Refer to the financial statements and notes of Tootsie Roll Industries Inc. Research and answer the following questions about Tootsie Roll Industries Inc. Present your findings using complete sentences and paragraph format. Word Document

1. 1.Which method of reporting cash flows from operations does the company use?
2. 2.Compare the net cash provided/used from operations to the net income amount on the income statement for all of the years presented in the annual report. Are these two numbers trending in the same direction? What is the largest adjustment item in the cash flows from operations?
3. 3.What has created the largest inflow and outflow of cash for investing activities? Did investing activities provide or use cash for each of the years presented?
4. 4.Did the financing activities provide or use cash in each of the years presented? What are the stock repurchase and dividend trends of your chosen company?
5. 5.Doesthecashprovidedbyoperationscovertheinvestingactivities?Financingactivities?
6. *TootsieRollAnnualReportAttached Due TODAY -5/24/16 at 9pm

Tootsie Roll Industries, Inc. Annual Report 2014 Melvin J. Gordon 1919 - 2015 On January 20, 2015, Melvin J. Gordon, Chairman of the Board of Directors and Chief Executive Officer of Tootsie Roll Industries, passed away at the age of 95 after a brief illness. Mr. Gordon joined the board of what was then Sweets Company of America in 1952 and was elevated to the roles of Chairman and CEO in 1962. Sales at that time were $25 million, profits were $1 million and our product line primarily consisted of Tootsie Rolls and Tootsie Pops. Mr. Gordon, a man of great vision and drive, reshaped the Company over his long tenure. Early on, he changed the Company's name to Tootsie Roll Industries in recognition of the flagship brand and relocated the Company to a large, centrally located facility in Chicago which remains the Company's headquarters and its largest plant. He expanded operations into Mexico and led the Company through a series of complementary acquisitions which added Dots, Crows, Cella's, Charms, Blow Pop, Junior Mints, Charleston Chew, Sugar Daddy, Sugar Babies, Fluffy Stuff, Andes, Dubble Bubble, Cry Baby and Nik-L-Nip to our portfolio of well-known brands. Mr. Gordon embraced change and was quick to adopt rapidly evolving technological developments in manufacturing, material handling and information technology. He also directed the development of new products and package configurations to meet changing consumer preferences and evolving trade channels. Throughout his many years as Chairman, the Company saw great growth and success. Today Tootsie Roll is a leading confectioner with a diverse portfolio of well-known brands, seven plants across the United States, Canada and Mexico, and sales in many countries throughout the world. Mr. Gordon's life represented the very highest values in business, wisdom, generosity, and integrity. His dedication to Tootsie Roll for over fifty years as Board Chair, his creativity, his optimism and his relentless determination to succeed were an inspiration to all who knew him. Corporate Principles Corporate Profile 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. Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of confectionery products for 118 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. 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 2014 December 31, 2013 (in thousands except per share data) Net Product Sales . . . . . . . . . . . . . . . Net Earnings Attributable to Tootsie Roll Industries, Inc. . . . . . . . . . . . Working Capital . . . . . . . . . . . . . . . . Net Property, Plant and Equipment . . . . . . . . . . . . . . . . . . Shareholders' Equity . . . . . . . . . . . . . Average Shares Outstanding* . . . . . Per Share Items* Net Earnings Attributable to Tootsie Roll Industries, Inc. . . . . . . . . . . . Cash Dividends Paid . . . . . . . . . . . . *Adjusted for stock dividends. $539,895 $539,627 63,298 200,162 60,849 179,990 190,081 690,809 60,562 196,916 680,305 61,399 $1.05 0.32 $0.99 0.24 To Our Shareholders As a value oriented confectioner, we deem it essential to be a low cost producer. We actively pursue investments in the latest technology to keep us so. We take a long-term view of our business and enact only those measures that improve our operating results without jeopardizing the long-term strength of the Company and its well-known brands. In this regard, capital expenditures were $10.7 million in 2014. In addition to new state of the art material handling and packaging equipment at a number of our plants, a portion of this figure was directed toward a significant information technology project. We remain committed to enhance productivity through the deployment of leading edge business software. Ellen R. Gordon, Chairman and Chief Executive Officer Net product sales in 2014 were $539.9 million, as compared to 2013 net product sales of $539.6 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 $63.3 million in 2014 from $60.8 million in 2013. Earnings per share were $1.05 in 2014, up from $0.99 in the 2013, due to the combination of higher earnings and fewer shares outstanding in 2014. 