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Corporate Profile
Tootsie Roll Industries, Inc. has been engaged in the
manufacture and sale of confectionery products for
125 years. Our products are primarily sold under the
familiar brand names: Tootsie Roll, Tootsie Roll Pops,
Caramel Apple Pops, Child’s Play, Charms, Blow Pop,
Blue Razz, Cella’s chocolate covered cherries, Dots,
Crows, Junior Mints, Junior Caramels, Charleston
Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff
cotton candy, Dubble Bubble, Razzles, Cry Baby and
Nik-L-Nip.
Board of Directors
Offices, Plants
Ellen R. Gordon
Chairman of the Board and
Executive Offices
Virginia L. Gordon
Private Investor
Lana Jane Lewis-Brent(1)(2)
Plants/Warehouses
Corporate Principles
We believe that the differences among companies are
attributable to the caliber of their people, and therefore
we strive to attract and retain superior people for each
job.
We believe that an open family atmosphere at work
combined with professional management fosters
cooperation and enables each individual to maximize
his or her contribution to the Company and realize the
corresponding rewards.
We do not jeopardize long-term growth for immediate,
short-term results.
We maintain a conservative financial posture in the
deployment and management of our assets.
We run a trim operation and continually strive to
eliminate waste, minimize cost and implement
performance improvements.
We invest in the latest and most productive equipment
to deliver the best quality product to our customers at
the lowest cost.
We seek to outsource functions where appropriate and
to vertically integrate operations where it is financially
advantageous to do so.
We view our well known brands as prized assets to be
aggressively advertised and promoted to each new
generation of consumers.
We conduct business with the highest ethical
standards and integrity which are codified in the
Company’s “Code of Business Conduct and Ethics.”
Financial Highlights
December 31,
2021 2020
(in thousands except per share data)
Net Product Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $566,043 $467,427
Net Earnings Attributable to Tootsie Roll Industries, Inc. . . . . . . . . . . . . . . . . . 65,326 58,995
Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188,333 250,851
Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208,906 187,328
Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769,042 763,327
Average Shares Outstanding* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,431 68,482
Per Share Items
Net Earnings Attributable to Tootsie Roll Industries, Inc.* . . . . . . . . . . . . . . . . $0.97 $0.86
Cash Dividends Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.36 0.36
*Adjusted for stock dividends.
Chief Executive Officer
President, Paul Brent
Designer, Inc., an art
publishing, design and
licensing company
Retired First Vice President,
Washington Mutual Bank
Former Senior Vice
President—Finance,
Twenty-First Century Fox
Chairman of the Board and
Chief Executive Officer
Vice President,
Marketing & Sales
(1)Audit Committee (2)Compensation Committee
Barre A. Seibert(1)(2)
Paula M. Wardynski(1)(2)
Officers
Ellen R. Gordon
Kenneth D. Naylor
G. Howard Ember, Jr.
Vice President, Finance &
Chief Financial Officer
Stock Registrar
Stephen P. Green
Vice President, Manufacturing
Barry P. Bowen
Treasurer & Assistant
Robert L. Zirk
Secretary
Controller
7401 S. Cicero Ave.
Chicago, Illinois 60629
www.tootsie.com
Illinois
Tennessee
Massachusetts
Wisconsin
Ontario, Canada
Mexico City, Mexico
Barcelona, Spain
Mexico City, Mexico
Ontario, Canada
Barcelona, Spain
Foreign Sales Offices
Other Information
Stock Exchange
Stock Identification
New York Stock
Exchange, Inc.
(Since 1922)
Ticker Symbol: TR
CUSIP No. 890516 10-7
Stock Transfer Agent and
American Stock Transfer
Independent Registered
Public Accounting Firm
Grant Thornton LLP
171 North Clark Street,
General Counsel
Aronberg Goldgehn Davis &
Annual Meeting
May 2, 2022
and Trust Company
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
1-800-710-0932
www.amstock.com
Suite 200
Chicago, IL 60601
Garmisa
330 North Wabash Avenue
Chicago, IL 60611
One James Center, Suite 200
901 East Cary Street
Richmond, VA 23219
JOB: 22-7022-2 CYCLE#;BL#: 2; 0 TRIM: 8.50" x 11.00" AS: Chicago: 877-427-2185
COLORS: Yellow, Cyan, ~note-color 2, Black, Magenta GRAPHICS: Tootsie_roll_candy_logo.eps V1.5
31091 Tootsie Roll Covers.indd 2
JOB: 22-7022-2 CYCLE#;BL#: 2; 0 TRIM: 8.50" x 11.00" AS: Chicago: 877-427-2185
COLORS: Yellow, Cyan, ~note-color 2, Black, Magenta GRAPHICS: tootsie_com_4c_photo.eps, tr_listed_nyse_k_logo.eps, recycled_logo.eps V1.5
3/2/22 7:26:22 AM
Printed on recycled paper.
To Our
Shareholders
Ellen R. Gordon, Chairman and Chief Executive Officer
Net product sales in 2021 were $566 million, as compared to 2020 net product
sales of $467 million. This was an increase of $99 million or 21% and a record
high for the Company. Net earnings grew to $65 million in 2021 from $59 million in
2020, an increase of $6 million. Earnings per share were $0.97 in 2021, up 13%
from $0.86 in 2020.
The record sales achieved in 2021 were attributable to effective sales and mar-
keting programs as the economy continued to recover from the adverse effects of
the Covid-19 pandemic. Many of the Company’s products are consumed at group
events, outings, and other gatherings which had been significantly curtailed, or in
some cases completely eliminated, during 2020 in response to the Covid-19 virus.
As consumers returned to more normal activities, which included planned purchas-
es of the Company’s products for “sharing” and “give-a-way” occasions, our core
brands posted strong improvement in customer orders and sales. One such “give-
a-way” occasion is Halloween, and this was once again our largest selling season
of the year.
We are mindful of a key objective for our venerable brands, which is to maintain
their value orientation. In order to achieve this goal we strive to mitigate costs and
maximize efficiency where we can without jeopardizing the long-term strength of
the Company and its brands. We deem it essential to be a low cost producer and
actively pursue investments in the latest equipment and technology to keep us so.
In this regard, capital expenditures were $31 million in 2021.
The Company is continuing its investments in manufacturing operations to meet
evolving customer and consumer demands, achieve quality improvements and
increase operational efficiencies. In particular, during 2021 new state of the art
production and packaging equipment were added in a number of our plants and
several important infrastructure projects were completed.
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Plant efficiencies driven by capital investments and ongoing
cost containment programs contributed to improved earn-
ings in 2021. However, we encountered increased costs
for ingredients, packaging materials, freight and delivery,
and certain manufacturing supplies. In addition, like many
companies, our efficiency in 2021 was adversely affected by
recurring supply chain challenges. These lead to much lon-
ger lead times and critical shortages of key inputs which, in
turn, necessitated shorter runs and more frequent change-
overs in order to maintain service levels to our customers.
These actions were instrumental in sustaining distribution of
our products in the marketplace, but presented a headwind
to profitability.
As a result of higher input costs and supply chain disrup-
tions, profits grew at a slower pace than sales. In response
to this cost pressure, many companies in our industry and in
the broader consumer products category have announced
increases in their selling prices in order to restore their
margins. We did so as well, with the phase-in beginning in
the fourth quarter of 2021 and continuing into the first half of
2022.
During 2021, we again paid cash dividends of 36 cents per
share and distributed a 3% stock dividend. This was the
seventy-ninth consecutive year the Company has paid cash
dividends and the fifty-seventh consecutive year that a stock
dividend was distributed. We also repurchased 920,704
shares of our common stock in the open market for an ag-
gregate price of $30.2 million.
We ended 2021 with $340 million in cash and investments
net of interest bearing debt and investments that hedge
deferred compensation liabilities. With these financial
resources, we are able to continue investing in our business,
improving manufacturing productivity and quality, supporting
our brands, paying dividends and repurchasing common
stock. We also continue to seek appropriate complementary
business acquisitions.
2021 was the 125th anniversary of our flagship product.
Looking back to our roots, in 1896 a confectioner named
Leo Hirschfield developed a recipe for a unique, chewy,
chocolaty confection and soon discovered that people
enjoyed its flavor and consistency. They were also drawn
to the practicality of the product since regular chocolate
was prone to heat damage in the days before refrigeration.
Hirschfield named his hand-rolled confection “Tootsie Roll”
after his young daughter, whose nickname was Tootsie, and
it became the first wrapped penny candy on the market.
These many years later Tootsie Roll Industries now manu-
factures and sells a wide and appealing range of branded
confectionery offerings suitable for virtually every major
consumer group and retail format. The broad assortment of
items in our diverse and highly recognizable portfolio is pop-
ular across all trade channels where candy is typically sold.
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During 2021, we again used targeted marketing initiatives,
directed both to the trade and to consumers, to help move
our products into distribution and subsequently to move
them off the retail shelf. We find that these carefully execut-
ed and channel-specific promotions drive sales by empha-
sizing high sell-through and attractive profit margins to the
trade and a high quality, attractive value to the consumer.
In 2021 we reinforced this value proposition in several
important ways. Our bonus bag program offers big value,
high margins, fast turns and, especially when combined
with pallet shipper displays, increased retail lift—a win for
retailers and consumers alike. This popular promotion was
enhanced in 2021 with an offering of up to 25% more for
free on selected items.
We also continued to expand into the large stand-up pouch
format. This presents consumers with an even better value,
more suitable for larger families or sharing and give-a-away
occasions such as social gatherings or office candy dishes.
These and other of our items were further supported by
use of instantly redeemable coupons which appeal to cost
conscious shoppers.
Our growing Fluffy Stuff brand was extended with the
introduction of Fluffy Rainbow Sherbet, fruit flavored cotton
candy in a colorful combination of pink, green and orange
reminiscent of the classic frozen treat. With distinctive
packaging featuring a unicorn with a rainbow-colored mane,
this item is also available on clip strips or in shipper displays,
offering maximum retail placement flexibility and merchan-
dising opportunities.
The selling power of floor stand displays is well established.
In this format we offer a range of items including theater
boxes and bagged goods in a variety of sizes ranging from
full pallets for high volume venues all the way down to a
one-eighth size pallet for smaller retail stores that lack the
floor space or sales volume to support a traditionally sized
display. These displays normally feature attractive pricing
for the consumer and increase sales velocity for the retailer.
Halloween has long been our largest selling period, with
third quarter sales nearly double those of any other quarter
in the year. Especially popular for the Halloween season
are our large bags of Child’s Play and other mixed candy as-
sortments. These are offered in a variety of pack sizes and
merchandising presentations including pallet packs, off-shelf
displays and display ready cases.
For Halloween 2021 we introduced a new packaging alter-
native featuring coordinated Halloween graphics for some
of our top selling products. This enabled retailers to display
a unified, multi-branded program, creating an impactful
merchandising statement across the portfolio and driving
consumer purchase interest.
The candy marketplace is highly competitive and we are
vigilant in keeping our products contemporary even as they
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remain iconic. Our line undergoes continual refinement, such as described above
in order to retain its appeal to ever-evolving preferences and life styles.
We continue to use our voice on social media to reach our consumers on many
platforms. These include Facebook, Twitter, Instagram, Pinterest and YouTube.
In 2021, we entered the world of TikTok to extend our brand message to up-and-
coming generations. We have continued to strengthen our social media strategy by
engaging with our fans through numerous video experiences as well as banner ads
and giveaways. We have reinforced our brand message through photography and
motion graphics in a way that has proven to appeal to our existing and future shop-
pers, building connections to our brands and also providing a channel for consumer
feedback.
Mr. Owl and the long-running “How Many Licks” Tootsie Pop message are prom-
inently featured in our social media program and in our television advertising
campaigns. This renowned theme has become part of Americana, even spawning
scientific studies to determine the elusive answer to this mysterious question. As
we carefully examine all of the data we have received on this topic, we can only
conclude that this riddle remains unsolved, and “the world may never know!”
Operationally, we continue to seek innovative ways to keep our costs as low as
possible. Competitive bidding, selective hedging and leveraging our high volume of
ingredient and packaging purchases are some of the means we use to achieve this.
We also continue to invest capital and resources in projects that keep our produc-
tion and distribution facilities as efficient as possible. Much of this investment is
driven by continuing advancements in automation technology that we can incorpo-
rate on the shop floor.
When new installations are being designed, considerable effort is made to maxi-
mize their flexibility so that we can respond to evolving package configurations or
product assortments demanded by the market. Incorporating such flexibility can
add significant up-front costs. We are fortunate to have sufficient financial resourc-
es and are able to make these necessary investments.
February 24, 2022 was the centennial anniversary of the Company’s stock be-
coming listed on the New York Stock Exchange. We are one of only a few dozen
companies to reach this milestone. We strongly believe that the caliber of our
many loyal employees has been a leading driver of the Company’s success over
these many years.
We wish to express our appreciation to them, along with our customers, suppliers,
sales brokers and distributors throughout the world for their support in 2021. We
also thank our fellow shareholders as we remain committed to the pursuit of excel-
lence in the near term as well as in the years to come.
Ellen R. Gordon
Chairman of the Board and Chief
Executive Officer
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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, 2021
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.)
Securities registered pursuant to Section 12(b) of the Act:
7401 South Cicero Avenue, Chicago, Illinois 60629
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number: (773) 838-3400
Title of each class
Common Stock — Par Value $.69-4/9 Per Share
Trading Symbol
TR
Name of each exchange
on which registered
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 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 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
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 18, 2022, there were outstanding 39,344,651 shares of Common Stock par value $.69-4/9 per share, and 27,792,175 shares of Class B Common Stock
par value $.69-4/9 per share.
As of June 30, 2021 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 $569,327,000. 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
27,821,453 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, 2021 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $726,131,000. 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.
Portions of the Company’s Definitive Proxy Statement for the Company’s Annual Meeting of Shareholders (the “2022 Proxy Statement”) scheduled to be held
on May 2, 2022 are incorporated by reference in Part III of this report.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
ITEM 1.
Business
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments
ITEM 2.
Properties
ITEM 3.
Legal Proceedings
ITEM 4. Mine Safety Disclosures
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
ITEM 6.
Selected Financial Data
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
ITEM 8.
Financial Statements and Supplementary Data
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
ITEM 9A. Controls and Procedures
ITEM 9B. Other Information
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
ITEM 10. Directors, Executive Officers and Corporate Governance
ITEM 11. Executive Compensation
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
ITEM 14.
Principal Accounting Fees and Services
ITEM 15. Exhibits, Financial Statement Schedules
ITEM 16. Form 10-K Summary
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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 forward-
looking 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.
ITEM 1. Business.
PART I
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 25 food and grocery brokers and by the
Company itself to approximately 3,000 customers throughout the United States, Canada and Mexico. These customers
include wholesale distributors of candy, food 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, e-commerce merchants, 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’s backlog of orders increased from approximately $3.5 million at December 31, 2020 to
$16.0 million at December 31, 2021, which reflects the need to reschedule some sales from fourth quarter 2021 to first
quarter 2022 principally due to supply chain disruptions.
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
3
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.
to significant changes in ingredient and other input costs.
From time to time, the Company also changes the size and weight of certain of its products in response
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 full-time persons at all locations. Our business has
seasonality which results in bringing on some additional employees to meet seasonal production demands. The Company
experiences a relatively consistent sales level throughout the year except for an increase in the third quarter which reflects
pre-Halloween and back-to-school sales. In anticipation of this seasonal sales period, the Company generally begins
building inventories, and its seasonal workforce, in the second and third quarter of each year. Although Halloween is the
most significant season in sales and related production, other seasons, including Christmas, Valentines, and Easter also
have some impact on workforce levels. The Company’s union labor agreement at its Chicago plant was executed in 2018
and will continue through September 2022.
We believe our employees are among our most important resources and are critical to our continued
success. We focus significant attention on attracting and retaining talented and experienced individuals to manage and
support our operations. We pay our employees competitively and offer a broad range of company-paid benefits, which we
believe are competitive with others in our industry. Our management teams and all of our employees are expected to
exhibit and promote honest, ethical and respectful conduct in the workplace. All of our employees must adhere to a code
of conduct that sets standards for appropriate behavior. A copy of our code of conduct can be found on our website,
Tootsie.com. We have prioritized the safety of our employees and therefore implemented safety protocols during 2020 and
continuing into 2022, to respond to the Covid-19 pandemic. We have taken many steps to provide our employees with a
safe and healthy work environment, including increased sanitation, requiring face masks for employees, social distancing
measures at all Company locations, employee temperature checks, curtailing visitors at Company locations and having
office employees work remotely where possible and when appropriate based on a risk assessment.
4
Our net product sales from Wal-Mart Stores, Inc. aggregated approximately 22.7%, 23.5%, and 24.2%
of net product sales during the years ended December 31, 2021, 2020 and 2019, respectively. Our net sales from Dollar
Tree, Inc. (which includes net sales from Family Dollar which is owned by Dollar Tree) aggregated approximately 12.1%,
11.7%, and 11.3% of net product sales during the years ended December 31, 2021, 2020 and 2019, respectively. Some of
the aforementioned sales to Wal-Mart and Dollar Tree were 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 21.0% in 2021 and 22.1% in 2020 and 17.7% in 2019. At December 31,
2021 and 2020, the Company’s three largest customers discussed above accounted for approximately 36% and 21% of
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. 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.
to Consolidated Financial Statements which is incorporated herein by reference.
For a summary of sales and long-lived assets of the Company by geographic area see Note 9 of the Notes
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. The information on our website is not incorporated into this Annual Report on Form 10-K.
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.
without limitation, the following:
Significant factors that could impact the Company’s financial condition or results of operations include,
Risk factors which we believe affect all competitors in our industry
• Our business and financial results may be negatively impacted by changes in confectionary trade practices and
consumer patterns, or operational challenges associated with the actual or perceived effects of a disease or
pandemic outbreak, such as the Covid-19 pandemic including variants and sub variants, and other public health
concerns, consumer spending levels, shopping habits and behaviors (including changes in impulse purchase
behaviors), consumer activities, work routines, events and traditions where confectionary products are consumed,
the availability of our products at retail, including at large retail customers, and our ability to manufacture and
distribute products to our customers and consumers in an effective and efficient manner. Government mandates
to “shelter in place” or “closing of the economy”, public health guidelines, or fear of exposure or actual effects
of a disease or pandemic, such as the Covid-19 pandemic, could negatively impact our overall business and
financial results. Specific factors that may impact our operations, some of which have had, and in the future could
have, an unfavorable impact on our operations as a result of Covid-19, include, but are not limited to:
a. Significant reductions in demand for one or more of our products - Changes in demand may be caused by,
among other things, the temporary inability of consumers to purchase our products due to illness, quarantine,
travel restrictions, financial hardship, “shelter in place” directives, or overall fear to return to past behaviors.
