UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 1, 2006
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 22-1318955
(State of Incorporation) (I.R.S. Employer Identification No.)
7401 South Cicero Avenue, Chicago, Illinois 60629
(Address of Principal Executive Offices) (Zip Code)
773-838-3400
(Registrant's Telephone Number, Including Area Code)
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 X No ___
Indicate by check mark whether the Registrant is a large accelerated
filer, an accelerated filer or a non-accelerated filer. See definition
of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer X Accelerated filer __ Non-accelerated filer __
Indicate by check mark whether the Registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)
Yes No X
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (April
1, 2006)
Class Outstanding
Common Stock, $.69 4/9 par value 36,096,800
Class B Common Stock, $.69 4/9 par value 18,522,840
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
APRIL 1, 2006
INDEX
Page No.
Part I - Financial Information
Item 1. Financial Statements:
Condensed Consolidated Statements of
Financial Position 2
Condensed Consolidated Statements of Earnings,
Comprehensive Earnings and Retained Earnings 3
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 6C
Item 4. Controls and Procedures 6D
Part II - Other Information
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds 7
Item 6. Exhibits 7
Signatures 7
Certifications 7A-C
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of dollars) (UNAUDITED)
ASSETS April 01, April 02, Dec. 31,
CURRENT ASSETS 2006 2005 2005
Cash & cash equivalents $ 49,007 $ 31,065 $ 69,006
Restricted cash 10,165 - 22,330
Investments 47,596 40,192 54,892
Trade accounts receivable,
Less allowances of
$2,479, $2,404 & $2,255 33,941 26,794 30,856
Other receivables 1,853 8,445 2,768
Inventories, at cost
Finished goods & work in process 45,315 47,293 34,311
Raw material & supplies 20,897 23,925 20,721
Prepaid expenses 4,047 3,997 5,840
Deferred income taxes 6,666 1,370 5,872
Total current assets 219,487 183,081 246,596
PROPERTY, PLANT & EQUIPMENT, at cost
Land 17,089 14,976 14,857
Buildings 73,709 61,725 63,544
Machinery & equipment 252,429 249,029 250,841
343,227 325,730 329,242
Less-accumulated depreciation 152,846 145,877 150,482
Net property, plant and equipment 190,381 179,853 178,760
OTHER ASSETS
Goodwill 74,194 73,974 74,194
Trademarks 189,024 193,342 189,024
Investments 44,539 85,713 44,851
Split dollar life insurance 71,104 67,743 69,772
Investment in joint venture 10,848 10,511 10,499
389,709 431,283 388,340
Total assets $799,577 $794,217 $813,696
-2-
(The accompanying notes are an integral part of these statements.)
(in thousands except per share data) (UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY April 1, April 2, Dec. 31,
CURRENT LIABILITIES 2006 2005 2005
Bank loan $ 16,000 $ 9,667 $ 32,001
Accounts payable 20,956 15,888 17,482
Dividends payable 131 329 4,263
Accrued liabilities 40,783 42,613 44,969
Income taxes payable 15,835 13,378 14,941
Total current liabilities 93,705 81,875 113,656
NON-CURRENT LIABILITIES
Bank loan - 67,333 -
Deferred income taxes 36,249 25,689 32,088
Postretirement health care and life
insurance benefits 10,931 10,238 10,783
Industrial development bonds 7,500 7,500 7,500
Deferred compensation and other liabilities 32,715 29,673 32,264
Total non-current liabilities 87,395 140,433 82,635
Total liabilities 181,100 222,308 196,291
SHAREHOLDERS' EQUITY
Common Stock, $.69-4/9 par value-
120,000 shares authorized; 36,097, 35,582 & 35,255
respectively, issued 25,067 24,710 24,483
Class B common stock, $.69-4/9 par value-
40,000 shares authorized; 18,523, 18,035 & 18,000,
respectively, issued 12,863 12,524 12,500
Capital in excess of par value 462,464 436,734 426,125
Retained earnings 128,666 111,266 164,236
Accumulated other comprehensive earnings (loss) (8,591) (11,333) (7,947)
Treasury stock (at cost)-
60, 60 & 60 shares, respectively (1,992) (1,992) (1,992)
Total shareholders' equity 618,477 571,909 617,405
Total liabilities and
Shareholders' equity $799,577 $794,217 $813,696
-2A-
(The accompanying notes are an integral part of these statements.)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS, COMPREHENSIVE EARNINGS AND RETAINED EARNINGS
(in thousands except per share amounts) (UNAUDITED)
