I NEED TO MAKE SURE I GET THE TRENDS CORRECT, PLEASE MAKE SURE THOSE ARE CORRECT
ID: 2497348 • Letter: I
Question
I NEED TO MAKE SURE I GET THE TRENDS CORRECT, PLEASE MAKE SURE THOSE ARE CORRECT ALONG WITH DEBT TO ASSETS RATIO FOR BOTH YEARS AND PROFIT MARGIN, ASSET TURNOVER, RETURN ON ASSETS, RETURN ON COMMON SE. I HAVE ASKED THIS QUESTION MANY TIMES AND NOBODY HAS GOTTEN IT CORRECT, PLEASE HELP!!! AND REPLY TO COMMENTS
Your parents are considering investing in Tootsie Roll Industries common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Excerpts from a recent annual report of Tootsie Roll are presented below.
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands)
Impairment of equity method investment
Loss from equity method investment
Amortization of marketable security premiums
Changes in operating assets and liabilities:
Accounts receivable
Other receivables
Inventories
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Income taxes payable and deferred
Postretirement health care and life insurance benefits
Deferred compensation and other liabilities
Others
Capital expenditures
Net purchase of trading securities
Purchase of available for sale securities
Sale and maturity of available for sale securities
Net cash used in investing activities
Shares repurchased and retired
Dividends paid in cash
Net cash used in financing activities
Income taxes paid
Interest paid
Stock dividend issued
I NEED TO MAKE SURE I GET THE TRENDS CORRECT, PLEASE MAKE SURE THOSE ARE CORRECT ALONG WITH DEBT TO ASSETS RATIO FOR BOTH YEARS AND PROFIT MARGIN, ASSET TURNOVER, RETURN ON ASSETS, RETURN ON COMMON SE. I HAVE ASKED THIS QUESTION MANY TIMES AND NOBODY HAS GOTTEN IT CORRECT, PLEASE HELP!!! AND REPLY TO COMMENTS
Your parents are considering investing in Tootsie Roll Industries common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Excerpts from a recent annual report of Tootsie Roll are presented below.
CONSOLIDATED STATEMENTS OF
Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) For the year ended December 31, 2011 2010 2009 Net product sales $528,369 $517,149 $495,592 Rental and royalty revenue 4,136 4,299 3,739 Total revenue 532,505 521,448 499,331 Product cost of goods sold 365,225 349,334 319,775 Rental and royalty cost 1,038 1,088 852 Total costs 366,263 350,422 320,627 Product gross margin 163,144 167,815 175,817 Rental and royalty gross margin 3,098 3,211 2,887 Total gross margin 166,242 171,026 178,704 Selling, marketing and administrative expenses 108,276 106,316 103,755 Impairment charges — — 14,000 Earnings from operations 57,966 64,710 60,949 Other income (expense), net 2,946 8,358 2,100 Earnings before income taxes 60,912 73,068 63,049 Provision for income taxes 16,974 20,005 9,892 Net earnings $43,938 $53,063 $53,157 Net earnings $43,938 $53,063 $53,157 Other comprehensive earnings (loss) (8,740 ) 1,183 2,845 Comprehensive earnings $35,198 $54,246 $56,002 Retained earnings at beginning of year. $135,866 $147,687 $144,949 Net earnings 43,938 53,063 53,157 Cash dividends (18,360 ) (18,078 ) (17,790 ) Stock dividends (47,175 ) (46,806 ) (32,629 ) Retained earnings at end of year $114,269 $135,866 $147,687 Earnings per share $0.76 $0.90 $0.89 Average Common and Class B Common shares outstanding 57,892 58,685 59,425 (The accompanying notes are an integral part of these statements.) CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data) Assets December 31, 2011 2010 CURRENT ASSETS: Cash and cash equivalents $78,612 $115,976 Investments 10,895 7,996 Accounts receivable trade, less allowances of $1,731 and $1,531 41,895 37,394 Other receivables 3,391 9,961 Inventories: Finished goods and work-in-process 42,676 35,416 Raw materials and supplies 29,084 21,236 Prepaid expenses 5,070 6,499 Deferred income taxes 578 689 Total current assets 212,201 235,167 PROPERTY, PLANT AND EQUIPMENT, at cost: Land 21,939 21,696 Buildings 107,567 102,934 Machinery and equipment 322,993 307,178 Construction in progress 2,598 9,243 455,097 440,974 Less—Accumulated depreciation 242,935 225,482 Net property, plant and equipment 212,162 215,492 OTHER ASSETS: Goodwill 73,237 73,237 Trademarks 175,024 175,024 Investments 96,161 64,461 Split dollar officer life insurance 74,209 74,441 Prepaid expenses 3,212 6,680 Equity method investment 3,935 4,254 Deferred income taxes 7,715 9,203 Total other assets 433,493 407,300 Total assets $857,856 $857,959 Liabilities and Shareholders’ Equity December 31, 2011 2010 CURRENT LIABILITIES: Accounts payable $10,683 $9,791 Dividends payable 4,603 4,529 Accrued liabilities 43,069 44,185 Total current liabilities 58,355 58,505 NONCURRENT LIABILITES: Deferred income taxes 43,521 47,865 Postretirement health care and life insurance benefits 26,108 20,689 Industrial development bonds 7,500 7,500 Liability for uncertain tax positions 8,345 9,835 Deferred compensation and other liabilities 48,092 46,157 Total noncurrent liabilities 133,566 132,046 SHAREHOLDERS’ EQUITY: Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and 36,057 respectively, issued 25,333 25,040 Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued 14,601 14,212 Capital in excess of par value 533,677 505,495 Retained earnings, per accompanying statement 114,269 135,866 Accumulated other comprehensive loss (19,953 ) (11,213 ) Treasury stock (at cost)—71 shares and 69 shares, respectively (1,992 ) (1,992 ) Total shareholders’ equity 665,935 667,408 Total liabilities and shareholders’ equity $857,856 $857,959
