans		965		832		781
Dividends payable		168		5,948		160
Accrued liabilities		43,421		45,099		38,424
Postretirement health care benefits		544		544		598
Operating lease liabilities		611		780		1,063
Deferred compensation		-		-		16,751
Income taxes payable		5,957		3,793		3,418
Total current liabilities		65,941		70,021		77,186

NONCURRENT LIABILITIES:
Deferred income taxes		47,636		47,900		45,755
Postretirement health care benefits		12,947		12,943		13,206
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		3,483		3,351		3,697
Operating lease liabilities		42		78		325
Deferred compensation and other liabilities		82,856		79,665		56,737
Total noncurrent liabilities		154,464		151,437		127,220

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value - 120,000 shares authorized; 40,002, 39,073 and 39,769, respectively, issued		27,779		27,134		27,617
Class B common stock, $.69-4/9 par value - 40,000 shares authorized; 27,821, 27,012 and 27,037, respectively, issued		19,320		18,758		18,776
Capital in excess of par value		732,165		706,930		729,673
Retained earnings		3,121		32,312		3,197
Accumulated other comprehensive loss		(21,577)		(19,815)		(25,539)
Treasury stock (at cost) - 96, 93 and 93 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		758,816		763,327		751,732
Noncontrolling interests		(230)		(227)		(211)
Total equity		758,586		763,100		751,521
Total liabilities and shareholders’ equity	$	978,991	$	984,558	$	955,927



	Quarter Ended
	March 31, 2021		March 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	10,763	$	11,976
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation		4,365		4,647
Deferred income taxes		174		(1,013)
Amortization of marketable security premiums		739		217
Changes in operating assets and liabilities:
Accounts receivable		6,326		8,205
Other receivables		487		(197)
Inventories		(8,883)		(13,676)
Prepaid expenses and other assets		572		172
Accounts payable and accrued liabilities		(1,204)		1,422
Income taxes payable		2,295		2,983
Postretirement health care benefits		(347)		(276)
Deferred compensation and other liabilities		50		121
Net cash provided by operating activities		15,337		14,581
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(3,787)		(3,737)
Purchases of trading securities		(1,835)		(2,287)
Sales of trading securities		582		380
Purchase of available for sale securities		(30,031)		(21,312)
Sale and maturity of available for sale securities		8,543		35,217
Net cash from (used in) investing activities		(26,528)		8,261
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(7,423)		(8,809)
Dividends paid in cash		(11,874)		(11,703)
Proceeds from bank loans		1,070		928
Repayment of bank loans		(896)		(880)
Net cash used in financing activities		(19,123)		(20,464)
Effect of exchange rate changes on cash		(252)		(2,278)
Increase (Decrease) in cash and cash equivalents		(30,566)		100
Cash, cash equivalents and restricted cash at beginning of year		167,256		139,340
Cash, cash equivalents and restricted cash at end of quarter	$	136,690	$	139,440
Supplemental cash flow information:
Income taxes paid/(received), net	$	1,233	$	794
Interest paid	$	2	$	23


Dated:	May 5, 2021	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer


Dated:	May 5, 2021	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer