The financial statements of The Hershey Company and Tootsie Roll are presented below. Assume
Hershey’s average number of shares outstanding was 220,688,000, and Tootsie Roll’s was
57,892,000.
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31,
2011
2010
2009
In thousands of dollars except per share amounts
Net Sales
$6,080,788 $5,671,009 $5,298,668
Costs and Expenses:
Cost of sales
3,548,896
3,255,801
3,245,531
Selling, marketing and administrative
1,477,750
1,426,477
1,208,672
Business realignment and impairment (credits) charges,
(886)
83,433
82,875
net
Total costs and expenses
5,025,760
4,765,711
4,537,078
Income before Interest and Income Taxes
1,055,028
905,298
761,590
Interest expense, net
92,183
96,434
90,459
Income before Income Taxes
962,845
808,864
671,131
Provision for income taxes
333,883
299,065
235,137
Net Income
$628,962
$509,799
$435,994
Net Income Per Share—Basic—Class B Common
$2.58
$2.08
$1.77
Stock
Net Income Per Share—Diluted—Class B Common
$2.56
$2.07
$1.77
Stock
Net Income Per Share—Basic—Common Stock
$2.85
$2.29
$1.97
Net Income Per Share—Diluted—Common Stock
$2.74
$2.21
$1.90
Cash Dividends Paid Per Share:
Common Stock
$1.3800
$1.2800
$1.1900
Class B Common Stock
1.2500
1.1600
1.0712
The notes to consolidated financial statements are an integral part of these statements and are
included in the Hershey's 2011 Annual Report, available at www.thehersheycompany.com.
THE HERSHEY COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
In thousands of dollars
ASSETS
Current Assets:
Cash and cash equivalents
Accounts receivable—trade
Inventories
Deferred income taxes
Prepaid expenses and other
Total current assets
Property, Plant and Equipment, Net
Goodwill
Other Intangibles
Deferred Income Taxes
Other Assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable
Accrued liabilities
Accrued income taxes
Short-term debt
Current portion of long-term debt
2011
2010
$693,686
399,499
648,953
136,861
167,559
2,046,558
1,559,717
516,745
111,913
38,544
138,722
$4,412,199
$884,642
390,061
533,622
55,760
141,132
2,005,217
1,437,702
524,134
123,080
21,387
161,212
$4,272,732
$420,017
612,186
1,899
42,080
97,593
$410,655
593,308
9,402
24,088
261,392
Total current liabilities
Long-term Debt
Other Long-term Liabilities
Total liabilities
Commitments and Contingencies
Stockholders’ Equity:
The Hershey Company Stockholders’ Equity
Preferred Stock, shares issued: none in 2011 and 2010
Common Stock, shares issued: 299,269,702 in 2011 and
299,195,325 in 2010
Class B Common Stock, shares issued: 60,632,042 in 2011 and
60,706,419 in 2010
Additional paid-in capital
Retained earnings
Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and
132,871,512 in 2010
Accumulated other comprehensive loss
The Hershey Company stockholders’ equity
Noncontrolling interests in subsidiaries
Total stockholders’ equity
Total liabilities and stockholders’equity
1,173,775
1,748,500
617,276
3,539,551
—
1,298,845
1,541,825
494,461
3,335,131
—
—
—
299,269
299,195
60,632
60,706
490,817
4,699,597
434,865
4,374,718
(4,258,962)
(4,052,101)
(442,331)
849,022
23,626
872,648
$4,412,199
(215,067)
902,316
35,285
937,601
$4,272,732
THE HERSHEY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
2011
2010
In thousands of dollars
Cash Flows Provided from (Used by) Operating Activities
Net income
$628,962 $509,799
Adjustments to reconcile net income to net cash provided from
operations:
Depreciation and amortization
215,763
197,116
Stock-based compensation expense, net of tax of $15,127,
28,341
32,055
$17,413 and $19,223, respectively
Excess tax benefits from stock-based compensation
(13,997)
(1,385)
Deferred income taxes
33,611
(18,654)
Gain on sale of trademark licensing rights, net of tax of
(11,072)
—
$5,962
Business realignment and impairment charges, net of tax of
30,838
77,935
$18,333, $20,635 and $38,308, respectively
Contributions to pension plans
(8,861)
(6,073)
Changes in assets and liabilities, net of effects from business
acquisitions and divestitures:
Accounts receivable—trade
(9,438)
20,329
Inventories
(115,331)
(13,910)
Accounts payable
7,860
90,434
Other assets and liabilities
(205,809)
13,777
Net Cash Provided from Operating Activities
580,867
901,423
Cash Flows Provided from (Used by) Investing Activities
Capital additions
(323,961) (179,538)
Capitalized software additions
(23,606)
(21,949)
Proceeds from sales of property, plant and equipment
312
2,201
Proceeds from sales of trademark licensing rights
20,000
—
Business acquisitions
(5,750)
—
Net Cash (Used by) Investing Activities
(333,005) (199,286)
Cash Flows Provided from (Used by) Financing Activities
Net change in short-term borrowings
10,834
1,156
Long-term borrowings
249,126
348,208
Repayment of long-term debt
(256,189)
(71,548)
2009
$435,994
182,411
34,927
(4,455)
(40,578)
—
60,823
(54,457)
46,584
74,000
37,228
293,272
1,065,749
(126,324)
(19,146)
10,364
—
(15,220)
(150,326)
(458,047)
—
(8,252)
Proceeds from lease financing agreement
Cash dividends paid
Exercise of stock options
Excess tax benefits from stock-based compensation
Contributions from noncontrolling interests in subsidiaries
Repurchase of Common Stock
Net Cash (Used by) Financing Activities
(Decrease) Increase in Cash and Cash Equivalents
Cash and Cash Equivalents as of January 1
Cash and Cash Equivalents as of December 31
Interest Paid
Income Taxes Paid
47,601
—
(304,083) (283,434)
184,411
92,033
13,997
1,385
—
10,199
(384,515) (169,099)
(438,818)
(71,100)
(190,956)
631,037
884,642
253,605
$693,686 $884,642
$97,892
$97,932
292,315
350,948
—
(263,403)
28,318
4,455
7,322
(9,314)
(698,921)
216,502
37,103
$253,605
$91,623
252,230
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
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
Other comprehensive earnings (loss)
Comprehensive earnings
Retained earnings at beginning of year.