FIRST QUARTER ENDED
April 01, 2006 & April 02,2005
Net sales $103,822 $ 97,925
Cost of goods sold 64,422 58,476
Gross margin 39,400 39,449
Selling, marketing and administrative expense 23,049 22,290
Earnings from operations 16,351 17,159
Other income, net 1,847 1,207
Earnings before income taxes 18,198 18,366
Provision for income taxes 5,836 5,860
Net earnings 12,362 12,506
Other comprehensive income, before tax:
Foreign currency translation adjustments (324) 86
Unrealized gain (losses) on securities 160 (621)
Unrealized losses on derivatives (669) (153)
Other comprehensive loss, before tax (833) (688)
Income tax benefit related to items of other
comprehensive income 189 286
Other comprehensive loss, net of tax (644) (402)
Comprehensive earnings $ 11,718 $ 12,104
Retained earnings at beginning of period $164,236 $149,055
Net earnings 12,362 12,506
Cash dividends (4,238) (3,655)
Stock dividends - 3% (43,694) (46,640)
Retained earnings at end of period $128,666 $111,266
Net earnings per share $.23 $.23
Dividends per share * $.08 $.07
Average number of shares outstanding 54,697 55,303
*Does not include 3% stock dividend to shareholders of record on 3/10/06 and 3/11/05.
-3-
(The accompanying notes are an integral part of the statements.)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars) (UNAUDITED)
FIRST QUARTER ENDED
April 1, 2006 & April 2, 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 12,362 $ 12,506
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,666 3,553
Amortization of marketable securities 299 514
Purchase of trading securities (1,449) (1,170)
Changes in operating assets and liabilities:
Accounts receivable (3,185) 1,679
Other receivables 494 459
Inventories (11,254) (12,423)
Prepaid expenses and other assets 93 (175)
Accounts payable and accrued liabilities (2,436) (5,548)
Income taxes payable and deferred 4,167 4,803
Postretirement health care and life
insurance benefits 148 163
Deferred compensation and other liabilities 369 411
Other 13 24
Net cash provided by operating activities 3,287 4,796
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (15,424) (4,626)
Decrease in restricted cash 12,165 -
Purchase of available for sale securities - (3,000)
Sale and maturity of available for
sale securities 8,970 5,611
Net cash provided by (used in) investing activities 5,711 ( 2,015)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on borrowings (14,219) (15,000)
Dividends paid in cash (8,502) (7,315)
Shares repurchased and retired (6,276) (6,390)
Net cash used in financing activities (28,997) (28,705)
Decrease in cash and cash equivalents (19,999) (25,924)
Cash and cash equivalents-beginning of year 69,006 56,989
Cash and cash equivalents end of quarter $ 49,007 $ 31,065
Supplemental cash flow information:
Income taxes paid $ 435 $ 462
Interest paid $ 448 $ 580
Stock dividend issued $ 43,563 $ 46,311
(The accompanying notes are an integral part of the statements.)
-4-
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 1, 2006
(in thousands except per share amounts) (UNAUDITED)
Note 1 - Foregoing data has been prepared from the unaudited
financial records of Tootsie Roll Industries, Inc. and
Subsidiaries (the Company) and in the opinion
of management all adjustments necessary for a fair
statement of the results for the interim period have
been reflected. All adjustments were of a normal
and recurring nature. Certain reclassifications have
been made to the prior year financial statements to
conform to the current year presentation. These
consolidated financial statements should be read in
conjunction with the consolidated financial statements
and the related notes included in the Company's 2005
Annual Report on Form 10-K.
Note 2 - Average shares outstanding for the period ended April
1, 2006 reflects stock repurchases of 222 shares for
$6,276 and a 3% stock dividend distributed on April
13, 2006. Average shares outstanding for the period
ended April 2, 2005 reflects stock repurchases of
216 shares for $6,390 and a 3% stock dividend
distributed on April 14, 2005.
Note 3 - Results of operations for the period ended April 1,
2006 are not necessarily indicative of results to be
expected for the year to end December 31, 2006 because
of the seasonal nature of the Company's operations.
Historically, the third quarter has been the Company's
largest sales quarter due to Halloween sales.
