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Merrill Corp - Tootsie Roll Annual Report ED | 109761 | 01-Mar-19 16:29 | 19-4305-1.ba | Sequence: 1 CHKSUM Content: 37474 Layout: 32454 Graphics: 29616 CLEAN Corporate Profile Tootsie Roll Industries, Inc. has been engaged in the Blue Razz, Cella’s chocolate covered cherries, Dots, manufacture and sale of confectionery products for Crows, Junior Mints, Junior Caramels, Charleston over 120 years. Our products are primarily sold under Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff the familiar brand names: Tootsie Roll, Tootsie Roll Pops, cotton candy, Dubble Bubble, Razzles, Cry Baby and Caramel Apple Pops, Child’s Play, Charms, Blow Pop, Nik-L-Nip. Corporate Principles We believe that the differences among companies are We invest in the latest and most productive equipment attributable to the caliber of their people, and therefore to deliver the best quality product to our customers at we strive to attract and retain superior people for each the lowest cost. job. We seek to outsource functions where appropriate and We believe that an open family atmosphere at work to vertically integrate operations where it is financially combined with professional management fosters advantageous to do so. cooperation and enables each individual to maximize his or her contribution to the Company and realize the We view our well known brands as prized assets to be corresponding rewards. aggressively advertised and promoted to each new generation of consumers. We do not jeopardize long-term growth for immediate, short-term results. We conduct business with the highest ethical standards and integrity which are codified in the We maintain a conservative financial posture in the Company’s “Code of Business Conduct and Ethics.” deployment and management of our assets. We run a trim operation and continually strive to eliminate waste, minimize cost and implement performance improvements. Financial Highlights December 31, 2018 2017 (in thousands except per share data) Net Product Sales . $515,251 $515,674 Net Earnings Attributable to Tootsie Roll Industries, Inc. 56,893 80,864 Working Capital . 242,655 207,132 Net Property, Plant and Equipment . 186,101 178,972 Shareholders’ Equity . 750,622 733,840 Average Shares Outstanding* . 64,216 65,048 Per Share Items* Net Earnings Attributable to Tootsie Roll Industries, Inc. $0.89 $1.24 Cash Dividends Paid . 0.36 0.36 *Adjusted for stock dividends. JOB: 19-4305-1 CYCLE#;BL#: 1; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, Cyan, Magenta, Yellow, ~note-color 2 GRAPHICS: Tootsie_roll_candy_logo.eps V1.5 penses due to an unprecedented measures that improve every higher freight and delivery ex- holders. We strive to implement versely impacted by significantly our consumers and to our share- Net earnings in 2018 were ad- we can deliver maximum value to keep our operations lean so that tax liabilities. lenge. We always endeavor to 2017 on the Company’s deferred another are a pervasive chal- U.S. Tax Cuts and Jobs Act of Cost pressures of one sort or share related to the impact of the ment of $20.3 million or $0.31 per new manufacturing lines. income tax accounting adjust- product packaging and start-up of a one-time favorable deferred related to quality improvements in in the prior year. 2017 included programs, as well as by costs were $0.89 as compared to $1.24 our self-insured employee benefit lion in 2017. Earnings per share es and unfavorable experience in million as compared to $80.9 mil- increases in manufacturing wag- Net earnings in 2018 were $56.9 Earnings were also affected by increases. season. and had to absorb these another good Halloween selling cost of delivery to our customers remained strong and we had the candy industry, we pay for the in 2017. Sales of our core brands ing industry. As is customary in million in 2018 and $515.7 million shortage of capacity in the truck- Net product sales were $515.3 Ellen R. Gordon, Chairman and Chief Executive Officer Shareholders To Our To Our To Our ShareholdersShareholders EllenEllen R. R. Gordon, Gordon, Chairman Chairman and Chief ExecutiveExecutive Officer Officer NetNet product product sales sales were were $515.3 $515.3 shortage ofof capacitycapacity in in the the truck- truck- millionmillion in in 2018 2018 and and $515.7 $515.7 millionmillion inging industry. As As is is customary customary in in in in2017. 