2016 Merrill Corp - Tootsie Roll Annual Report ED | 105914 | 28-Feb-17 08:17 | 17-6862-1.Ba | Sequence: 1 CHKSUM Content: 31960 Layout: 63945 Graphics: 29616 CLEAN
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2016 Merrill Corp - Tootsie Roll Annual Report ED | 105914 | 28-Feb-17 08:17 | 17-6862-1.ba | Sequence: 1 CHKSUM Content: 31960 Layout: 63945 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 120 years. Our products are primarily sold under the Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff 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, 2016 2015 (in thousands except per share data) Net Product Sales . $517,373 $536,692 Net Earnings Attributable to Tootsie Roll Industries, Inc. 67,510 66,089 Working Capital . 235,739 221,744 Net Property, Plant and Equipment . 180,905 184,586 Shareholders’ Equity . 711,364 698,183 Average Shares Outstanding* . 62,239 63,256 Per Share Items* Net Earnings Attributable to Tootsie Roll Industries, Inc. $1.08 $1.04 Cash Dividends Paid . 0.36 0.35 *Adjusted for stock dividends. JOB: 17-6862-1 CYCLE#;BL#: 6; 0 TRIM: 8.5" x 11" COMPOSITE COLORS: Black, Cyan, Magenta, Yellow, ~note-color 2 GRAPHICS: Tootsie_roll_candy_logo.eps V1.5 Merrill Corp - Tootsie Roll Annual Report ED | 105914 | 28-Feb-17 08:17 | 17-6862-1.bc | Sequence: 4 CHKSUM Content: 42686 Layout: 33250 Graphics: 10063 CLEAN conservative financial posture and so we have numerous postings, game experiences, prize To Our Shareholders the resources necessary to make the important contests and pop-up ads. Mr. Owl and the long- investments described above. We ended 2016 standing “How many licks does it take to get to common stock.with $276 During million 2016 in wecash paid and quarterly investments cash (net of campaigns.the Tootsie Roll This center renowned of a Tootsieadvertisement Pop” message has, dividends interesttotaling bearing36 cents debt per shareand investments and that hedge itself,are prominently become part featured of Americana, in our social with appearances media distributeddeferred a 3% stock compensation dividend. This liabilities) was the and, rangingprogram from and crossword in our television puzzles advertising to quiz shows to accordingly, continue to be in a position to campaigns. This renowned advertisement has, seventy-fourth consecutive year that the Company scientific studies replete with complicated respond to future opportunities that inevitably will itself, become part of Americana, with paid cash dividends and the fifty-second lick-estimating algorithms. In addition, each year arise. manyappearances consumers ranging contact from us crosswordto share their puzzles personal to consecutive year that stock dividend was quiz shows to scientific studies replete with findings. With no consensus having been reached distributed.Our financial resources also enable us to complicated lick-estimating algorithms. In in the answer to this time-tested conundrum, we continue to invest in our brands, pay dividends addition, each year many consumers contact us The Companyand repurchasehas historically common grown stock. in three During ways: 2016 we canto share only concludetheir personal one thing: findings. “the Withworld no may never by increasingpaid distribution quarterly cash of existing dividends products, totaling by 36 cents know!”consensus having been reached in the answer to introducingper new share items, and including distributed line aextensions, 3% stock dividend. this time-tested conundrum, we can only and by acquisition.This was theWhile seventy-fourth many of our brandsconsecutive were year that Theconclude appeal one of our thing: iconic “the brands world ismay evidenced never know!” by developedthe internally, Company certain paid of cash them dividends including and the fifty- their inclusion in popular television food shows. DOTS, BLOWsecond POPS, consecutive JUNIOR yearMINTS, that ANDES, a stock dividend DuringThe appeal 2016 ofthe our Cooking iconic Channel’sbrands is evidencedUnwrapped by 2.0 DUBBLE wasBUBBLE distributed. and others have come to us profiledtheir inclusion the production in popular process television for BLOWfood shows. POPS, through acquisition. We continue to seek CARAMELDuring 2016 APPLE the Cooking POPS, Channel’sSUGAR DADDY Unwrapped and The Company has historically grown in three 2.0 profiled the production process for BLOW complimentary business acquisitions that will JUNIOR MINTS. In past years similar programs ways: by increasing distribution of existing POPS, CARAMEL APPLE POPS, SUGAR DADDY add to our stable of brands. featuring our brands have appeared on other products, by introducing new items, including line specialand JUNIOR interest MINTS. cable channels.In past years We believesimilar 25FEB201611233621 extensions, and by acquisition. While many of our programs featuring our brands have appeared on Ellen R. Gordon, Chairman and Chief Executive Officer documentaries of this kind provide recurring Several promisingbrands were new developedproducts were internally, brought certain to of them other special interest cable channels. We believe exposure for our brands in a fashion that captures Net product sales in 2015 were $537 million Although our overall comparative ingredient costs market in including2016. Cella’s DOTS, Dips BLOW are aPOPS, delicious JUNIOR MINTS, documentaries of this kind provide recurring Ellen R. Gordon, Chairman and Chief Executive Officer the interest of a wide viewing audience. compared to $540 million in 2014. The Company in 2015 were somewhat more favorable compared combinationANDES, of whole DUBBLE dried cherries BUBBLE covered and others in have come exposure for our brands in a fashion that had another strong Halloween selling season, and to the prior year, certain key ingredient costs were rich dark chocolate.to us through Made acquisition. with the same We continue care to seek captures the interest of a wide viewing audience. many2016 of marked our core the 120thbrands anniversary achieved ofsales our flagshipgains higherfacility, in one2015, thing and has we remained expect overall constant: ingredient the bond In closing, we wish to express our appreciation and expertisecomplimentary as our other business quality Cella’s acquisitions that will add overconfection, the prior theyear. Tootsie Sales were,Roll. Ithowever, was in 1896 adversely that costsbetween to be ourhigher consumers in 2016. andStill, the we wholesomeare pleased to to our stable of brands. toIn ourclosing, many we loyal wish employees, to express consumers, our appreciation to confections, this item capitalizes on the popularity affectedLeo Hirschfield, by translation an Austrian of sales immigrant, made in cookedforeign reportconfections that we they are havemaking trusted progress from uson forrestoring suppliers,our many salesloyal employees,brokers, distributors consumers, and customerssuppliers, of dried fruit in candy. New Caramel Marshmallow currencies,up the first principally batch of MexicoTootsie andRolls Canada, on his stove due into ourgenerations. margins to Most their of historical our iconic levels brands while trace wetheir Several promising new products were brought to throughoutsales brokers, the world distributors for their and support customers in 2016. the relative strength of the U.S. dollar. continue to strive to implement measures to Sugar Babies were a delicious line extension to New York City. As the chocolaty concoction roots back seventy or more years. Our goal is to market in 2016. Cella’s Dips are a delicious Wethroughout also thank the our world fellow for shareholderstheir support forin 2016.their We improve every aspect of our operations. the Sugar Baby brand. Netcooled, earnings he andin 2015 his daughterwere $66 cutmillion off piecescompared and to maintain this important connection with consumers combination of whole dried cherries covered in supportalso thank throughout our fellow the shareholders years. We remain for their committed $63rolled million them in by2014, hand. an Thenincrease they ofwrapped 4%. Earnings the rolls Othereven highlights as we continue of 2015 to include:deploy new manufacturing rich dark chocolate. Made with the same care tosupport profitable