10-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
o	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 (State or other jurisdiction of incorporation or organization)	22-1318955 (IRS Employer Identification No.)
7401 South Cicero Avenue, Chicago, Illinois 60629 (Address of principal executive offices) (Zip Code)
Registrant's Telephone Number: (773) 838-3400

        Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock—Par Value $.694/9 Per Share	New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act:

Class B Common Stock — Par Value $.69⁴/9 Per Share

        Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes    o                      No    ý

        Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes    o                      No    ý

        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    ý                      No    o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

        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 o                Accelerated Filer ý                Non-accelerated Filer o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    o                      No    ý

        As of March 1, 2006, there were outstanding 35,078,809 shares of Common Stock par value $.69⁴/9 per share, and 17,990,722 shares of Class B Common Stock par value $.69⁴/9 per share.

        As of June 30, 2005, the aggregate market value of the Common Stock (based upon the closing price of the stock on the New York Stock Exchange on such date) held by non-affiliates was approximately $561,622,000. Class B Common Stock is not traded on any exchange, is restricted as to transfer or other disposition, but is convertible into Common Stock on a share-for-share basis. Upon such conversion, the resulting shares of Common Stock are freely transferable and publicly traded. Assuming all 17,990,722 shares of outstanding Class B Common Stock were converted into Common Stock, the aggregate market value of Common Stock held by non-affiliates on June 30, 2005 (based upon the closing price of the stock on the New York Stock Exchange on such date) would have been approximately $590,866,000. Determination of stock ownership by non-affiliates was made solely for the purpose of this requirement, and the Registrant is not bound by these determinations for any other purpose.

DOCUMENTS INCORPORATED BY REFERENCE

        1.     Portions of the Company's Annual Report to Shareholders for the year ended December 31, 2005 (the "2005 Report") are incorporated by reference in Parts I and II of this report and filed as an exhibit to this report.

        2.     Portions of the Company's Definitive Proxy Statement for the Company's Annual Meeting of Shareholders (the "2006 Proxy Statement") scheduled to be held on May 1, 2006 are incorporated by reference in Part III of this report.

TABLE OF CONTENTS

ITEM 1.	Business	2
ITEM 1A.	Risk Factors	4
ITEM 1B.	Unresolved Staff Comments	5
ITEM 2.	Properties	5
ITEM 3.	Legal Proceedings	5
ITEM 4.	Submission of Matters to a Vote of Security Holders	5
ITEM 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
ITEM 6.	Selected Financial Data	6
ITEM 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	6
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	6
ITEM 8.	Financial Statements and Supplementary Data	7
ITEM 9.	Changes in and Disagreements with Auditors on Accounting and Financial Disclosure	7
ITEM 9A.	Controls and Procedures	7
ITEM 9B.	Other Information	7
ITEM 10.	Directors and Executive Officers of the Registrant	7
ITEM 11.	Executive Compensation	8
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8
ITEM 13.	Certain Relationships and Related Transactions	9
ITEM 14.	Principal Accountant Fees and Services	9
ITEM 15.	Exhibits and Financial Statement Schedules	9

i

Forward-Looking Information

        From time to time, in the Company's statements and written reports, including this report, the Company discusses its expectations regarding future performance by making certain "forward-looking statements." These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain, and actual results may differ materially from those expressed or implied herein. Consequently, the Company wishes to caution readers not to place undue reliance on any forward-looking statements. In connection with the "safe harbor provisions" of the Private Securities Litigation Reform Act of 1995, the Company notes the following factors which, among others, could cause future results to differ materially from the forward-looking statements, expectations and assumptions expressed or implied herein. Among the factors that could impact the Company's ability to achieve its stated goals are the following: (i) significant competitive activity, including advertising, promotional and price competition, and changes in consumer demand for the Company's products; (ii) fluctuations in the cost and availability of various raw materials; (iii) inherent risks in the marketplace associated with new product introductions, including uncertainties about trade and consumer acceptance and seasonal events such as Halloween (iv) the effect of acquisitions on the company's results of operations and financial condition; (v) the effect of changes in foreign currencies on the company's foreign subsidiaries; (vi) the company's reliance on third-party vendors for various goods and services; (vii) the company's ability to successfully implement new production processes and lines; (viii) the effect of changes in assumptions, including discount rates, sales growth and profit margins, relating to the company's impairment testing and analysis of its goodwill and trademarks;(ix) changes in the confectionary market place including actions taken by major retailers and customers; customer and consumer response to marketing programs and price adjustments; (x) changes in governmental laws and regulations including taxes; and (xi) changes in assumptions and judgments discussed under the heading "Critical Accounting Policies" included in the 2005 Report and incorporated by reference into this report. In addition, the Company's results may be affected by general factors, such as economic conditions, political developments, currency exchange rates, interest and inflation rates, accounting standards, taxes, and laws and regulations affecting the Company in markets where it competes.

PART I

ITEM 1.    Business.

        Tootsie Roll Industries, Inc. and its consolidated subsidiaries (the "Company") have been engaged in the manufacture and sale of confectionery products for over 100 years. This is the only industry segment in which the Company operates and is its only line of business. The majority of the Company's products are sold under the registered trademarks TOOTSIE ROLL, TOOTSIE ROLL POPS, CHILD'S PLAY, CARAMEL APPLE POPS, CHARMS, BLOW-POP, BLUE RAZZ, ZIP-A-DEE-DOO-DA POPS, CELLA'S, MASON DOTS, MASON CROWS, JUNIOR MINT, CHARLESTON CHEW, SUGAR DADDY, SUGAR BABIES, ANDES, FLUFFY STUFF, DUBBLE BUBBLE, RAZZLES, CRY BABY and NIK-L-NIP. In 2000, the Company acquired the trademarks for Andes and Fluffy Stuff along with their corresponding manufacturing assets. In 2004 the Company acquired the trademarks for DUBBLE BUBBLE, RAZZLES, CRY BABY and NIK-L-NIP along with their corresponding manufacturing assets and a 50% equity interest in a Spanish joint venture that manufactures and sells confectionery products, principally gum, from Concord Confections, Inc. and its affiliates for an adjusted aggregate purchase price, including direct transactions fees and expenses, of $212,474,000. See Note 12 of the Notes to Consolidated Financial Statements on Page 17 of the 2005 Report.

        The Company's products are marketed in a variety of packages designed to be suitable for display and sale in different types of retail outlets. They are distributed through approximately 100 candy and grocery brokers and by the Company itself to approximately 15,000 customers throughout the United States. These customers include wholesale distributors of candy and groceries, supermarkets, variety stores, dollar stores, chain grocers, drug chains, discount chains, cooperative grocery associations, warehouse and membership club stores, vending machine operators, the U. S. military and fund-raising charitable organizations.

        The Company's principal markets are in the United States, Canada and Mexico. The Company's Mexican plant supplies a very small percentage of the products marketed in the United States and Canada. The majority of production from the Company's Canadian plants is sold in the United States.

        The domestic confectionery business is highly competitive. The Company competes primarily with other manufacturers of bar candy, bagged candy and bubble gum of the type sold in the above mentioned stores. Although accurate statistics are not available, the Company believes it is among the ten largest domestic manufacturers in this field. In the markets in which the Company competes, the main forms of competition comprise brand recognition as well as a fair price for our products at various retail price points.

