10-Q 1 mar05filing.txt TOOTSIE ROLL INDUSTRIES, INC. 10Q ENDING 4/2/05 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 2, 2005 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 an accelerated filer (as Defined in Rule 12b-2 of the Exchange Act) Yes X No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (April 2, 2005) Class Outstanding Common Stock, $.69 4/9 par value 35,581,783 Class B Common Stock, $.69 4/9 par value 18,034,648 TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES APRIL 2, 2005 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 5-5B 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 02, April 03, Dec. 31, CURRENT ASSETS 2005 2004 2004 Cash & cash equivalents $ 31,065 $ 52,942 $ 56,989 Investments 40,192 89,348 32,369 Trade accounts receivable, Less allowances of $2,404, $2,009 & $2,440 26,794 20,837 28,456 Other receivables 8,445 4,223 9,001 Inventories, at cost Finished goods & work in process 47,293 37,669 37,384 Raw material & supplies 23,925 19,138 21,393 Prepaid expenses 3,997 15,707 5,719 Deferred income taxes 1,370 951 1,382 Total current assets 183,081 240,815 192,693 PROPERTY, PLANT & EQUIPMENT, at cost Land 14,976 8,268 14,973 Buildings 61,725 44,968 61,714 Machinery & equipment 249,029 209,929 244,367 325,730 263,165 321,054 Less-accumulated depreciation 145,877 133,532 142,304 Net property, plant and equipment 179,853 129,633 178,750 OTHER ASSETS Goodwill 73,974 38,151 74,002 Trademarks 193,342 79,348 193,342 Investments 85,713 120,705 96,640 Split dollar life insurance 67,743 62,861 66,094 Investment in joint venture 10,511 - 10,232 431,283 301,065 440,310 Total assets $794,217 $671,513 $811,753 -2- (The accompanying notes are an integral part of these statements.)
(in thousands except per share data) (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY April 2, April 3, Dec. 31, CURRENT LIABILITIES 2005 2004 2004 Bank loan $ 9,667 $ - $ 6,333 Accounts payable 15,888 14,614 19,315 Dividends payable 329 400 3,659 Accrued liabilities 42,613 37,562 44,722 Income taxes payable 13,378 13,714 8,288 Total current liabilities 81,875 66,290 82,317 NON-CURRENT LIABILITIES Bank loan 67,333 - 85,667 Deferred income taxes 25,689 22,680 25,995 Postretirement health care and life insurance benefits 10,238 9,510 10,075 Industrial development bonds 7,500 7,500 7,500 Deferred compensation and other liabilities 29,673 27,446 30,020 Total non-current liabilites 140,433 67,136 159,257 Total liabilities 222,308 133,426 241,574 SHAREHOLDERS' EQUITY Common Stock, $.69-4/9 par value- 120,000 shares authorized; 35,582, 34,933 & 34,760 respectively, issued 24,710 24,259 24,139 Class B common stock, $.69-4/9 par value-40,000 shares authorized; 18,035, 17,645 & 17,515, respectively, issued 12,524 12,254 12,163 Capital in excess of par value 436,734 407,759 397,745 Retained earnings 111,266 107,345 149,055 Accumulated other comprehensive earnings (loss) (11,333) (11,538) (10,931) Treasury stock (at cost)- 60, 60 & 60 shares, respectively (1,992) (1,992) (1,992) Total shareholders' equity 571,909 538,087 570,179 Total liabilities and shareholders' equity $794,217 $671,513 $811,753 -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 02, 2005 & April 03,2004 Net sales $ 97,925 $ 80,046 Cost of goods sold 58,476 45,316 Gross margin 39,449 34,730 Selling, marketing and administrative expense 22,290 18,670 Earnings from operations 17,159 16,060 Other income, net 1,207 1,275 Earnings before income taxes 18,366 17,335 Provision for income taxes 5,860 5,842 Net earnings 12,506 11,493 Other comprehensive income, before tax: Foreign currency translation adjustments 86 79 Unrealized losses on securities (621) (60) Unrealized (losses) gains on derivatives (153) 203 Other comprehensive (loss) income, before tax (688) 222 Income tax benefit (expense) related to items of other comprehensive income 286 (51) Other comprehensive (loss) income, net of tax (402) 171 Comprehensive earnings $ 12,104 $ 11,664 Retained earnings at beginning of period $149,055 $156,786 Net earnings 12,506 11,493 Cash dividends (3,655) (3,575) Stock dividends - 3% (46,640) (57,359) Retained earnings at end of period $111,266 $107,345 Net earnings per share $.23 $.21 Dividends per share * $.07 $.07 Average number of shares outstanding 53,720 54,153 *Does not include 3% stock dividend to shareholders of record on 3/11/05 and 3/02/04. -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 2, 2005 & April 3, 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 12,506 $ 11,493 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 3,553 2,754 Amortization of marketable securities 514 662 Purchase of trading securities (1,170) (1,521) Changes in operating assets and liabilities: Accounts receivable 1,679 (2,686) Other