The financial statements of tootsie roll are presented below

Broadening Your Perspective 8-1

The financial statements of Tootsie Roll are presented below.

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data)
For the year ended December 31,
2011 2010 2009
Net product sales $528,369 $517,149 $495,592
Rental and royalty revenue 4,136 4,299 3,739
Total revenue 532,505 521,448 499,331
Product cost of goods sold 365,225 349,334 319,775
Rental and royalty cost 1,038 1,088 852
Total costs 366,263 350,422 320,627
Product gross margin 163,144 167,815 175,817
Rental and royalty gross margin 3,098 3,211 2,887
Total gross margin 166,242 171,026 178,704
Selling, marketing and administrative expenses 108,276 106,316 103,755
Impairment charges — — 14,000
Earnings from operations 57,966 64,710 60,949
Other income (expense), net 2,946 8,358 2,100
Earnings before income taxes 60,912 73,068 63,049
Provision for income taxes 16,974 20,005 9,892
Net earnings $43,938 $53,063 $53,157

Net earnings $43,938 $53,063 $53,157
Other comprehensive earnings (loss) (8,740 ) 1,183 2,845
Comprehensive earnings $35,198 $54,246 $56,002

Retained earnings at beginning of year. $135,866 $147,687 $144,949
Net earnings 43,938 53,063 53,157
Cash dividends (18,360 ) (18,078 ) (17,790 )
Stock dividends (47,175 ) (46,806 ) (32,629 )
Retained earnings at end of year $114,269 $135,866 $147,687

Earnings per share $0.76 $0.90 $0.89

Average Common and Class B Common shares outstanding 57,892 58,685 59,425
(The accompanying notes are an integral part of these statements.)

CONSOLIDATED STATEMENTS OF

Financial Position

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)
Assets December 31,
2011 2010
CURRENT ASSETS:
Cash and cash equivalents $78,612 $115,976
Investments 10,895 7,996
Accounts receivable trade, less allowances of $1,731 and $1,531 41,895 37,394
Other receivables 3,391 9,961
Inventories:
Finished goods and work-in-process 42,676 35,416
Raw materials and supplies 29,084 21,236
Prepaid expenses 5,070 6,499
Deferred income taxes 578 689
Total current assets 212,201 235,167
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 21,939 21,696
Buildings 107,567 102,934
Machinery and equipment 322,993 307,178
Construction in progress 2,598 9,243
455,097 440,974
Less—Accumulated depreciation 242,935 225,482
Net property, plant and equipment 212,162 215,492
OTHER ASSETS:
Goodwill 73,237 73,237
Trademarks 175,024 175,024
Investments 96,161 64,461
Split dollar officer life insurance 74,209 74,441
Prepaid expenses 3,212 6,680
Equity method investment 3,935 4,254
Deferred income taxes 7,715 9,203
Total other assets 433,493 407,300
Total assets $857,856 $857,959
Liabilities and Shareholders’ Equity December 31,
2011 2010
CURRENT LIABILITIES:
Accounts payable $10,683 $9,791
Dividends payable 4,603 4,529
Accrued liabilities 43,069 44,185
Total current liabilities 58,355 58,505
NONCURRENT LIABILITES:
Deferred income taxes 43,521 47,865
Postretirement health care and life insurance benefits 26,108 20,689
Industrial development bonds 7,500 7,500
Liability for uncertain tax positions 8,345 9,835
Deferred compensation and other liabilities 48,092 46,157
Total noncurrent liabilities 133,566 132,046
SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and 36,057 respectively, issued 25,333 25,040
Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued 14,601 14,212
Capital in excess of par value 533,677 505,495
Retained earnings, per accompanying statement 114,269 135,866
Accumulated other comprehensive loss (19,953 ) (11,213 )
Treasury stock (at cost)—71 shares and 69 shares, respectively (1,992 ) (1,992 )
Total shareholders’ equity 665,935 667,408
Total liabilities and shareholders’ equity $857,856 $857,959

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

Cash Flows (in thousands)
For the year ended December 31,
2011 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $43,938 $53,063 $53,157
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation 19,229 18,279 17,862
Impairment charges — — 14,000

Impairment of equity method investment
— — 4,400

Loss from equity method investment
194 342 233

Amortization of marketable security premiums
1,267 522 320

Changes in operating assets and liabilities:


Accounts receivable
(5,448 ) 717 (5,899 )

Other receivables
3,963 (2,373 ) (2,088 )

Inventories
(15,631 ) (1,447 ) 455

Prepaid expenses and other assets
5,106 4,936 5,203

Accounts payable and accrued liabilities
84 2,180 (2,755 )

Income taxes payable and deferred
(5,772 ) 2,322 (12,543 )

