1. Tootsie Roll Industries
Audit Presentation by KPMG

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

3. 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

4. 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

5. 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 % in 2010
Gross profit margin decreased from 36.29% in 2009 to 33.27% in 2010
Times interest earned increased from in 2009 to in 2010

6. 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

7. Retained Earnings
Retained Earnings at beginning of year 148, ,123
Net Earnings , ,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, ,738
Outstanding
2010: :
Dividends paid for the year $64, $50,419
Percent of net income paid out of cash % %
dividends
$0.32 of cash dividends paid out to stockholders in both years
Paid out cash dividends 86 years in a row

8. 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%

9. 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

10. Cash Flows
Increase in net cash: Operating activities $82, 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

11. 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

12. 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

13. About KPMG U.S. Audit, Tax, and Advisory services firm
Purpose – turn knowledge into value for our clients
Comply with changing regulations and professional standards
Proactive coordination and communication – Chicago office
Provide our teams’ well-built understanding
23,000 employees strong / 144 countries
Risk-based, industry specific, and tailored to our clients
Give you an edge to competitors

14. Any Questions?