Note 4 - The bank loan is a demand note issued in December 2005
due no later than July 20, 2006. The loan is
collateralized by investments in marketable securities
and is subject to other terms and conditions, none of
which are significant. The Company intends to repay the
loan during the second quarter of 2006. Interest is
LIBOR based, and the average rate was 4.464% in 2006.
-5-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollars in thousands except per share amounts)
The following is management's discussion of the Company's operating
results and analysis of factors that have affected the accompanying
Condensed Statement of Earnings.
NET SALES: Net change in
First Quarter, 2006
First Quarter vs.
2006 2005 First Quarter, 2005
$103,822 $97,925 6.0%
First quarter 2006 net sales were $103,822 compared to $97,925 in first
quarter 2005, an increase of $5,897 or 6.0%. First quarter 2006 sales
reflect increases in substantially all of the Company's core brands due
to successful marketing programs. The first quarter sales increase
principally reflects increases in sales volume, however, a portion of the
sale increase is attributable to sales price increases as discussed below.
First quarter 2006 net sales were $103,822 compared to $112,495 in fourth
quarter 2005. This decrease in net sales is not considered unusual, as the
first quarter of the year is historically the Company's lowest sales
quarter.
COST OF SALES:
Cost of Sales as a
First Quarter Percentage of Net Sales
2006 2005 1st Qtr. 2006 1st Qtr. 2005
$64,422 $58,476 62.1% 59.7%
Cost of sales as a percentage of net sales increased from 59.7% in first
quarter 2005 to 62.1% in first quarter 2006. The increase in cost of sales
as a percentage of net sales reflects substantially higher costs relating to
major ingredients, principally sugar and corn syrup, and plant manufacturing
utilities and energy. Higher costs of labor and related fringe benefits,
principally health insurance, and certain packaging materials also added to
higher costs.
OPERATING EARNINGS:
First Quarter, 2006
First Quarter vs.
2006 2005 First Quarter, 2005
$16,351 $17,159 (4.7)%
-6-
Selling, marketing and administrative expenses increased from $22,290 in the
first quarter 2005 to $23,049 in first quarter 2006, an increase of $759 or
3.4%. As a percentage of net sales, such operating expenses favorably
decreased from 22.8% in 2005 to 22.2% in 2006, reflecting various cost
efficiencies achieved from increased consolidated net sales. However, the
Company was adversely affected by significant increases in freight and
delivery expenses, principally reflecting higher fuel surcharges, during
first quarter 2006 compared to the corresponding period in the prior year.
First quarter earnings from operations were $16,351 and $17,159 in 2006 and
2005, respectively, a decrease of $808 or 4.7%. The favorable effects of
higher sales were mitigated by adverse factors that resulted in higher cost
of sales and lower gross profit margins as discussed above. Although the
Company has taken action and implemented programs, including price
increases, intending to recover these cost increases and restore margins,
the Company's first quarter 2006 results only partially benefited from these
initiatives. The Company's first quarter 2006 period was a transition period
for the implementation of many of these actions and initiatives in 2006.
NET EARNINGS:
First Quarter, 2006
First Quarter vs.
2006 2005 First Quarter, 2005
$12,362 $12,506 (1.2)%
First quarter 2006 net earnings were $12,362 compared to first quarter 2005
net earnings of $12,506. First quarter earnings per share were $0.23 in
both 2006 and 2005.
Other income, net was $1,847 in first quarter 2006 compared to $1,207 in
first quarter 2005. Other income, net in 2006 includes $207 of decreased
interest expense and $292 of increased investment income reflecting the
reductions in bank debts and financing costs of the Concord Confections
business acquired in August 2004.
The consolidated effective income tax rate increased from 32.4% in first
quarter 2005 to 32.7% in first quarter 2006. The aforementioned increase
generally reflects higher effective rates for foreign taxes.
In addition to the factors discussed above, earnings per share benefited
from fewer shares outstanding as a result of the Company's share
repurchases.