5
Shifts in demand for one or more of our products, changes in trade and distribution patterns, or changes in
consumer buying habits, if prolonged, could negatively impact our results.
b. The inability to meet our customers’ needs and achieve efficient production of finished products - Disruptions
in our manufacturing operations or supply chain delivery disruptions caused by the loss or disruption of essential
manufacturing ingredients, materials, supplies and services, transportation resources, workforce availability, or
other manufacturing and distribution capability could have significant adverse effects on our business and
financial results.
c. Significant adverse changes in the political conditions and government mandates or directives - In markets in
which we manufacture, sell or distribute our products, governmental or regulatory actions, closures or other
restrictions such as quarantine or travel restrictions, that limit or close our manufacturing, distribution or office
facilities, or otherwise prevent our third-party suppliers, sales brokers, or customers from achieving the level of
operations necessary for the production, distribution, sale, and support of our products, could negatively impact
our results.
d. Risk related to Halloween and other seasonal sales - The Company’s net product sales are highest during the
Halloween season which have historically comprised approximately 50% of third quarter domestic net product
sales. Changes in consumer behavior, traditions, behaviors, and interest in Halloween activities and events, or
changes mandated or recommended by government or health officials, as well as negative media coverage, could
significantly affect the Company’s seasonal sales.
e. Risks relating to potential employer liability – The effects of Covid-19 relating to employer liability remains
uncertain, and if it is determined that employers are to have liability for employee or other matters related to
Covid-19, this could have significant adverse effects on our financial results.
• Risk of changes in the price and availability of ingredients and 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 volume of its annual purchases, the Company may
experience price increases in certain ingredients, packaging materials, operating supplies, services, and wages
and benefits, including the effects of higher inflation, that it may not be able to offset, which could have an adverse
impact on the Company’s results of operations and financial condition. In addition, although the Company has
historically been able to procure sufficient supplies of its ingredients, packaging materials, and other supplies,
supply chain disruptions and market conditions could change such that adequate materials might not be available
or only become available at substantially higher costs. Adverse weather patterns, including the effects of climate
change or supply interruptions, could also significantly affect the cost and availability of ingredients and other
needed materials to manufacture products for sale.
• Risk of changes in product performance and competition - The Company competes with other well-established
manufacturers of confectionery products. A failure of new or existing products to be favorably received, a failure
to retain preferred shelf space at retail or a failure to sufficiently counter aggressive promotional and price
competition could have an adverse impact on the Company’s results of operations and financial condition.
• Risk of discounting and other competitive actions - Discounting and pricing pressure by the Company’s retail
customers and other competitive actions could make it more difficult for the Company to maintain its operating
margins. Actions taken by major customers and competitors may make shelf space less available for the
confectionery product category or some of the Company’s products.
• Risk of pricing actions - Inherent risks in the marketplace, including uncertainties about trade and consumer
acceptance of pricing actions, including related trade discounts, or product weight changes (indirect price
increases), could make it more difficult for the Company to maintain its sales and operating margins.
• Risk related to seasonality of sales - The Company’s sales are highest during the Halloween season, although
Christmas, Easter and Valentine’s Day are also key seasons for the Company. Circumstances surrounding
6
Halloween, such as, widespread adverse weather or other widespread events that affect consumer behavior and
related media coverage at that time of year or general changes in consumer interest in Halloween, could
significantly affect the Company’s sales.
• Risk of changes in consumer preferences and tastes - Failure to adequately anticipate and react to changing
demographics, consumer trends, consumer health concerns and product preferences, including product
ingredients and packaging materials, could have an adverse impact on the Company’s results of operations and
financial condition.
• Risk of economic conditions on consumer purchases - The Company’s sales are impacted by consumer spending
levels and impulse purchases which are affected by general macroeconomic conditions, consumer confidence,
employment levels, disposable income, inflation, availability of consumer credit and interest rates on that credit,
consumer debt levels, energy costs and other factors. Volatility in food and energy costs, rising unemployment
and/or underemployment, declines in personal spending, recessionary economic conditions or other adverse
market conditions, could adversely impact the Company’s revenues, profitability and financial condition.
• Risks related to environmental matters - The Company’s operations are not particularly impactful on the
environment, but increased government environmental regulation or legislation, including various “green”
initiatives could adversely impact the Company’s profitability.
• Risk of new governmental laws and regulations - Governmental laws and regulations, including those that affect
food advertising and marketing to children, use of certain ingredients in products, new labeling requirements,
income and other taxes and tariffs, including the effects of changes to international trade agreements, new taxes
targeted toward confectionery products and the environment, both in and outside the U.S.A., are subject to change
over time, which could adversely impact the Company’s results of operations and ability to compete in domestic
or foreign marketplaces.
• Risk of labor stoppages - To the extent the Company experiences any significant labor stoppages, strikes or
possible labor shortages, could negatively affect overall operations including production or shipments of finished
product to customers. The Company’s union labor agreement at its Chicago plant was executed in 2018 and will
continue through September 2022.
• Risk of the cost of energy increasing - Higher energy costs would likely result in higher plant overhead,
distribution, freight and delivery, and other operating costs. The Company may not be able to offset these cost
increases or pass such cost increases onto customers in the form of price increases, which could have an adverse
impact on the Company’s results of operations and financial condition. In addition, higher energy costs also
adversely affect the cost of many resins which are used as a foundation material for many of our packaging
materials.
• Risk of a product recall - Issues related to the quality and safety of the Company’s products could result in a
voluntary or involuntary large-scale product recall. Costs associated with a product recall and related litigation or
fines, and marketing costs relating to the re-launch of such products or brands, could negatively affect operating
results. In addition, negative publicity associated with this type of event, including a product recall relating to
product contamination or product tampering, whether valid or not, could negatively impact future demand for the
Company’s products.
• Risk of operational interruptions relating to computer software or hardware failures, including cyber-attacks - The
Company is reliant on computer systems to operate its business and supply chain. Software failure or corruption,
including cyber-based attacks or network security breaches, or catastrophic hardware or software failures or other
disasters could disrupt communications, supply chain planning and activities relating to sales demand forecasts,
materials procurement, production and inventory planning, customer orders, shipments, and collections, and
financial and accounting, all of which could negatively impact sales and profits.
7
• Risk of releasing sensitive information - Although the Company does not believe that it maintains a large amount
of sensitive data, a system breach, whether inadvertent or perpetrated by hackers, could result in identity theft,
ransomware and/or a disruption in operations which could expose the Company to financial costs and adversely
affect profitability.
• Disruption to the Company’s supply chain could impair the Company’s ability to produce or deliver its finished
products, resulting in a negative impact on operating results - Disruption to the manufacturing operations or
supply chain, some of which are discussed above, could result from, but are not limited to adverse tariffs which
could effectively limit supply or make supply more costly, natural disasters, pandemics, weather, fire or explosion,
earthquakes, terrorism or other acts of violence, unavailability of ingredients or packaging materials which could
result if our suppliers are unable to obtain certain raw materials or make timely deliveries, labor strikes or other
labor activities, labor shortages including over-the-road truck drivers, logistical delays including materials from
foreign locations, operational and/or financial instability of key suppliers, and other vendors or service providers.
Although precautions are taken to mitigate the impact of possible disruptions, if the Company is unable, or if it is
not financially feasible to effectively mitigate the likelihood or potential impact of such disruptive events, the
Company’s results of operations and financial condition could be negatively impacted.
Risk factors which we believe are principally specific to our Company (although some may apply to varying degrees
to competitors in our industry)
• Risks relating to participation in the multi-employer pension plan for certain Company union employees - As
outlined in the Note 7 of the Company’s Notes to Consolidated Financial Statements and discussed in the
Management’s Discussion and Analysis, the Company participates in a multi-employer pension plan (Plan) which
is currently in “critical and declining status”, as defined by applicable law. A designation of “critical and declining
status” implies that the Plan is expected to become insolvent within the next 20 years. Should the Company
withdraw from the Plan, it would be subject to a significant withdrawal liability which is discussed in Note 7 of
the Company’s Notes to Consolidated Financial Statements and Management’s Discussion and Analysis. The
Company is currently unable to determine the ultimate outcome of this matter and therefore, is unable to determine
the effects on its consolidated financial statements, but, the ultimate outcome could be material to its consolidated
results of operations in one or more future periods.
• Risk of impairment of goodwill or indefinite-lived intangible assets - In accordance with authoritative guidance,
goodwill and indefinite-lived intangible assets are not amortized but are subject to an impairment evaluation
annually or more frequently upon the occurrence of a triggering event. Other long-lived assets are likewise tested
for impairment upon the occurrence of a triggering event. Such evaluations are based on assumptions and
variables including sales growth, profit margins and discount rates. Adverse changes in any of these variables
could affect the carrying value of these intangible assets and the Company’s reported profitability.
• Risk of production interruptions - The majority of the Company’s products are manufactured in a single
production facility on specialized equipment. In the event of a disaster, such as a fire or earthquake, at a specific
plant location, or other disruption, it would be difficult to transfer production to other facilities or a new location
in a timely manner, which could result in loss of market share for the affected products. In addition, from time to
time, the Company upgrades or replaces this specialized equipment. In many cases these are integrated and
complex installations. A failure or delay in implementing such an installation could impact the availability of one
or more of the Company’s products which would have an adverse impact on sales and profits.
• Risk related to investments in marketable securities - The Company invests its surplus cash in a diversified
portfolio of highly rated marketable securities, including corporate bonds, with maturities of generally up to three
years, and variable rate demand notes with weekly resets of interest rates and “puts’ to redeem the investment
each week. Nonetheless, such investments could become impaired in the event of certain adverse economic and/or
geopolitical events which, if severe, would adversely affect the Company’s financial condition.
8
• Risk of further losses in Spain - The Company has restructured its Spanish subsidiary and is exploring a variety
of programs to increase sales and profitability. These efforts thus far are resulting in reductions in operating losses,
and our efforts are continuing. Nonetheless, if our efforts are not successful, additional losses and impairments
may be reported in the future. See also Management’s Discussion and Analysis.
• Risk of dependence on large customers - The Company’s largest customers, McLane Company, Wal-Mart and
Dollar Tree, accounted for approximately 36% of net product sales in 2021, and other large national chains are
also material to the Company’s sales. The loss of any of these customers, or one or more other large customers,
or a material decrease in purchases by one or more large customers, could result in decreased sales and adversely
impact the Company’s results of operations and financial condition.
• Risk related to acquisitions - From time to time, the Company has purchased other confectionery companies or
brands. These acquisitions generally come at a high multiple of earnings and are justified based on various
assumptions related to sales growth, and operating margins. Were the Company to make another acquisition and
be unable to achieve the assumed sales and operating margins, it could have an adverse impact on future sales
and profits. In addition, it could become necessary to record an impairment which would have a further adverse
impact on reported profits.
• Risk of “slack fill” litigation - The Company, as well as other confectionery and food companies, have
experienced a number of plaintiff claims that certain products are sold in boxes that are not completely full, and
therefore such “slack filled” products are misleading, and even deceptive, to the consumer. Although the
Company believes that these claims are without merit and has generally been successful in litigation and court
decrees, the Company could be exposed to significant legal fees to defend its position, and in the event that it is
not successful, could be subject to fines and costs of settlement, including class action settlements.
• Risk related to international operations - To the extent there are political leadership or legislative changes, social
and/or political unrest, civil war, pandemics such as the Coronavirus, terrorism or significant economic or social
instability in the countries in which the Company operates, the results of the Company’s business in such countries
could be adversely impacted. Currency exchange rate fluctuations between the U.S. dollar and foreign currencies
could also have an adverse impact on the Company’s results of operations and financial condition. The
Company’s principal markets are the U.S.A., Canada, and Mexico.
• The Company is a controlled company due to the common stock holdings of the Gordon family - The Gordon
family’s share ownership represents a majority of the combined voting power of all classes of the Company’s
common stock as of December 31, 2021. As a result, the Gordon family has the power to elect the Company’s
directors and approve actions requiring the approval of the shareholders of the Company.
The factors identified above are believed to be significant factors, but not necessarily all of the significant
factors, that could impact the Company’s business. Unpredictable or unknown factors could also have material effects on
the Company.
Additional significant factors that may affect the Company’s operations, performance and business
results include the risks and uncertainties listed from time to time in filings with the Securities and Exchange Commission
and the risk factors or uncertainties listed herein or listed in any document incorporated by reference herein.
ITEM 1B. Unresolved Staff Comments.
None.
9
ITEM 2. Properties.
The Company owns its principal manufacturing, warehousing and distribution, and offices
facilities. The Company’s largest operating facility in Chicago, Illinois also serves as the Corporate headquarters. The
Company also owns domestic manufacturing, warehousing and distribution facilities in Tennessee (Covington),
Massachusetts (Cambridge), and Wisconsin (Delavan) and international manufacturing facilities in Mexico (Mexico City),
Spain (Barcelona) and two in Canada (Concord, Ontario). In addition, the Company leases manufacturing and
warehousing facilities at a second location in Chicago. The lease is renewable by the Company every five years through
June 2041.
The Company owns substantially all of the production machinery and equipment located in its plants,
warehouses and distribution centers. The Company also holds four commercial real estate properties for investment which
were acquired with the proceeds from a sale of surplus real estate in 2005 as well as two warehouse facilities (in Concord,
Ontario, Canada, and Hazelton, Pennsylvania, USA) that are currently leased to third parties.
ITEM 3. Legal Proceedings.
In the ordinary course of business, the Company is, from time to time, subject to a variety of active or
threatened legal proceedings and claims. While it is not possible to predict the outcome of such matters with certainty, in
the Company’s opinion, both individually and in the aggregate, they are not expected to have a material effect on the
Company’s financial condition, results of operations or cash flows.
ADDITIONAL ITEM. Executive Officers of the Registrant.
See the information on Executive Officers set forth in the table in Part III, Item 10.
ITEM 4. Mine Safety Disclosures.
None.
10
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
The Company’s common stock is traded on the New York Stock Exchange. The Company’s Class B
common stock is subject to restrictions on transferability. The Class B common stock is convertible at the option of the
holder into shares of common stock on a share-for-share basis. As of February 21, 2022 there were approximately 2,300
and 900 registered holders of record of common and Class B common stock, respectively. In addition, the Company
estimates that as of February 21, 2022 there were 21,000 and 1,000 beneficial holders of common and Class B common
stock, respectively.
The Company does not have a formal dividend policy, but has historically issued quarterly dividends
and in 2021 issued a quarterly dividend of $0.09 per share. The Company has also historically distributed an annual 3%
stock dividend. While the Company plans to continue to issue quarterly cash dividends and the annual stock dividend
there can be no assurance that it will continue to do so in the future.
Performance Graph
The following performance graph compares the cumulative total shareholder return on the Company’s
common stock for a five-year period (December 31, 2016 to December 31, 2021) with the cumulative total return of
Standard & Poor’s 500 Stock Index (“S&P 500”) and the Dow Jones Industry Food Index (“Peer Group,” which includes
the Company), assuming (i) $100 invested on December 31 of the first year of the chart in each of the Company’s common
stock, S&P 500 and the Dow Jones Industry Food Index and (ii) the reinvestment of cash and stock dividends.
11
ITEM 6. Selected Financial Data.
Five Year Summary of Earnings and Financial Highlights
(Thousands of dollars except per share, percentage and ratio figures)
Sales and Earnings Data
Net product sales
Product gross margin
Interest expense
Provision for income taxes
Net earnings attributable to Tootsie Roll
Industries, Inc.
% of net product sales
% of shareholders’ equity
Per Common Share Data (1)
Net earnings attributable to Tootsie Roll
Industries, Inc.
Cash dividends declared
Stock dividends
Additional Financial Data (1)
Working capital
Net cash provided by operating activities
Net cash provided by (used in) investing
activities
Net cash used in financing activities
Property, plant & equipment additions
Net property, plant & equipment
Total assets
Long-term debt
Total Tootsie Roll Industries, Inc.
shareholders’ equity
Average shares outstanding
2021
2020
2019
2018
2017
$
566,043
195,938
46
20,421
$ 467,427
167,717
164
17,288
$ 523,616
194,514
220
20,565
$ 515,251
185,371
181
16,401
$ 515,674
189,263
144
3,907
65,326
58,995
64,920
56,893
11.5 %
8.5 %
12.6 %
7.7 %
12.4 %
8.5 %
11.0 %
7.6 %
80,864 (2)
15.7 %
11.0 %
$
0.97
0.36
$
0.86
0.36
$
0.94
0.36
$
0.81
0.36
$
3 %
3 %
3 %
3 %
1.14 (2)
0.36
3 %
$
188,333
85,298
$ 250,851
74,710
$ 273,786
100,221
$ 242,655
100,929
$ 207,132
42,973
(91,899)
(54,146)
31,426
208,906
1,018,618
7,500
9,501
(55,846)
17,970
187,328
984,558
7,500
(15,009)
(57,187)
20,258
188,455
977,864
7,500
(44,510)
(42,353)
27,612
186,101
947,361
7,500
(9,320)
(56,881)
16,673
178,972
930,946
7,500
769,042
67,431
763,327
68,482
759,854
69,386
750,622
70,042
733,840
70,874
(1) Per common share data and average shares outstanding adjusted for annual 3% stock dividends.
(2) The 2017 net earnings and earnings per share includes $20,318 or $0.29 per share relating to a favorable accounting
adjustment to revalue the Company’s deferred income tax liabilities resulting from the enactment of the U.S. Tax
Cuts and Jobs Act in December 2017.
12
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(Thousands of dollars except per share, percentage and ratio figures)
The following discussion should be read in conjunction with the other sections of this report, including the consolidated
financial statements and related notes contained in Item 8 of this Form 10-K.