receivables 459 (1,019) Inventories (12,423) (10,704) Prepaid expenses and other assets (175) (11,649) Accounts payable and accrued liabilities (5,548) 1,383 Income taxes payable and deferred 4,803 5,247 Postretirement health care and life insurance benefits 163 208 Deferred compensation and other liabilities 411 347 Other 24 (64) Net cash provided by (used in) operating activities 4,796 (5,549) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (4,626) (3,191) Purchase of held to maturity securities - (8,155) Maturity of held to maturity securities - 8,250 Purchase of available for sale securities (3,000) (33,079) Sale and maturity of available for sale securities 5,611 23,928 Net cash used in investing activities ( 2,015) (12,247) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of bank loan (15,000) - Dividends paid in cash (7,315) (7,164) Shares repurchased and retired (6,390) (6,182) Net cash used in financing activities (28,705) (13,346) Decrease in cash and cash equivalents (25,924) (31,142) Cash and cash equivalents-beginning of year 56,989 84,084 Cash and cash equivalents end of quarter $ 31,065 $ 52,942 Supplemental cash flow information: Income taxes paid $ 462 $ 639 Interest paid $ 580 $ 81 Stock dividend issued $ 46,311 $ 56,959 (The accompanying notes are an integral part of the statements.) -4-
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APRIL 2, 2005 (in thousands except per share amounts) (UNAUDITED) Note 1 - Foregoing data has been prepared from the unaudited financial records of 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 2004 Annual Report on Form 10-K. Note 2 - 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. Average shares outstanding for the period ended April 3, 2004 reflects stock repurchases of 170 shares for $6,182 and a 3% stock dividend distributed on April 14, 2004. Note 3 - Results of operations for the period ended April 2, 2005 are not necessarily indicative of results to be expected for the year to end December 31, 2005 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 - On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the "Act"). The Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividends received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations and as of today, uncertainty remains as to how to interpret certain provisions of the Act. As such, the company has not yet determined whether, and to what extent, it may repatriate earnings that have not yet been remitted to the U.S. and therefore makes no estimate as to the amount of future remittances. -5- The Act also provides for a deduction for income from qualified domestic production activities, which will be phased in from 2005 through 2010. This provision also is subject to a number of limitations which affect the effective tax rate in 2005 and later. The accompanying financial statements reflect the company's estimate of the effect of the Act on its effective tax rate in 2005. Note 5 - On August 30, 2004, the company purchased certain assets and assumed certain liabilities from Concord Confections, Inc. and its affiliates (collectively Concord) including its 50% equity interest in a Spanish joint venture. Cash consideration paid of $218,229 was funded by the liquidation of $64,229 of marketable securities and a bank term loan of $154,000. The adjusted purchase price of $212,587 reflects an estimated recovery of $6,642 relating to a deficiency in minimum working capital required under terms of the purchase contract. Subsequent to the end of first quarter 2005, the company finalized the estimated working capital deficiency and collected $6,755. The results of Concord's operations have been included in the company's condensed consolidated financial statements since August 30, 2004. Concord holds a strong market position in the bubble gum category and its products are sold primarily under the Dubble Bubble brand name and trademark. The following table includes the unaudited pro forma net sales, net earnings and net earnings per share for the first quarter of 2004 as if the company had acquired Concord as of January 1, 2004. Pro forma adjustments are necessary to reflect costs and expenses of financing the purchase, including additional interest expense on bank borrowings, decrease in investment income reflecting the sale of marketable securities, and changes in depreciation expense resulting from fair value adjustments to net tangible assets. The pro forma results do not reflect any cost savings or synergies that might be realized, including the anticipated elimination of substantially all of the Concord historical senior executive compensation and other management expenses which aggregated $863 net of income taxes for the first quarter 2004. -5A- Following is a summary of the unaudited pro forma combined results for Tootsie Roll Industries, Inc. and the Concord Confections business for the first quarter 2004: 2004 Combined Pro Forma Net sales..............................