        The Company did not have a material backlog of firm orders at the end of the calendar years 2005 or 2004.

        Packaging materials and ingredients used by the Company are readily obtainable from a number of suppliers at competitive prices. Cocoa prices declined from recent historic highs due to improved supplies from the Ivory Coast, the world's largest producer. Vegetable oil prices were higher due to weather-related crop yield declines in certain foreign markets that effect world supply and pricing. The domestic price of both raw and refined sugar increased toward the end of 2005 due to supply disruptions from a lower than expected crop of beet sugar and hurricane Katrina. Packaging material costs, including films, cartons, corrugated containers and waxed paper, were higher in 2005, in part due to tighter supplies and higher oil prices. The Company continues to seek competitive bids to leverage the high volume of annual purchases it makes of these items and to lower per unit costs. The Company has engaged in hedging transactions, primarily in sugar, corn syrup and soybean oil and may do so in

2

the future if and when advisable. From time to time, the Company changes the size of certain of its products, which are usually sold at standard prices, to reflect significant changes in raw material costs.

        The Company does not hold any material patents, licenses, franchises or concessions. The Company's major trademarks are registered in the United States and in many other countries. Continued trademark protection is of material importance to the Company's business as a whole.

        Although the Company does develop new products, including product line extensions for existing brands, the Company does not expend material amounts of money on research or development activities.

        The Company's compliance with Federal, State and local regulations which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect on the capital expenditures, earnings or competitive position of the Company nor does the Company anticipate any such material effects from presently enacted or adopted regulations.

        The Company employs approximately 2,200 persons.

        The Company has found that its sales normally maintain a consistent level throughout the year except for a substantial upsurge in the third quarter which reflects sales associated with Halloween. In anticipation of this high sales period, the Company generally begins its Halloween inventory build-up in the second quarter of each year. The Company historically offers extended credit terms for sales made under Halloween sales programs. Each year, after Halloween receivables have been collected, the Company invests such funds in various temporary cash investments.

        Revenues from Wal-Mart Stores, Inc. aggregated approximately 24.0%, 20.8%, and 20.6% of total net sales during the years ended December 31, 2005, 2004 and 2003, respectively. Although no other customer other than Wal-Mart Stores, Inc. accounted for more than 10% of net sales, the loss of one or more significant customers could have a material adverse effect on the Company's business. In early 2006, one customer of the business acquired from Concord Confections terminated a contract manufacturing arrangement which accounted for approximately 2% of net sales in 2005. Although management anticipates the Company will generate sufficient additional sales throughout its business to offset the loss of this customer, that cannot be assured.

        For a summary of sales and long-lived assets of the Company by geographic area and additional information regarding the foreign subsidiaries of the Company, see Note 9 of the Notes to Consolidated Financial Statements on Page 16 of the 2005 Report and on Page 4 of the 2005 Report under the section entitled "International." Note 9 and the aforesaid section are incorporated herein by reference. Portions of the 2005 Report are filed as an exhibit to this report.

        Information regarding the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, will be made available, free of charge, upon written request to Tootsie Roll Industries, Inc., 7401 South Cicero Avenue, Chicago, Illinois 60629, Attention: Barry Bowen, Treasurer and Assistant Secretary. The Company does not make such reports available on its website at www.tootsie.com because it believes that they are readily available from the Securities Exchange Commission at www.sec.gov, and because the Company provides them free of charge upon request. Interested parties, including shareholders, may communicate to the Board of Directors or any individual director in writing, by regular mail, addressed to the Board of Directors or an individual director, in care of Tootsie Roll Industries, Inc., 7401 South Cicero Avenue, Chicago, Illinois 60629, Attention: Ellen R. Gordon, President. If you wish to communicate directly with the Company's non-employee directors, please note that on the cover of the communication.

3

ITEM 1A.    Risk Factors

        Significant factors that could impact the Company's financial condition or results of operations include, without limitation, the following:

•

Changes in the price of raw materials—The packaging materials and several of the principal ingredients used by the Company are subject to price volatility. Although the Company engages in commodity hedging transactions and seeks to leverage the high volume of its annual purchases, the Company may experience price increases in these raw materials that it may not be able to offset, which could have an adverse impact on the Company's results of operations and financial condition.



•

Changes in product performance and competition    The Company competes with other well-established manufacturers of confectionery products. A failure of new or existing products to be favorably received, a failure to retain preferred shelf space at retail or a failure to sufficiently counter aggressive competitive actions could have an adverse impact on the Company's results of operations and financial condition.



•

Discounting and other competitive actions—Discounting and other competitive actions may make it more difficult for the Company to maintain its operating margins.



•

Dependence on customers—The Company's largest customer, Wal-Mart Stores, Inc., accounted for approximately 24.0% of total net sales in 2005. The loss of Wal-Mart or one or more other large customers, or a material decrease in purchases by one or more large customers, could result in decreased sales and adversely impact the Company's results of operations and financial condition.



•

Changes in consumer preferences and tastes—Failure to adequately anticipate and react to changing demographics, consumer trends, consumer health concerns and product preferences could have an adverse impact on the Company's results of operations and financial condition.



•

Governmental laws and regulations—Governmental laws and regulations, including food and drug laws, laws related to advertising and marketing practices, accounting standards, taxation requirements, competition laws, employment laws and environmental laws, both in and outside the U.S, could adversely impact the Company's results of operations and ability to compete in domestic or foreign marketplaces.



•

Labor stoppages—To the extent the Company experiences any material labor stoppages, such disputes or strikes could negatively affect shipments from suppliers or shipments of finished product.



•

Changes to Certain Post-Retirement Benefit Obligations—Cash expenditures and costs for post-retirement health insurance benefits could be materially higher than the Company has predicted if health care cost trend assumptions and discount rates prove to be incorrect. Moreover, regulatory changes could increase the Company's obligations to provide these or additional benefits.



•

International operations—While the countries in which the Company operates tend to be politically, socially and economically stable, to the extent there is political or social unrest, civil war, terrorism or significant economic instability, the results of the Company's business in such countries could be adversely impacted. Currency exchange rate fluctuations between the U.S. dollar and foreign currencies could have an adverse impact on the Company's results of operations and financial condition.

4

        The factors identified above are believed to be significant factors, but not necessarily all of the significant factors, that could impact our business. Unpredictable or unknown factors could also have material effects on the Company.

        Additional significant factors that may affect the Company's operations, performance and business results include the risks and uncertainties listed from time to time in filings with the Securities and Exchange Commission and the risk factors or uncertainties listed herein or listed in any document incorporated by reference herein.

ITEM 1B.    Unresolved Staff Comments.

        None.

ITEM 2.    Properties.

        The Company owns its principal plant and offices which are located in Chicago, Illinois in a building consisting of approximately 2,225,000 square feet which is utilized for offices, manufacturing and warehousing. In addition to owning the principal plant and warehousing facilities mentioned above, the Company leases manufacturing and warehousing facilities at a second location in Chicago which comprises 138,000 square feet. The lease is renewable by the Company every five years through June, 2011. The Company also periodically leases additional warehousing space at this second location as needed on a month to month basis.

        The Company's other principal manufacturing facilities, all of which are owned, are:

Location	Square Feet(a)
Covington, Tennessee	685,000
Cambridge, Massachusetts	142,000
Delevan, Wisconsin	162,000
Concord, Ontario, Canada	280,500	(b)
Mexico City, Mexico	90,000

(a)

Square footage is approximate and includes production, warehousing and office space.