FINANCIAL REVIEW
This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources,
significant accounting policies and estimates, new accounting pronouncements, market risks and other matters. It should
be read in conjunction with the Consolidated Financial Statements and related Notes that follow this discussion.
FINANCIAL CONDITION
The Company’s overall financial position remains strong given that aggregate cash, cash equivalents and investments is
$436,983 at December 31, 2021, including $89,736 in trading securities discussed below. Cash flows from 2021 operating
activities totaled $85,298 compared to $74,710 in 2020, and are discussed in the section entitled Liquidity and Capital
Resources. During 2021, the Company paid cash dividends of $24,136, purchased and retired $30,184 of its outstanding
shares, and made capital expenditures of $31,426.
The Company’s net working capital was $188,333 at December 31, 2021 compared to $250,851 at December 31, 2020.
This change principally reflects the effects of a $71,155 increases in long-term investments because more of our
investments have maturities greater than one year at December 31, 2021 compared to December 31, 2020. As of
December 31, 2021, the Company’s total cash, cash equivalents and investments, including all long-term investments, was
$436,983 compared to $428,951 at December 31, 2020, an increase of $8,032. See Liquidity And Capital Resources section
below. The aforementioned includes $89,736 and $73,828 of investments in trading securities as of December 31, 2021
and 2020, respectively. The Company invests in trading securities to provide an economic hedge for its deferred
compensation liabilities, as further discussed herein and in Note 7 of the Company’s Notes to Consolidated Financial
Statements.
Shareholders’ equity increased from $763,327 at December 31, 2020 to $769,041 as of December 31, 2021, which
principally reflects 2021 net earnings of $65,326, less cash dividends of $24,136 and share repurchases of $30,184.
The Company has a relatively straight-forward financial structure and has historically maintained a conservative financial
position. The Company has no special financing arrangements or “off-balance sheet” special purpose entities. Cash flows
from operations plus maturities of short-term investments are expected to be adequate to meet the Company’s overall
financing needs, including capital expenditures, in 2021. Periodically, the Company considers possible acquisitions, and
if the Company were to pursue and complete such an acquisition, that could result in bank borrowings or other financing.
RESULTS OF OPERATIONS
2021 vs. 2020
Twelve months 2021 consolidated net product sales were $566,043 compared to $467,427 in twelve months 2020, an
increase of $98,616 or 21.1%. Fourth quarter 2021 net product sales were $166,598 compared to $127,866 in fourth quarter
2020, an increase of $38,732, or 30%. The growth in fourth quarter and twelve months 2021 sales reflect effective sales
and marketing programs as well as the favorable effects of the continuing economic recovery from the adverse effects of
the Covid-19 pandemic. The Company had continuing improvement in customer orders and sales throughout 2021 as
consumers returned to more activities which included planned purchases of the Company’s products for “sharing” and
“give-a-way” occasions. Many of the Company’s products are consumed at group events, outings, and other gatherings
which had been significantly curtailed or in some cases eliminated in response to the Covid-19 virus. Fourth quarter 2021
sales also exceeded fourth quarter 2019 sales by 24% which provides a quarterly sales comparison to a period prior to the
13
pandemic, and twelve months 2021 sales were 8% ahead of twelve months 2019 sales. Fourth quarter 2021 sales also
benefited from the timing of some sales that were rescheduled from third to fourth quarter due to supply chain disruptions.
Product cost of goods sold were $370,105 in 2021 compared to $299,710 in 2020, an increase of $70,395 or 23.5%. Product
cost of goods sold includes $687 and $610 in certain deferred compensation expenses in 2021 and 2020, respectively.
These deferred compensation expenses principally result from changes in the market value of investments and investment
income from trading securities relating to compensation deferred in previous years and are not reflective of current
operating results. Adjusting for the aforementioned, product cost of goods sold increased from $299,100 in 2020 to
$369,418 in 2021, an increase of $70,318 or 23.5%. As a percent of net product sales, these adjusted costs increased from
64.0% in 2020 to 65.3% in 2021, a 1.3 unfavorable percentage point change. Fourth quarter and twelve months 2021 gross
profit margins were adversely affected by increasing costs for ingredients, packaging materials, and certain manufacturing
supplies and services. Fourth quarter and twelve months product cost of goods sold compared to the corresponding prior
year periods, were also adversely impacted by inefficiencies caused by higher than expected sales demand, supply chain
challenges and disruptions, longer supplier lead times, and some labor shortages. These factors resulted in additional costs
related to our efforts to meet this higher demand. Certain cost and expense reductions, including Company initiatives to
reduce costs did provide some benefit to 2021 gross profit margins.
Selling, marketing and administrative expenses were $132,108 in 2021 compared to $112,117 in 2020, an increase of
$19,991 or 17.8%. Selling, marketing and administrative expenses include $13,521 and $11,909 in certain deferred
compensation expenses in 2021 and 2020, respectively. These deferred compensation expenses principally result from
increases in the market value of investments and investment income from trading securities relating to compensation
deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, selling,
marketing and administrative expenses increased from $100,208 in 2020 to $118,587 in 2021, an increase of $18,379 or
18.3%. This increase was principally driven by the increase in certain variable expenses, primarily freight and delivery
and direct selling expenses, relating to the increase in sales as discussed above. However, as a percent of net product sales,
these adjusted expenses decreased from 21.4% of net product sales in 2020 to 21.0% of net product sales in 2021, a 0.4
favorable percentage point change.
Selling, marketing and administrative expenses include freight, delivery and warehousing expenses. These expenses
increased from $42,593 in 2020 to $55,289 in 2021, an increase of $12,696 or 29.8%. As a percent of net product sales,
these adjusted expenses increased from 9.1% in 2020 to 9.8% in 2021, a 0.7 unfavorable percentage point change.
Increasing energy costs and related effects on fuel surcharges, and the adverse effects of the continuing shortage of over-
the-road drivers and high demand for carriers, were the principal drivers of these higher freight and delivery expenses in
2021 compared to 2020.
In response to the higher input costs discussed above, the confectionary industry, as well as many companies in the broader
consumer products industry, announced increases in selling prices. We have followed with price increases as well, with
the objective of improving sales price realization and restoring margin declines. Price increases, which principally became
effective during fourth quarter 2021, contributed to the improved results in fourth quarter 2021 as well as the twelve months
2021. Price increases for certain products that were not increased in 2021 have also been announced for first half 2022 in
our continuing efforts to restore margins.
Our input costs continued to remain elevated in fourth quarter 2021 and we expect even higher costs in 2022 as our 2021
supply contracts and hedging programs come to closure and new contracts and hedging at higher 2022 costs begin to take
effect. Higher commodity markets are driving up our costs for key ingredients, packaging materials and energy, including
the adverse effects of higher energy costs on freight and delivery fuel surcharges and plant manufacturing utilities. We
expect these higher input costs and the overall increase in inflation, some of which is driven by supply chain problems, to
continue through most of, and possibly all of, 2022. The Company uses the Last-In-First-Out (LIFO) method of accounting
for inventory and costs of goods sold which results in lower current income taxes during such periods of increasing costs,
but this method does charge the most current costs to cost of goods sold and thereby accelerates the realization of these
higher costs. Although the Company continues to monitor these higher input costs and price increases in the industry, we
are mindful of the effects and limits of passing on all of the above discussed higher input costs to consumers of our
products. As a result, we believe that margins for part or all of 2022 will not fully recover to historical norms.
14
The Company has foreign operating businesses in Mexico, Canada and Spain, and exports products to many foreign
markets. The Company’s Spanish subsidiary (97% owned by the Company) incurred an operating loss of $598 in 2021
which was an improvement compared to its $691 loss in 2020. Company management expects the competitive and business
challenges in Spain to continue but believes that there will be continued reductions in operating losses in 2022 compared
to 2021. Nonetheless, management believes that operating losses will likely continue beyond 2022 and that these future
losses, as well as some capital expenditures, will likely require some additional cash financing.
The Company believes that the carrying values of its goodwill and trademarks have indefinite lives as they are expected
to generate cash flows indefinitely. In accordance with current accounting guidance, these indefinite-lived intangible assets
are assessed at least annually for impairment as of December 31 or whenever events or circumstances indicate that the
carrying values may not be recoverable from future cash flows. No impairments were recorded in 2021, 2020 or 2019.
Current accounting guidance provides entities an option of performing a qualitative assessment (a "step-zero" test) before
performing a quantitative analysis. If the entity determines, on the basis of certain qualitative factors, that it is more-likely-
than-not that the intangibles (goodwill and certain trademarks) are not impaired, the entity would not need to proceed to
the two step impairment testing process (quantitative analysis) as prescribed in the guidance. During fourth quarter 2021
(and fourth quarters 2020 and 2019), the Company performed a “step zero” test of its goodwill and certain trademarks, and
concluded that there was no impairment based on this guidance. For the fair value assessment of certain trademarks where
the “step-zero” analysis was not considered appropriate, impairment testing was performed in fourth quarter 2021 (and
fourth quarters 2020 and 2019) using discounted cash flows and estimated royalty rates. For these trademarks, holding all
other assumptions constant at the test date, a 100 basis point increase in the discount rate or a 100 basis point decrease in
the royalty rate would reduce the fair value of these trademarks by approximately 16% and 10%, respectively. Individually,
a 100 basis point increase in the discount rate or a 100 basis point decrease in the royalty rate would not result in a potential
impairment as of December 31, 2021.
Earnings from operations were $67,133 in 2021 compared to $58,244 in 2020, an increase of $8,889. Earnings from
operations include $14,208 and $12,519 in certain deferred compensation expense in 2021 and 2020, respectively, which
are discussed above. Adjusting for these deferred compensation expenses, adjusted earnings from operations increased
from $70,763 in 2020 to $81,341 in 2021, an increase of $10,578 or 14.9%. The above discussed increase in net product
sales was the principal driver of higher operating earnings in 2021 compared to 2020. Although higher 2021 sales
contributed to improved operating earnings compared to the corresponding prior year periods, higher input costs mitigated
much of the benefits of increased sales.
Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred
compensation, are more reflective of the underlying operations of the Company.
Other income, net was $18,596 in 2021 compared to $18,018 in 2020, an increase of $578. Other income, net principally
reflects $14,208 and $12,519 of aggregate net gains and investment income on trading securities in 2021 and 2020,
respectively. These trading securities provide an economic hedge of the Company’s deferred compensation liabilities; and
the related net gains and investment income were offset by a like amount of expense in aggregate product cost of goods
sold and selling, marketing, and administrative expenses in the respective years as discussed above. Other income, net
includes investment income on available for sale securities of $2,740 and $4,005 in 2021 and 2020, respectively. Other
income, net also includes foreign exchange gains of $667 and $534 in 2021 and 2020, respectively.
The Company’s effective income tax rate was 23.8% and 22.7% in 2021 and 2020, respectively. The increase in the
effective tax rates in 2021 generally reflects higher rates for state income tax provisions. A reconciliation of the differences
between the U.S. statutory rate and these effective tax rates is provided in Note 4 of the Company’s Notes to Consolidated
Financial Statements.
The Company has provided a full valuation allowance on its Spanish subsidiaries’ tax loss carry-forward benefits of $4,376
and $4,508 as of December 31, 2021 and 2020, respectively, because the Company has concluded that it is not more-likely-
than-not that these losses will be utilized before their expiration dates. The Spanish subsidiary has a history of net operating
losses and it is not known when and if they will generate taxable income in the future.
15
U.S. tax reform (US Tax Cuts and Jobs Act enacted in December 2017) changed the United States approach to the taxation
of foreign earnings to a territorial system by providing a one hundred percent dividends received deduction for certain
qualified dividends received from foreign subsidiaries. These provisions of U.S. tax reform significantly impact the
accounting for the undistributed earnings of foreign subsidiaries. The tax costs associated with a future distribution,
including foreign withholding taxes, are not material to the Company’s financial statements. After carefully considering
these facts, the Company determined that it would not be asserting permanent reinvestment of all of its foreign subsidiaries
earnings as of December 31, 2017, and the Company continued to take this position as of December 31, 2021.
Net earnings were $65,326 in 2021 compared to $58,995 in 2020, and net earnings per share were $0.97 and $0.86 in 2021
and 2020, respectively, an increase of $0.11 per share or 13%. Earnings per share in 2021 benefited from the reduction in
average shares outstanding resulting from purchases of the Company’s common stock in the open market by the Company.
Average shares outstanding decreased from 68,482 in 2020 to 67,431 in 2021 which reflects share repurchases of $30,184
during 2021.
Fourth quarter 2021 and 2020 net earnings attributable to Tootsie Roll Industries, Inc. were $20,032 and $14,952,
respectively, and net earnings per share were $0.30 and $0.22, respectively, an increase of $0.08 per share or 36%. The
Company’s fourth quarter 2021 results were principally driven by its 30% increase in fourth quarter sales and price
increases that became effective in fourth quarter 2021 as discussed above.
Beginning in 2012, the Company received periodic notices from the Bakery and Confectionery Union and Industry
International Pension Fund (Plan), a multi-employer defined benefit pension plan for certain Company union employees,
that the Plan’s actuary certified the Plan to be in “critical status”, as defined by the Pension Protection Act (PPA) and the
Pension Benefit Guaranty Corporation (PBGC); and that a plan of rehabilitation was adopted by the trustees of the Plan in
2012. The Plan’s status was changed to “critical and declining status”, as defined by the PPA and PBGC, for the plan year
beginning January 1, 2015, and that the Plan was projected to have an accumulated funding deficiency for the 2017 through
2024 plan years. A designation of “critical and declining status” implies that the Plan is expected to become insolvent in
the next 20 years. The Company has continued to receive annual notices each year (2016 to 2021) that this Plan remains
in “critical and declining status” and is projected to become insolvent within the next 20 years. These notices have also
advised that the Plan trustees were considering the reduction or elimination of certain retirement benefits and may seek
assistance from the PBGC. Plans in “critical and declining status” may elect to suspend (temporarily or permanently) some
benefits payable to all categories of participants, including retired participants, except retirees that are disabled or over the
age of 80. Suspensions must be equally distributed and cannot drop below 110% of what would otherwise be guaranteed
by the PBGC.
Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities),
as defined, were 48.3%, 50.4%, and 51.6% as of the most recent valuation dates available, January 1, 2020, 2019, and
2018, respectively (these valuation dates are as of the beginning of each Plan year). These funded percentages are based
on actuarial values, as defined, and do not reflect the actual market value of Plan investments as of these dates. If the
market value of investments had been used as of January 1, 2020 the funded percentage would be 51.6% (not 48.3%). As
of the January 1, 2020 valuation date (most recent valuation available), only 16% of Plan participants were current active
employees, 53% were retired or separated from service and receiving benefits, and 31% were retired or separated from
service and entitled to future benefits. The number of current active employee Plan participants as of January 1, 2020 fell
4% from the previous year and 17% over the past two years. When compared to the Plan valuation date of January 1, 2011
(just prior to the Plan being certified to be in “critical status”), current active employee participants have declined 49%,
whereas participants who were retired or separated from service and receiving benefits increased 4% and participants who
were retired or separated from service and entitled to future benefits increased 12%.
The Company has been advised that its withdrawal liability would have been $104,300, $99,300 and $99,800 if it had
withdrawn from the Plan during 2021, 2020 and 2019, respectively. The Company’s relative share of the Plan’s
contribution base, driven by employer withdrawals, has increased for the last several years, and management believes that
this trend could continue indefinitely which will continue to add upward pressure on the Company’s withdrawal liability.
Based on the above, including the Plan’s projected insolvency in the next 20 years, management believes that the
Company’s withdrawal liability could increase further in future years.
16
Based on the Company’s updated actuarial study and certain provisions in ERISA and the law relating to withdrawal
liability payments, management believes that the Company’s liability would likely be limited to twenty annual payments
of $2,793 which have a present value in the range of $32,800 to $46,600 depending on the interest rate used to discount
these payments. While the Company’s actuarial consultant does not believe that the Plan will suffer a future mass
withdrawal (as defined) of participating employers, in the event of a mass withdrawal, the Company’s annual withdrawal
payments would theoretically be payable in perpetuity. Based on the Company’s updated actuarial study, the present value
of such perpetuities is in the range of $45,764 to $142,447 and would apply in the unlikely event that substantially all
employers withdraw from the Plan. The aforementioned is based on a range of valuations and interest rates which the
Company’s actuary has advised is provided under the statute. Should the Company actually withdraw from the Plan at a
future date, a withdrawal liability, which could be higher than the above discussed amounts, could be payable to the Plan.
The Company and the union concluded a new labor contract in 2018 which requires the Company’s continued participation
in this Plan through September 2022 (the expiration of this union contract). The amended rehabilitation plan, which also
continues, requires that employer contributions include 5% compounded annual surcharge increases each year for an
unspecified period of time beginning in 2012 as well as certain plan benefit reductions. The Company’s pension expense
for this Plan for 2021, 2020 and 2019 was $3,156, $2,866 and $2,961, respectively. The aforementioned expense includes
surcharges of $1,112, $1,010 and $948 in 2021, 2020 and 2019, respectively, as required under the amended rehabilitation
plan.
In fourth quarter 2020, the Plan Trustees advised the Company that the surcharges would no longer increase annually and
therefore be “frozen” at the rates and amounts in effect as of December 31, 2020 provided that the local bargaining union
and the Company executed a formal consent agreement by March 31, 2021. The Trustees advised that they have concluded
that continuing increases in surcharges would likely have a long-term adverse effect on the solvency of the Plan. The
Trustees concluded that further increases would result in increasing financial hardships and withdrawals of participating
employers, and that this change will not have a material effect on the Plan’s insolvency date. In first quarter 2021, the local
bargaining union and the Company executed this agreement which resulted in the “freezing” of such surcharges as of
December 31, 2020.
The Plan recently advised the Company that it will be applying for benefits available to financial troubled plans under the
American Rescue Plan Act of 2021. Company management understands that this legislation would provide financial
assistance from the PBGC to shore up financially distressed multi-employer plans to ensure that they can remain solvent
and continue to pay benefits to retirees through 2051 without any reduction in retiree benefits. Nonetheless, the Company’s
actuary believes that given the Plan’s projected insolvency date of 2031 as well as other factors, that it still remains unclear
if the Plan can remain solvent through the targeted date of 2051. The Company’s actuary also advised that the regulations
under the aforementioned PBGC financial assistance could result in a higher withdrawal liability even with PBGC financial
assistance. The Company is currently unable to determine the ultimate outcome of the above discussed multi-employer
union pension matter and therefore is unable to determine the effects on its consolidated financial statements, but the
ultimate outcome could be material to its consolidated results of operations or cash flows in one or more future periods.
