ACC 291 week 2 question

The financial statements of Tootsie Roll are presented below.TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OFEarnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data)For the year ended December 31,201120102009Net product sales$528,369$517,149$495,592Rental and royalty revenue4,1364,2993,739Total revenue532,505521,448499,331Product cost of goods sold365,225349,334319,775Rental and royalty cost1,0381,088852Total costs366,263350,422320,627Product gross margin163,144167,815175,817Rental and royalty gross margin3,0983,2112,887Total gross margin166,242171,026178,704Selling, marketing and administrative expenses108,276106,316103,755Impairment charges——14,000Earnings from operations57,96664,71060,949Other income (expense), net2,9468,3582,100Earnings before income taxes60,91273,06863,049Provision for income taxes16,97420,0059,892Net earnings$43,938$53,063$53,157Net earnings$43,938$53,063$53,157Other comprehensive earnings (loss)(8,740)1,1832,845Comprehensive earnings$35,198$54,246$56,002Retained earnings at beginning of year.$135,866$147,687$144,949Net earnings43,93853,06353,157Cash 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$147,687Earnings per share$0.76$0.90$0.89Average Common and Class B Common shares outstanding57,89258,68559,425(The accompanying notes are an integral part of these statements.)CONSOLIDATED STATEMENTS OFFinancial PositionTOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)AssetsDecember 31,20112010CURRENT ASSETS:Cash and cash equivalents$78,612$115,976Investments10,8957,996Accounts receivable trade, less allowances of $1,731 and $1,53141,89537,394Other receivables3,3919,961Inventories:Finished goods and work-in-process42,67635,416Raw materials and supplies29,08421,236Prepaid expenses5,0706,499Deferred income taxes578689Total current assets212,201235,167PROPERTY, PLANT AND EQUIPMENT, at cost:Land21,93921,696Buildings107,567102,934Machinery and equipment322,993307,178Construction in progress2,5989,243455,097440,974Less—Accumulated depreciation242,935225,482Net property, plant and equipment212,162215,492OTHER ASSETS:Goodwill73,23773,237Trademarks175,024175,024Investments96,16164,461Split dollar officer life insurance74,20974,441Prepaid expenses3,2126,680Equity method investment3,9354,254Deferred income taxes7,7159,203Total other assets433,493407,300Total assets$857,856$857,959Liabilities and Shareholders’ EquityDecember 31,20112010CURRENT LIABILITIES:Accounts payable$10,683$9,791Dividends payable4,6034,529Accrued liabilities43,06944,185Total current liabilities58,35558,505NONCURRENT LIABILITES:Deferred income taxes43,52147,865Postretirement health care and life insurance benefits26,10820,689Industrial development bonds7,5007,500Liability for uncertain tax positions8,3459,835Deferred compensation and other liabilities48,09246,157Total noncurrent liabilities133,566132,046SHAREHOLDERS’ EQUITY:Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and 36,057 respectively, issued25,33325,040Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued14,60114,212Capital in excess of par value533,677505,495Retained earnings, per accompanying statement114,269135,866Accumulated other comprehensive loss(19,953)(11,213)Treasury stock (at cost)—71 shares and 69 shares, respectively(1,992)(1,992)Total shareholders’ equity665,935667,408Total liabilities and shareholders’ equity$857,856$857,959TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OFCash Flows (in thousands)For the year ended December 31,201120102009CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings$43,938$53,063$53,157 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation19,22918,27917,862 Impairment charges——14,000 Impairment of equity method investment——4,400 Loss from equity method investment194342233 Amortization of marketable security premiums1,267522320 Changes in operating assets and liabilities: Accounts receivable(5,448)717(5,899) Other receivables3,963(2,373)(2,088) Inventories(15,631)(1,447)455 Prepaid expenses and other assets5,1064,9365,203 Accounts payable and accrued liabilities842,180(2,755) Income taxes payable and deferred(5,772)2,322(12,543) Postretirement health care and life insurance benefits2,0221,4291,384 Deferred compensation and other liabilities2,1462,5252,960 Others(708)310305 Net cash provided by operating activities50,39082,80576,994CASH 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 securities7,6808,20817,511 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)24,98622,082Cash and cash equivalents at beginning of year115,97690,99068,908Cash and cash equivalents at end of year$78,612$115,976$90,990Supplemental cash flow information Income taxes paid$16,906$20,586$22,364 Interest paid$38$49$182 Stock dividend issued$47,053$46,683$32,538(The accompanying notes are an integral part of these statements.)Notes to Consolidated Financial Statements ($ in thousands)PROPERTY, PLANT AND EQUIPMENT:Depreciation is computed for financial reporting purposes by use of the straight-line method based on the useful lives of 20 to 35 years for building and 5 to 25 years for machinery and equipment. Depreciation expenses was $19,229, $18,279 and $17,862 in 2011, 2010 and 2009, respectively.Goodwill and intangible assets:In accordance with authoritative guidance, goodwill and intangible assets with indefinite lives are not amortized, but rather 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. The Company has completed its annual impairment testing of its goodwill and trademarks at December 31 of each of the years presented. As of December 31, 2009, management ascertained that certain trademarks were impaired, and recorded a pre-tax charge of $14,000. No impairments of intangibles were recorded in 2011 and 2010. This determination is made by comparing the carrying value of the asset with its estimated fair value, which is calculated using estimates including discounted projected future cash flows. If the carrying value of goodwill exceeds the fair value, a second step would measure the carrying value and implied fair value of goodwill. Management believes that all assumptions used for the impairment tests are consistent with those utilized by market participants performing similar valuations.Answer the following questions.What were the total cost and book value of property, plant, and equipment at December 31, 2011? (Enter the amounts in thousands.)Total cost$Book value$[img border=’0′ alt=” height=’1′ width=’8′ src=’’>[img border=’0′ alt=” height=’1′ width=’8′ src=’’>What was the amount of depreciation expense for each of the 3 years 2009–2011? (Hint: Use the statement of cash flows.) (Enter the amounts in thousands.)Depreciation2009$2010$2011$

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