(b)

Two facilities; a third owned facility, comprising 225,000 square feet of warehousing space, and which is excluded from the reported totals above, is leased to a third party.

        The Company owns substantially all of the production machinery and equipment located in its plants and considers that all of its facilities are well maintained, in good operating condition and adequately insured.

ITEM 3.    Legal Proceedings.

        There are no material pending legal proceedings known to the Company to which the Company or any of its subsidiaries is a party or of which any of their property is the subject.

ITEM 4.    Submission of Matters to a Vote of Security Holders.

        No matters were submitted to a vote of the Company's shareholders through the solicitation of proxies or otherwise during the fourth quarter of 2005.

ADDITIONAL ITEM.    Executive Officers of the Registrant.

        See the information on Executive Officers set forth in the table in Part III, Item 10, Page 9 of this report, which is incorporated herein by reference.

5

PART II

ITEM 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

        The Company's Common Stock is traded on the New York Stock Exchange. The Company's Class B Common Stock is subject to restrictions on transferability and no market exists for such shares of Class B Common Stock. The Class B Common Stock is convertible at the option of the holder into shares of Common Stock on a share-for-share basis. As of March 4, 2006, there were approximately 4,100 and 1,500 registered holders of record of Common and Class B Common Stock, respectively. In addition, the Company estimates that as of March 4, 2006 there were 18,000 and 5,000 beneficial holders of Common and Class B Common Stock, respectively. For information on the market price of, and dividends paid with respect to, the Company's Common Stock, see the section entitled "2005-2004 Quarterly Summary of Tootsie Roll Industries, Inc. Stock Price and Dividends Per Share" which appears on Page 20 of the 2005 Report. This section is incorporated herein by reference and filed as an exhibit to this report.

        The following table sets forth information about the shares of Common Stock the Company repurchased on the open market during the quarter ended December 31, 2005:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
Oct 2 to Oct 31	-0-	$	—	Not Applicable	Not Applicable
Nov 1 to Nov 30	172,000		30.12	Not Applicable	Not Applicable
Dec 1 to Dec 31	152,700		30.02	Not Applicable	Not Applicable
Total	324,700	$	30.06

        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.    Selected Financial Data.

        See the section entitled "Five Year Summary of Earnings and Financial Highlights" which appears on Page 21 of the 2005 Report. This section is incorporated herein by reference and filed as an exhibit to this report.

ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

        See the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" on Pages 5-9 of the 2005 Report. This section is incorporated herein by reference and filed as an exhibit to this report.

ITEM 7A.    Quantitative and Qualitative Disclosures About Market Risk.

        See the section entitled "Market Risks" in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 7-8 of the 2005 Report. This section is incorporated herein by reference and filed as an exhibit to this report.

        See also Note 1 of the Notes of Consolidated Financial Statements commencing on Page 14 of the 2005 Report, which is incorporated herein by reference.

6

ITEM 8.    Financial Statements and Supplementary Data.

        The financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated March 14, 2006, appearing on Pages 9-19 of the 2005 Report and the Quarterly Financial Data on Page 20 of the 2005 Report are incorporated by reference in this report. With the exception of the aforementioned information and the information incorporated in Items 1, 5, 6, 7, 7A, and 9A, the 2005 Report is not to be deemed filed as part of this report.

ITEM 9.    Changes in and Disagreements with Auditors on Accounting and Financial Disclosure.

        None.

ITEM 9A.    Controls And Procedures.

Disclosure Controls and Procedures

        The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and (ii) is accumulated and communicated to the Company's management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

        (a)   See Page 18 of the 2005 Report for Management's Report on Internal Control over Financial Reporting, which is incorporated herein by reference.

        (b)   See Page 19 of the 2005 Report for the attestation report of the Company's independent registered public accounting firm, which is incorporated herein by reference.

        (c)   There were no changes in the Company's internal control over financial reporting during the quarter ended December 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B.    Other Information.

        None

PART III

ITEM 10.    Directors and Executive Officers of the Registrant.

        See the information with respect to the Directors of the Company which is set forth in the section entitled "Election of Directors" of the 2006 Proxy Statement. Except for the last paragraph of this section relating to the compensation of Directors, this section of the 2006 Proxy Statement is incorporated herein by reference. See the information in the section entitled "Section 16(a) Beneficial Ownership Reporting Compliance" of the Company's 2006 Proxy Statement, which section is incorporated herein by reference.

7

        The following table sets forth the information with respect to the executive officers of the Company:

Name	Position(1)	Age
Melvin J. Gordon*	Chairman of the Board and Chief Executive Officer(2)	86
Ellen R. Gordon*	President and Chief Operating Officer(2)	74
G. Howard Ember Jr.	Vice President/Finance	53
John W. Newlin Jr.	Vice President/Manufacturing	68
Thomas E. Corr	Vice President/Marketing and Sales	57
John P. Majors	Vice President/Distribution	44
Barry P. Bowen	Treasurer	50

*

A member of the Board of Directors of the Company

(1)

All of the above named officers other than Mr. Majors have served in the positions set forth in the table as their principal occupations for more than the past ten years. From January, 2000 until joining the Company in October, 2004 Mr. Majors was employed by The Pepsi Bottling Group in various senior logistics management positions. Mr. and Mrs. Gordon also serve as President and Vice President, respectively of HDI Investment Corp., a family investment company.

(2)

Melvin J. Gordon and Ellen R. Gordon are husband and wife.

Code of Ethics

        The Company has a Code of Business Conduct and Ethics, which applies to all of the Company's directors and employees, and which meets the Securities Exchange Commission criteria for a "code of ethics." The Code of Ethics is available on the Company's website, located at www.tootsie.com, and the information in such Code of Conduct is available in print to any shareholder who requests a copy.

ITEM 11.    Executive Compensation.

        See the information set forth in the section entitled "Executive Compensation and Other Information" of the Company's 2006 Proxy Statement. Except for the "Report on Executive Compensation" and "Performance Graph," this section of the 2006 Proxy Statement is incorporated herein by reference. See the last paragraph of the section entitled "Election of Directors" of the 2006 Proxy Statement relating to the compensation of Directors, which paragraph is incorporated herein by reference.

ITEM 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

        For information with respect to the beneficial ownership of the Company's Common Stock and Class B Common Stock by the beneficial owners of more than 5% of said shares and by the management of the Company, see the sections entitled "Ownership of Common Stock and Class B Common Stock by Certain Beneficial Owners" and "Ownership of Common Stock and Class B Common Stock by Management" of the 2006 Proxy Statement. These sections of the 2006 Proxy Statement are incorporated herein by reference. The Company does not have any compensation plans under which equity securities of the Company are authorized for issuance.

8

ITEM 13.    Certain Relationships and Related Transactions.

        See the section entitled "Certain Relationships and Related Transactions" of the 2006 Proxy Statement, which is incorporated herein by reference.

ITEM 14.    Principal Accountant Fees and Services.

        See the section entitled "Independent Auditor Fees and Services" of the 2006 Proxy Statement, which is incorporated herein by reference.

ITEM 15.    Exhibits and Financial Statement Schedule.

(a)

Financial Statements.