See also Note 7 of the Company’s Note to Consolidated Financial Statements on Form 10-K for the year ended December
31, 2021.
17
2020 vs. 2019
Twelve months 2020 consolidated net product sales were $467,427 compared to $523,616 in twelve months 2019, a
decrease of $56,189 or 10.7%. Net product sales were adversely impacted by the effects of the Covid-19 pandemic, which
curtailed and limited access to certain channels of trade where the Company has historically sold its products. Response
to this pandemic has resulted in the disruption and changes in lifestyles, shopping habits, daily work routines, and consumer
behaviors, all of which have adversely affected planned consumer purchases of the Company’s products for “sharing” and
“give away” occasions. Many of the Company’s products are consumed at group events, outings, and other gatherings
which have been significantly curtailed or in some cases eliminated due to concern of possible infection or spreading of
the Covid-19 virus. Impulse purchases of Company products at retail outlets have also been adversely affected by these
changes in consumer behavior. Unfavorable foreign exchange also had some adverse impact on 2020 net product sales
compared to 2019.
Fourth quarter 2020 net product sales were $127,866 compared to $134,663 in fourth quarter 2019, a decrease of $6,797
or 5.0%. After a 2% sales increase in first quarter 2020, sales declined 25% in second quarter 2020 at the height of the
pandemic and economic downturn. In third quarter 2020 sales declined 14%, while in fourth quarter 2020 the sales decline
was narrowed to 5% when compared to the corresponding quarterly periods in 2019.
Product cost of goods sold were $299,710 in 2020 compared to $329,102 in 2019, a decrease of $29,392 or 8.9%. Product
cost of goods sold includes $610 and $408 in certain deferred compensation expenses in 2020 and 2019, respectively.
These deferred compensation expenses principally result from changes in the market value of investments and investment
income from trading securities relating to compensation deferred in previous years and are not reflective of current
operating results. Adjusting for the aforementioned, product cost of goods sold decreased from $328,694 in 2019 to
$299,100 in 2020, a decrease of $29,594 or 9.0%. As a percent of net product sales, these adjusted costs increased from
62.8% in 2019 to 64.0% in 2020, a 1.2 unfavorable percentage point change. Lower sales and production volumes had an
unfavorable impact on plant manufacturing overhead costs included in the aforementioned adjusted product cost of goods
sold. These plant overhead costs are primarily fixed and recurring each year, and only partially decline with lower volumes.
Product gross margin was $167,717 in 2020 compared to $194,514 in 2019, a decrease of $26,797 or 13.8%. The above
discussed sales decline was the principal driver that adversely impacted gross profit margins in 2020. Certain cost and
expense reductions, including Company initiatives to reduce costs did provide some benefit to 2020 gross profit margins.
The Company is continuing its investments in its plant manufacturing operations to meet new consumer and customer
demands, achieve quality improvements, provide genuine value to consumers, and increase operational efficiencies.
Selling, marketing and administrative expenses were $112,117 in 2020 compared to $127,802 in 2019, a decrease of
$15,685 or 12.3%. Selling, marketing and administrative expenses include $11,909 and $10,884 in certain deferred
compensation expenses in 2020 and 2019, respectively. These deferred compensation expenses principally result from
changes in the market value of investments and investment income from trading securities relating to compensation
deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, selling,
marketing and administrative expenses decreased from $116,918 in 2019 to $100,208 in 2020, a decrease of $16,710 or
14.3%. As a percent of net product sales, these adjusted expenses decreased from 22.3% of net product sales in 2019 to
21.4% of net product sales in 2020, a 0.9 favorable percentage point change. Reductions in travel and trade show expense
resulting from changes in Company policies in response to the Covid-19 pandemic, and more favorable freight and delivery
unit costs were the principal drivers in this expense reduction as a percentage of sales in 2020.
Selling, marketing and administrative expenses include freight, delivery and warehousing expenses. These expenses
decreased from $49,288 in 2019 to $42,593 in 2020, a decrease of $6,695 or 13.6%. As a percent of net product sales,
these adjusted expenses decreased from 9.4% in 2019 to 9.1% in 2020, a 0.3 favorable percentage point change. More
favorable freight and delivery rates from third-party over-the-road truck carriers, and certain operational and cost reduction
initiatives, contributed to this favorable change.
Earnings from operations were $58,244 in 2020 compared to $69,214 in 2019, a decrease of $10,970. Earnings from
operations include $12,519 and $11,292 in certain deferred compensation expense in 2020 and 2019, respectively, which
are discussed above. Adjusting for these deferred compensation expenses, adjusted earnings from operations decreased
18
from $80,506 in 2019 to $70,763 in 2019, a decrease of $9,743 or 12.1%. The above discussed decline in net product sales
was the principal driver of lower operating income in 2020 compared to 2019, however, 2020 earnings from operations
did benefit from some cost and expense reductions as discussed above.
Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred
compensation, are more reflective of the underlying operations of the Company.
Other income, net was $18,018 in 2020 compared to $16,190 in 2019, an increase of $1,828. Other income, net principally
reflects $12,519 and $11,292 of aggregate net gains and investment income on trading securities in 2020 and 2019,
respectively. These trading securities provide an economic hedge of the Company’s deferred compensation liabilities; and
the related net gains and investment income were offset by a like amount of expense in aggregate product cost of goods
sold and selling, marketing, and administrative expenses in the respective years as discussed above. Other income, net
includes investment income on available for sale securities of $4,005 and $4,423 in 2020 and 2019, respectively. Other
income, net also includes foreign exchange gains (losses) of $534 and $(533) in 2020 and 2019, respectively.
The Company’s effective income tax rate was 22.7% and 24.1% in 2020 and 2019, respectively. The decrease in the
effective tax rate in 2020 reflects more favorable foreign tax rates, income tax credits and adjustments for reserves for
uncertain tax positions.
The Company utilized $617 and $1,227 of Canadian tax carry-forward benefits in 2020 and 2019, respectively. At
December 31, 2019, the Company’s deferred tax assets included $617 of income tax benefits relating to its Canadian
subsidiary tax loss carry-forwards. The Company fully utilized this deferred tax asset in 2020 as expected. The Company
provided a full valuation allowance on its Spanish subsidiaries’ tax loss carry-forward benefits of $4,508 and $4,584 as of
December 31, 2020 and 2019, respectively, because the Company concluded that it is not more-likely-than-not that these
losses will be utilized before their expiration dates.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into U.S. law. The
CARES Act has provided a substantial stimulus and assistance package intended to address the economic impact of the
Covid-19 pandemic, including tax relief and government loans, grants and investments. The Canadian government also
enacted a stimulus program, Canadian Emergency Wage Subsidy (“CEWS”), to respond to the economic impact of Covid-
19 during 2020. The Company’s financial results in 2020 did reflect some benefits, primarily in the second and third
quarters of 2020, from these stimulus programs.
Net earnings were $58,995 in 2020 compared to $64,920 in 2019, and net earnings per share were $0.86 and $0.94 in 2020
and 2019, respectively, a decrease of $0.08 per share of 9%. Earnings per share in 2020 benefited from the reduction in
average shares outstanding resulting from purchases of the Company’s common stock in the open market by the Company.
Average shares outstanding decreased from 69,386 in 2019 to 68,482 in 2020 which reflects share repurchases of $32,055
during 2020.
Fourth quarter 2020 and 2019 net earnings attributable to Tootsie Roll Industries, Inc. were $14,952 and $14,555,
respectively, and net earnings per share were $0.22 and $0.21, respectively, an increase of $0.01 per share or 5%. Certain
cost and expense reductions, including Company operational changes and initiatives to reduce costs as discussed above,
did provide some benefit to fourth quarter 2020 results. Although unfavorable foreign exchange adversely affected fourth
quarter 2020 results, a lower effective income tax rate contributed to the increase in net earnings in fourth quarter 2020
compared to fourth quarter 2019.
Our Company is focused on the longer term and therefore we are continuing to make investments in plant manufacturing
operations to meet new consumer and customer product demands, achieve product quality improvements, and increase
operational efficiencies in order to provide genuine value to consumers. We are continuing to focus on the supply chain
and possible delays and disruptions, but this area continues to have much less predictability compared to past history. The
effects of the Covid-19 pandemic, including variants and sub-variants, are unprecedented, and therefore the Company is
unable to determine the related effects on its sales and net earnings in 2022 and beyond.
19
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities were $85,298, $74,710 and $100,221 in 2021, 2020 and 2019, respectively. The
$10,588 increase in cash flows from operating activities from 2020 to 2021 primarily reflects increases in net earnings as
a result of higher revenue as the Company experienced the favorable effects of the continuing economic recovery from the
adverse effects of the Covid-19 pandemic. Increases in accounts payable and accrued liabilities in 2021 compared to 2020
as a result of higher production to support the recovery in demand discussed above and payments of deferred compensation
that reduced cash flows from operations in 2020 were offset by an increase in accounts receivable also due to higher
revenue. The $25,511 decrease in cash flows from operating activities from 2019 to 2020 primarily reflects decreases in
net earnings and payments of deferred compensation in 2020.
The Company manages and controls a VEBA trust, to fund the estimated future costs of certain union employee health,
welfare and other benefits. A contribution of $20,024 was made to this trust in 2017; no contribution was made to the trust
during 2019, 2020 or 2021. The Company uses these funds to pay the actual cost of such benefits over each union contract
period. At December 31, 2021 and 2020, the VEBA trust held $3,941 and $8,272, respectively, of aggregate cash and cash
equivalents, which the Company will use to pay certain union employee benefits through part or all of 2022. This asset
value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial
Position and is categorized as Level 1 within the fair value hierarchy.
Cash flows from investing activities reflect capital expenditures of $31,426, $17,970, and $20,258 in 2021, 2020 and 2019,
respectively. The increase amounts from 2020 to 2021 principally reflects the timing of expenditures relating to plant
manufacturing capital projects, primarily for the rehabilitation upgrade and expansion of one of its manufacturing plants
in the U.S.A. The Company spent approximately $15,000, $6,000 and $2,000 in 2021, 2020 and 2019, respectively, for
this plant rehabilitation upgrade and expansion and expects additional cash outlays for this project to approximate $2,000
in 2022. All capital expenditures have been or are expected to be funded from the Company’s cash flow from operations
and internal sources including available for sale securities. The repayment of $2,514 of previously paid premiums on split
dollar life insurance policies did provide additional cash from investing activities in 2021.
Other than the bank loans and the related restricted cash of the Company’s Spanish subsidiary which are discussed in Note
1 of the Company’s Notes to Consolidated Financial Statements, the Company had no bank borrowings or repayments in
2019, 2020, or 2021, and had no outstanding bank borrowings as of December 31, 2020 or 2021. Nonetheless, the
Company would consider bank borrowing or other financing in the event that a business acquisition is completed.
Financing activities include Company common stock purchases and retirements of $30,184, $32,055, and $34,116 in 2021,
2020 and 2019, respectively. Cash dividends of $24,136, $23,810, and $23,460 were paid in 2021, 2020 and 2019,
respectively.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Preparation of the Company’s financial statements involves judgments and estimates due to uncertainties affecting the
application of accounting policies, and the likelihood that different amounts would be reported under different conditions
or using different assumptions. The Company bases its estimates on historical experience and other assumptions, as
discussed herein, that it believes are reasonable. If actual amounts are ultimately different from previous estimates, the
revisions are included in the Company’s results of operations for the period in which the actual amounts become known.
The Company’s significant accounting policies are discussed in Note 1 of the Company’s Notes to Consolidated Financial
Statements.
Following is a summary and discussion of the more significant accounting policies and estimates which management
believes to have a significant impact on the Company’s operating results, financial position, cash flows and footnote
disclosure.
20
Revenue recognition
As further discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements, the Company follows the
revenue recognition guidance in ASC 606. ASC 606 requires adjustments for estimated customer cash discounts upon
payment, discounts for price adjustments, product returns, allowances, and certain advertising and promotional costs,
including consumer coupons, which are variable consideration and are recorded as a reduction of product sales revenue in
the same period the related product sales are recorded. Such estimates are calculated using historical averages adjusted for
any expected changes due to current business conditions and experience. Revenue for net product sales is recognized at a
point in time when products are delivered to or picked up by the customer, as designated by customers’ purchase orders,
as discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements.
Provisions for bad debts are recorded as selling, marketing and administrative expenses. Write-offs of bad debts did not
exceed 0.1% of net product sales in each of 2021, 2020 and 2019, and accordingly, have not been significant to the
Company’s financial position or results of operations.
Intangible assets
The Company’s intangible assets consist primarily of goodwill and acquired trademarks. In accordance with accounting
guidance, goodwill and other indefinite-lived assets, trademarks, are not amortized, but are instead subjected to annual
testing for impairment unless certain triggering events or circumstances are noted. The Company performs its annual
impairment review and assessment as of December 31. All trademarks have been assessed by management to have
indefinite lives because they are expected to generate cash flows indefinitely. The Company reviews and assesses certain
trademarks (non-amortizable intangible assets) for impairment by comparing the fair value of each trademark with its
carrying value. Current accounting guidance provides entities an option of performing a qualitative assessment (a "step-
zero" test) before performing a quantitative analysis. If the entity determines, on the basis of certain qualitative factors,
that it is more-likely-than-not that the intangibles (goodwill and certain trademarks) are not impaired, the entity would not
need to proceed to the two step impairment testing process (quantitative analysis) as prescribed in the guidance. During
fourth quarter 2021, the Company performed a “step zero” test of its goodwill and certain trademarks, and concluded that
there was no impairment based on this guidance.
The Company determines the fair value of certain trademarks using discounted cash flows and estimates of royalty rates.
If the carrying value exceeds fair value, such trademarks are considered impaired and are reduced to fair value. The
Company utilizes third-party professional valuation firms to assist in the determination of valuation of certain trademarks.
Impairments have not generally been material to the Company’s historical operating results. Cash flow projections require
the Company to make assumptions and estimates regarding the Company’s future plans, including sales projections and
profit margins, market based discount rates, competitive factors, and economic conditions; and the Company’s actual
results and conditions may differ over time. A change in the assumptions relating to the impairment analysis including but
not limited to a reduction in projected cash flows, the use of a different discount rate to discount future cash flows or a
different royalty rate applied to such trademarks, could cause impairment in the future.
Customer incentive programs, advertising and marketing
Advertising and marketing costs are recorded in the period to which such costs relate. The Company does not defer the
recognition of any amounts on its consolidated balance sheet with respect to such costs. Customer incentives and other
promotional costs, including consumer coupon (price reduction) incentives, are recorded in accordance with ASU 606 at
the time of the Company’s sale based upon incentive program terms and historical utilization statistics, which are generally
consistent from year to year. The liabilities associated with these programs are reviewed quarterly and adjusted if utilization
rates differ from management’s original estimates. Such adjustments have not historically been material to the Company’s
operating results.
21
Valuation of long-lived assets
Long-lived assets, primarily property, plant and equipment, are reviewed for impairment as events or changes in business
circumstances occur indicating that the carrying value of the asset may not be recoverable. The estimated cash flows
produced by assets or asset groups, are compared to the asset carrying value to determine whether impairment exists. Such
estimates involve considerable management judgment and are based upon assumptions about expected future operating
performance. As a result, actual cash flows could differ from management’s estimates due to changes in business
conditions, operating performance, and economic and competitive conditions. Such impairments have not historically been
material to the Company’s operating results.
Income taxes
Deferred income taxes are recognized for future tax effects of temporary differences between financial and income tax
reporting using tax rates in effect for the years in which the differences are expected to reverse. The Company records
valuation allowances in situations where the realization of deferred tax assets, including those relating to net operating tax
losses, is not more-likely-than-not; and the Company adjusts and releases such valuation allowances when realization
becomes more-likely-than-not as defined by accounting guidance. The Company periodically reviews assumptions and
estimates of the Company’s probable tax obligations and effects on its liability for uncertain tax positions, using informed
judgment which may include the use of third-party consultants, advisors and legal counsel, as well as historical experience.
Valuation of investments
Investments primarily comprise high quality corporate bonds, including variable rate demand notes (generally long term
bonds where interest rates are reset weekly, and provide a weekly “put” which allows the holder to also sell each week
with no loss in principal), which are reviewed for impairment at each reporting period by comparing the carrying value or
amortized cost to the fair market value. In the event that an investment security’s fair value is below carrying value or
amortized cost, the Company will record an other-than-temporary impairment or a temporary impairment based on
accounting guidance. The Company’s investment policy, which guides investment decisions, is focused on high quality
investments which mitigates the risk of impairment. The Company does not invest in Level 3 securities, as defined, but
may utilize third-party professional valuation firms as necessary to assist in the determination of the value of investments
that utilize Level 3 inputs (as defined by guidance) should any of its investments be downgraded to Level 3.
Other matters
In the opinion of management, other than contracts for foreign currency forwards and raw materials, including currency
and commodity hedges and outstanding purchase orders for packaging, ingredients, supplies, operational services, and
capital expenditures, all entered into in the ordinary course of business, the Company does not have any significant
contractual obligations or future commitments.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 of the Company’s Notes to Consolidated Financial Statements.
MARKET RISKS
The Company is exposed to market risks related to commodity prices, interest rates, investments in marketable securities,
equity price and foreign exchange.
The Company’s ability to forecast the direction and scope of changes to its major input costs is impacted by significant
potential volatility in crude oil and energy, sugar, corn, edible oils, cocoa and cocoa powder, and dairy products markets.
The prices of these commodities are influenced by changes in global demand, changes in weather and crop yields, including
the effects of climate change, changes in import tariffs and governments’ farm policies, including mandates for ethanol
and bio-fuels, environmental matters, fluctuations in the U.S. dollar relative to dollar-denominated commodities in world
markets, and in some cases, geo-political risks. The Company believes that its competitors face the same or similar
challenges.