2017. Sales Sales of of our our core core brandsbrands the candy industry,industry, we we pay pay for for the the remainedremained strong strong and and we we had had cost of deliverydelivery to to our our customers customers anotheranother good good Halloween Halloween selling selling and had toto absorbabsorb these these season.season. increases.increases. Net earnings in 2018 were $56.9 Earnings were also affected by Net earnings in 2018 were $56.9 Earnings were also affected by million as compared to $80.9 mil- increases in manufacturing wag- millionlion in as 2017. compared Earnings to $80.9per share mil- increaseses and unfavorable in manufacturing experience wag- in lionwere in 2017. $0.89 asEarnings compared per to share $1.24 esour and self-insured unfavorable employee experience benefit in werein the $0.89 prior as year. compared 2017 included to $1.24 ourprograms, self-insured as well employee as by costs benefit in athe one-time prior year. favorable 2017 deferred included programs,related to quality as well improvements as by costs in a one-timeincome tax favorable accounting deferred adjust- relatedproduct topackaging quality improvements and start-up of in incomement oftax $20.3 accounting million or adjust- $0.31 per productnew manufacturing packaging lines.and start-up of mentshare of related$20.3 million to the impactor $0.31 of theper new manufacturing lines. shareU.S. relatedTax Cuts to and the Jobsimpact Act of of the Cost pressures of one sort or U.S.2017 Tax on Cuts the Company’sand Jobs Act deferred of Costanother pressures are a pervasive of one sortchal- or 2017tax liabilities.on the Company’s deferred anotherlenge. We are always a pervasive endeavor chal- to tax liabilities. lenge.keep our We operations always endeavor lean so that to Net earnings in 2018 were ad- keepwe can our deliver operations maximum lean value so that to Netversely earnings impacted in 2018 by significantlywere ad- weour canconsumers deliver andmaximum to our share-value to verselyhigher impacted freight and by delivery significantly ex- ourholders. consumers We strive and to to implement our share- higherpenses freight due toand an delivery unprecedented ex- holders.measures We that strive improve to implement every penses due to an unprecedented measures that improve every 161945_Narative_v2.indd 1 3/7/19 11:27 AM penses due to an unprecedented unprecedented an to due penses measures that improve every every improve that measures higher freight and delivery ex- ex- delivery and freight higher holders. We strive to implement implement to strive We holders. versely impacted by significantly significantly by impacted versely our consumers and to our share- share- our to and consumers our Net earnings in 2018 were ad- ad- were 2018 in earnings Net we can deliver maximum value to to value maximum deliver can we keep our operations lean so that that so lean operations our keep tax liabilities. liabilities. tax lenge. We always endeavor to to endeavor always We lenge. 2017 on the Company’s deferred deferred Company’s the on 2017 another are a pervasive chal- chal- pervasive a are another U.S. Tax Cuts and Jobs Act of of Act Jobs and Cuts Tax U.S. Cost pressures of one sort or or sort one of pressures Cost share related to the impact of the the of impact the to related share ment of $20.3 million or $0.31 per per $0.31 or million $20.3 of ment new manufacturing lines. lines. manufacturing new income tax accounting adjust- adjust- accounting tax income product packaging and start-up of of start-up and packaging product a one-time favorable deferred deferred favorable one-time a related to quality improvements in in improvements quality to related in the prior year. 2017 included included 2017 year. prior the in programs, as well as by costs costs by as well as programs, were $0.89 as compared to $1.24 $1.24 to compared as $0.89 were our self-insured employee benefit benefit employee self-insured our lion in 2017. Earnings per share share per Earnings 2017. in lion es and unfavorable experience in in experience unfavorable and es million as compared to $80.9 mil- mil- $80.9 to compared as million increases in manufacturing wag- wag- manufacturing in increases Net earnings in 2018 were $56.9 $56.9 were 2018 in earnings Net Earnings were also affected by by affected also were Earnings increases. increases. season. season. and had to absorb these these absorb to had and another good Halloween selling selling Halloween good another cost of delivery to our customers customers our to delivery of cost remained strong and we had had we and strong remained the candy industry, we pay for the the for pay we industry, candy the in 2017. Sales of our core brands brands core our of Sales 2017. in ing industry. As is customary in in customary is As industry. ing million in 2018 and $515.7 million million $515.7 and 2018 in million shortage of capacity in the truck- truck- the in capacity of shortage Net product sales were $515.3 $515.3 were sales product Net Ellen R. Gordon, Chairman and Chief Executive Officer Officer Executive Chief and Chairman Gordon, R. Ellen Shareholders Shareholders To Our Our To aspect of our operations without jeopardizing the the jeopardizing without operations our of aspect long-term strength of the company.