Tootsie Roll Industries
AUDIT PRESENTATION BY KPMG
Table of Contents:
TOOTSIE ROLL
REVIEW OF FINANCIAL STATEMENTS
OVERALL EVALUATION
THE FUTURE
KPMG & TOOTSIE
CONCLUSION / QUESTIONS
Your Company
 Favorite candy company
 Most popular confectionary brands
 Distribution channels – 75 countries
 Strong among every age group, culture, demographic
 During every economic climate – truly enduring
 Family-run corporate culture
Continued…
 Fiscally responsible focus – “America’s 200 Best
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Small Companies” by Forbes Magazine
Highest ethical business standards – “100 Best
Corporate Citizens” by Business Ethics Magazine
Focus on high profitability
Emphasis on ethics and integrity
Involvement with the community and national
concerns
Income Statement
 Total Revenue increased over $22 million
 Net Income decreased $164,000
 EPS increased from .93 in 2009 to .94 in 2010
 Profit margin decreased from 10.87% in 2009 to
10.39% in 2010
 Gross profit margin decreased from 36.29% in 2009
to 33.27% in 2010
 Times interest earned increased from 265.11 in 2009
to 522.75 in 2010
Why did Net Income Decrease?
 Net earnings benefited from increased sales
 Cost of Goods Sold increased almost $30 million
 Cost of sugar and cocoa increase
 Provision for income taxes increased over $10
million
Retained Earnings
2010
Retained Earnings at beginning of year
Net Earnings
Cash Dividends
Stock Dividends
Retained Earnings at the end of year
Earnings per share
Average Common and Class B Common shares
Outstanding
Dividends paid for the year
Percent of net income paid out of cash
dividends
148,582
53,714
(18,078)
(46,806)
$137,412
$0.94
56,997
2010:
$64,884
33.67%
2009
145,123
53,878
(17,790)
(32,629)
$148,582
$0.93
57,738
2009:
$50,419
33.02%
• $0.32 of cash dividends paid out to stockholders in both years
• Paid out cash dividends 86 years in a row
Balance Sheet
Working Capital
Current Ratio
Acid-Test Ratio
Debt to Equity
Ratio
2010
$179,086
4.06
2.76
28.62%
2009
155,812
3.78
2.45
27.95%
Major Changes
• Cash and cash equivalents increased almost
$25 million
• Added over $10 million in machinery and
equipment
• Liability for uncertain tax positions
decreased almost $10 million
• Capital in excess of par value increased over
$23 million
Cash Flows
 Increase in net cash: Operating activities $82,805 - 2010 compared
to $76,994 – 2009
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Net earnings benefited from increased sales
No gain because of increased costs
 Investing activities - capital expenditures of $12,813
 Showing continual reinvestment
 Plant, equipment, and information technology
 Not as must sale and maturity of securities
 From financing activities - paid cash dividends of $18,130 and
purchased and retired $22,881 of its outstanding shares
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Treasury stock
Able to do more of both
 Cash increased because of increased sales (operating activities):
 Reached new groups of customers
 New marketing plans
 Great Halloween season
Our Overall Evaluation
 Net product sales in 2010 reached $517 million
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A record for the Company
Increase of $22 million over 2009 net product sales
Equals about 4.3%
 Another strong Halloween selling season
 Overall financial position remains very strong
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Net product sales
Net earnings
Related cash flows provided by operating activities
 Cash flows from operations plus maturities of short-term
investments - adequate to meet the Company’s overall
financing needs in 2011
Tootsie’s Future
 Key competitive advantage Well-known brands
 High volume for Retailers
 Attractive value for customers
 Entry into digital marketing = new opportunities
 Kosher certified open new markets
 Increase efficiency & eliminate waste
 Cash and stock dividends – 86 years in a row
About KPMG
 U.S. Audit, Tax, and Advisory services firm
 Purpose – turn knowledge into value for our clients
 Comply with changing regulations and professional
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standards
Proactive coordination and communication – Chicago
office
Provide our teams’ well-built understanding
23,000 employees strong / 144 countries
Risk-based, industry specific, and tailored to our clients
Give you an edge to competitors
Any Questions?