22
In order to address the impact of changes in input and other costs, the Company periodically reviews each item in its
product portfolio to ascertain if price realization adjustments or other actions should be taken. These reviews include an
evaluation of the risk factors relating to market place acceptance of such changes and their potential effect on future sales
volumes. In addition, the estimated cost of packaging modifications associated with weight changes, if applicable, is
evaluated. The Company also maintains ongoing cost reduction and productivity improvement programs under which cost
savings initiatives are encouraged and progress monitored. The Company is not able to accurately predict the outcome of
these cost savings initiatives and their effects on its future results.
Commodity future and foreign currency forward contracts
Commodity price risks relate to ingredients, primarily sugar, cocoa and cocoa powder, chocolate, corn syrup, dextrose,
edible oils, milk, whey and gum base ingredients. The Company believes its competitors face similar risks, and the industry
has historically adjusted prices, and/or product weights, to compensate for adverse fluctuations in commodity costs. The
Company, as well as competitors in the confectionery industry, has historically taken actions, including higher price
realization to mitigate rising input costs for ingredients, packaging, labor and fringe benefits, energy, and freight and
delivery. Although management seeks to substantially recover cost increases over the long-term, there is risk that higher
price realization cannot be fully passed on to customers and, to the extent they are passed on, they could adversely affect
customer and consumer acceptance and resulting sales volume.
The Company utilizes commodity futures contracts, as well as annual supply agreements, to hedge and plan for anticipated
purchases of certain ingredients, including sugar, in order to mitigate commodity cost fluctuation. The Company also may
purchase forward foreign exchange contracts to hedge its costs of manufacturing certain products in Canada for sale and
distribution in the United States (U.S.A.), and periodically does so for purchases of equipment or raw materials from
foreign suppliers. Such commodity futures and currency forward contracts are cash flow hedges and are effective as hedges
as defined by accounting guidance. The unrealized gains and losses on such contracts are deferred as a component of
accumulated other comprehensive loss (or gain) and are recognized as a component of product cost of goods sold when
the related inventory is sold.
The potential change in fair value of commodity and foreign currency derivative instruments held by the Company at
December 31, 2021, assuming a 10% change in the underlying contract price, was $1,274. The analysis only includes
commodity and foreign currency derivative instruments and, therefore, does not consider the offsetting effect of changes
in the price of the underlying commodity or foreign currency. This amount is not significant compared with the net earnings
and shareholders’ equity of the Company.
Interest rates
Interest rate risks primarily relate to the Company’s investments in marketable securities with maturity dates of generally
up to three years.
The majority of the Company’s investments, which are classified as available for sale, have historically been held until
their maturity which is generally up to about 3 years, which limits the Company’s exposure to interest rate fluctuations.
The Company also invests in variable rate demand notes which have interest rates that are reset weekly and can be “put
back” and sold each week through a remarketing agent, generally a large financial broker, which also substantially
eliminates the Company’s exposure to interest rate fluctuations on the principal invested. The accompanying chart
summarizes the maturities of the Company’s investments in debt securities at December 31, 2021.
Less than 1 year
1 – 2 years
2 – 3 years
Total
23
$
39,460
99,223
102,724
241,407
$
The Company’s outstanding debt at December 31, 2021 and 2020 was $7,500 in an industrial revenue bond in which
interest rates reset each week based on the current market rate. Therefore, the Company does not believe that it has
significant interest rate risk with respect to its interest bearing debt.
Investment in marketable securities
As stated above, the Company invests primarily in marketable securities including variable rate demand notes (VRDNs).
The VRDNs have weekly “puts” which are collateralized by bank letters of credit or other assets, and interest rates are
reset weekly. Except for VRDN’s, the Company’s marketable securities are held to maturity with maturities generally not
exceeding three years. The Company utilizes professional money managers and maintains investment policy guidelines
which emphasize high quality and liquidity in order to minimize the potential loss exposures that could result in the event
of higher interest rates, a default or other adverse event. The Company continues to monitor these investments and markets,
as well as its investment policies, however, the financial markets could experience unanticipated or unprecedented events
and future outcomes may be less predictable than in the past.
Equity price
Equity price risk relates to the Company’s investments in mutual funds which are principally used to fund and hedge the
Company’s deferred compensation liabilities. These investments in mutual funds are classified as trading securities. Any
change in the fair value of these trading securities is completely offset by a corresponding change in the respective hedged
deferred compensation liability, and therefore, the Company does not believe that it has significant equity price risk with
respect to these investments.
Foreign currency
Foreign currency risk principally relates to the Company’s foreign operations in Canada, Mexico and Spain, as well as
periodic purchase commitments of machinery and equipment from foreign sources, generally the European Union where
the EURO is the currency.
Certain of the Company’s Canadian manufacturing costs, including local payroll and plant operations, and a portion of its
packaging and ingredients are sourced in Canadian dollars. The Company may purchase Canadian forward contracts to
receive Canadian dollars at a specified date in the future and uses its Canadian dollar collections on Canadian sales as a
partial hedge of its overall Canadian manufacturing obligations sourced in Canadian dollars. The Company also
periodically purchases and holds Canadian dollars to facilitate the risk management of these currency changes.
From time to time, the Company may use foreign exchange forward contracts and derivative instruments to mitigate its
exposure to foreign exchange risks, as well as those related to firm commitments to purchase equipment from foreign
vendors. See Note 11 of the Company’s Notes to Consolidated Financial Statements for outstanding foreign exchange
forward contracts as of December 31, 2021.
24
QUARTERLY FINANCIAL DATA
First
(Thousands of dollars except per share data)
Third
Second
Fourth
Year
2021
Net product sales
Product gross margin
Net earnings attributable to Tootsie Roll Industries, Inc.
Net earnings attributable to Tootsie Roll Industries, Inc.
per share
2020
Net product sales
Product gross margin
Net earnings attributable to Tootsie Roll Industries, Inc.
Net earnings attributable to Tootsie Roll Industries, Inc.
per share
$ 101,795 $ 114,560 $ 183,090 $ 166,598 $ 566,043
195,938
65,326
56,452
20,032
36,230
10,767
64,644
24,733
38,612
9,794
0.16
0.14
0.37
0.30
0.97
$ 102,803 $ 79,796 $ 156,962 $ 127,866 $ 467,427
167,717
58,995
44,165
14,952
36,360
11,982
57,775
24,673
29,417
7,388
0.17
0.11
0.36
0.22
0.86
Net earnings per share is based upon average outstanding shares as adjusted for 3% stock dividends issued during the
second quarter of each year as discussed above. The sum of the quarterly per share amounts may not equal annual amounts
due to rounding.
25
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this item is included under the caption “Market Risk” in Item 7 above.
See also Note 1 of the Notes to Consolidated Financial Statements.
ITEM 8. Financial Statements and Supplementary Data.
Management’s Report on Internal Control Over Financial Reporting
The management of Tootsie Roll Industries, Inc. is responsible for establishing and maintaining adequate internal control
over financial reporting, as such term is defined in the Securities Exchange Act of 1934 (SEC) Rule 13a-15(f). Company
management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021 as required by SEC Rule 13a-15(c). In making this assessment, the Company used the criteria
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (the COSO criteria). Based on the Company’s evaluation under the COSO criteria, Company
management concluded that its internal control over financial reporting was effective as of December 31, 2021.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 has been audited by
Grant Thornton LLP (PCAOB ID: 248), an independent registered public accounting firm, as stated in their report which
is included herein.
26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Shareholders
Tootsie Roll Industries, Inc.
Opinions on the financial statements and internal control over financial reporting
We have audited the accompanying consolidated financial position of Tootsie Roll Industries, Inc. (a Virginia corporation)
and subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of earnings
and retained earnings, comprehensive earnings, and cash flows for each of the three years in the period ended December
31, 2021, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the
“financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31,
2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated
Framework issued by COSO.
Basis for opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an
opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audits provide a reasonable basis for our opinions.
27
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical audit matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements,
taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Trademark Impairment Assessment
As described in Note 1 and Note 13 to the consolidated financial statements, the Company’s consolidated trademark
balance was $175 million at December 31, 2021, which is allocated to the Company’s brands that were purchased.
Indefinite-lived trademarks are tested for impairment at least annually. For several trademarks, a Step 0 approach is used
to test for impairment based on relevant qualitative factors, as outlined within Accounting Standards Codifications (ASC)
350-20 and 350-30. For the fair value assessment of certain other trademarks where a Step 0 analysis was not considered
appropriate, Step 1 impairment testing is performed annually using discounted cash flows, derived from inputs including
but not limited to projected revenue, operating margins and estimated discount rates. The determination of the fair value
of the trademarks subjected to a Step 1 impairment test requires management to make significant estimates and assumptions
related to forecasts of future revenues, operating margins and discount rates. As disclosed by management, changes in
these assumptions could have a significant impact on either the fair value of the trademark, the amount of any trademark
impairment charge, or both.
We identified the Step 1 trademark impairment assessment as a critical audit matter, as auditing management’s judgements
regarding forecasts of future revenue, operating margin and discount rate involves a high degree of subjectivity.
The primary procedures we performed to address this critical audit matter included:
• Testing the operating effectiveness of controls relating to management’s impairment tests, including controls over the
determination of the fair value of these specific trademarks. Through these tests, we evaluated management’s review
controls over the financial projections, including reperformance and approval of the reasonableness of the key
assumptions and inputs to the analysis, such as discount rates, growth rates, and key performance indicators such as
sales forecast and operating margins.
• Testing management’s process for determining the fair value of the trademarks. We evaluated the reasonableness of
management’s forecasts of future revenue and operating margin by considering the impact that COVID-19 had on the
year ended December 31, 2021, and its expected impact on future periods. We also considered whether such
assumptions were consistent with historical forecasts and operating results for the Company, as well as evidence
obtained in other areas of the audit. Additionally, a sensitivity analysis was performed using a Capital Asset Pricing
28
Model in order to evaluate whether the assumptions used in management’s model fell within reasonable ranges based
on third-party industry market data.
• Utilizing a valuation specialist to assist in evaluating the reasonableness of and testing the methodology used in the
Company’s discounted cash flow model for the trademarks and certain significant assumptions, including projected
revenue, operating margins, and discount rates. Additionally, we evaluated the work, expertise and objectivity of
management’s specialist.
/s/ GRANT THORNTON LLP
We have served as the Company’s auditor since 2018.
Chicago, Illinois
March 1, 2022
29
(in thousands except per share data)
For the year ended December 31,
2019
2020
2021
$ 566,043 $ 467,427 $ 523,616
3,497
527,113
329,102
995
330,097
194,514
2,502
197,016
127,802
69,214
16,190
85,404
20,565
64,839
(81)
$ 65,326 $ 58,995 $ 64,920
3,636
471,063
299,710
992
300,702
167,717
2,644
170,361
112,117
58,244
18,018
76,262
17,288
58,974
(21)
4,733
570,776
370,105
1,430
371,535
195,938
3,303
199,241
132,108
67,133
18,596
85,729
20,421
65,308
(18)
$
0.97 $
0.86 $
67,431
68,482
0.94
69,386
$ 32,312 $ 40,809 $ 33,767
64,920
(23,371)
(34,507)
$ 39,545 $ 32,312 $ 40,809
58,995
(23,739)
(43,753)
65,326
(24,061)
(34,032)
CONSOLIDATED STATEMENTS OF
Earnings and Retained Earnings
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
Net product sales
Rental and royalty revenue
Total revenue
Product cost of goods sold
Rental and royalty cost
Total costs
Product gross margin
Rental and royalty gross margin
Total gross margin
Selling, marketing and administrative expenses
Earnings from operations
Other income, net
Earnings before income taxes
Provision for income taxes
Net earnings
Less: net earnings (loss) attributable to noncontrolling interests
Net earnings attributable to Tootsie Roll Industries, Inc.
Net earnings attributable to Tootsie Roll Industries, Inc. per share
Average number of shares outstanding
Retained earnings at beginning of period
Net earnings attributable to Tootsie Roll Industries, Inc.
Cash dividends
Stock dividends
Retained earnings at end of period
(The accompanying notes are an integral part of these statements.)
30
CONSOLIDATED STATEMENTS OF
Comprehensive Earnings
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
Net earnings
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments
(in thousands)
For the year ended December 31,
2019
2020
2021
$ 65,308 $ 58,974 $ 64,839
(301)
(1,213)
791
Pension and postretirement reclassification adjustments:
Unrealized gains (losses) for the period on postretirement and pension benefits
Less: reclassification adjustment for (gains) losses to net earnings
Unrealized gains (losses) on postretirement and pension benefits
448
(1,405)
(957)
467
(1,349)
(882)
(1,230)
(1,522)
(2,752)
Investments:
Unrealized gains (losses) for the period on investments
Less: reclassification adjustment for (gains) losses to net earnings
Unrealized gains (losses) on investments
(4,227)
(96)
(4,323)
1,463
—
1,463
3,130
34
3,164
Derivatives:
Unrealized gains (losses) for the period on derivatives
Less: reclassification adjustment for (gains) losses to net earnings
Unrealized gains (losses) on derivatives
1,423
(2,593)
(1,170)
1,259
325
1,584
451
677
1,128
(6,751)
1,553
60,110
(18)
2,331
(354)
66,816
(81)
$ 60,128 $ 59,425 $ 66,897
952
(522)
59,404
(21)
Total other comprehensive income (loss), before tax
Income tax benefit (expense) related to items of other comprehensive income
Total comprehensive earnings
Comprehensive earnings (loss) attributable to noncontrolling interests
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.
(The accompanying notes are an integral part of these statements.)
31
CONSOLIDATED STATEMENTS OF
Financial Position
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
Assets
CURRENT ASSETS:
Cash and cash equivalents
Restricted cash
Investments
Accounts receivable trade, less allowances of $2,281 and $1,694
Other receivables
Inventories:
Finished goods and work-in-process
Raw materials and supplies
Prepaid expenses
Total current assets
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land
Buildings
Machinery and equipment
Construction in progress
Operating lease right-of-use assets
Less — accumulated depreciation
Net property, plant and equipment
OTHER ASSETS:
Goodwill
Trademarks
Investments
Split dollar officer life insurance
Prepaid expenses and other assets
Deferred income taxes
Total other assets
Total assets
(The accompanying notes are an integral part of these statements.)
(in thousands)
December 31,
2021
2020
$
105,840 $ 166,841
415
42,090
41,209
3,894
386
39,968
54,921
3,920
31,431
24,074
7,761
268,301
21,704
130,158
446,777
15,344
7,419
621,402
412,496
208,906
35,583
23,996
6,844
320,872
21,738
123,883
422,506
14,347
858
583,332
396,004
187,328
73,237
175,024
291,175
—
603
1,372
541,411
73,237
175,024
220,020
2,514
4,525
1,038
476,358
$ 1,018,618 $ 984,558
32
(in thousands except per share data)
Liabilities and Shareholders’ Equity
CURRENT LIABILITIES:
Accounts payable
Bank loans
Dividends payable
Accrued liabilities
Postretirement health care benefits
Operating lease liabilities
Income taxes payable
Total current liabilities
NONCURRENT LIABILITIES:
Deferred income taxes
Postretirement health care benefits
Industrial development bonds
Liability for uncertain tax positions
Operating lease liabilities
Deferred compensation and other liabilities
Total noncurrent liabilities
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value — 120,000 shares authorized — 39,344 and
39,073, respectively, issued
Class B common stock, $.69-4/9 par value — 40,000 shares authorized — 27,793 and
27,012, respectively, issued
Capital in excess of par value
Retained earnings
Accumulated other comprehensive loss
Treasury stock (at cost) — 96 shares and 93 shares, respectively
Total Tootsie Roll Industries, Inc. shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities and shareholders' equity
(The accompanying notes are an integral part of these statements.)
$
December 31,
2021
2020
14,969 $ 13,025
832
5,948
45,099
544
780
3,793
70,021
939
6,042
53,896
616
1,072
2,434
79,968
45,461
12,619
7,500
3,415
6,347
94,511
169,853
47,900
12,943
7,500
3,351
78
79,665
151,437
27,322
27,134
19,300
709,880
39,545
(25,013)
(1,992)
769,042
(245)
768,797
18,758
706,930
32,312
(19,815)
(1,992)
763,327
(227)
763,100
$ 1,018,618 $ 984,558
33
CONSOLIDATED STATEMENTS OF
Cash Flows
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
(in thousands)
For the year ended December 31,
2020
2021
2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
Adjustments to reconcile net earnings to net cash provided by operating activities:
$
65,308 $
58,974 $
64,839
Depreciation
Deferred income taxes
Impairment of majority-owned foreign subsidiaries
Amortization of marketable security premiums
Changes in operating assets and liabilities:
Accounts receivable
Other receivables
Inventories
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Income taxes payable
Postretirement health care benefits
Deferred compensation and other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
Repayment of premiums on split dollar life insurance policies
Purchases of trading securities
Sales of trading securities
Purchase of available for sale securities
Sale and maturity of available for sale securities
Net cash (used in) provided by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired
Dividends paid in cash
Proceeds from bank loans
Repayment of bank loans
Net cash used in financing activities
Effect of exchange rate changes on cash
Increase (decrease) in cash and cash equivalents
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Supplemental cash flow information:
Income taxes paid
Interest paid
Stock dividend issued
(The accompanying notes are an integral part of these statements.)
17,570
(1,263)
—
3,837
(14,130)
(706)
3,940
2,622
10,010
(1,296)
(1,281)
687
85,298
(31,426)
2,514
(2,668)
968
(108,576)
47,289
(91,899)
18,184
(279)
—
1,404
3,483
636
(770)
2,961
3,849
3,012
(1,041)
(15,703)
74,710
(17,970)
23,527
(3,183)
18,058
(109,816)
98,885
9,501
18,779
2,832
377
1,282
5,086
(313)
(4,383)
4,362
1,080
4,336
(1,478)
3,422
100,221
(20,258)
—
(3,427)
795
(67,730)
75,611
(15,009)
(30,184)
(24,136)
3,792
(3,618)
(54,146)
(283)
(61,030)
167,256
(34,116)
(32,055)
(23,460)
(23,810)
3,582
3,902
(3,193)
(3,883)
(57,187)
(55,846)
28
(449)
28,053
27,916
111,287
139,340
106,226 $ 167,256 $ 139,340
$
$
$
$
22,855 $
6 $
64,667 $
14,503 $
57 $
63,402 $
13,858
121
70,557
34
Notes to Consolidated Financial Statements ($ in thousands except per share data)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTE 1—SIGNIFICANT ACCOUNTING POLICIES:
Basis of consolidation:
The consolidated financial statements include the accounts of Tootsie Roll Industries, Inc. and its wholly-owned and
majority-owned subsidiaries (the Company), which are primarily engaged in the manufacture and sales of candy products.