        The following financial statements and schedule are filed as part of this report:

(1)

Financial Statements (filed herewith as part of Exhibit 13):

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Earnings, Comprehensive Earnings and Retained Earnings for the three years ended December 31, 2005

Consolidated Statements of Cash Flows for the three years ended December 31, 2005

Consolidated Statements of Financial Position at December 31, 2005 and 2004

Notes to Consolidated Financial Statements

(2)

Financial Statement Schedule:

Report of Independent Registered Public Accounting Firm on Financial Statement Schedule

For the three years ended December 31, 2005—Valuation and Qualifying Accounts

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

(3)

Exhibits required by Item 601 of Regulation S-K:

See Index to Exhibits which appears following Financial Schedule II.

9

SIGNATURES

        Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, Tootsie Roll Industries, Inc., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TOOTSIE ROLL INDUSTRIES, INC.
By:	Melvin J. Gordon Melvin J. Gordon, Chairman of the Board of Directors and Chief Executive Officer
Date:	March 14, 2006

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Melvin J. Gordon Melvin J. Gordon	Chairman of the Board of Directors and Chief Executive Officer (principal executive officer)	March 14, 2006
Ellen R. Gordon Ellen R. Gordon	Director, President and Chief Operating Officer	March 14, 2006
Barre A. Seibert Barre A. Seibert	Director	March 14, 2006
Lana Jane Lewis-Brent Lana Jane Lewis-Brent	Director	March 14, 2006
Richard P. Bergeman Richard P. Bergeman	Director	March 14, 2006
G. Howard Ember, Jr. G. Howard Ember, Jr.	Vice President, Finance (principal financial officer and principal accounting officer)	March 14, 2006

10

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of
Tootsie Roll Industries, Inc.:

        Our audits of the consolidated financial statements, of management's assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated March 14, 2006 appearing in the 2005 Annual Report to Shareholders of Tootsie Roll Industries, Inc. (which report, consolidated financial statements and assessment are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP

Chicago, Illinois
March 14, 2006

TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

DECEMBER 31, 2005, 2004 AND 2003

Description		Balance at beginning of year		Additions charged to costs and expenses		Deductions(1)		Balance at End of Year
2005:
	Reserve for bad debts	$	1,954,000	$	122,000	$	373,000	$	1,703,000
	Reserve for cash discounts		486,000		7,400,000		7,334,000		552,000
		$	2,440,000	$	7,522,000	$	7,707,000	$	2,255,000
2004:
	Reserve for bad debts	$	1,628,000	$	489,091	$	163,091	$	1,954,000
	Reserve for cash discounts		342,000		7,511,842		7,367,842		486,000
		$	1,970,000	$	8,000,933	$	7,530,933	$	2,440,000
2003:
	Reserve for bad debts	$	1,629,000	$	720,152	$	721,152	$	1,628,000
	Reserve for cash discounts		376,000		7,260,504		7,294,504		342,000
		$	2,005,000	$	7,980,656	$	8,015,656	$	1,970,000

(1)

Deductions against reserve for bad debts consist of accounts receivable written off net of recoveries and exchange rate movements. Deductions against reserve for cash discounts consist of allowances to customers.

INDEX TO EXHIBITS

        The Company hereby agrees to provide the Commission, upon request, copies of any omitted exhibits or schedules required by Item 601(b)(2) of Regulation S-K.

2.1	Purchase Agreement dated August 11, 2004 among the Company, Concord, certain of Concord's affiliates and Concord's stockholders, including a list of omitted exhibits and schedules. Incorporated by reference to Exhibit 2.1 to the Company's Report on Form 8-K dated August 27, 2004; Commission File No. 1-1361.
2.2	First Amendment to Purchase Agreement dated August 27, 2004 among the Company, certain of the Company's affiliates, Concord, certain of Concord's affiliates and Concord's stockholders. Incorporated by reference to Exhibit 2.2 to the Company's Report on Form 8-K dated August 27, 2004; Commission File No. 1-1361.
3.1	Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.1 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997; Commission File No. 1-1361.
3.2	Amendment to Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1999; Commission File No. 1-1361.
3.3	Amended and Restated By-Laws. Incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996; Commission File No. 1-1361.
4.1	Specimen Class B Common Stock Certificate. Incorporated by reference to Exhibit 1.1 of the Company's Registration Statement on Form 8-A dated February 29, 1988. Commission File No. 1-1361.
10.8.1*	Excess Benefit Plan. Incorporated by reference to Exhibit 10.8.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1990; Commission File No. 1-1361.
10.8.2*	Amended and Restated Career Achievement Plan of the Company. Incorporated by reference to Exhibit 10.8.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 1998; Commission File No. 1-1361.
10.8.3*	Amendment to the Amended and Restated Career Achievement Plan of the Company. Incorporated by reference to Exhibit 10.8.3 of the Company's Annual Report on Form 10-K for the year ended December 31, 1999; Commission File No. 1-1361.
10.12*	Restatement of Split Dollar Agreement (Special Trust) between the Company and the trustee of the Gordon Family 1993 Special Trust dated January 31, 1997. Incorporated by reference to Exhibit 10.12 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996; Commission File No. 1-1361.
10.21*	Executive Split Dollar Insurance and Collateral Assignment Agreement between the Company and G. Howard Ember Jr. dated July 30, 1994. Incorporated by reference to Exhibit 10.21 of the Company's Annual Report on Form 10-K for the year ended December 31, 1994; Commission File No. 1-1361.
10.22*	Executive Split Dollar Insurance and Collateral Assignment Agreement between the Company and John W. Newlin dated July 30, 1994. Incorporated by reference to Exhibit 10.22 of the Company's Annual Report on Form 10-K for the year ended December 31, 1994; Commission File No. 1-1361.

10.23*	Executive Split Dollar Insurance and Collateral Assignment Agreement between the Company and Thomas E. Corr dated July 30, 1994. Incorporated by reference to Exhibit 10.23 of the Company's Annual Report on Form 10-K for the year ended December 31, 1994; Commission File No. 1-1361.
10.25*	Form of Change In Control Agreement dated August, 1997 between the Company and certain executive officers. Incorporated by reference to Exhibit 10.25 of the Company's Annual Report on Form 10-K for the year ended December 31, 1997; Commission File No. 1-1361.
10.26*	Executive Split Dollar Insurance and Collateral Assignment Agreement between the Company and Barry Bowen dated April 1, 1997. Incorporated by reference to Exhibit 10.26 of the Company's Annual Report on Form 10-K for the year ended December 31, 1997; Commission File No. 1-1361.
10.27*	Amendment to Split Dollar Agreement (Special Trust) dated April 2, 1998 between the Company and the trustee of the Gordon Family 1993 Special Trust, together with related Collateral Assignments. Incorporated by reference to Exhibit 10.27 of the Company's Annual Report on Form 10-K for the year ended December 31, 1998; Commission File No. 1-1361.
10.28*	Tootsie Roll Industries, Inc. Bonus Incentive Plan. Incorporated by reference to Exhibit A of the Company's Proxy Statement dated March 27, 1997; Commission File No. 1-1361.
10.29*	Tootsie Roll Industries, Inc. Bonus Incentive Plan. Incorporated by reference to Exhibit A of the Company's Proxy Statement dated March 30, 2002; Commission File No. 1-1361.
10.30*	Executive Officer Compensation
10.31*	Director Compensation
10.32	Loan Agreement dated August 27, 2004 between the Company and Bank of America, N.A. Incorporated by reference to Exhibit 2.3 to the Company's Report on Form 8-K dated August 27, 2004, Commission File No. 1-1361.
13	The following items incorporated by reference herein from the Company's 2005 Annual Report to Shareholders for the year ended December 31, 2005 (the "2005 Report"), are filed as Exhibits to this report:
	(i)	Information under the section entitled "International" set forth on Page 4 of the 2005 Report;
	(ii)	Information under the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth on Pages 5-9 of the 2005 Report;
	(iii)	Consolidated Statement of Earnings, Comprehensive Earnings and Retained Earnings for the three years ended December 31, 2005 set forth on Page 12 of the 2005 Report;
	(iv)	Consolidated Statement of Financial Position at December 31, 2005 and 2004 set forth on Pages 10-11 of the 2005 Report;
	(v)	Consolidated Statement of Cash Flows for the three years ended December 31, 2005 set forth on Page 13 of the 2005 Report;
	(vi)	Notes to Consolidated Financial Statements set forth on Pages 14-17 of the 2005 Report;
	(vii)	Management's Report on Internal Control over Financial Reporting set forth on Page 18 of the 2005 Report,
	(viii)	Report of Independent Registered Public Accounting Firm set forth on Page 19 of the 2005 Report;
	(ix)	Quarterly Financial Data set forth on Page 20 of the 2005 Report;

