ACCT111 Tootsie Roll 2018 Accounting Annual Report Project Assignment I have attached nine question about the Tootsie Roll 2018 Formal Report. Also attache

ACCT111 Tootsie Roll 2018 Accounting Annual Report Project Assignment I have attached nine question about the Tootsie Roll 2018 Formal Report. Also attached is the report that should be the only information you need! With each question is a reference to what page the information is on. 1
ACCT 111 ANNUAL REPORT PROJECT
50 Points
Name ________________________________
Download the Tootsie Roll Form 10K Annual Filing for 2018 from ACCT 111 D2L website
Use the Tootsie Roll Form 10K to answer the following questions:
1) Looking at Tootsie Roll’s 2018 Balance Sheet (pages 31-32 printed on document), please
record the following information:
2018
2017
Total Current Assets
Total Long-Term Assets
Total Current Liabilities
Total Long-Term Liabilities
2) Looking at Tootsie Roll’s 2018 Income Statement (page 20 on printed document),
please record the following information:
2018
2017
Total Revenues
Total Expenses
Net Income
2
3) Looking at Tootsie Roll’s 2018 Statement of Retained Earnings (bottom of page 29 on
printed document), please record the following information:
2018
2017
Total Dividends Paid
Retained Earnings,
End of year
4) What item(s) from Tootsie Roll’s 2018 Income Statement appear on its 2018 Statement
of Retained Earnings?
Item Name ______________________
Amount __________
Item Name ______________________
Amount __________
5) What item(s) from Tootsie Roll’s 2018 Statement of Retained Earnings appear on its
2018 Balance Sheet?
Item Name ______________________
Amount __________
Item Name ______________________
Amount __________
6) Looking at Tootsie Roll’s 2018 Income Statement, compare the Net Earnings amount for
2017 to 2018.
Did Net Earnings increase or decrease?
By how much? __________________
7) Looking at Tootsie Roll’s 2018 Balance Sheet, compare the Total Assets amount for 2017
to 2018.
Did Total Assets increase or decrease?
By how much? __________________
3
8) Looking at Tootsie Roll’s 2018 Statement of Cash Flows (page 33 on printed
documents), please record the amounts below:
2018
2017
Net cash flows from Operating Activities
Net cash flows from Investing Activities
Net cash flows from Financing Activities
Net increase (decrease) in Cash
9) Looking at your answers to questions 1-8, how did Tootsie Roll perform financially in
2018 compared to 2017? Please cite the reasons for your opinion.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
? ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2018
OR
? TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from
to
Commission file number 1-1361
TOOTSIE ROLL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Virginia
(State or other jurisdiction of
incorporation or organization)
22-1318955
(IRS Employer Identification No.)
7401 South Cicero Avenue, Chicago, Illinois 60629
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number: (773) 838-3400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Name of each exchange
on which registered
Common Stock — Par Value $.69-4/9 Per Share
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock — Par Value $.69-4/9 Per Share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ? No ?
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ? No ?
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ? No ?
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit). Yes ? No ?
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ?
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large accelerated filer ?
Accelerated filer ?
Non-accelerated filer ?
Smaller reporting company ?
Emerging growth company ?
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ?
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ? No ?
As of February 21, 2019, there were outstanding 38,541,273 shares of Common Stock par value $.69-4/9 per share, and 25,583,209 shares of Class B Common Stock
par value $.69-4/9 per share.
As of June 30, 2018, the aggregate market value of the Common Stock (based upon the closing price of the stock on the New York Stock Exchange on such date) held
by non-affiliates was approximately $545,405,000. Class B Common Stock is not traded on any exchange, is restricted as to transfer or other disposition, but is convertible
into Common Stock on a share-for-share basis. Upon such conversion, the resulting shares of Common Stock are freely transferable and publicly traded. Assuming all
25,604,704 shares of outstanding Class B Common Stock were converted into Common Stock, the aggregate market value of Common Stock held by non-affiliates on
June 30, 2018 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $680,400,000. Determination of
stock ownership by non-affiliates was made solely for the purpose of this requirement, and the Registrant is not bound by these determinations for any other purpose.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company’s Definitive Proxy Statement for the Company’s Annual Meeting of Shareholders (the “2019 Proxy Statement”) scheduled to be held
on May 6, 2019 are incorporated by reference in Part III of this report.
TABLE OF CONTENTS
ITEM 1.
Business
3
ITEM 1A. Risk Factors
5
ITEM 1B.
Unresolved Staff Comments
8
ITEM 2.
Properties
9
ITEM 3.
Legal Proceedings
9
ITEM 4.
Mine Safety Disclosures
9
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
10
ITEM 6.
Selected Financial Data
12
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
13
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
25
ITEM 8.
Financial Statements and Supplementary Data
25
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
51
ITEM 9A. Controls and Procedures
51
ITEM 9B.
