Tootsie Roll Industries Audit Presentation by KPMG

Review of Financial Statements Conclusion / Questions Table of Contents: Tootsie Roll Review of Financial Statements Overall Evaluation The Future KPMG & Tootsie Conclusion / Questions

Your Company Favorite candy company Most popular confectionary brands Distribution channels – 75 countries Strong among every age group, culture, demographic During every economic climate – truly enduring Family-run corporate culture

Continued… Fiscally responsible focus – “America’s 200 Best Small Companies” by Forbes Magazine Highest ethical business standards – “100 Best Corporate Citizens” by Business Ethics Magazine Focus on high profitability Emphasis on ethics and integrity Involvement with the community and national concerns

Income Statement Total Revenue increased over $22 million Net Income decreased $164,000 EPS increased from .93 in 2009 to .94 in 2010 Profit margin decreased from 10.87% in 2009 to 10.39% in 2010 Gross profit margin decreased from 36.29% in 2009 to 33.27% in 2010 Times interest earned increased from 265.11 in 2009 to 522.75 in 2010

Why did Net Income Decrease? Net earnings benefited from increased sales Cost of Goods Sold increased almost $30 million Cost of sugar and cocoa increase Provision for income taxes increased over $10 million

Retained Earnings 2010 2009 Retained Earnings at beginning of year 148,582 145,123 Net Earnings 53,714 53,878 Cash Dividends (18,078) (17,790) Stock Dividends (46,806) (32,629) Retained Earnings at the end of year $137,412 $148,582 Earnings per share $0.94 $0.93 Average Common and Class B Common shares 56,997 57,738 Outstanding 2010: 2009: Dividends paid for the year $64,884 $50,419 Percent of net income paid out of cash 33.67% 33.02% dividends $0.32 of cash dividends paid out to stockholders in both years Paid out cash dividends 86 years in a row

Balance Sheet 2010 2009 Working Capital $179,086 155,812 Current Ratio 4.06 3.78 Acid-Test Ratio 2.76 2.45 Debt to Equity Ratio 28.62% 27.95%

Major Changes Cash and cash equivalents increased almost $25 million Added over $10 million in machinery and equipment Liability for uncertain tax positions decreased almost $10 million Capital in excess of par value increased over $23 million

Cash Flows Increase in net cash: Operating activities $82,805 - 2010 compared to $76,994 – 2009 Net earnings benefited from increased sales No gain because of increased costs Investing activities - capital expenditures of $12,813 Showing continual reinvestment Plant, equipment, and information technology Not as must sale and maturity of securities From financing activities - paid cash dividends of $18,130 and purchased and retired $22,881 of its outstanding shares Treasury stock Able to do more of both Cash increased because of increased sales (operating activities): Reached new groups of customers New marketing plans Great Halloween season

Our Overall Evaluation Net product sales in 2010 reached $517 million A record for the Company Increase of $22 million over 2009 net product sales Equals about 4.3% Another strong Halloween selling season Overall financial position remains very strong- Net product sales Net earnings Related cash flows provided by operating activities Cash flows from operations plus maturities of short-term investments - adequate to meet the Company’s overall financing needs in 2011

Tootsie’s Future Key competitive advantage- Well-known brands High volume for Retailers Attractive value for customers Entry into digital marketing = new opportunities Kosher certified open new markets Increase efficiency & eliminate waste Cash and stock dividends – 86 years in a row

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