	(x)	Information under the section entitled "2005-2004 Quarterly Summary of Tootsie Roll Industries, Inc. Stock Price and Dividends per Share" set forth on Page 20 of the 2005 Report; and
	(xi)	Information under the section entitled "Five Year Summary of Earnings and Financial Highlights" set forth on Page 21 of the 2005 Report.
21	List of Subsidiaries of the Company.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*

Management compensation plan or arrangement.

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Forward-Looking Information
PART I

ITEM 1. Business.
ITEM 1A. Risk Factors
ITEM 1B. Unresolved Staff Comments.
ITEM 2. Properties.
ITEM 3. Legal Proceedings.
ITEM 4. Submission of Matters to a Vote of Security Holders.
ADDITIONAL ITEM. Executive Officers of the Registrant.

PART II

ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
ITEM 6. Selected Financial Data.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.
ITEM 8. Financial Statements and Supplementary Data.
ITEM 9. Changes in and Disagreements with Auditors on Accounting and Financial Disclosure.
ITEM 9A. Controls And Procedures.
ITEM 9B. Other Information.

PART III

ITEM 10. Directors and Executive Officers of the Registrant.
ITEM 11. Executive Compensation.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
ITEM 13. Certain Relationships and Related Transactions.
ITEM 14. Principal Accountant Fees and Services.
ITEM 15. Exhibits and Financial Statement Schedule.

SIGNATURES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARY COMPANIES SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS DECEMBER 31, 2005, 2004 AND 2003
INDEX TO EXHIBITS

EX-10.30

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EXHIBIT 10.30

EXECUTIVE OFFICER COMPENSATION

1)    Base Salary

        The Board of Directors annually reviews each executive officer's salary. The Board considers the following with respect to the determination of an individual executive officer's base salary: performance and contribution to the Company, including length of service in the position, comparative compensation levels of other companies, including periodic compensation studies performed by independent compensation and benefit consultants, overall competitive environment for executives and the level of compensation considered necessary to attract and retain executive talent, historical compensation and performance levels for the Company; and a desire to adhere to Internal Revenue Code Section 162(m) regulations on deductible compensation, thus maximizing the Company's ability to receive federal income tax deductions.

        Companies used in comparative analyses for the purpose of determining each executive officer's salary are selected periodically with the assistance of professional compensation consultants. Selection of such companies is based on a variety of factors, including market capitalization, revenue size and industry classification. The Board of Directors believes that the Company's primary competitors for executive talent are companies with a similar market capitalization and, accordingly, relies on a broad array of companies in various industries for comparative analyses. 2006 base salary for the named executive officers is $999,000, each, for Melvin J. Gordon and Ellen R. Gordon, $976,000 for John W. Newlin, $915,000 for Thomas E. Corr, and $693,000 for G. Howard Ember.

2)    Annual Incentives and Other Awards

        Effective January 1, 1997, the Compensation Committee established the Tootsie Roll Industries, Inc. Bonus Incentive Plan. In 2001, the shareholders approved the 2001 Bonus Incentive Plan to replace the previous Bonus Incentive Plan for 2001 and future years. The 2001 Bonus Incentive Plan was adopted to ensure the tax deductibility of the annual bonus that may be earned by executive officers of the Company. Under the Plan, certain key employees (including employees who are also directors) designated by the Compensation Committee may receive annual incentive compensation determined by pre-established objective performance goals. This year, all executive officers named in the summary compensation table included in this proxy statement were eligible for the 2001 Bonus Incentive Plan. Performance goals were based on the measures, objectives and financial criteria discussed below.

        Annual incentive bonuses to some executive officers and/or CAP and split-dollar insurance awards for all executive officers are made at the discretion of the Board of Directors in order to recognize and reward each executive officer's contribution to the Company's overall performance in terms of both financial results and attainment of individual and Company goals. The annual cash incentive bonus is designed to reward executives, as well as other management personnel, for their contributions to the Company's financial performance during the recently completed year.

        The annual CAP award and/or split-dollar life insurance program is principally designed to provide an incentive to executive officers to achieve both short-term and long-term financial and other goals, including strategic objectives. These programs are also designed to provide an incentive for the executive to remain with the Company on a long-term basis. These awards are determined by the Board of Directors based on the performance of the Company and the executive's contribution to the growth and success of the Company.

        The Board of Directors considers both achievement of strategic objectives and financial performance measures in determining compensation levels. The following measures of Company performance are considered in the determination of bonuses and awards: earnings per share, increase in sales of core brands and total sales, return on assets, return on equity; and net earnings as a percentage of sales.

3)    Other

        Each named executive officer is provided an automobile except for Mr. and Mrs. Gordon who share an automobile and are provided with the services of a driver. As disclosed in the proxy, Mr. and Mrs. Gordon also share the use of a corporate apartment in connection with travel to their Chicago offices and share the use of a corporate aircraft in connection with such travel and other business purposes. Mr. and Mrs. Gordon also made personal use of the corporate aircraft at a cost of $2,639 each in 2005. No personal use has been made in 2006.

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EXHIBIT 10.30

EXECUTIVE OFFICER COMPENSATION

EX-10.31

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EXHIBIT 10.31

DIRECTOR COMPENSATION

        Mr. and Mrs. Gordon do not receive fees for their service on the Board of Directors or committees. Other directors receive an annual fee of $43,000 plus $1,250 per meeting attended. Each member of the Audit Committee receives an annual retainer of $5,000 and each member of the Compensation Committee receives $1,250 per meeting attended. The Chairman of the Audit Committee receives an additional annual fee of $5,500. Board members are reimbursed for reasonable travel expenses in connection with attending meetings, and, in their capacity as ambassadors of the Company, receive free samples of the Company's products at Halloween and at other times throughout the year.

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EXHIBIT 10.31

DIRECTOR COMPENSATION

EX-13

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Corporate Profile Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of confectionery products for 109 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, Mason Dots, Mason Crows, Junior Mints, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff cotton candy, Dubble Bubble, Razzles, Cry Baby, Nik-L-Nip and EI Bubble.