Non-controlling interests relating to majority-owned subsidiaries are reflected in the consolidated financial statements and
all significant intercompany transactions have been eliminated. Certain amounts previously reported have been reclassified
to conform to the current year presentation. These reclassifications had no effect on previously reported net earnings.
The preparation of financial statements in conformity with generally accepted accounting principles in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition:
The Company’s revenues, primarily net product sales, principally result from the sale of goods, reflect the
consideration to which the Company expects to be entitled, generally based on customer purchase orders. The Company
records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") Topic 606.
Adjustments for estimated customer cash discounts upon payment, discounts for price adjustments, product returns,
allowances, and certain advertising and promotional costs, including consumer coupons, are variable consideration and
are recorded as a reduction of product sales revenue in the same period the related product sales are recorded. Such
estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and
experience. A net product sale is recorded when the Company delivers the product to the customer, or in certain instances,
the customer picks up the goods at the Company’s distribution centers, and thereby obtains control of such product.
Amounts billed and due from our customers are classified as accounts receivables trade on the balance sheet and require
payment on a short-term basis. Accounts receivable are unsecured. Shipping and handling costs of $55,289, $42,593, and
$49,288 in 2021, 2020 and 2019, respectively, are included in selling, marketing and administrative expenses. A minor
amount of royalty income (less than 0.2% of our consolidated net sales) is also recognized from sales-based licensing
arrangements, pursuant to which revenue is recognized as the third-party licensee sales occur. Rental income (less than
1% of our consolidated net sales) is not considered revenue from contracts from customers.
Leases:
The Company identifies leases by evaluating its contracts to determine if the contract conveys the right to use an
identified asset for a stated period of time in exchange for consideration. The Company considers whether it can control
the underlying asset and has the right to obtain substantially all of the economic benefits or outputs from the asset. Leases
with terms greater than 12 months are classified as either operating or finance leases at the commencement date. For these
leases, the Company capitalized the present value of the minimum lease payments over the lease terms as a right-of-use
asset with an offsetting lease liability. The discount rate used to calculate the present value of the minimum lease payments
is typically the Company’s incremental borrowing rate, as the rate implicit in the lease is generally not known or
determinable. The lease term includes any noncancelable period for which the Company has the right to use the asset.
Currently, all capitalized leases are classified as operating leases and the Company records lease expense on a straight-line
basis over the term of the lease.
Cash and cash equivalents:
The Company considers short-term debt securities with an original maturity of three months or less to be cash
equivalents. Substantially all cash and cash equivalents are held at a major U.S. money center bank or its foreign branches
(Bank of America), or its investment broker affiliate (Merrill Lynch). The Company also holds certificates of deposit (CDs)
35
of U.S. banks selected by this investment broker based on their financial ratings; substantially all such CDs are invested
in separate individual banks which are generally not in excess of the Federal Deposit Insurance Corporation (FDIC) limit
of $250 per bank. The cash in the Company's U.S. banks (primarily Bank of America) is not fully insured by the FDIC
due to the statutory limit of $250. The Company had approximately $4,577 and $8,303 of cash held by it is foreign
subsidiaries, principally foreign branches of a U.S. bank (Bank of America), at December 31, 2021 and 2020, respectively.
The Company's cash in its foreign bank accounts is also not fully insured.
Investments:
Investments consist of various marketable securities with maturities of generally up to three years, and variable rate
demand notes with interest rates that are generally reset weekly and the security can be “put” back and sold weekly. The
Company classifies debt and equity securities as either available for sale or trading. Available for sale debt securities are
not actively traded by the Company and are carried at fair value. The Company follows current fair value measurement
guidance and unrealized gains and losses on these securities are excluded from earnings and are reported as a separate
component of shareholders’ equity, net of applicable taxes, until realized or other-than-temporarily impaired. Trading
securities related to deferred compensation arrangements are carried at fair value with gains or losses included in other
income, net. The Company invests in trading securities to economically hedge changes in its deferred compensation
liabilities.
The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is
other-than-temporary. If the decline in fair value is judged to be other-than-temporary, the cost basis of the security is
written down to fair value and the amount of the write-down is included in other income, net. Further information regarding
the fair value of the Company’s investments is included in Note 10 of the Company’s Notes to Consolidated Financial
Statements.
Derivative instruments and hedging activities:
From time to time, the Company enters into commodity futures and foreign currency forward contracts. Commodity
futures are intended and are effective as hedges of market price risks associated with the anticipated purchase of certain
raw materials (primarily sugar). Foreign currency forward contracts are intended and are effective as hedges of the
Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products
manufactured in Canada and sold in the United States, and periodic equipment purchases from foreign suppliers
denominated in a foreign currency. The Company does not engage in trading or other speculative use of derivative
instruments. Further information regarding derivative instruments and hedging activities is included in Note 11 of the
Company’s Notes to Consolidated Financial Statements.
Inventories:
Inventories are stated at lower of cost or net realizable value. The cost of substantially all of the Company’s inventories
($51,355 and $54,935 at December 31, 2021 and 2020, respectively) has been determined by the last-in, first-out (LIFO)
method. The excess of current cost over LIFO cost of inventories approximates $21,348 and $19,339 at December 31,
2021 and 2020, respectively. The cost of certain foreign inventories ($4,150 and $4,644 at December 31, 2021 and 2020,
respectively) has been determined by the first-in, first-out (FIFO) method. Rebates, discounts and other cash consideration
received from vendors related to inventory purchases is reflected as a reduction in the cost of the related inventory item,
and is, therefore, reflected in cost of sales when the related inventory item is sold.
Property, plant and equipment:
Depreciation is computed for financial reporting purposes by use of the straight-line method based on useful lives of
20 to 50 years for buildings and 5 to 20 years for machinery and equipment. Depreciation expense was $17,570, $18,184
and $18,779 in 2021, 2020 and 2019, respectively.
36
Carrying value of long-lived assets:
The Company reviews long-lived assets to determine if there are events or circumstances indicating that the amount
of the asset reflected in the Company’s balance sheet may not be recoverable. When such indicators are present, the
Company compares the carrying value of the long-lived asset, or asset group, to the future undiscounted cash flows of the
underlying assets to determine if impairment exists. If applicable, an impairment charge would be recorded to write down
the carrying value to its fair value. The determination of fair value involves the use of estimates of future cash flows that
involve considerable management judgment and are based upon assumptions about expected future operating performance.
The actual cash flows could differ from management’s estimates due to changes in business conditions, operating
performance, and economic conditions. In fourth quarter 2019, the Company recorded charges of $377 relating to the
impairment of assets of a foreign subsidiary which is included in selling, marketing and administrative expense. Except
for the aforementioned, no impairment charges of long-lived assets were recorded by the Company during 2021, 2020 or
2019.
Postretirement health care benefits:
The Company provides certain postretirement health care benefits to a group of “grandfathered” corporate office and
management employees. The cost of these postretirement benefits is accrued during the employees’ working careers. See
Note 7 of the Company’s Notes to Consolidated Financial Statements for additional information. The Company also
provided split dollar life benefits to an executive officer. The Company recorded an asset equal to the cumulative insurance
premiums paid that will be recovered upon the death of the covered executive officer or earlier under the terms of the plan.
During 2021, the Company received $2,514 of previously paid premiums on these insurance policies which was recorded
as a reduction to this asset and has now fully recovered all the premiums under the terms of the plan. No premiums were
paid in 2021, 2020 or 2019.
Goodwill and indefinite-lived intangible assets:
In accordance with authoritative guidance, goodwill and intangible assets with indefinite lives are not amortized, but
rather reviewed and tested for impairment at least annually unless certain interim triggering events or circumstances require
more frequent testing. All trademarks have been assessed by management to have indefinite lives because they are expected
to generate cash flows indefinitely. Management believes that all assumptions used for the impairment review and testing
are consistent with those utilized by market participants performing similar valuations. No impairments of intangibles,
including trademarks and goodwill, were recorded in 2021, 2020 or 2019.
Current accounting guidance provides entities an option of performing a qualitative assessment (a "step-zero" test)
before performing a quantitative analysis. If the entity determines, on the basis of certain qualitative factors, that it is more-
likely-than-not that the intangibles (goodwill and certain trademarks) are not impaired, the entity would not need to proceed
to the two step impairment testing process (quantitative analysis) as prescribed in the guidance. During fourth quarter 2021
and 2020, the Company performed a “step zero” test of its goodwill and certain trademarks, and concluded that there was
no impairment based on this guidance. For the fair value assessment of certain trademarks where the “step-zero” analysis
was not considered appropriate, impairment testing was performed in fourth quarter 2021 and 2020 using discounted cash
flows and estimated royalty rates. For these trademarks, holding all other assumptions constant at the test date in 2021, a
100 basis point increase in the discount rate or a 100 basis point decrease in the royalty rate would reduce the fair value of
these trademarks by approximately 16% and 10%, respectively. Individually, a 100 basis point increase in the discount
rate or a 100 basis point decrease in the royalty rate would not result in a potential impairment as of December 31, 2021.
Income taxes:
Deferred income taxes are recorded and recognized for future tax effects of temporary differences between financial
and income tax reporting. The Company records valuation allowances in situations where the realization of deferred tax
assets is not more-likely-than-not. The Company periodically reviews assumptions and estimates of the Company’s
probable tax obligations and effects on its liability for uncertain tax positions, using informed judgment which may include
the use of third-party consultants, advisors and legal counsel, as well as historical experience.
37
Further information regarding income tax matters are included in Note 4 of the Company’s Notes to Consolidated
Financial Statements.
Foreign currency translation:
The U.S. dollar is used as the functional currency where a substantial portion of the subsidiary’s business is indexed
to the U.S. dollar or where its manufactured products are principally sold in the U.S. All other foreign subsidiaries use the
local currency as their functional currency. Where the U.S. dollar is used as the functional currency, foreign currency
remeasurements are recorded as a charge or credit to other income, net in the statement of earnings. Where the foreign
local currency is used as the functional currency, translation adjustments are recorded as a separate component of
accumulated other comprehensive income (loss).
Restricted cash:
Restricted cash comprises certain cash deposits of the Company’s majority-owned Spanish subsidiary with
international banks that are pledged as collateral for letters of credit and bank borrowings.
VEBA trust:
The Company maintains a VEBA trust managed and controlled by the Company, to fund the estimated future costs of
certain employee health, welfare and other benefits. The Company made a $20,024 contribution to the VEBA trust in 2017
but no contributions were made to the trust in 2021, 2020 or 2019. The Company will continue using the VEBA trust funds
to pay the actual cost of such benefits through most or possibly all of 2022. At December 31, 2021 and 2020, the VEBA
trust held $3,941 and $8,272, respectively, of aggregate cash and cash equivalents. This asset value is included in prepaid
expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position. These assets are
categorized as Level 1 within the fair value hierarchy.
Bank loans:
Bank loans consist of short term (less than 120 days) borrowings by the Company’s Spanish subsidiary that are held
by international banks. The weighted-average interest rate as of December 31, 2021 and 2020 was 3.1% and 3.0%,
respectively.
Comprehensive earnings:
Comprehensive earnings include net earnings, foreign currency translation adjustments and unrealized gains/losses on
commodity and/or foreign currency hedging contracts, available for sale securities and certain postretirement benefit
obligations.
Earnings per share:
A dual presentation of basic and diluted earnings per share is not required due to the lack of potentially dilutive
securities under the Company’s simple capital structure. Therefore, all earnings per share amounts represent basic earnings
per share.
The Class B common stock has essentially the same rights as common stock, except that each share of Class B
common stock has ten votes per share (compared to one vote per share of common stock), is not traded on any exchange,
is restricted as to transfer and is convertible on a share-for-share basis, at any time and at no cost to the holders, into shares
of common stock which are traded on the New York Stock Exchange.
Use of estimates:
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in
the U.S. requires management to make estimates and assumptions that affect the amounts reported. Estimates are used
38
when accounting for sales discounts, allowances and incentives, product liabilities, assets recorded at fair value, income
taxes, depreciation, amortization, employee benefits, contingencies and intangible asset and liability valuations. Actual
results may or may not differ from those estimates.
Recently adopted accounting pronouncements:
In March 2020, the FASB issued ASU 2020-04 which provides optional guidance for a limited time to ease the
potential burden in accounting for reference rate reform. In January 2021, the FASB issued ASU 2021-1 which clarified
the scope of ASU 2020-04. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to
contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The
amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to
be discontinued due to reference rate reform. These amendments are effective immediately and may be applied
prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December
31, 2022. The Company adopted ASU 2020-04 and ASU 2021-1 in first quarter 2021. The adoption of these ASU’s did
not have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12 which is designed to simplify the accounting for income taxes
by removing certain exceptions to the general principles in Topic 740. ASU No. 2019-12 is effective for fiscal years
beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted ASU 2019-
12 in first quarter 2021. The adoption of the ASU did not have a material impact on the Company’s consolidated financial
statements.
NOTE 2—ACCRUED LIABILITIES:
Accrued liabilities are comprised of the following:
Compensation
Other employee benefits
Taxes, other than income
Advertising and promotions
Other
December 31,
2021
$ 10,865 $
8,640
3,574
22,547
8,270
2020
8,135
8,841
3,169
18,455
6,499
$ 53,896 $ 45,099
NOTE 3—INDUSTRIAL DEVELOPMENT BONDS:
Industrial development bonds are due in 2027. The average floating interest rate, which is reset weekly, was 0.7% and
0.7% in 2021 and 2020, respectively. See Note 10 of the Company’s Notes to Consolidated Financial Statements for fair
value disclosures.
NOTE 4—INCOME TAXES:
The domestic and foreign components of pretax income are as follows:
Domestic
Foreign
39
2021
2020
$ 77,434 $ 69,211 $ 74,978
10,426
$ 85,729 $ 76,262 $ 85,404
8,295
7,051
2019
The provision for income taxes is comprised of the following:
2021
2020
2019
Current:
Federal
Foreign
State
Deferred:
Federal
Foreign
State
$ 16,886 $ 14,831 $ 15,133
—
2,942
18,075
1,029
1,763
17,623
1,983
2,822
21,691
(2,069)
39
760
(1,270)
(543)
2,422
611
2,490
$ 20,421 $ 17,288 $ 20,565
(1,006)
1,316
(645)
(335)
Significant components of the Company’s net deferred tax liability at year end were as follows:
December 31,
2021
2020
Deferred tax assets:
Accrued customer promotions
Deferred compensation
Postretirement benefits
Other accrued expenses
Foreign subsidiary tax loss carry forward
Outside basis difference in foreign subsidiary
Deductible state tax depreciation
Tax credit carry forward
Valuation allowances
Total deferred tax assets
Deferred tax liabilities:
Depreciation
Deductible goodwill and trademarks
Accrued export company commissions
Employee benefit plans
Inventory reserves
Prepaid insurance
Unrealized capital gains
Deferred foreign exchange gain
Deferred gain on sale of real estate
Total deferred tax liabilities
Net deferred tax liability
$
2,107 $
1,506
18,501
3,355
3,078
4,508
365
471
3,288
35,072
(5,593)
$ 35,460 $ 29,479
22,311
3,324
5,158
4,497
365
736
2,517
41,015
(5,555)
38,255
4,615
525
2,532
965
3,874
132
5,309
$ 23,342 $ 22,192
37,348
4,508
1,767
1,994
569
2,515
179
5,269
$ 79,549 $ 76,341
$ 44,089 $ 46,862
At December 31, 2021, the Company has benefits related to state tax credit carry-forwards expiring by year as follows:
$175 in 2023, $200 in 2024, $35 in 2025, $40 in 2026, $50 in 2028, $131 in 2029, $213 in 2030, $225 in 2031, $238 in
2032, $211 in 2033, $235 in 2034, $274 in 2035 and $235 in 2036. The Company expects that not all the credits will be
utilized before their expiration and has provided a valuation allowance for the estimated amounts that will expire. Such
valuation allowances were $924 and $837 at December 31, 2021 and 2020, respectively.
At December 31, 2021, the amounts of the Company’s Spanish subsidiary loss carry-forwards expiring by year are as
follows: $286 in 2026, $61 in 2027, $182 in 2028, $103 in 2029, $314 in 2030, $418 in 2031, $315 in 2032, $127 in 2033,
$440 in 2034, $556 in 2035, $805 in 2036, $412 in 2037, $197 in 2038 and $160 in 2039. A full valuation allowance has
40
been provided for all of these Spanish loss carry-forwards as the Company expects that the losses will not be utilized before
their expiration.
The effective income tax rate differs from the statutory rate as follows:
U.S. statutory rate
State income taxes, net
Exempt municipal bond interest
Foreign income tax rates
Income tax credits and adjustments
Adjustment of deferred tax balances
Reserve for uncertain tax benefits
Other, net
Effective income tax rate
2021
21.0 %
2.4
—
0.2
(0.6)
0.6
—
0.2
23.8 %
2020
21.0 %
2.1
—
1.0
(1.4)
(0.2)
(0.8)
1.0
22.7 %
2019
21.0 %
2.2
(0.1)
(0.1)
0.5
—
0.4
0.2
24.1 %
As a result of the 2017 Tax Cuts and Jobs Act, the Company does not assert permanent reinvestment of its foreign
subsidiaries earnings.
At December 31, 2021 and 2020, the Company had unrecognized tax benefits of $3,133 and $3,011, respectively.
Included in this balance is $1,547 and $1,468, respectively, of unrecognized tax benefits that, if recognized, would
favorably affect the annual effective income tax rate. As of December 31, 2021 and 2020, $282 and $340, respectively, of
interest and penalties were included in the liability for uncertain tax positions.
