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
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
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
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
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
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
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?
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