Melvin J. Gordon, Chairman and Chief Executive Officer and Ellen R. Gordon, President and Chief Operating Officer.

Corporate Principles

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.

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."

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To Our Shareholders

Sales in 2005 reached $488 million, an increase of $68 million over 2004, and a new record for the Company. Sales gains resulted from a full year of operating results from the Concord Confections business which we acquired in August, 2004, as well as from new products and growth in some of our core brands.

Net earnings in 2005 grew to a record $77 million as compared to the $64 million reported in 2004.    On a per share basis, net earnings grew to a record $1.44 in 2005 from $1.19 in 2004.

The increase in net earnings during 2005 was principally attributable to the higher sales level and a gain on the sale of surplus real estate.

Financial Highlights

	December 31,
	2005	2004
	(in thousands except per share data)
Net Sales	$487,739	$420,110
Net Earnings	77,227	64,174
Working Capital	132,940	110,376
Net Property, Plant and Equipment	178,760	178,750
Shareholders' Equity	617,405	570,179
Average Shares Outstanding*	53,542	53,921
Per Share Items*
Net Earnings	$1.44	$1.19
Cash Dividends Paid	.29	.27

*Adjusted for stock dividends.

Among the many highlights of 2005 was the continuing and successful integration of Concord Confections, the largest acquisition in the history of our Company. This acquisition was completed in August of 2004, and was consistent with our strategy to pursue profitable growth through the acquisition of niche confectionery brands that complement our existing business.

We also pursue growth through expanding distribution of our existing brands, line extensions and new product introductions. Investing in our brands, developing innovative new product offerings and designing and executing effective promotional programs has enabled the Company to grow profitably over many years.

These strategies were executed once again during 2005 with promising results.

Another key component of our long term strategy is that we seek to operate state-of-the-art, or better, production facilities and to be the low cost producer for each of our major product lines. This objective is critical to our mission as a value oriented branded confectioner, and in 2005 we invested $15 million in capital expenditures.

While it is our preference to finance the Company with internally generated funds we are willing to incur debt when it is prudent to do so. The Concord acquisition was partially financed with borrowed funds and we are pleased to report that this debt was substantially paid down during 2005 through a combination of cash generated from operations and from maturing investments.

We ended the year with cash and investments of $129 million in excess of interest bearing debt. We also held an additional $22 million of restricted cash at year end which arose from the sale of surplus real estate.

Our strong financial position enables us to distribute dividends, support our brands in the marketplace, develop new products, make investments in operating assets, and consider business acquisition opportunities that may arise without jeopardizing the financial prospects of the Company.

During 2005 we again paid cash dividends and distributed a stock dividend. This was the sixty-third consecutive year in which the Company has paid cash dividends, which has earned us the distinction of "Dividend Achiever" by Mergent. The 2005 stock dividend marked the forty-first consecutive year in which such a distribution has been made by the Company.

Sales and Marketing

Targeted consumer and trade promotions emphasize the high quality and attractive values that our well known brands provide. These have long been a key component of the sales and marketing strategy of the Company and they remained so once again in 2005. Prominent confectionery brands such as Dubble Bubble, Cry Baby, Razzles and Nik-L-Nip that were added to our portfolio through the Concord acquisition fit well into this strategy.

During 2005, carefully executed promotions helped to move our products into distribution and to subsequently move them off the retailer's shelf due to strong consumer take-away. Our brands' high consumer recognition and historically high sell-through make them popular in virtually all major classes of trade.

Halloween remains our largest selling period and thus a major focus of our marketing activities. Product initiatives such as large bags of mixed product assortments and merchandising presentations such as pallet packs contributed to sales growth in our Halloween packaged goods line, most notably so in the grocery, mass merchandisers, warehouse clubs and drug classes of trade.

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In addition to our Halloween lines, our "theater" products continued to receive good consumer acceptance in the drug, mass merchandise, supermarket and dollar store trade classes. The product presentation for this line consists of large, "theater sized" boxes with attractive display panels.

Brands in this line include Dots, Tropical Dots, Crows, Sugar Babies, Mini-Charleston Chews, Junior Mints and Junior Caramels. With their convenient, "reclosable top" feature, these items need not be restricted to movie theater or home video applications. They offer a delicious, value-priced snack in almost any venue.

New products also added to sales during the year. Our familiar Tootsie Pop went tropical with the addition of Tropical Stormz. Each pop is a colorful swirl of two tangy fruit sensations, in five different combinations. We also introduced Tropical Bunch Pops, an assortment of five great tropical flavored Tootsie Pops banded together in an attractive, ten-pop cluster.

Tropical Stormz Tootsie Pops

Both of these items feature the same chewy, Tootsie Roll center that has made our pop a favorite among kids of all ages for 75 years. Of course, no matter what variety of hard candy shell entices consumers to lick the outside of a Tootsie Pop, they can hardly resist the temptation to find out "How many licks?" it takes to get to the delicious, chocolaty chewy center that lies within.

Cherry Ice Blow Pops

Blow Pops were also introduced in a cluster pack. This grouping of six delicious, bubble gum filled treats, referred to as "Flavor Zones" made a successful debut as did the newest flavor in the Blow Pop line, "Cherry Ice." This item features a translucent sour cherry flavored hard candy shell surrounding a sour cherry flavored red bubble gum center.

Our "Limited Edition" line of candies was expanded with the addition of Inside Outs Junior Mints, a refreshing dark chocolaty mint center enrobed in a luscious smooth white coating. This unique confection was a natural and successful fit in our theater box line.

"Inside Outs" Junior Mints

Two new varieties were introduced in the Andes line. "Fall Harvest" is a blend of cocoa, toffee crunch and orange cocoa flavors in the familiar rectangular Andes shape which are embossed with seasonal images and packaged in a fall-themed bag. Peppermint Crunch is a combination of candy cane bits encased in luscious white-chocolate which are embossed with candy cane images. Both of these items were successful seasonal products.

Andes Fall Harvest and Peppermint Crunch

Advertising and Public Relations

Television was once again used to convey our "How Many Licks?" message via a national cable TV campaign directed towards children and families. This riddle is among the best known in advertising history, and challenges the consumer to determine the exact lick-count without biting.

As always, many consumers responded to this message by writing to us to share their findings, and, as always, the results fall within a wide range of variability. Indeed, as stated in the ending of our commercial, it appears that "the world may never know" the true answer!

During 2005 television personality and "Cheers" star John Ratzenberger brought his popular "Made in America" series to our Company and filmed a segment featuring Tootsie Rolls and Tootsie Pops, which aired several times on the Travel Channel. Additional exposure was brought to our Caramel Apple Pops and Junior Caramels, which were featured on popular Food Network special interest program "Unwrapped." In addition to these new programs, ongoing reruns on several cable programs featuring many other of our brands continue to generate positive consumer interest in the Company and its products.

The Company was recognized in other ways during the year. Business Ethics magazine ranked us among the 100 Best Corporate Citizens and KLD named us to their Domini 400 Social Index on the strength of our leadership in corporate and social responsibility. We were also

3

cited by Jeremy Siegel in his popular book "The Future for Investors" as having delivered the fourth highest return to our shareholders among all surviving S & P 500 firms from the original index first published in 1957, and the highest among food companies. We place a high value on ethics, corporate leadership and creating shareholder value over the long-term, and are gratified to receive distinctions such as these.