A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:
Unrecognized tax benefits at January 1
Increases in tax positions for the current year
Reductions in tax positions for lapse of statute of limitations
Reductions in tax positions for settlements and payments
Increases (decreases) in prior period unrecognized tax benefits due to change in
judgment
Unrecognized tax benefits at December 31
2021
2019
2020
$ 3,011 $ 3,678 $ 3,339
1,164
(576)
(249)
377
(501)
(308)
700
(578)
—
—
—
$ 3,133 $ 3,011 $ 3,678
(235)
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes
on the Consolidated Statements of Earnings and Retained Earnings.
The Company is subject to taxation in the U.S. and various state and foreign jurisdictions, primarily Canada and
Mexico. The Company generally remains subject to examination by U.S. federal, state and foreign tax authorities for the
years 2018 through 2020. With few exceptions, the Company is no longer subject to examinations by tax authorities for
the years 2017 and prior.
41
NOTE 5—SHARE CAPITAL AND CAPITAL IN EXCESS OF PAR VALUE:
Common Stock
Class B
Common Stock
Treasury Stock
Shares Amount Shares Amount Shares Amount
Excess
of Par
Value
Capital in
Balance at December 31, 2018
Issuance of 3% stock dividend
Conversion of Class B common shares to
common shares
Purchase and retirement of common shares
Balance at December 31, 2019
Issuance of 3% stock dividend
Conversion of Class B common shares to
common shares
Purchase and retirement of common shares
Balance at December 31, 2020
Issuance of 3% stock dividend
Conversion of Class B common shares to
common shares
Purchase and retirement of common shares
Balance at December 31, 2021
(000’s)
38,544
1,150
65
(923)
38,836
1,157
62
(982)
39,073
1,163
(000’s)
26,767 25,584
768
798
17,767
532
(000’s)
88
2
(1,992)
—
696,535
32,999
45
(641)
(65)
—
26,969 26,287
787
804
43
(682)
(62)
—
27,134 27,012
810
807
(45) —
— —
90
18,254
3
547
—
—
(1,992)
—
—
(33,475)
696,059
42,244
(43) —
— —
93
18,758
3
562
—
—
(1,992)
—
—
(31,373)
706,930
32,495
29
(921)
20
(639)
(29)
—
(20) —
— —
39,344 $ 27,322 27,793 $ 19,300
—
—
—
(29,545)
96 $ (1,992) $ 709,880
Average shares outstanding and all per share amounts included in the financial statements and notes thereto have been
adjusted retroactively to reflect annual three percent stock dividends.
While the Company does not have a formal or publicly announced Company common stock purchase program, the
Company’s board of directors periodically authorizes a dollar amount for such share purchases.
Based upon this policy, shares were purchased and retired as follows:
Year
2021
2020
2019
Total Number of Shares
Purchased (000’s)
Average Price Paid Per Share
32.76
32.59
36.93
921 $
982 $
923 $
NOTE 6—OTHER INCOME, NET:
Other income, net is comprised of the following:
Interest and dividend income
Gains (losses) on trading securities relating to deferred compensation plans
Interest expense
Foreign exchange gains (losses)
Capital gains (losses)
Miscellaneous, net
42
2021
2019
2020
$ 2,740 $ 4,005 $ 4,423
11,292
(220)
(533)
22
1,206
$ 18,596 $ 18,018 $ 16,190
12,519
(164)
534
(6)
1,130
14,207
(46)
667
(286)
1,314
NOTE 7—EMPLOYEE BENEFIT PLANS:
Pension plans:
The Company sponsors a defined contribution pension plan covering certain non-union employees with over one year
of credited service. The Company’s policy is to fund pension costs accrued based on compensation levels. Total expense
for this plan for 2021, 2020 and 2019 approximated $3,010, $2,722 and $3,114, respectively, for this defined contribution
plan. The Company also maintains certain defined contribution 401K profit sharing and retirement plans. Company
contributions in 2021, 2020 and 2019 to these plans were $3,201, $2,766 and $2,858 respectively.
The Company also contributes to a multi-employer defined benefit pension plan for certain of its union employees
under a collective bargaining agreement which is as follows:
Plan name: Bakery and Confectionery Union and Industry International Pension Fund (Plan)
Employer Identification Number and plan number: 52-6118572, plan number 001
Funded Status as of the most recent year available: 48.30% funded as of January 1, 2020
The Company’s contributions to such plan: $3,118, $2,850 and $2,943 in 2021, 2020 and 2019, respectively
Plan status: Critical and declining as of December 31, 2020 (most recent date information is available)
Beginning in 2012, the Company received periodic notices from the Plan, a multi-employer defined benefit pension
plan for certain Company union employees, that the Plan’s actuary certified the Plan to be in “critical status”, as defined
by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC); and that a plan of
rehabilitation was adopted by the trustees of the Plan in 2012. Beginning in 2015, the Plan was reclassified to “critical and
declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015. A designation of “critical
and declining status” implies that the Plan is expected to become insolvent in the next 20 years. In 2016, the Company
received new notices that the Plan’s trustees adopted an updated Rehabilitation Plan effective January 1, 2016, and all
annual notices through 2020 have continued to classify the Plan in the “critical and declining status” category.
The Company has been advised that its withdrawal liability would have been $104,300, $99,300 and $99,800 if it had
withdrawn from the Plan during 2021, 2020 and 2019, respectively. Should the Company actually withdraw from the Plan
at a future date, a withdrawal liability, which could be higher than the above discussed amounts, could be payable to the
Plan.
The amended rehabilitation plan, which continues, requires that employer contributions include 5% compounded
annual surcharge increases each year for an unspecified period of time beginning January 2013 (in addition to the 5%
interim surcharge initiated in 2012) as well as certain plan benefit reductions. In fourth quarter 2020, the Plan Trustees
advised the Company that the surcharges would no longer increase and therefore be “frozen” at the rates and amounts in
effect as of December 31, 2020 provided that the local bargaining union and the Company executed a formal consenting
agreement by March 31, 2021. During first quarter 2021, the local bargaining union and the Company executed this
agreement which resulted in the “freezing” of such surcharges as of December 31, 2020. The Company’s pension expense
for this Plan for 2021, 2020 and 2019 was $3,156, $2,866 and $2,961, respectively. The aforementioned expense includes
surcharges of $1,112, $1,010 and $948 in 2021, 2020 and 2019, respectively, as required under the plan of rehabilitation,
as amended.
The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore is
unable to determine the effects on its consolidated financial statements, but the ultimate outcome or the effects of any
modifications to the current rehabilitation plan could be material to its consolidated results of operations or cash flows in
one or more future periods.
43
Deferred compensation:
The Company sponsors three deferred compensation plans for selected executives and other employees: (i) the Excess
Benefit Plan, which restores retirement benefits lost due to IRS limitations on contributions to tax-qualified plans, (ii) the
Supplemental Plan, which allows eligible employees to defer the receipt of eligible compensation until designated future
dates and (iii) the Career Achievement Plan, which provides a deferred annual incentive award to selected executives.
Participants in these plans earn a return on amounts due them based on several investment options, which mirror returns
on underlying investments (primarily mutual funds). The Company economically hedges its obligations under the plans
by investing in the actual underlying investments. These investments are classified as trading securities and are carried at
fair value. At December 31, 2021 and 2020, these investments totaled $89,736 and $73,828, respectively. All gains and
losses and related investment income from these investments, which are recorded in other income, net, are equally offset
by corresponding increases and decreases in the Company’s deferred compensation liabilities.
Postretirement health care benefit plans:
The Company maintains a post-retirement health benefits plan for a group of “grandfathered” corporate employees.
The plan, as amended in 2013, generally limited future annual cost increases in health benefits to 3%, restricted this benefit
to current employees and retirees with long-term service with the Company, and eliminated all post-retirement benefits for
future employees effective April 1, 2014. Post-retirement benefits liabilities (as amended) were $13,235 and $13,487 at
December 31, 2021 and 2020, respectively.
Amounts recognized in accumulated other comprehensive loss (pre-tax) at December 31, 2021 are as follows:
Prior service credit
Net actuarial gain
Net amount recognized in accumulated other comprehensive loss
$
$
(613)
(1,341)
(1,954)
The changes in the accumulated postretirement benefit obligation at December 31, 2021 and 2020 consist of the
following:
Benefit obligation, beginning of year
Service cost
Interest cost
Actuarial (gain)/loss
Benefits paid
Benefit obligation, end of year
December 31,
2021
2020
$ 13,487 $ 13,743
288
403
(510)
(437)
$ 13,235 $ 13,487
270
291
(326)
(487)
The actuarial (gain) in 2021 is attributable to an actuarial gain due to an increase in the discount rate partially offset
by updated mortality projections for the year ended December 31, 2021. The actuarial (gain) in 2020 is attributable to
updated participation rates and participant spending as well as mortality table projections partially offset by an actuarial
loss due to the decrease in discount rate for the year ended December 31, 2020.
Net periodic postretirement benefit cost (income) included the following components:
2021
2020
2019
Service cost—benefits attributed to service during the period
Interest cost on the accumulated postretirement benefit obligation
Net amortization
Net periodic postretirement benefit cost (income)
$
270 $
291
(1,405)
288 $
403
(1,349)
$
(844) $
(658) $
270
499
(1,522)
(753)
The Company estimates future benefit payments will be $616, $646, $668, $686 and $693 in each year beginning in
2022 through 2026, respectively, and a total of $3,572 in 2027 through 2031.
44
NOTE 8—COMMITMENTS:
Lease expense aggregated $1,068, $942 and $1,032 in 2021, 2020 and 2019, respectively. Future operating lease
commitments are as follows: $1,072 in 2022, $717 in 2023, $420 in 2024, $422 in 2025, $409 in 2026 and $4,379
thereafter.
NOTE 9—SEGMENT AND GEOGRAPHIC INFORMATION:
The Company operates as a single reportable segment encompassing the manufacture and sale of confectionery
products. Its principal manufacturing operations are located in the United States and Canada, and its principal market is
the United States. The Company also manufactures confectionery products in Mexico, primarily for sale in Mexico, and
exports products to Canada and other countries worldwide.
The following geographic data includes net product sales summarized on the basis of the customer location and long-
lived assets based on their physical location:
2021
2020
2019
Net product sales:
United States
Canada, Mexico and Other
Long-lived assets:
United States
Canada
Mexico and Other
$ 514,437 $ 431,024 $ 478,790
44,826
$ 566,043 $ 467,427 $ 523,616
36,403
51,606
$ 178,936 $ 155,664 $ 155,428
30,412
2,615
$ 208,906 $ 187,328 $ 188,455
28,765
2,899
27,051
2,919
Sales revenues from Wal-Mart Stores, Inc. aggregated approximately 22.7%, 23.5%, and 24.2% of net product sales
during the year ended December 31, 2021, 2020 and 2019, respectively. Sales revenues from Dollar Tree, Inc. (which
includes Family Dollar which was acquired by Dollar Tree) aggregated approximately 12.1%, 11.7%, and 11.3% of net
product sales during the year ended December 31, 2021, 2020 and 2019, 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 21.0% in 2021 and 22.1% in 2020 and 17.7% in 2019. At December 31, 2021 and 2020, the
Company’s three largest customers discussed above accounted for approximately 36% and 21% of total accounts
receivable, respectively.
NOTE 10—FAIR VALUE MEASUREMENTS:
Current accounting guidance defines fair value as the price that would be received in the sale of an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires
disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in
calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or
changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the
transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement
date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include
quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity
rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about
the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable
inputs is reflected in the hierarchy assessment disclosed in the table below.
45
As of December 31, 2021 and 2020, the Company held certain financial assets that are required to be measured at fair
value on a recurring basis. These include derivative hedging instruments related to the foreign currency forward contracts
and purchase of certain raw materials, investments in trading securities and available for sale securities. The Company’s
available for sale and trading securities principally consist of corporate bonds and variable rate demand notes.
The fair value of the Company’s industrial revenue development bonds at December 31, 2021 and 2020 were valued
using Level 2 inputs which approximates the carrying value of $7,500 for both periods. Interest rates on these bonds reset
weekly based on current market conditions.
The following tables present information about the Company’s financial assets and liabilities measured at fair value
as of December 31, 2021 and 2020, and indicate the fair value hierarchy and the valuation techniques utilized by the
Company to determine such fair value:
Estimated Fair Value December 31, 2021
Cash and equivalents
Available for sale securities
Foreign currency forward contracts
Commodity futures contracts, net
Trading securities
Total assets measured at fair value
Cash and equivalents
Available for sale securities
Foreign currency forward contracts
Commodity futures contracts, net
Trading securities
Total assets measured at fair value
Total
Fair Value
$ 105,840 $ 105,840 $
Level 1
Input Levels Used
Level 2
241,407
426
124
89,736
1,282
—
124
76,196
$ 437,533 $ 183,442 $ 254,091 $
240,125
426
—
13,540
— $
Level 3
—
—
—
—
—
—
Estimated Fair Value December 31, 2020
Total
Fair Value
$ 166,841 $ 166,841 $
Level 1
Input Levels Used
Level 2
188,282
778
941
73,828
3,149
—
941
61,431
$ 430,670 $ 232,362 $ 198,308 $
185,133
778
—
12,397
— $
Level 3
—
—
—
—
—
—
Available for sale securities which utilize Level 2 inputs consist primarily of corporate bonds and variable rate demand
notes, which are valued based on quoted market prices or alternative pricing sources with reasonable levels of price
transparency.
A summary of the aggregate fair value, gross unrealized gains, gross unrealized losses, realized losses and amortized
cost basis of the Company’s investment portfolio by major security type is as follows:
December 31, 2021
Amortized
Cost
Fair
Value
Unrealized
Gains Losses
536 $ — $
$
542 $
—
238,045
1,271
3,246
—
236,332
1,282
3,257
—
—
11
11
Realized
Losses
(6) $ —
—
—
—
(1,713)
—
—
—
—
—
$ 243,104 $ 241,407 $ 22 $ (1,719) $
Available for Sale:
Municipal bonds
Variable rate demand notes
Corporate bonds
Government securities
Certificates of deposit
46
Available for Sale:
Municipal bonds
Variable rate demand notes
Corporate bonds
Government securities
Certificates of deposit
December 31, 2020
Amortized
Cost
Fair
Value
Gains
$
556 $
561 $
1,300
174,835
3,049
5,915
1,300
177,229
3,149
6,043
Unrealized
5 $
—
2,394
100
128
Realized
Losses Losses
— $ —
—
—
—
—
—
—
—
—
—
— $
$ 185,655 $ 188,282 $ 2,627 $
NOTE 11—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:
From time to time, the Company uses derivative instruments, including foreign currency forward contracts and
commodity futures contracts to manage its exposures to foreign exchange and commodity prices. Commodity futures
contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw
materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s
exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured
in Canada and sold in the United States, and periodic equipment purchases from foreign suppliers denominated in a foreign
currency. The Company does not engage in trading or other speculative use of derivative instruments.
The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Consolidated
Statements of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded
in accrued liabilities. The Company uses either hedge accounting or mark-to-market accounting for its derivative
instruments. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting
the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as
well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.
Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss,
net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially
all amounts reported in accumulated other comprehensive loss for commodity derivatives are expected to be reclassified
to cost of goods sold. Approximately $124 of this accumulated comprehensive gain is expected to be charged to earnings
in 2022. Approximately $420 and $6 in accumulated other comprehensive gain for foreign currency derivatives is expected
to be reclassified to other income, net in 2022 and 2023, respectively.
The following table summarizes the Company’s outstanding derivative contracts and their effects on its Consolidated
Statements of Financial Position at December 31, 2021 and 2020:
Derivatives designated as hedging instruments:
Foreign currency forward contracts
Commodity futures contracts
Total derivatives
Derivatives designated as hedging instruments:
Foreign currency forward contracts
Commodity futures contracts
Total derivatives
47
December 31, 2021
Notional
Amounts
Assets
Liabilities
$ 6,729 $
6,012
$
426 $
231
657 $
—
(107)
(107)
December 31, 2020
Notional
Amounts
Assets
Liabilities
$ 6,391 $
4,010
778 $
941
$ 1,719 $
—
—
—
The effects of derivative instruments on the Company’s Consolidated Statement of Earnings, Comprehensive Earnings
and Retained Earnings for year ended December 31, 2021 and 2020 are as follows:
For Year Ended December 31, 2021
Foreign currency forward contracts
Commodity futures contracts
Total
$
93 $
1,330
$ 1,423 $
445 $
2,148
2,593 $
Gain (Loss)
Gain (Loss)
on Amount Excluded
from Effectiveness
Accumulated OCI Testing Recognized
Gain (Loss) Reclassified from
Recognized
in OCI
into Earnings
For Year Ended December 31, 2020
Gain (Loss)
Gain (Loss)
on Amount Excluded
from Effectiveness
Accumulated OCI Testing Recognized
Gain (Loss) Reclassified from
Recognized
in OCI
into Earnings
in Earnings
—
—
—
in Earnings
—
—
—
Foreign currency forward contracts
Commodity futures contracts
Total
$
686 $
573
$ 1,259 $
(78) $
(247)
(325) $
NOTE 12—ACCUMULATED OTHER COMPREHENSIVE LOSS:
The following table sets forth information with respect to accumulated other comprehensive earnings (loss):
Balance at December 31, 2019
Other comprehensive earnings (loss) before
reclassifications
Reclassifications from accumulated other
comprehensive loss
Other comprehensive earnings (loss) net of
tax
Balance at December 31, 2020
Other comprehensive earnings (loss) before
reclassifications
Reclassifications from accumulated other
comprehensive loss
Other comprehensive earnings (loss) net of
tax
Balance at December 31, 2021
Foreign
Currency
Translation
$ (23,368) $
Foreign
Currency
Investments Derivatives
882 $
Commodity and Pension
Derivatives
Benefits
10 $
92 $
2,139 $
Postretirement
Accumulated
Other
Comprehensive
Earnings (Loss)
(20,245)
(1,213)
1,110
520
434
356
1,207
—
—
59
187
(1,023)
(777)
(1,213)
$ (24,581) $
1,110
1,992 $
579
589 $
621
713 $
(667)
1,472 $
430
(19,815)
(301)
(3,205)
70
1,009
332
(2,095)
—
(73)
(337)
(1,628)
(1,065)
(3,103)
(301)
$ (24,882) $
(3,278)
(1,286) $
(267)
322 $
(619)
94 $
(733)
739 $
(5,198)
(25,013)
48
The amounts reclassified from accumulated other comprehensive income (loss) consisted of the following:
Details about Accumulated
Other
Comprehensive Income
Components
Investments
Foreign currency derivatives
Commodity derivatives
Postretirement and pension
benefits
Total before tax
Tax expense (benefit)
Net of tax
Year to Date Ended
December 31, 2021 December 31, 2020 Location of (Gain) Loss Recognized in Earnings
$
(96) $
(445)
(2,148)
- Other income, net
78 Other income, net
247 Product cost of goods sold
(1,405)
(4,094)
991
(3,103) $
(1,349)Other income, net
(1,024)
247
(777)
$
NOTE 13—GOODWILL AND INTANGIBLE ASSETS:
All of the Company’s intangible indefinite-lived assets are trademarks.