-6A-
LIQUIDITY AND CAPITAL RESOURCES:
The Company's current ratio (current assets divided by current liabilities)
was 2.3 to 1 as of the end of first quarter 2006 as compared to 2.2 to 1 as
of the end of first quarter 2005 and 2.2 to 1 as of the end of fourth
quarter 2005. Net working capital was $125,782 as of the end of first
quarter 2006 as compared to $132,940 and $101,206 as of the end of fourth
quarter 2005 and first quarter 2005, respectively. The aforementioned net
working capital amounts are principally reflected in aggregate cash and cash
equivalents and short-term investments which totaled $96,603 as of the end
of first quarter 2006 compared to $123,898 and $71,257, as of the end of
fourth quarter 2005 and first quarter 2005, respectively. In addition, long
term investments, principally debt securities comprising municipal bonds,
were $44,539 as of the end of first quarter 2006 as compared to $44,851 and
$85,713 as of the end of fourth quarter 2005 and first quarter 2005,
respectively. Investments in municipal bonds and other debt securities that
matured during first quarters 2006 and 2005 were generally used to pay down
bank loans or replaced with debt securities of similar maturities.
As of the end of first quarter 2006 and 2005, the Company had $16,000 and
$77,000, respectively, of bank loans which principally relate to the
financing of the Concord Confections acquisition in August 2004. These bank
loans were paid down through a combination of cash flows provided by
operating activities and investment maturities. The balance of the bank
loan outstanding at the end of first quarter 2006 is due in July 2006, and
the Company intends to repay the outstanding loan during the second quarter
2006.
Net cash provided by operating activities was $3,287 for first quarter 2006,
as compared to $4,796 for first quarter 2005. The aforementioned net change
in net cash provided by operating activities principally reflects the timing
of payments and cash flows relating to accounts receivable and accounts
payable and accrued liabilities. Capital expenditures for first quarter
2006 and 2005 were $15,424 and $4,626, respectively. First quarter 2006
capital expenditures reflect $12,397 of investments in rental income
producing real estate which was funded from the Company's restricted cash.
Excluding the reinvestment of restricted cash, capital expenditures for the
2006 year are anticipated to be generally in line with historical annualized
spending, and are to be funded from the Company's cash flow from operations
and internal sources.
Of the $22,330 in proceeds from the sale of surplus real estate during 2005
and held as restricted cash as of December 31, 2005, $12,397 was reinvested
in "like kind" real estate during first quarter 2006 in compliance with U.S.
Internal Revenue Code Section 1031. During first quarter 2006 the Company
also reclassified approximately $4,300 of current income taxes payable to
deferred income taxes, all of which relates to the aforementioned Section
1031 reinvestment. Subsequent to the end of first quarter 2006, the Company
reinvested the balance of $9,933 of such proceeds and restricted cash in
additional rental income producing real estate in accordance with Section
1031.
-6B-
Cash dividends declared in first quarter 2006 and 2005 were $4,238 and
$3,655, respectively. However, dividends paid in cash were $8,502 and
$7,315, in first quarter 2006 and 2005, respectively. The difference between
dividends declared and dividends paid is due to payment in the first quarter
of a dividend declared in the fourth quarter of the respective preceding
year.
The Company repurchased and retired $6,276 and $6,390 of its outstanding
common stock during first quarter 2006 and 2005, respectively.
This discussion and certain other sections of this Form 10-Q contain
forward-looking statements that are based largely on the Company's current
expectations and are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are subject to certain risks, trends and uncertainties that could
cause actual results and achievements to differ materially from those
expressed in the forward-looking statements. Such risks, trends and
uncertainties, which in some instances are beyond the Company's control,
include changes in demand and consumer preferences, including seasonal
events such as Halloween; the effects of increases in ingredient and
packaging costs; the effect of acquisitions on the Company's results of
operations and financial condition; the effect of changes in foreign
currencies on the Company's foreign subsidiaries; the Company's reliance on
third-party vendors for various goods and services; the effect of changes in
assumptions, including discount rates and profit margins, relating to the
Company's impairment testing and analysis of its goodwill and trademarks;
changes in the confectionary market place including actions taken by major
retailers and customers; customer and consumer response to marketing
programs and price and trade allowance adjustments; changes in governmental
laws and regulations including taxes; the overall competitive environment in
the Company's industry; and changes in assumptions and judgments discussed
under the heading "Critical Accounting Policies of the company's MD&A"
included in the 2005 annual report and 10-K. The words "believe," "expect,"
"anticipate," "estimate," "intend" and similar expressions generally
identify forward-looking statements. Readers are cautioned not to place
undue reliance on such forward-looking statements, which are as of the date
of this filing.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK:
The Company is exposed to various market risks, including fluctuations in
sugar, corn syrup, edible oils, cocoa, gum and gum-base ingredients and
packaging costs. The Company is exposed to exchange rate fluctuations in the
Canadian dollar which is the currency used for a portion of the operating
costs at its Canadian plants. The Company also invests in securities with
maturities of up to three years, the majority of which are held to maturity,
which limits the Company's exposure to interest rate fluctuations. There
has been no material change in the Company's market risks that would
significantly affect the disclosures made in the Form 10-K for the year
ended December 31, 2005.