In one of the more unusual stories we learned of in 2005, our El Bubble bubble gum cigars were used by astronaut Mike Fincke to celebrate the birth of his daughter, Tarali Paulina. While El Bubble has long been a fun and safe way to commemorate such a special occasion, this marked the first time a baby was born to an astronaut while in orbit-and the first time, to our knowledge, that one of our products was brought aboard the international space station!

Manufacturing and Distribution

During 2005 we continued working on key projects that were initiated in prior years, including the reengineering and start up of a major production line. We also 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 undertook a comprehensive study to examine our supply chain in 2005. The focus was on reengineering the network and patterns of distribution, As a result of this study, certain changes were implemented in 2005 and other recommendations that arose from this study are expected to be implemented early in 2006. We anticipate cost savings, lower inventories and even better customer fulfillment as a result of this project.

As in all aspects of our business, we keep a sharp focus on cost containment. Capital projects, process reengineering and employee training and development are all vital components of this process.

Purchasing

Although 2005 was another year of generally low inflation as measured by the Consumer Price Index, we experienced cost pressure in certain ingredients, packaging, transportation, fuel and energy. We continue to use hedging programs to moderate short-term commodity price fluctuations and to use competitive bidding, volume purchasing and other means to mitigate costs to the fullest extent possible.

We also completed the integration of procurement activities related to Concord into our bidding processes and purchasing and MRP systems during 2005.

Information Technology and Internal Controls

Our principal information technology efforts during 2005 were in support of the Concord integration and the supply chain reengineering projects. The former involved migrating Concord onto all of our financial and business systems, while the latter required programming modifications to support the business process changes that were made.

We consider state of the art information technology to be a key strategic tool to deliver information and support process refinements that enable the Company to remain competitive in today's rapidly evolving business environment. It is also a key component of our internal control system, which was successfully tested and audited during 2005, our second year of compliance with the requirements of Section 404 of the Sarbanes-Oxley Act.

International

Our international sales increased during 2005 as a result of a full year of Concord foreign sales in addition to a strong year in Mexico. We 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. We believe that our well known products, including the additions of Dubble Bubble and other Concord brands, offers a compelling and broad assortment of items that can be extended to additional foreign markets.

In Appreciation

We wish to thank our loyal employees, customers, suppliers, sales brokers, foreign distributors and fellow shareholders for their many years of support. We are also grateful to the many consumers who buy and use our products for making them a lasting part of Americana.

Melvin J. Gordon
Chairman of the Board and
Chief Executive Officer

Ellen R. Gordon
President and
Chief Operating Officer

4

Management's Discussion and Analysis of Financial
Condition and Results of Operations
(in thousands except per share, percentage and ratio figures)

FINANCIAL REVIEW

This financial review discusses the Company's financial condition, results of operations, liquidity and capital resources, market risks and other matters. It should be read in conjunction with the Consolidated Financial Statements and related footnotes that follow this discussion.

FINANCIAL CONDITION

The Company's overall financial position was further strengthened by its 2005 net earnings and related cash flows provided by operating activities. After making the Concord Confections acquisition, the largest in the Company's history, the Company was able to reduce its overall bank loan balance from $154,000 at August 30, 2004, the date of the Concord acquisition, to $32,001 at December 31, 2005, a reduction of $121,999. Bank loans were paid down through a combination of cash flows provided by operating activities and investment maturities.

During 2005, the Company's cash flows from operating activities aggregated $82,524. The Company used a portion of these cash flows to pay cash dividends of $15,132, repurchase $17,248 of its outstanding shares, and make capital expenditures of $14,690.

The Company's net working capital was $132,940 at December 31, 2005 compared to $110,376 at December 31, 2004, a favorable increase of $22,564. As of December 31, 2005 the Company's aggregate cash, cash equivalents and investments (excluding restricted cash), net of all bank and interest-bearing loans was $129,248 compared to $86,498 at December 31, 2004, a net increase of $42,750. In addition, the Company held restricted cash of $22,330 at December 31, 2005 relating to the sale of surplus real estate. This restricted cash is earmarked for reinvestment in rental income producing real estate in 2006.

Shareholders' equity increased to $617,405 as of December 31, 2005 compared to $570,179 as of December 31, 2004, reflecting 2005 net earnings less cash dividends and share repurchases. The Company has paid cash dividends for sixty-three consecutive years and has distributed a stock dividend for forty-one consecutive years.

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 repay outstanding bank loans and meet the Company's overall financing needs in 2006. However, the Company continues to pursue appropriate acquisition opportunities which could add to future bank borrowings.

RESULTS OF OPERATIONS

2005 vs. 2004

Net sales were $487,739 in 2005, a new record, compared to $420,110 in 2004, an increase of $67,629 or 16.1%. The 2005 and 2004 sales reflect approximately $76,100 and $29,300, respectively, of sales from Concord acquired on August 30, 2004. Excluding these Concord sales, 2005 net sales grew to $411,639, a $20,829 or 5.3% increase over 2004. This sales increase principally reflects volume increases in most of the

5

Company's core brands, including record "back to school" and pre-Halloween sales in third quarter 2005.

Cost of goods sold as a percentage of net sales increased from 58.2% in 2004 to 61.3% in 2005. The aforementioned reflects cost increases in overall major ingredients, packaging and plant overhead, including energy costs, and additional costs associated with the relocation and start-up of new production lines. Increases in 2005 ingredient and packaging costs approximated $700 and $900, respectively; and increases in energy costs added $1,700 to plant overhead costs in 2005, $1,000 of which was incurred in fourth quarter 2005. Management estimates that relocation and start-up costs of new production lines incrementally added $3,600 to 2005 cost of goods sold. The effect of slightly lower margins on certain new products and line extensions contributed to higher costs as a percentage of sales in 2005 compared to 2004.

Due to the seasonal nature of the Company's business and corresponding variations in product mix, gross margins have historically been lower in the second half of the year, and second half 2005 was consistent with this trend. The impact of those factors affecting higher input costs were more concentrated in fourth quarter 2005, resulting in lower fourth quarter 2005 gross margins compared to 2004.

Selling, marketing and administrative expenses were $96,936 in 2005 compared to $85,705 in 2004, an increase of $11,231 or 13.1%. This increase principally reflects the additional costs associated with Concord. However, these costs favorably decreased from 20.4% of sales in 2004 to 19.9% of sales in 2005, reflecting certain synergies achieved as part of the integration of Concord into the Company's sales and distribution systems, as well as other expense reductions achieved. The Company incurred approximately $2,000 of higher fuel surcharges for freight and delivery expense in 2005, however, improved efficiencies gained in the Company's distribution network mitigated a substantial portion of these cost increases.

Earnings from operations were $108,744 in 2005, compared to $89,904 in 2004. Operating earnings in 2005 benefited from a $21,840 pre-tax gain on the sale of surplus real estate partially offset by a $4,743 pre-tax charge relating to the impairment of a minor trademark and related goodwill. Both of these factors impacted operating earnings for the fourth quarter and twelve month 2005 periods.

