Annual Report 2009
Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of confectionery products for 113 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, Tootsie Dots, Tootsie Crows, Junior Mints, Junior Caramels, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff cotton candy, Dubble Bubble, Razzles, Cry Baby, Nik-L-Nip and EI Bubble.
Ellen R. Gordon, President and Chief Operating Officer and Melvin J. Gordon, Chairman and Chief Executive Officer.
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.”
To Our Shareholders
Net product sales in 2009 were $496 million as compared with 2008 net product sales of $492 million. Most of our core brands posted solid results and Halloween was once again our largest selling season of the year. Net earnings grew to $53 million from $39 million in 2008. The increase in earnings was attributable to margin improvements stemming from selected price increases and product weight adjustments as well as from lower energy and fuel costs and from foreign income tax benefits. Commodity and packaging costs have risen significantly in recent years. While some of these costs abated during 2009, as a whole they remain at historically high levels. We are challenged to look for every feasible way to keep our operations lean and costs in check so that we can continue to deliver maximum value to our consumers. We take a long-term view of our business and strive to implement measures that improve our operating results without jeopardizing the long-term strength of the Company and its well known brands. As a value oriented confectioner, we deem it essential to be a low cost producer and actively pursue investments in the latest technology to keep us so. To that end, capital expenditures in 2009 were $21 million. In addition to new state of the art equipment installations at a number of our plants, a portion of this figure was directed toward the latest phase of implementing our enterprise resource planning system, a comprehensive system of leading edge business software. During 2009 we paid cash dividends of 32 cents per share and again distributed a 3% stock dividend. This was the sixty-seventh consecutive year the Company has paid cash dividends and the forty-fifth consecutive year that a stock dividend was distributed. We also repurchased 937,956 shares of common stock on the open market for an aggregate cost of $21 million. We ended 2009 with $158 million in cash and investments and we remain poised to continue investing in our business, improving manufacturing productivity and...