$ 97,003 Net earnings...........................$ 12,004 Earnings per share.....................$ .22 The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of January 1, 2004, nor are they necessarily indicative of future consolidated results. Note 6 - The bank loan is payable in quarterly installments through August of 2006. As a result of prepayments, the next quarterly installment is due in March, 2006. The loan is collateralized by investments in marketable securities and is subject to other terms and conditions, none of which are significant. Interest is LIBOR based, and the average rate was 2.8% in 2005. -5B- 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, 2005 First Quarter vs. 2005 2004 First Quarter, 2004 $97,925 $80,046 22.3% First quarter 2005 net sales were $97,925 compared to $80,046 in first quarter 2004, an increase of $17,879 or 22.3%. First quarter 2005 sales benefited from $17,345 of sales from the Concord Confections business which was acquired on August 30,2004. First quarter 2005 net sales of $97,925 were down from fourth quarter 2004 net sales of $105,936. This 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 2005 2004 1st Qtr. 2005 1st Qtr. 2004 $58,476 $45,316 59.7% 56.6% Cost of sales as a percentage of net sales increased from 56.6% in first quarter 2004 to 59.7% in first quarter 2005. The increase in cost of sales as a percentage of net sales reflects the inclusion of the Concord Confections business which has higher costs as a percentage of net sales, various start-up costs associated with a new production line, generally higher labor costs, including health insurance and other fringe benefits, and increased manufacturing plant overhead costs. OPERATING EARNINGS: First Quarter, 2005 First Quarter vs. 2005 2004 First Quarter, 2004 $17,159 $16,060 6.8% -6- Selling, marketing and administrative expenses rose from $18,670 in the first quarter 2004 to $22,290 in first quarter 2005, an increase of $3,620 or 19.4%. The aforementioned increase principally reflects the incremental operating expenses of the Concord Confections business. However, as a percentage of net sales, such operating expenses favorably decreased from 23.3% in 2004 to 22.8% in 2005, reflecting various cost efficiencies achieved from increased consolidated net sales due to the inclusion of the Concord Confections business. First quarter earnings from operations were $17,159 and $16,060 in 2005 and 2004, respectively, an increase of $1,099 or 6.8%. Improved first quarter 2005 operating earnings benefited from higher reported net sales and resulting operating earnings from the inclusion of the Concord Confections business as discussed above. NET EARNINGS: First Quarter, 2005 First Quarter vs. 2005 2004 First Quarter, 2004 $12,506 $11,493 8.8% First quarter 2005 net earnings were $12,506 compared to first quarter 2004 net earnings of $11,493. First quarter 2005 earnings per share were $0.23, compared to $0.21 per share in the prior year comparative period, an increase of $0.02 or 9.5%. Other income, net was $1,207 in first quarter 2005 compared to $1,275 in first quarter 2004. Other income, net in 2005 includes $570 of increased interest expense and $487 of decreased investment income reflecting the financing costs of the Concord Confections business acquired on August 30, 2004. First quarter 2005 other income, net benefited from $472 of foreign exchange and translation gains, $251 of real estate rental income from the Concord Confections business, and $279 of net income from the company's Spanish joint venture acquired as part of the Concord Confections business. The consolidated effective income tax rate favorably decreased from 33.7% in first quarter 2004 to 32.4% in first quarter 2005. This improvement generally reflects the statutory reduction in the U.S. federal income tax rate in 2005 for US manufacturing activities as well as lower 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 2.2 to 1 as of the end of first quarter 2005 as compared to 3.6 to 1 as of the end of first quarter 2004 and 2.3 to 1 as of the end of fourth quarter 2004. Net working capital was $101,207 as of the end of first quarter 2005 as compared to $110,376 and $174,525 as of the end of fourth quarter 2004 and first quarter 2004, respectively. The aforementioned net working capital amounts are principally reflected in aggregate cash and cash equivalents and short-term investments which totalled $71,257 as of the end of first quarter 2005 compared to $89,358 and $142,290, as of the end of fourth quarter 2004 and first quarter 