1 The increase in earnings was attributable to margin improvements stemming from lower input costs in 2014. We are pleased that we are making progress on restoring our margins to their historical levels before the increases in commodity and other input costs in past years. In order to achieve our profit goals and still deliver maximum value to our consumers, we are challenged to look for every feasible way to keep our operations lean and costs in check. During 2014, we paid cash dividends of 32 cents per share and again distributed a 3% stock dividend. This was the seventysecond consecutive year the Company has paid cash dividends and the fiftieth consecutive year that a stock dividend was distributed. We also repurchased shares of common stock on the open market. We ended 2014 with $224.0 million in cash and investments net of interest bearing debt and investments that hedge deferred compensation liabilities. We remain poised 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. Sales and Marketing Our diverse and highly recognizable brand portfolio is popular across all trade channels. We have a range of offerings suitable for virtually every major consumer group and retail format. During 2014, we again used carefully executed and channelspecific promotions to drive sales. These targeted initiatives, directed both to the trade and to consumers, help to move our products into distribution and subsequently to move them off the retail shelf. We find that emphasizing high sell-through and attractive profit margins to the trade and a high quality, attractive value to the consumer is a winning strategy. Halloween has long been our largest selling period, with third quarter sales nearly double those of any other quarter in the year. We posted strong results last Halloween in all major trade classes including grocery, mass merchandisers, warehouse clubs, dollar stores and drug chains. Especially popular are our large bags of Child's Play and other mixed candy assortments, which are offered in a variety of pack sizes and merchandising presentations including pallet packs, off-shelf displays and display ready cases. The candy marketplace is highly competitive and we are vigilant in keeping our products contemporary even as they remain iconic. Our product line undergoes continual refinement in order to retain its appeal to ever-evolving preferences and life styles. pallet of Tootsie Rolls and Tootsie Pops in bonus bags. This display has the dual attributes of increasing sales velocity for the retailer and attractive feature pricing for the consumer. Dubble Bubble Fizzers Lemon Lime Frooties Building on the success of our Caramel Apple Pops, our Blow Pop line was expanded with the addition of Caramel Apple Blow Pops. With a candy shell of luscious caramel entwined with tart green apple hard candy and its emblematic bubble gum center, this unique new confection is really three treats in one! For Dots lovers, the next big thing is herethe BIG BOX! Featuring 20.5 ounces of delicious fruit flavored Dots in a reclosable box, this eye-catching pack promises lots of Dots for the whole family to share! Consumers have become increasingly concerned with protecting the environment, and manufacturers are seeking innovative ways to minimize packaging. One such solution that we implemented in 2014 was in our gumball machine refill packs. By replacing bulky, rigid plastic jars with lightweight resealable flexible pouches, packaging weight was reduced considerably without compromising product freshness. 1/8 Pallet Display Caramel Apple Blow Pops The selling power of floor stand displays is well established, but some smaller retail venues may lack the floor space or sales volume to support a traditionally sized display. To meet this need, we introduced a new one-eighth size The addition of a new floor display also contributed added sales in our penny goods line. The half pallet Frootie shipper consists of 192 bags of the most popular flavors, Blue Razz, Fruit Punch, Green Apple and Strawberry, and was well received in the Cash and Carry class of trade. The Frootie line was further expanded with the addition of tart new Lemon-Lime Frooties. Dots BIG BOX We put some fizz in gumball fun with the introduction of Dubble Bubble Fizzers. Pop one of five fizzy soda flavors in your mouth and bite down for a unique effervescent experience of bubble-blowing fun! Gumball refill pouch Our Andes Crme de Menthe thins have a strong selling history during 2 cited by Jeremy Siegel in his popular book ''The Future for Investors'' as having the fourth thedelivered Thanksgiving andhighest Christmas returnHoliday to our