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands)
Impairment of equity method investment
— — 4,400Loss from equity method investment
194 342 233Amortization of marketable security premiums
1,267 522 320Changes in operating assets and liabilities:
Accounts receivable
(5,448 ) 717 (5,899 )Other receivables
3,963 (2,373 ) (2,088 )Inventories
(15,631 ) (1,447 ) 455Prepaid expenses and other assets
5,106 4,936 5,203Accounts payable and accrued liabilities
84 2,180 (2,755 )Income taxes payable and deferred
(5,772 ) 2,322 (12,543 )Postretirement health care and life insurance benefits
2,022 1,429 1,384Deferred compensation and other liabilities
2,146 2,525 2,960Others
(708 ) 310 305 Net cash provided by operating activities 50,390 82,805 76,994 CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures
(16,351 ) (12,813 ) (20,831 )Net purchase of trading securities
(3,234 ) (2,902 ) (1,713 )Purchase of available for sale securities
(39,252 ) (9,301 ) (11,331 )Sale and maturity of available for sale securities
7,680 8,208 17,511Net cash used in investing activities
(51,157 ) (16,808 ) (16,364 ) CASH FLOWS FROM FINANCING ACTIVITIES:Shares repurchased and retired
(18,190 ) (22,881 ) (20,723 )Dividends paid in cash
(18,407 ) (18,130 ) (17,825 )Net cash used in financing activities
(36,597 ) (41,011 ) (38,548 ) Increase (decrease) in cash and cash equivalents (37,364 ) 24,986 22,082 Cash and cash equivalents at beginning of year 115,976 90,990 68,908 Cash and cash equivalents at end of year $78,612 $115,976 $90,990 Supplemental cash flow informationIncome taxes paid
$16,906 $20,586 $22,364Interest paid
$38 $49 $182Stock dividend issued
$47,053 $46,683 $32,538 (The accompanying notes are an integral part of these statements.) Five Year Summary of Earning and Financial HightlightsTOOTISE ROLL. INDUSTRY, INC. AND SUBSIDIARIES
(Thousands of dollars except per share, percentage and ratio figures) 2011 2010 2009 2008 2007 Sales and Earnings Data Net product sales $528,369 $517,149 $495,592 $492,051 $492,742 Product gross margin 163,144 167,815 175,817 158,055 165,456 Interest expenses 121 142 243 378 535 Provision for income taxes 16,974 20,005 9,892 16,347 25,401 Net earnings 43,938 53,063 53,157 38,880 52,175 % of net product sales 8.3 % 10.3 % 10.7 % 7.9 % 10.6 % % of shareholders' equity 6.6 % 8.0 % 8.1 % 6.1 % 8.1 % Per Common Share Data Net earnings $0.76 $0.90 $0.89 $0.65 $0.85 Cash dvidends declared 0.32 0.32 0.32 0.32 0.32 Stock dividends 3 % 3 % 3 % 3 % 3 % Additional Financial Data Working capital $153,846 $176,662 $154,409 $129,694 $142,163 Net cash provided by opreating activities 50,390 82,805 76,994 57,333 90,148 Net cash provided by (used by) investing activities (51,157 ) (16,808 ) (16,364 ) (7,565 ) (43,429 ) Net cash used in financing activities (36,597 ) (41,011 ) (38,548 ) (38,666 ) (38,666 ) Property, plant & equipment additions 16,351 12,813 20,831 34,355 14,767 Net property, plant & equipment 212,162 215,492 220,721 217,628 201,401 Total assets 857,856 857,959 836,844 813,252 813,134 Long-term debt 7,500 7,500 7,500 7,500 7,500 Shareholders' equity 665,935 667,408 654,244 636,847 640,204 Average shares outstanding 57,892 58,685 59,425 60,152 61,580
NOTE 6—OTHER INCOME (EXPENSE), NET:
Other income (expense), net is comprised of the following:
2011 2010 2009 Interest and dividend income $1,087 $879 $1,439 Gains (losses) on trading securities relating to deferred compensation plans 29 3,364 4,524 Interest expense (121) (142) (243) Impairment of equity method investment. _ _ (4,400) Equity method investment loss (194) (342) (233) Foreign exchange gains (losses) 2,098 4,090 951 Capital gains (losses) (277) (28) (38) Miscellaneous, net 274 537 100 $2,946 $8,358 $2,100
As of December 31, 2009, management determined that the carrying value of an equity method investment was impaired as a result of accumulated losses from operations and review of future expectations. The Company recorded a pre-tax impairment charge of $4,400 resulting in an adjusted carrying value of $4,961 as of December 31, 2009. The fair value was primarily assessed using the present value of estimated future cash flows.
Explanation / Answer
I NEED TO MAKE SURE I GET THE TRENDS CORRECT, PLEASE MAKE SURE THOSE ARE CORRECT
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.