2004, respectively. In addition, long-term investments, principally debt securities comprising municipal bonds, were $85,713 as of the end of first quarter 2005 as compared to $96,640 and $120,705 as of the end of fourth quarter 2004 and first quarter 2004, respectively. Investments in municipal bonds and other debt securities that matured during first quarters 2005 and 2004 were generally replaced with debt securities of similar maturities. The decreases in overall working capital, aggregate cash and cash equivalents, and short-term and long-term investments from first quarter 2004 reflects the company's financing of the Concord Confections business on August 30,2004 for an adjusted purchase price of approximately $212,587. The aforementioned adjusted purchase price reflects the Company's recovery subsequent to the end of first quarter 2005 of approximately $6,755 relating to the final determination of the required minimum working capital amount under terms of the Concord purchase contract. Net cash provided by operating activities was $4,796 for first quarter 2005, whereas $5,549 of net cash was used in operating activities in first quarter 2004. The aforementioned net change in net cash provided by/used in operating activities principally reflects the Company's pre-funding of the annual cost of certain defined contribution employee benefit plans in 2004, reflected as a prepaid expense, which was not pre-funded in 2005; the timing of payments relating to accounts payable also contributed to such net change. Capital expenditures for first quarter 2005 and 2004 were $4,626 and $3,191, respectively. Capital expenditures for the 2005 year are anticipated to be generally in line with historical annualized spending after adjusting for the addition of the Concord Confections business, and are to be funded from the company's cash flow from operations and internal sources. As of the end of first quarter 2005, the company has $77,000 outstanding relating to its bank loan in connection with the financing of the Concord Confections acquisition on August 30,2004. As a result of prepayments on this loan, the next required installment of $9,667 is due in March 2006. The balance of the bank loan is due in later 2006. The company anticipates making substantial prepayments on this loan in 2005 which will be funded from cash flows from operations and maturities of investments in marketable securities. -6B- Cash dividends declared in first quarter 2005 and 2004 were $3,655 and $3,575, respectively. However, dividends paid in cash were $7,315 and $7,164, in first quarter 2005 and 2004, 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. The company repurchased and retired $6,390 and $6,182 of its outstanding common stock during first quarter 2005 and 2004, 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 effect of ingredient 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 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 2004 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 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 expenses 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, 2004. -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 2, 2005 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 2, 2005 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 (a) Total (b) Average Shares Approximate Dollar Number of Price Paid per Purchased as Part of Value of Shares that May Yet Be Purchased Shares Share Publicly Announced Plans Under the Plans or Period Purchased Or Programs or Programs JAN 1 TO JAN 29 - $ . NOT APPLICABLE NOT APPLICABLE JAN 30 TO FEB 26 - . NOT APPLICABLE NOT APPLICABLE FEB 27 TO APR 2 215,700 29.59 NOT APPLICABLE NOT APPLICABLE TOTAL 215,700 $ 29.59 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 11, 2005 BY:/S/Melvin J. Gordon Melvin J. Gordon Chairman of the Board Date: MAY 11, 2005 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)) 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 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: 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 11, 2005 By: /s/Melvin J. Gordon Melvin J. Gordon Chairman and Chief Executive Officer -7A- Exhibit 31.2 CERTIFICATION I, G. Howard Ember, 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)) 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 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: 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 11, 2005 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 2, 2005 (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 11, 2005 /s/Melvin J. Gordon Melvin J. Gordon Chairman and Chief Executive Officer Dated: May 11, 2005 /s/G. Howard Ember, Jr. G. Howard Ember, Jr. V.P./Finance and Chief Financial Officer -7C-