shareholders among seasons. Andes hasallalso surviving S & P 500 firms from had great success sellingthe outside original first published in 1957, theindex candy aisle with Andes Crme and the highest among de Menthe Bakingfood Chips, which companies. We place highselling value mint have become thea top on ethics, corporate leadership and baking chip. In 2014, we promoted creating shareholder value over the with the minty merriment of baking long-term, and are gratified to Andes Recipe Contest. Visit receive distinctions suchtoas these.out the www.tootsie.com check We also undertook a comprehensive study to examine our supply chain in 2005. Therecently focus was on of NYU Most a group reengineering the network and graduate students developed a patterns of distribution, As result of model to analyze how afluids thisdissolve study, certain changes wereand various materials, implemented in 2005 and other applied it to the Tootsie Pop. Their recommendations that arose algorithm concluded thatfrom it would thistake study are expected to be precisely one thousand licks to implemented in Tootsie 2006. We get to the early chewy Roll center. anticipate We willcost addsavings, this datalower point to the inventories and even better customer thousands of estimates we have fulfillment as a result of this project. Information Technology and Internal Controls Supply Chain Weprincipal continue to invest capital and Our information technology resources projects keep our efforts duringin2005 were that in support and distribution ofproduction the Concord integration and facilities the as efficient as possible, supply chain reengineering support projects. evolving patterns, The former distribution involved migrating improveonto quality Concord all ofand oursupport financial and growingsystems, productwhile lines.the Much business latterof this investment is driven by continuing required programming modifications in automation toadvancements support the business process winning entries and other delicious received over the many years. technology that we can incorporate changes that were made. Andes Nonetheless, we can only conclude In one of therecipes! more unusual stories on the shop floor. As in all aspects of our business, we that the answer to this riddle remains we learned of in 2005, our El Bubble keep a sharp on cost \"the world focus may never know!\" bubble gum cigars were used by We consider state of the art Considerable effort is made in Advertising and Public Relations containment. Capital projects, astronaut Mike Fincke to celebrate information to be a to key designingtechnology new installations process reengineering and employee Purchasing the birth of his daughter, Tarali strategic tooltheir to deliver information maximize flexibility so that we During 2014, we continued training and development are all vital Paulina. While El Bubble has long our and support process refinements can respond to evolving package Cost decreases in sugar, corn of safe engaging components of this process. beeninitiative a fun and way towith that enable the Company to remain configurations or product syrup, cocoa powder, edible oils consumers through social media. commemorate such a special in today's rapidly assortments demanded by the and packaging were partially offset competitive Numerous game the experiences, occasion, this marked first time a evolving business environment. It is market. Incorporating such flexibility by increases in coatings, dairy ads prize contest babybanner was born toand an astronaut while also a key component of our internal Purchasing can add significant up-front costs. products and gum base entries the on Facebook, in orbit-and first time, to Twitter, our control system, which was sufficient We are fortunate to have components. In packaging the Instagram and Pinterest build and knowledge, that one of our products successfully tested and audited financial resources and are able to decrease was primarily due to connections to our Although 2005 was another year of was strengthen brought aboard the international during 2005, our second year of make these necessary investments. lower corrugated prices. brands compliance with the requirements of space station!and also provide a venue generally low inflation as measured for consumer feedback. by Though the Consumer Price wethe Section 404 of the Sarbanes-Oxley the cost of Index, many of International experienced cost we pressure certain Act. commodities use isinlower than ingredients, packaging, In Mexico we manufacture and sell recent record highs, some remain Mr. Owl and and the long-standing Manufacturing Distribution transportation, energy.levels We and products primarily under the well above fuel theirand historical \"How Many Licks\" Tootsie Pop to use hedging programstotobe trademark Tutsi. Most of our restoring margins continues message are prominently featured continue International moderate