Other Information
51
ITEM 10.
Directors, Executive Officers and Corporate Governance
52
ITEM 11.
Executive Compensation
52
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
52
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
53
ITEM 14.
Principal Accounting Fees and Services
53
ITEM 15.
Exhibits, Financial Statement Schedules
53
ITEM 16.
Form 10-K Summary
53
2
Forward-Looking Information
From time to time, in the Company’s statements and written reports, including this report, the Company
discusses its expectations regarding future performance by making certain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use
of words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “project,” and other words of similar meaning in
connection with a discussion of future operating or financial performance and are subject to certain factors, risks, trends
and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forwardlooking statements. These forward-looking statements are based on currently available competitive, financial and
economic data and management’s views and assumptions regarding future events. Such forward-looking statements are
inherently uncertain, and actual results may differ materially from those expressed or implied herein. Consequently, the
Company wishes to caution readers not to place undue reliance on any forward-looking statements. Factors, among others,
which could cause the Company’s future results to differ materially from the forward-looking statements, expectations and
assumptions expressed or implied herein include general factors, such as economic conditions, political developments,
currency exchange rates, interest and inflation rates, accounting standards, taxes, and laws and regulations affecting the
Company in markets where it competes and those factors described in Item 1A “Risk Factors” and elsewhere in this
Form 10-K and in other Company filings with the Securities and Exchange Commission. The Company does not undertake
to update any of these forward-looking statements.
PART I
ITEM 1.
Business.
Tootsie Roll Industries, Inc. and its consolidated subsidiaries (the “Company”) have been engaged in the
manufacture and sale of confectionery products for over 100 years. This is the only industry segment in which the Company
operates and is its only line of business. The majority of the Company’s products are sold under the registered trademarks
TOOTSIE ROLL, TOOTSIE POPS, CHILD’S PLAY, CARAMEL APPLE POPS, CHARMS, BLOW-POP, CHARMS
MINI POPS, CELLA’S, DOTS, JUNIOR MINTS, CHARLESTON CHEW, SUGAR DADDY, SUGAR BABIES,
ANDES, FLUFFY STUFF, DUBBLE BUBBLE, RAZZLES, CRY BABY, NIK-L-NIP, and TUTSI POP (Mexico).
The Company’s products are marketed in a variety of packages designed to be suitable for display and
sale in different types of retail outlets. They are sold through approximately 30 candy and grocery brokers and by the
Company itself to approximately 3,100 customers throughout the United States. These customers include wholesale
distributors of candy and groceries, supermarkets, variety stores, dollar stores, chain grocers, drug chains, discount chains,
cooperative grocery associations, mass merchandisers, warehouse and membership club stores, vending machine
operators, the U.S. military and fund-raising charitable organizations.
The Company’s principal markets are in the United States, Canada and Mexico. The majority of
production from the Company’s Canadian plants is sold in the United States. The majority of production from the
Company’s Mexican plant is sold in Mexico.
The domestic confectionery business is highly competitive. The Company competes primarily with other
manufacturers of confectionery products sold to the above mentioned customers. Although accurate statistics are not
available, the Company believes it is among the ten largest domestic manufacturers in this field. In the markets in which
the Company competes, the main forms of competition comprise brand recognition, as well as competition for retail shelf
space and a fair price for the Company’s products at various retail price points.
The Company did not have a material backlog of firm orders at the end of the calendar years 2018 or
2017.
Because of increased pricing pressures and cost increases facing the confectionary industry, companies
in the confectionary industry are taking pricing actions to recover many of the same input cost increases that we have and
continue to experience including higher freight and delivery expenses. In particular, the Company has taken selective price
increases, effective at the beginning of 2019, to recover these same input cost increases.
3
The Company has historically hedged certain of its future sugar and corn syrup needs with derivatives
at such times that it believes that the forward markets are favorable. The Company’s decision to hedge its major ingredient
requirements is dependent on the Company’s evaluation of forward commodity markets and their comparison to vendor
quotations, if available, and/or historical costs. The Company has historically hedged some of these major ingredients with
derivatives, primarily commodity futures contracts, before the commencement of the next calendar year to better ascertain
the need for product pricing changes or product weight decline (indirect price change) adjustments to its product sales
portfolio and better manage ingredient costs. The Company will generally purchase forward derivative contracts (i.e.,
“long” position) in selected future months that correspond to the Company’s estimated procurement and usage needs of
the respective commodity in the respective forward periods.
From time to time, the Company also changes the size and weight of certain of its products in response
to significant changes in ingredient and other input costs.
The Company does not hold any material patents, licenses, franchises or concessions. The Company’s
major trademarks are registered in the United States, Canada, Mexico and in many other countries. Continued trademark
protection is of material importance to the Company’s business as a whole.
