Financial Analysis Essay

Financial Statement Analysis
Tootsie Roll Industries, Inc.

Tootsie Roll Industries, Inc., along with its subsidiaries, is engaged in the manufacture and sale of confectionery products. The address of the principal executive offices is located at 7401 S Cicero Avenue, Chicago, IL 60629. The independent auditor of the company is PricewaterhouseCoopers LLP of Chicago, IL. Tootsie Roll Industries Inc. is a public company, traded on the New York Stock Exchange, symbol TR. As of April 25, 2014, the current share price was $28.29 with a range of low price $27.75 and high price of $34.22 for 2013, which is a range of $6.47. For fiscal year ended December 31, 2013, dividend per share increased from $0.15 to $0.32 with 36.76 (in millions) shares outstanding. Tootsie Roll Industries, Inc. have been engaged in the manufacture and sale of confectionery products for over 100 years. The majority of the Company’s products are sold under registered trademarks: Tootsie Roll, Tootsie Roll Pops, Child’s Play, Caramel Apple Pops, Charms, Blow-Pop, Charms Mini Pops, Cella’s, Mason Dots, Mason Crows, Junior Mints, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff, Dubble Bubble, Razzles, Cry Baby and Nik-L-Nip. These products are marketed in a variety of packages designed to be suitable for display and sale in different types of retail utlets. They are sold through approximately 30 candy and grocery brokers and by the Company itself to approximately 4,000 customers throughout the United States. These customers include wholesale distributors of candy and groceries, supermarkets, 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 dole in the United States. The majority of production from the Company’s Mexican plant is sold in Mexico. The Company employs approximately 2,000 people. The domestic confectionery business is highly competitive. The Company competes primarily with other manufacturers of confectionery products sold to the same 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 products at various retail price points. Although the Company experienced moderating costs for some ingredients in 2013 compared to 2012, unit costs for certain ingredients, packaging materials, freight and delivery, wages and benefits, and plant operations continued to increase further in 2013 compared to 2012. The Company has made progress toward restoring margins to their historical levels before the increases in commodity and other input costs in recent years, but margins remain below historical levels prior to these increases in commodity and other input costs. 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. The chairman and chief executive of Tootsie Roll is Melvin Gordon, a bespectacled man in his 90s who has headed the company for 50 years. He runs it with his 80-year-old wife, Ellen. According to Ben Kesling in his article “Tootsie Roll’s Secret Empire”, Mr. Gordon is

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