short-term commodity one of our objectives. Competitive domestic brands are also sold in in our social media program and in During 2005 we continued working price fluctuations and to use bidding, selective hedging and Canada, though for certain items ourprojects television on key thatadvertising were initiated in bidding, volume they are offeredsales in different leveraging our high volume of Thisthe renowned theme competitive Our international increased prior campaigns. years, including purchasing andare other means to means package at purchases some of the has become part of during 2005configurations as a result of aand full year reengineering and start up Americana, of a costs to the fullest points are we use to mitigate inputextent costs to the ofdifferent fromline. crossword Concordprice foreign saleswhich in addition majorranging production We also puzzles to mitigate possible. thatinmarket. greatest extent feasible. scientific studies. totailored a strongtoyear Mexico. We approved several new projects to expand capacity in support of growing product categories in addition to ongoing efforts to streamline and automate existing processes at all of our plants, in order to realize cost savings. We also completed the integration of procurement activities related to Concord into our bidding processes and purchasing and MRP systems during 2005. manufacture and sell products in Mexico under the Tutsi trademark. We also sell Tootsie, Charms and Concord products to Canada and over 75 other countries in Europe, Asia and South and Central America. Management's Discussion and Analysis of Financial Condition and Results of Operations We believe that our well known products, including the additions of Dubble Concord We alsoBubble exportand our other products to brands, offers a compelling and many countries in Europe, Asia, broad assortment of items that can and South and Central America. be extended to additional foreign During 2014, we increased our markets. (in thousands except per share, percentage and ratio figures) FINANCIAL REVIEW ownership percentage in Fleer Espanola, a Spanish manufacturer of sugared and sugar free gum. We In areAppreciation currently rebranding a number of their sugared offerings under the Dubble We wish Bubble to thankumbrella our loyal and hope to expand our presence in Europe employees, customers, suppliers, sales brokers, foreign and the Middle East. distributors 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 footnotes that follow this discussion. and fellow shareholders for their many years of support. We are also grateful to the many consumers who In Appreciation buy and use our products for making a lastingour part of We wishthem to express Americana. FINANCIAL CONDITION appreciation to our many loyal employees, customers, suppliers, sales brokers and distributors throughout the world for their support in 2014. We also thank our fellow shareholders as we remain committed to the pursuit of excellence in every aspect of our Melvin J. Gordon operations and face the increasing Chairman of of thetoday's Board business and challenges Chief Executive Officer environment. The Company's overall financial position remains very strong as a result of its improving 2014 gross profit margins, higher net earnings and strong cash flows provided by operating activities. Cash flows from 2014 operating activities totaled $88,769 and were used to pay cash dividends of $19,241, purchase and retire $25,020 of its outstanding shares, make capital expenditures of $10,704, and add to our marketable securities investments. Ellen R. Gordon The Company's net working capital was $200,162 at December 31, 2014 compared to $179,990 at December 31, 2013 which generally reflects higher cash and cash equivalents and short-term investments. As of December 31, 2014, the Company's aggregate cash, cash equivalents and investments, including all long-term investments in marketable Chairman of the Board and Ellen R. Gordon Chief Executive Officer President and Chief Operating Officer securities, was $303,137 compared to $270,387 at December 31, 2013, an increase of $32,750. The aforementioned includes $71,682 and $63,215 in trading securities as of December 31, 2014 and 2013, 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 to the Consolidated Financial Statements. Shareholders' equity increased from $680,305 at December 31, 2013 to $690,809 as of December 31, 2014, principally reflecting 2014 net earnings of $63,298, less cash dividends of $19,241, share repurchases of $25,020, and an increase in accumulated other comprehensive loss during 2014. The Company has a relatively straight-forward financial structure and has historically maintained a conservative financial position. Except for an immaterial amount of operating leases, 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 2015. 