Although the Company does research and develops new products and product line extensions for existing
brands, it also improves the quality of existing products, improves and modernizes production processes, and develops and
implements new technologies to enhance the quality and reduce the costs of products. The Company does not expend
material amounts of money on research or development activities.
The manufacture and sale of consumer food products is highly regulated. In the United States, the
Company’s activities are subject to regulation by various government agencies, including the Food and Drug
Administration, the Department of Agriculture, the Federal Trade Commission, the Department of Commerce and the
Environmental Protection Agency, as well as various state and local agencies. Similar agencies also regulate the businesses
outside of the United States. The Company maintains quality assurance, food safety and other programs to help ensure that
all products the Company manufactures and distributes are safe and of high quality and comply with all applicable laws
and regulations.
The Company’s compliance with federal, state and local regulations which have been enacted or adopted
regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has
not had a material effect on the capital expenditures, earnings or competitive position of the Company nor does the
Company anticipate any such material effects from presently enacted or adopted regulations.
The Company employs approximately 2,000 persons.
The Company has found that its sales normally maintain a consistent level throughout the year except
for a substantial increase in the third quarter which reflects pre-Halloween and back-to-school sales. In anticipation of this
high sales period, the Company generally begins building inventories in the second quarter of each year. The Company
historically offers extended credit terms for sales made under seasonal sales programs, including Halloween. Each year,
after accounts receivables related to third quarter sales have been collected, the Company invests such funds in various
marketable securities.
Sales revenues from Wal-Mart Stores, Inc. aggregated approximately 24.1%, 24.0%, and 23.3% of net
product sales during the years ended December 31, 2018, 2017 and 2016, respectively. Sales revenues from Dollar Tree,
Inc. (which includes Family Dollar which was acquired by Dollar Tree) aggregated approximately 11.2%, 10.9%, and
10.4% of net product sales during the years ended December 31, 2018, 2017 and 2016, respectively. Some of the
aforementioned sales to Wal-Mart and Dollar Tree are sold to McLane Company, a large national grocery wholesaler,
which services and delivers certain of the Company’s products to Wal-Mart, Dollar Tree and other retailers in the U.S.A.
Net product sales revenues from McLane, which includes these Wal-Mart and Dollar Tree sales as well as sales and
deliveries to other Company customers, were 17.4% in 2018 and 16.9% in 2017 and 16.3% in 2016. At December 31,
2018 and 2017, the Company’s three largest customers discussed above accounted for approximately 31% and 32% of
4
total accounts receivable, respectively. Although no customer other than McLane Company, Inc., Wal-Mart Stores, Inc.
and Dollar Tree accounted for more than 10% of net product sales, the loss of one or more significant customers could
have a material adverse effect on the Company’s business.
For a summary of sales and long-lived assets of the Company by geographic area see Note 9 of the
“Notes to Consolidated Financial Statements” which is incorporated herein by reference.
Information regarding the Company’s Form 10-K, Form 10-Q, current reports on Form 8-K, and any
amendments to these reports, will be made available, free of charge, upon written request to Tootsie Roll Industries, Inc.,
7401 South Cicero Avenue, Chicago, Illinois 60629, Attention: Barry Bowen, Treasurer and Assistant Secretary. The
Company does not make all such reports available on its website at www.tootsie.com because it believes that they are
readily available from the Securities Exchange Commission at www.sec.gov, and because the Company provides them
free of charge upon request. Interested parties, including shareholders, may communicate to the Board of Directors or any
individual director in writing, by regular mail, addressed to the Board of Directors or an individual director, in care of
Tootsie Roll Industries, Inc., 7401 South Cicero Avenue, Chicago, Illinois 60629, Attention: Ellen R. Gordon, Chairman
and Chief Executive Officer. If an interested party wishes to communicate directly with the Company’s non-employee
directors, it should be noted on the cover of the communication.
ITEM 1A.
Risk Factors.
Significant factors that could impact the Company’s financial condition or results of operations include,
without limitation, the following:
•
Risk related to freight and delivery of products to customers – The Company has experienced significant increases
in freight and delivery costs which are driven by a shortage of over-the road delivery trucks and truck drivers.
The Company expects this trend of higher over-the-road truck freight and delivery expenses to continue in 2019,
and uncertainties exist as to how this imbalance of supply and demand will be resolved. The Company may not
be able to fully offset these cost increases or fully pass such cost increases onto customers in the form of price
increases, or the Company may not be able to make timely delivery of products to its customers, all of which
could have an adverse impact on the Company’s results of operations and financial condition.
•
Risk of changes in the price and availability of raw materials – The principal ingredients used by the Company
are subject to price volatility. Although the Company engages in commodity hedging transactions and annual
supply agreements as well as leveraging the high vo…
Purchase answer to see full
attachment