-6C-
Item 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of management, the chief
executive officer and chief financial officer of the Company have evaluated
the effectiveness of the design and operation of the Company's disclosure
controls and procedures as of April 1, 2006 and, based on their evaluation,
the chief executive officer and chief financial officer have concluded that
these controls and procedures are effective. Disclosure controls and
procedures are designed to ensure that information required to be disclosed
by the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission's rules
and forms. Disclosure controls and procedures are also designed to ensure
that information is accumulated and communicated to management, including
the chief executive officer and chief financial officer, as appropriate to
allow timely decisions regarding required disclosure.
There has been no change in the Company's internal control over financial
reporting that occurred during the Company's fiscal quarter ended April 1,
2006 that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
-6D-
PART II - OTHER INFORMATION
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Approximate Dollar
(a) Total (b) Average Shares Value of Shares that
Number of Price Paid per Purchased as Part of May Yet Be Purchased
Shares Share Publicly Announced Plans Under the Plans
Period Purchased Or Programs or Programs
JAN 1 TO JAN 28 29,700 $28.80 NOT APPLICABLE NOT APPLICABLE
JAN 29 TO FEB 25 52,200 28.68 NOT APPLICABLE NOT APPLICABLE
FEB 26 TO APR 1 140,200 27.92 NOT APPLICABLE NOT APPLICABLE
TOTAL 222,100 $28.22
While the Company does not have a formal or publicly announced stock
repurchase program, the Company's board of directors periodically authorizes
a dollar amount for share repurchases. The treasurer executes share
repurchase transactions according to these guidelines.
Item 6. EXHIBITS
Exhibits 31.1 and 31.2 - Certifications Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32 - Certification Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
TOOTSIE ROLL INDUSTRIES, INC.
Date: May 10, 2006 BY:/s/Melvin J. Gordon
Melvin J. Gordon
Chairman of the Board
Date: May 10, 2006 BY:/s/G. Howard Ember, Jr.
G. Howard Ember, Jr.
Vice President - Finance
-7-
Exhibit 31.1
CERTIFICATION
I, Melvin J. Gordon, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tootsie Roll
Industries, Inc.;
2. 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 state-
ments made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial infor-
mation 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;
4. The registrant's other certifying officer 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 dis-
closure 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 disclosure controls 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 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: May 10, 2006
By: /s/Melvin J. Gordon
Melvin J. Gordon
Chairman and Chief Executive Officer
-7A-
Exhibit 31.2
CERTIFICATION
I, G. Howard Ember, Jr. certify that:
1. I have reviewed this quarterly report on Form 10-Q of Tootsie Roll
Industries, Inc,;
2. 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 state-
ments made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial infor-
mation 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;
4. The registrant's other certifying officer 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 dis-
closure 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 disclosure controls 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 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: May 10, 2006
By: /s/G. Howard Ember, Jr.
G. Howard Ember, Jr.
Vice President/Finance and
Chief Financial Officer
-7B-
Exhibit 32
Certificate Pursuant to Section 1350 of Chapter 63
Of Title 18 of the United States Code
Each of the undersigned officers of Tootsie Roll Industries, Inc.
Certifies that (i) the Quarterly Report on Form 10-Q of Tootsie Roll
Industries, Inc. for the quarterly period ended April 1, 2006 (the
Form 10-Q) fully complies with the requirements of secton 13(a) or
15(d) of the Securities Exchange Act of 1934 and (ii) the information
contained in the Form 10-Q fairly presents, in all material respects,
the financial condition and results of operations of Tootsie Roll
Industries, Inc. and its subsidiaries.
Dated: May 10, 2006 /s/Melvin J. Gordon
Melvin J. Gordon
Chairman and Chief
Executive Officer
Dated: May 10, 2006 /s/G. Howard Ember, Jr.
G. Howard Ember, Jr.
V.P./Finance and
Chief Financial Officer
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