Net earnings
Cash dividends
Stock dividends
Retained earnings at end of year
Earnings per share
$43,938
(8,740)
$35,198
$135,866
43,938
(18,360)
(47,175)
$114,269
$0.76
$53,063
1,183
$54,246
$53,157
2,845
$56,002
$147,687
53,063
(18,078)
(46,806)
$135,866
$144,949
53,157
(17,790)
(32,629)
$147,687
$0.90
$0.89
Average Common and Class B Common shares outstanding
57,892
58,685
(The accompanying notes are an integral part of these statements.)
59,425
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
Investments
Accounts receivable trade, less allowances of $1,731 and $1,531
Other receivables
Inventories:
Finished goods and work-in-process
Raw materials and supplies
Prepaid expenses
Deferred income taxes
Total current assets
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land
Buildings
Machinery and equipment
Construction in progress
Less—Accumulated depreciation
Net property, plant and equipment
OTHER ASSETS:
Goodwill
Trademarks
Investments
Split dollar officer life insurance
Prepaid expenses
Equity method investment
Deferred income taxes
Total other assets
Total assets
Liabilities and Shareholders’ Equity
CURRENT LIABILITIES:
Accounts payable
Dividends payable
Accrued liabilities
Total current liabilities
NONCURRENT LIABILITES:
Deferred income taxes
Postretirement health care and life insurance benefits
Industrial development bonds
Liability for uncertain tax positions
Deferred compensation and other liabilities
Total noncurrent liabilities
SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value—120,000 shares authorized—36,479
and 36,057 respectively, issued
Class B common stock, $.69-4/9 par value—40,000 shares authorized—
21,025 and 20,466 respectively, issued
Capital in excess of par value
Retained earnings, per accompanying statement
Accumulated other comprehensive loss
Treasury stock (at cost)—71 shares and 69 shares, respectively
Total shareholders’ equity
Total liabilities and shareholders’ equity
$78,612
10,895
41,895
3,391
$115,976
7,996
37,394
9,961
42,676
29,084
5,070
578
212,201
35,416
21,236
6,499
689
235,167
21,939
107,567
322,993
2,598
455,097
242,935
212,162
21,696
102,934
307,178
9,243
440,974
225,482
215,492
73,237
73,237
175,024
175,024
96,161
64,461
74,209
74,441
3,212
6,680
3,935
4,254
7,715
9,203
433,493
407,300
$857,856 $857,959
December 31,
2011
2010
$10,683
4,603
43,069
58,355
$9,791
4,529
44,185
58,505
43,521
26,108
7,500
8,345
48,092
133,566
47,865
20,689
7,500
9,835
46,157
132,046
25,333
25,040
14,601
14,212
533,677
114,269
(19,953)
(1,992)
665,935
$857,856
505,495
135,866
(11,213)
(1,992)
667,408
$857,959
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
Cash Flows (in thousands)
For the year ended December
31,
2011
2010
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
$43,938
$53,063
$53,157
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation
19,229
18,279
17,862
Impairment charges
—
—
14,000
Impairment of equity method investment
—
—
4,400
Loss from equity method investment
194
342
233
Amortization of marketable security premiums
1,267
522
320
Changes 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)
455
Prepaid expenses and other assets
5,106
4,936
5,203
Accounts 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
1,384
Deferred compensation and other liabilities
2,146
2,525
2,960
Others
(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
17,511
Net 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
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental cash flow information
Income taxes paid
Interest paid
Stock dividend issued
(The accompanying notes are an integral part of
(37,364)
115,976
$78,612
24,986
90,990
$115,976
22,082
68,908
$90,990
$16,906
$20,586
$38
$49
$47,053
$46,683
these statements.)
$22,364
$182
$32,538
For each company calculate the following values for 2011. (Hint: When calculating free cash flow, do
not consider business acquisitions to be part of capital expenditures.) (Round all ratios to 1
decimal places, e.g. 15.2:1 or 15.2%, earnings per share to 2 decimal places, e.g. 15.21 and
all other answers to thousands. Enter negative amounts using either a negative sign
preceding the number e.g. -45 or parentheses e.g. (45).)
(1) Working capital.
Working capital
Hershey Company
$
Tootsie Roll
$
(2) Current ratio.
Current ratio
Hershey Company
:1
Tootsie Roll
:1
(3) Debt to assets ratio.
Debt to assets ratio
Hershey Company
%
Tootsie Roll
%
(4) Free cash flow.
Free cash flow
Hershey Company
$
Tootsie Roll
$
(5) Earnings per share.
Earnings per share
Hershey Company
$
Tootsie Roll
$
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