Postretirement health care and life insurance benefits
2,022 1,429 1,384

Deferred compensation and other liabilities
2,146 2,525 2,960

Others
(708 ) 310 305
Net cash provided by operating activities 50,390 82,805 76,994
CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures
(16,351 ) (12,813 ) (20,831 )

Net purchase of trading securities
(3,234 ) (2,902 ) (1,713 )

Purchase of available for sale securities
(39,252 ) (9,301 ) (11,331 )

Sale and maturity of available for sale securities
7,680 8,208 17,511

Net cash used in investing activities
(51,157 ) (16,808 ) (16,364 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Shares repurchased and retired
(18,190 ) (22,881 ) (20,723 )

Dividends paid in cash
(18,407 ) (18,130 ) (17,825 )

Net cash used in financing activities
(36,597 ) (41,011 ) (38,548 )
Increase (decrease) in cash and cash equivalents (37,364 ) 24,986 22,082
Cash and cash equivalents at beginning of year 115,976 90,990 68,908
Cash and cash equivalents at end of year $78,612 $115,976 $90,990
Supplemental cash flow information

Income taxes paid
$16,906 $20,586 $22,364

Interest paid
$38 $49 $182

Stock dividend issued
$47,053 $46,683 $32,538
(The accompanying notes are an integral part of these statements.)

Five Year Summary of Earning and Financial Hightlights

TOOTISE ROLL. INDUSTRY, INC. AND SUBSIDIARIES

(Thousands of dollars except per share, percentage and ratio figures)
2011 2010 2009 2008 2007
Sales and Earnings Data
Net product sales $528,369 $517,149 $495,592 $492,051 $492,742
Product gross margin 163,144 167,815 175,817 158,055 165,456
Interest expenses 121 142 243 378 535
Provision for income taxes 16,974 20,005 9,892 16,347 25,401
Net earnings 43,938 53,063 53,157 38,880 52,175
% of net product sales 8.3 % 10.3 % 10.7 % 7.9 % 10.6 %
% of shareholders' equity 6.6 % 8.0 % 8.1 % 6.1 % 8.1 %

Per Common Share Data
Net earnings $0.76 $0.90 $0.89 $0.65 $0.85
Cash dvidends declared 0.32 0.32 0.32 0.32 0.32
Stock dividends 3 % 3 % 3 % 3 % 3 %

Additional Financial Data
Working capital $153,846 $176,662 $154,409 $129,694 $142,163
Net cash provided by opreating activities 50,390 82,805 76,994 57,333 90,148
Net cash provided by (used by) investing activities (51,157 ) (16,808 ) (16,364 ) (7,565 ) (43,429 )
Net cash used in financing activities (36,597 ) (41,011 ) (38,548 ) (38,666 ) (44,842 )
Property, plant & equipment additions 16,351 12,813 20,831 34,355 14,767
Net property, plant & equipment 212,162 215,492 220,721 217,628 201,401
Total assets 857,856 857,959 836,844 813,252 813,134
Long-term debt 7,500 7,500 7,500 7,500 7,500
Shareholders' equity 665,935 667,408 654,244 636,847 640,204
Average shares outstanding 57,892 58,685 59,425 60,152 61,580

Notes to Consolidated Financial Statements ($ in thousands)

Revenue recognition:

Products are sold to customers based on accepted purchase orders which include quantity, sales price and other relevant terms of sale. Revenue, net of applicable provisions for discounts, returns, allowances and certain advertising and promotional costs, is recognized when products are delivered to customers and collectability is reasonably assured. Shipping and handling costs of $45,850, $43,034, and $38,628 in 2011, 2010 and 2009, respectively, are included in selling, marketing and administrative expenses. Accounts receivable are unsecured. Revenues from a major customer aggregated approximately 23.3%, 21.4% and 22.9% of net product sales during the years ended December 31, 2011, 2010 and 2009, respectively.

SEGMENT AND GEOGRAPHIC INFORMATION:

The Company operates as a single reportable segments encompassing the manufacturing and sale of confectionery products. Its principal manufacturing operations are located in the United States and Canada, and its principal market is in the United States. The Company also manufactures and sells confectionery products in Mexico, and exports products to Canada and 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 location:

2011 2010 2009
Net product sales:
United states $487,185 $471,714 $455,517
Foreign 41,184 45,435 40,075
$528,369 $517,149 $495,592
Long-lived assets:
United states $170,173 $172,087 $176,044
Foreign 41,989 43,405 44,677
$212,162 $215,492 $220,721

Calculate the accounts receivable turnover and average collection period for 2011. (Use “Net Product Sales.” Assume all sales were credit sales.) (Round answers to 1 decimal place, e.g. 15.2.)

Accounts receivable turnover [removed] times
Average collection period [removed] days