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 2014 vs. 2013 Net product sales in fourth quarter 2014 increased by 1.8% to $137,929, and twelve months net product sales increased by $268 or 0.1% to $539,895 in 2014. Our sales results in the United States reflect the challenges of certain of our retail customers regarding consumer sales and consumer spending. Overall, 2014 sales volumes in the United States were relatively even with 2013, and there were no significant changes in selling prices and price realization, or product mix. Lower sales in Mexico and Canada, including the effects of a weaker Mexican peso and Canadian dollar, respectively, also adversely affected our reported sales during these same comparative periods. Product cost of goods sold were $340,933 in 2014 compared to $350,960 in 2013, a decrease of $10,027 or 2.9%. Product cost of goods sold includes $1,140 and $2,457 in certain deferred compensation expenses in 2014 and 2013, 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 $348,503 in 2013 to $339,793 in 2014, a decrease of $8,710 or 2.5%. As a percent of net product sales, these adjusted costs decreased from 64.6% in 2013 to 62.9% in 2014, a favorable decrease of 1.7% as a percent of net product sales. Although our overall comparative ingredient costs are more favorable this year, certain key ingredient costs were higher in 2014 compared to 2013. We are continuing our focus on cost reductions and savings, including capital investments to achieve manufacturing efficiencies, and are making progress on restoring our margins to their historical levels before the increases in commodity and other input costs in past years. Selling, marketing and administrative expenses were $117,722 in 2014 compared to $119,113 in 2013, a decrease of $1,391 or 1.2%. Selling, marketing and administrative expenses include $3,761 and $8,131 in certain deferred compensation expenses in 2014 and 2013, 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 4 3 4 results. Adjusting for the aforementioned, selling, marketing and administrative expenses increased from $111,002 in 2013 to $113,961 in 2014, an increase of $2,959 or 2.7%. As a percent of net product sales, these adjusted expenses increased slightly from 20.6% of net product sales in 2013 to 21.1% of net product sales in 2014. Selling, marketing and administrative expenses include $46,525 and $45,367 of freight, delivery and warehousing expenses in 2014 and 2013, respectively, which increased slightly from 8.4% of net product sales in 2013 to 8.6% of net product sales in 2014. 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 2014 or 2013. The fair values of trademarks are assessed each year using the present value of estimated future cash flows and estimated royalties. Based on the Company's estimate at December 31, 2014, the individual fair values of the indefinite lived intangible assets exceed the net book value by more than 10%. For certain trademarks, holding all other assumptions constant at the test date, a 100 basis point increase in the discount rate or a 100 basis 5 point decrease in the royalty rate would reduce the fair value of certain trademarks by approximately 15% and 11%, respectively. Individually, a 100 basis point increase in the discount rate would indicate a potential impairment of approximately $2,000 as of December 31, 2014. However, if the royalty rate were decreased by 100 basis points no impairment would be indicated as of December 31, 2014. Earnings from operations were $83,923 in 2014 compared to $72,353 in 2013, an increase of $11,570. Earnings from operations include $4,901 and $10,588 in certain deferred compensation expense in 2014 and 2013, respectively, which are discussed above. Adjusting for these deferred compensation expenses, earnings from operations increased from $82,941 in 2013 to $88,824 in 2014, an increase of $5,883 or 7.1%. This increase in 2014 earnings from operations principally reflects more favorable ingredient costs, plant efficiencies driven by capital investments, and on-going cost control programs. 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 $7,371 in 2014 compared to $12,130 in 2013, a decrease of $4,759. Other income, net principally reflects $4,901 and $10,588 of aggregate net gains and investment income on trading securities in 2014 and 2013, 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 also includes foreign exchange losses of $861 and $790 in 2014 and 2013, respectively. During fourth quarter 2013, the Company sold its investment in Jefferson County Alabama Sewer Revenue Refunding Warrants for $10,840. This was an auction rate security (ARS) originally purchased for $13,550 in 2008 with an insurance-backed AAA rating. Because the Company recorded an other-than-temporary pre-tax impairment of $5,140 in 2008 on this ARS investment which resulted in a carrying value of $8,410 at that time, a net gain of $2,430 was recorded on this sale in fourth quarter 2013. Since