The changes in the carrying amount of trademarks for 2021 and 2020 were as follows:
2021
2020
Original cost
Accumulated impairment losses as of January 1
Balance at January 1
Current year impairment losses
Balance at December 31
Accumulated impairment losses as of December 31
(18,743)
$ 193,767 $ 193,767
(18,743)
$ 175,024 $ 175,024
—
$ 175,024 $ 175,024
$ (18,743) $ (18,743)
—
The fair value of indefinite-lived intangible assets was primarily assessed using the present value of estimated future
cash flows and relief-from-royalty method.
The Company has no accumulated impairment losses of goodwill.
Note 14 — LEASES:
The Company leases certain buildings, land and equipment that are classified as operating leases. These leases have
remaining lease terms of up to approximately 20 years. In the twelve months of 2021 and 2020, operating lease cost and
cash paid for operating lease liabilities totaled $1,068 and $1,023, respectively, which is classified in cash flows from
operating activities. As of December 31, 2021 and 2020, operating lease right-of-use assets and operating lease liabilities
were both $7,419 and $858, respectively. The weighted-average remaining lease term related to these operating leases
was approximately 7.7 years and 0.7 years as of December 31, 2021 and 2020, respectively. The weighted-average
discount rate related to the Company’s operating leases was 2.3% and 3.0% as of December 31, 2021 and 2020,
respectively. Maturities of operating lease liabilities at December 31, 2021 are as follows: $1,072 in 2022, $717 in 2023,
$420 in 2024, $422 in 2025, $409 in 2026 and $4,379 in 2027 through 2041.
The Company, as lessor, rents certain commercial real estate to third party lessees. The December 31, 2021 and 2020
cost related to these leased properties was $51,384 and $51,426, respectively, and the accumulated depreciation related to
these leased properties was $15,844 and $14,784, respectively. Terms of certain such leases, including renewal options,
may be extended for up to approximately sixty years, many of which provide for periodic adjustment of rent payments
based on changes in consumer or other price indices. The Company recognizes lease income on a straight-line basis over
the lease term. Lease income in the twelve months of 2021 and 2020 was $4,223 and $3,191, respectively, and is classified
in cash flows from operating activities.
49
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
ITEM 9A. Controls and Procedures.
Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer have concluded, based on their
evaluation as of the end of the period covered by this report, that the Company’s disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) ) are effective to
ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act
is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control over Financial Reporting
(a) See “Management’s Report on Internal Control Over Financial Reporting,” included in Item 8 “Financial
Statements and Supplementary Data,” which is incorporated herein by reference.
(b) See “Report of Independent Registered Public Accounting Firm” included in Item 8 “Financial Statements
and Supplementary Data” for the attestation report of the Company’s independent registered public
accounting firm, which is incorporated herein by reference.
(c) There were no changes in the Company’s internal control over financial reporting during the quarter ended
December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s
internal control over financial reporting.
ITEM 9B. Other Information.
None.
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
50
ITEM 10. Directors, Executive Officers and Corporate Governance.
PART III
See the information with respect to the Directors of the Company which is set forth in the section entitled
“Election of Directors” of the 2021 Proxy Statement, which section of the 2021 Proxy Statement is incorporated herein by
reference. See the information in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” of the
Company’s 2021 Proxy Statement, which section is incorporated herein by reference.
The following table sets forth the information with respect to the executive officers of the Company:
Name
Ellen R. Gordon*
G. Howard Ember Jr.
Stephen P. Green
Kenneth D Naylor
Barry P. Bowen
Position (1)
Age
Chairman of the Board and Chief Executive Officer 90
Vice President/Finance
Vice President/Manufacturing
Vice President/Marketing and Sales
Treasurer
69
63
62
66
* A member of the Board of Directors of the Company.
(1) All of the above named officers have served in the positions set forth in the table as their principal occupations for
more than the past five years except for Mr. Green and Mr. Naylor who were appointed to their current positions on
January 16, 2017 and January 1, 2020, respectively. Previously, Mr. Green and Mr. Naylor held positions of Plant
Manager and Vice President of USA Sales, respectively, during the past five-year period
Code of Ethics
The Company has a Code of Business Conduct and Ethics, which applies to all of the Company’s
directors and employees, and which meets the Securities Exchange Commission criteria for a “code of ethics.” The Code
of Business Conduct and Ethics is available on the Company’s website, located at www.tootsie.com, and the information
in such is available in print to any shareholder who requests a copy.
ITEM 11. Executive Compensation.
Compensation” of the Company’s 2022 Proxy Statement, which are incorporated herein by reference.
See the information set forth in the sections entitled “Executive Compensation” and “Director
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
For information with respect to the beneficial ownership of the Company’s common stock and Class B
common stock by the beneficial owners of more than 5% of said shares and by the management of the Company, see the
sections entitled “Ownership of Common Stock and Class B Common Stock by Certain Beneficial Owners” and
“Ownership of Common Stock and Class B Common Stock by Management” of the 2022 Proxy Statement. These sections
of the 2022 Proxy Statement are incorporated herein by reference. The Company does not have any compensation plans
under which equity securities of the Company are authorized for issuance.
51
ITEM 13. Certain Relationships and Related Transactions, and Director Independence.
incorporated herein by reference.
See the section entitled “Related Person Transactions” of the 2022 Proxy Statement, which is
The Company’s board of directors has determined that its non-management directors, Mr. Seibert and
Ms. Wardynski and Ms. Lewis-Brent, are independent under the New York Stock Exchange listing standards because they
have no direct or indirect relationship with the Company other than through their service on the Board of Directors.
ITEM 14. Principal Accounting Fees and Services.
See the section entitled “Independent Auditor Fees and Services” of the 2022 Proxy Statement, which is
incorporated herein by reference.
ITEM 15. Exhibits, Financial Statement Schedules.
(a) Financial Statements.
(1) The following financial statements are included in Item 8:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Earnings and Retained Earnings for each of the three years
ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Earnings for each of the three years ended
December 31, 2021, 2020 and 2019
Consolidated Statements of Financial Position at December 31, 2021 and 2020
Consolidated Statements of Cash Flows for each of the three years ended in the period
December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
The financial statement schedule included in this Form 10-K is Schedule II - Valuation and
Qualifying Accounts and Reserves for the Year Ended December 31, 2021, 2020 and 2019 (see Schedule II
immediately following ITEM 16 of this Form 10-K).
(3) Exhibits required by Item 601 of Regulation S-K:
See Index to Exhibits which appears following Financial Schedule II.
ITEM 16.
Form 10-K Summary.
None.
52
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS (in thousands)
Description
2021:
Reserve for bad debts
Reserve for cash discounts
Deferred tax asset valuation
2020:
Reserve for bad debts
Reserve for cash discounts
Deferred tax asset valuation
2019:
Reserve for bad debts
Reserve for cash discounts
Deferred tax asset valuation
DECEMBER 31, 2021, 2020 and 2019
Additions
(reductions)
charged
(credited) to
expense
Balance at
beginning
of year
Balance at
Deductions(1)
End of
Year
$
$
$
$
$
$
1,108 $
586
5,593
7,287 $
418 $
10,153
(38)
10,533 $
134 $
9,850
—
9,984 $
1,392
889
5,555
7,836
1,337 $
612
4,985
6,934 $
123 $
8,504
608
9,235 $
352 $
8,530
—
8,882 $
1,108
586
5,593
7,287
1,128 $
692
3,892
5,712 $
676 $
9,482
1,093
11,251 $
467 $
9,562
—
10,029 $
1,337
612
4,985
6,934
(1) Deductions against reserve for bad debts consist of accounts receivable written off net of recoveries and exchange rate
movements. Deductions against reserve for cash discounts consist of allowances to customers.
53
3.1
3.2
3.3
4.1
4.2
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
INDEX TO EXHIBITS
Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.1 of the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1997.
Amendment to Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.2 of the Company’s
Annual Report on Form 10-K for the year ended December 31, 1999.
Amended and Restated By-Laws. Incorporated by reference to Exhibit 3.2 of the Company’s Annual Report
on Form 10-K for the year ended December 31, 1996.
Specimen Class B Common Stock Certificate. Incorporated by reference to Exhibit 1.1 of the Company’s
Registration Statement on Form 8-A dated February 29, 1988.
Description of Common Stock. Incorporated by reference to Exhibit 4.2 of the Company’s Annual Report
on Form 10-K for the year ended December 31, 2019.
Excess Benefit Plan. Incorporated by reference to Exhibit 10.8.1 of the Company’s Annual Report on
Form 10-K for the year ended December 31, 1990.
Amended and Restated Career Achievement Plan of the Company. Incorporated by reference to Exhibit 10.8.2
of the Company’s Annual Report on Form 10-K for the year ended December 31, 1998.
Amendment to the Amended and Restated Career Achievement Plan of the Company. Incorporated by
reference to Exhibit 10.8.3 of the Company’s Annual Report on Form 10-K for the year ended December 31,
1999.
Restatement of Split Dollar Agreement (Special Trust) between the Company and the trustee of the Gordon
Family 1993 Special Trust dated January 31, 1997. Incorporated by reference to Exhibit 10.12 of the
Company’s Annual Report on Form 10-K for the year ended December 31, 1996.
Form of Change In Control Agreement dated August, 1997 between the Company and certain executive
officers. Incorporated by reference to Exhibit 10.25 of the Company’s Annual Report on Form 10-K for the
year ended December 31, 1997.
Amendment to Split Dollar Agreement (Special Trust) dated April 2, 1998 between the Company and the
trustee of the Gordon Family 1993 Special Trust, together with related Collateral Assignments. Incorporated
by reference to Exhibit 10.27 of the Company’s Annual Report on Form 10-K for the year ended December 31,
1998.
Form of Amendment to Change in Control Agreement between the Company and certain executive officers.
Incorporated by reference to Exhibit 10.28 of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008.
Post 2004 Supplemental Savings Plan of the Company. Incorporated by reference to Exhibit 10.29 of the
Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
Post 2004 Excess Benefit Plan of the Company. Incorporated by reference to Exhibit 10.30 of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008.
10.10*
Amended and Restated Career Achievement Plan of the Company. Incorporated by reference to Exhibit 10.31
of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
54
10.11*
10.12*
10.13*
10.14*
Exhibit 10.1- Tootsie Roll Industries, Inc. Management Incentive Plan. Incorporated by reference to Appendix
A to the Company’s definitive Proxy Statement filed with the Commission on March 24, 2006.
Amendment 2015-1, to the Tootsie Roll Industries, Inc. Post 2004 Excess Benefit Plan. Incorporated by
reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K for the year ended December 31,
2015.
Amendment 2015-1, to the Tootsie Roll Industries, Inc. Career Achievement Plan. Incorporated by reference
to Exhibit 10.13 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Second Amendment to the Tootsie Roll Industries, Inc. Post 2004 Excess Benefit Plan. Incorporated by
reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 13, 2021.
21
List of Subsidiaries of the Company.
31.1
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
101.INS
XBRL Instance Document - The instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
104
Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data
File because its XBRL tags are embedded within the Inline XBRL document.
*Management compensation plan or arrangement.
55
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, Tootsie
Roll Industries, Inc., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
TOOTSIE ROLL INDUSTRIES, INC.
By: Ellen R. Gordon
Ellen R. Gordon, Chairman of the Board of Directors
and Chief Executive Officer
Date: March 1, 2022
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
Ellen R. Gordon
Ellen R. Gordon
Chairman of the Board of Directors and Chief Executive Officer March 1, 2022
(principal executive officer)
Paula M. Wardynski
Paula M. Wardynski
Director
Lana Jane Lewis-Brent
Lana Jane Lewis-Brent
Director
Barre A. Seibert
Barre A. Seibert
Virginia L. Gordon
Virginia L. Gordon
Director
Director
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
G. Howard Ember, Jr.
G. Howard Ember, Jr.
Vice President, Finance
March 1, 2022
(principal financial officer and principal accounting officer)
56
NAME
JURISDICTION OF INCORPORATION
LIST OF SUBSIDIARIES OF THE COMPANY
EXHIBIT 21
Andes Candies LLC
Andes Manufacturing LLC
Andes Services LLC
C. G. P., Inc.
Cambridge Brands, Inc.
Cambridge Brands Manufacturing, Inc.
Cambridge Brands Services, Inc.
Cambridge Brands Sales LLC
Cella’s Confections, Inc.
CGCLP, Inc.
Charms LLC
Concord Wax, Inc.
Concord (GP) Inc.
Concord Canada Holdings ULC
Concord Confections Holdings USA, Inc.
Concord Partners LP
Fleer Española,S.L.
Henry Eisen Advertising Agency, Inc.
Impel Movie Line, Inc.
JT Company, Inc.
Rizzle Inversiones 2014, S.L.
Tootsie Roll Industries LLC
Tootsie Roll of Canada ULC
The Tootsie Roll Company, Inc.
Tootsie Roll Management, Inc.
Tootsie Roll Mfg, LLC
Tootsie Rolls - Latin America, Inc.
Tootsie Roll Worldwide, Ltd.
The Sweets Mix Company, Inc.
TRI de Latinoamerica S.A. de C.V.
TRI Captive Insurance Company, Inc.
TRI Finance, Inc.
TRI International, Inc.
TRI-Mass, Inc.
TRI Sales Co.
TRI Sales Services, LLC
Tutsi S. A. de C. V.
World Trade & Marketing Ltd.
Illinois
Illinois
Illinois
Delaware
Delaware
Delaware
Delaware
Illinois
Virginia
Delaware
Illinois
Delaware
Ontario
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CERTIFICATIONS
Exhibit 31.1
I, Ellen R. Gordon, Chairman and Chief Executive Officer of Tootsie Roll Industries, Inc., certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Tootsie Roll Industries, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: March 1, 2022
By: /s/ Ellen R. Gordon
Ellen R. Gordon
Chairman and Chief Executive Officer
CERTIFICATIONS
Exhibit 31.2
I, G. Howard Ember, Jr., Vice President/Finance and Chief Financial Officer of Tootsie Roll Industries, Inc., certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of Tootsie Roll Industries, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
7
Date: March 1, 2022
By:
/s/ G. Howard Ember, Jr.
G. Howard Ember, Jr.
Vice President/Finance and Chief Financial Officer
Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32
Each of the undersigned officers of Tootsie Roll Industries, Inc. certifies that (i) the Annual Report on Form 10-K of
Tootsie Roll Industries, Inc. for the year ended December 31, 2021 (the Form 10-K) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (ii) the information
contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of
Tootsie Roll Industries, Inc.
Dated: March 1, 2022
Dated: March 1, 2022
/s/ Ellen R. Gordon
Ellen R. Gordon
Chairman and Chief Executive Officer
/s/ G. Howard Ember, Jr.
G. Howard Ember, Jr.
Vice President/Finance and Chief Financial Officer
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Corporate Profile
Board of Directors
Offices, Plants
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
125 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 believe that an open family atmosphere at work
to vertically integrate operations where it is financially
We seek to outsource functions where appropriate and
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.
We do not jeopardize long-term growth for immediate,
short-term results.
aggressively advertised and promoted to each new
generation of consumers.
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,
2021 2020
(in thousands except per share data)
Net Product Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $566,043 $467,427
Net Earnings Attributable to Tootsie Roll Industries, Inc. . . . . . . . . . . . . . . . . . 65,326 58,995
Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188,333 250,851
Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208,906 187,328
Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769,042 763,327
Average Shares Outstanding* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,431 68,482
Net Earnings Attributable to Tootsie Roll Industries, Inc.* . . . . . . . . . . . . . . . . $0.97 $0.86
Cash Dividends Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.36 0.36
Per Share Items
*Adjusted for stock dividends.
Ellen R. Gordon
Chairman of the Board and
Chief Executive Officer
Executive Offices
Virginia L. Gordon
Private Investor
Lana Jane Lewis-Brent(1)(2)
Barre A. Seibert(1)(2)
Paula M. Wardynski(1)(2)
President, Paul Brent
Designer, Inc., an art
publishing, design and
licensing company
Retired First Vice President,
Washington Mutual Bank
Former Senior Vice
President—Finance,
Twenty-First Century Fox
(1)Audit Committee (2)Compensation Committee
Plants/Warehouses
Foreign Sales Offices
7401 S. Cicero Ave.
Chicago, Illinois 60629
www.tootsie.com
Illinois
Tennessee
Massachusetts
Wisconsin
Ontario, Canada
Mexico City, Mexico
Barcelona, Spain
Mexico City, Mexico
Ontario, Canada
Barcelona, Spain
Other Information
Officers
Ellen R. Gordon
Kenneth D. Naylor
G. Howard Ember, Jr.
Chairman of the Board and
Chief Executive Officer
Vice President,
Marketing & Sales
Vice President, Finance &
Chief Financial Officer
Stock Exchange
Stock Identification
Stock Transfer Agent and
Stock Registrar
Stephen P. Green
Vice President, Manufacturing
Barry P. Bowen
Treasurer & Assistant
Secretary
Robert L. Zirk
Controller
Independent Registered
Public Accounting Firm
General Counsel
Annual Meeting
New York Stock
Exchange, Inc.
(Since 1922)
Ticker Symbol: TR
CUSIP No. 890516 10-7
American Stock Transfer
and Trust Company
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
1-800-710-0932
www.amstock.com
Grant Thornton LLP
171 North Clark Street,
Suite 200
Chicago, IL 60601
Aronberg Goldgehn Davis &
Garmisa
330 North Wabash Avenue
Chicago, IL 60611
May 2, 2022
One James Center, Suite 200
901 East Cary Street
Richmond, VA 23219
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