recording this initial impairment in 2008, the Company carried this ARS investment at its estimated fair value utilizing a valuation model with Level 3 inputs, as defined by guidance, and resulting changes in the market value from the date of the original impairment charge in 2008 to its sale in fourth quarter 2013 have been recorded as changes to accumulated other comprehensive income (loss) each year. The consolidated effective tax rate was 31.1% and 28.0% in 2014 and 2013, respectively. This higher effective tax rate in 2014 reflects an additional deferred income tax expense of $2,350 relating the Company's step acquisition of its Spanish subsidiaries which is discussed below. A reconciliation of the differences between the U.S. statutory rate and these effective tax rates is provided in Note 4 to the Consolidated Financial Statements. At December 31, 2014, the Company's deferred tax assets include $10,880 of income tax benefits relating to its Canadian subsidiary tax loss carry-forwards which the Company expects to realize before their expiration dates (2027 through 2031). The Company utilized approximately $600 and $400 of these tax carry-forward benefits in 2014 and 2013, respectively. The Company has concluded that it is more-likelythan-not that it would realize these deferred tax assets relating to its Canadian tax operating loss carry-forwards because it is expected that sufficient levels of taxable income will be generated during the carry-forward periods. The Company has provided a full valuation allowance on its Spanish subsidiaries' tax loss carry-forward benefits of approximately $2,092 as of December 31, 2014 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 subsidiaries have a history of net operating losses and it is not known when and if they will generate taxable income in the future. The Company has not provided for U.S. federal or foreign withholding taxes on approximately $5,400 and $11,000 of foreign subsidiaries' undistributed earnings as of December 31, 2014 and December 31, 2013, respectively, because such earnings are considered to be permanently reinvested. The Company estimates that the federal income tax liability on such undistributed earnings would approximate 30% of these amounts. Net earnings attributable to Tootsie Roll Industries, Inc. were $63,298 in 2014 compared to $60,849 in 2013, and earnings per share were $1.05 and $0.99 in 2014 and 2013, respectively, an increase of $0.06 or 6.1%. Net earnings principally benefited from improved gross profit margins which are discussed above. Net earnings for the prior year 2013 benefited from a lower effective income tax rate and a capital gain on the sale of an investment security (Jefferson County Warrants discussed above), both of which adversely affects the comparison of 2014 net earnings to those in 2013. Earnings per share in 2014 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 61,399 in 2013 to 60,562 in 2014. During first quarter 2014, the Company gained operating control of its two 50% owned Spanish companies when Company employee representatives assumed all positions on their boards of directors. This was considered a step acquisition, whereby the Company remeasured the previously held investment to fair value in first quarter 2014. As a result, the Company's first quarter 2014 net earnings include a net loss of $529, including an additional income tax provision of $2,350 relating to deferred income taxes. During 2014, the Company further increased its control and ownership to 83% by purchasing and subscribing to additional common shares of its Spanish subsidiaries for approximately $1,400 ($1,200 was paid in 2014, and the balance will be paid in 2015). These Spanish companies had operating losses for each of the years 2008 through 2014. Company management has restructured the Spanish operations and made other changes to its business plan, and management believes that they should be nearing break-even cash flows from operating activities going forward. Management believes that the business, competitive and economic challenges in Spain are likely to continue, and therefore, additional cash financing of these Spanish companies may be required in the future. Other income, net in prior year 2013 includes the results of the Company's 50% share of two Spanish companies which were accounted for using the equity investment method in 2013. Equity method losses were $967 for 2013. In addition, a pre-tax impairment charge of $975 was recorded in 2013 to write-down the Company's carrying value of this equity investment to estimated fair value. Beginning in 2012, the Company received notices from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BC&T) Pension Plan (Plan), a multi-employer defined benefit pension plan for certain Company union employees. The notices indicated that the Plan's actuary certified the Plan to be in critical status, the \"Red Zone\