As of December 31, 2005 the Company held the $22,330 of net proceeds from the sale of surplus real estate as restricted cash. The Company intends to reinvest these proceeds in "like kind" real estate as allowed under Section 1031 of the U.S. Internal Revenue Code. Upon reinvestment, the Company will be able to defer income taxes of approximately $8,000. The Company expects to complete the purchase and closing of such "like kind" property in the first half of 2006. Upon completion, the Company will reclassify the $8,000 from current income taxes payable to a deferred income tax liability.

The Company performs its annual impairment testing of its intangible assets, trademarks and goodwill, during the fourth quarter of each year. As a result of this testing in 2005, the Company determined that due to a reassessment of long-range marketing plans a minor trademark and related goodwill were impaired, and, accordingly wrote off $4,743 of intangible assets as an operating expense in fourth quarter 2005. The Company believes that the carrying values of its remaining trademarks and goodwill have indefinite lives as they are expected to generate cash flows indefinitely. There were no impairments in 2004 or 2003.

Other income, net was $4,908 in 2005 compared to $4,784 in 2004. The difference reflects $1,625 of increased interest expense and $1,152 of decreased investment

6

income, both of which relate to the financing of the Concord acquisition. However, this was substantially offset by increased building rental income, increased royalty income from the licensing of Company trademarks, and an insurance recovery in 2005.

The consolidated effective tax rate was 32.3% in 2005 and 32.2% in 2004. Although the Company's effective state tax rate increased slightly, the Company's effective foreign tax rate decreased reflecting reductions in Canadian and Mexican income tax expense. In addition, the Company repatriated earnings from its foreign subsidiaries in Canada and Mexico at an incremental tax cost of $800 as allowed by the American Jobs Creation Act of 2004.

Net earnings were $77,227 in 2005 compared to $64,174 in 2004, and earnings per share were $1.44 and $1.19 in 2005 and 2004, respectively, an increase of $.25 or 21%. Both fourth quarter and twelve months 2005 benefited from a $13,868 after-tax gain on the sale of surplus real estate; however, both fourth quarter and twelve months 2005 were adversely affected by a $3,012 non-recurring after-tax charge relating to the write-off of a minor trademark and goodwill, and $800 of additional income taxes relating to repatriated foreign earnings. Earnings per share also benefited from a reduction in average shares outstanding reflecting common stock purchases in the open market by the Company. Average shares outstanding decreased from 53,921 in 2004 to 53,542 in 2005.

2004 vs. 2003

Net sales in 2004 grew to a record $420,110, an increase of $27,454 from 2003 sales of $392,656. Sales benefited from successful marketing and promotional programs, including pre-Halloween sales programs that have historically made the third quarter the Company's highest selling period of the year.

However, the net sales increase in 2004 was attributable to sales resulting from the Concord acquisition as core brand sales were approximately even with the prior year.

Cost of goods sold increased from 56.7% to 58.2% of sales. This increase reflects lower margins on acquired brands, lower production volumes in several core products lines, approximately $1,800 in start-up costs associated with the relocation and implementation of new production lines and an inventory adjustment for a discontinued product line. These costs were partially offset by somewhat lower raw material and packaging costs.

Selling, marketing and administrative expenses increased as a percent of sales to 20.4% in 2004 from 19.8% in 2003. The increase is due to expenses associated with Concord and approximately $1,500 higher freight costs primarily relating to fuel surcharges, as well as higher fees associated with Sarbanes-Oxley compliance and general cost increases.

Other income, net declined from $5,594 in 2003 to $4,784 in 2004 reflecting higher interest expense and lower investment earnings, both related to financing the Concord acquisition. The consolidated effective tax rate declined from 33.6% in 2003 to 32.2% reflecting a reduction in state and foreign income taxes.

Consolidated net earnings were $64,174 and $65,014 and earnings per share were $1.19 in both 2004 and 2003. Average shares outstanding declined from 54,861 to 53,921 due to share repurchases.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities were $82,524, $76,228 and $83,466 in 2005, 2004 and 2003, respectively. The increase in 2005 compared to 2004 principally reflects the $13,053 increase in 2005 net earnings plus certain increases in operating activities, including a $3,007 increase in depreciation and the $4,743 non-cash impairment charge, less the $21,840 gain on the sale of surplus real estate. In addition, cash provided by operations in 2005 benefited from a $3,947 decrease in inventories and a $8,423 increase in taxes payable and deferred.

Cash flows from investing activities reflect the purchase of Concord in 2004 for $218,229 less a 2005 recovery of $6,755 relating to a minimum working capital deficiency adjustment. Capital expenditures were $14,690, $17,948 and $12,150 in 2005, 2004, and 2003, respectively.

Cash flows from financing activities in 2004 reflect the borrowing of $154,000 and the liquidation of $64,229 of marketable securities to finance the Concord acquisition. Bank loans were reduced by $62,000 in 2004, and a further net reduction of $59,999 in 2005.

Share repurchases were $17,248, $16,407, and $40,096 in 2005, 2004 and 2003, respectively. Cash dividends of $15,132, $14,877, and $14,410 were paid in 2005, 2004 and 2003, respectively.

MARKET RISKS

The Company is exposed to market risks related to commodity prices, interest rates, equity prices and foreign exchange.

7

Commodities

Commodity price risks relate to ingredients, primarily sugar, cocoa, chocolate, corn syrup, dextrose and vegetable oils. The Company believes its competitors face similar risks, and the industry has historically adjusted prices to compensate for adverse fluctuations in commodity costs. The Company, as well as competitors in the confectionary industry, have taken actions, including price increases and selective product weight declines (indirect price increases) in 2006 to mitigate rising input costs for ingredients, transportation, fuel and energy. While management believes it will substantially recover cost increases in 2006, there is some risk that price increases and weight declines could adversely effect sales volume.

The Company utilizes commodity futures contracts as well as annual supply agreements to hedge anticipated purchases of certain ingredients, including sugar, in order to mitigate commodity cost fluctuations. Such commodity future contracts are cash flow hedges and are effective as hedges as defined by Statement of Financial Accounting Standards (SFAS) 133, "Accounting for Derivative Instruments and Hedging Activities." The unrealized gains and losses on such contracts are deferred as a component of accumulated other comprehensive earnings (loss) and are recognized as a component of cost of goods sold when the related inventory is sold.

The potential change in fair value of commodity derivative instruments (primarily sugar futures contracts) held by the Company, assuming a 10% change in the underlying commodity price, was $637. This analysis only includes commodity derivative instruments and, therefore, does not consider the offsetting effect of changes in the price of the underlying commodity. This amount is not significant compared with the net earnings and shareholders' equity of the Company.

Interest Rates

Interest rate risks primarily relate to the Company's investments in debt securities, primarily municipal bonds, with maturities of generally up to three years. The majority of these investments have historically been held to maturity, which limits the Company's exposure to interest rate fluctuations.

The accompanying chart summarizes the maturities of the Company's investments in debt securities at December 31, 2005.

Less than 1 year	$	51,344
1 - 2 years		17,379
Total	$	68,723

The Company's outstanding debt at the end of 2005 was not significant in relation to the Company's financial position taken as a whole, and therefore the Company does not believe that it has significant interest rate risk with respect to its interest bearing debt.

Equity price

Equity price risk relates to the Company's investments in mutual funds which are principally used to fund and hedge the Company's deferred compensation liabilities. At December 31, 2005, the Company has investments in mutual funds of $31,019. A potential change in their fair value would be substantially offset by a corresponding change in such deferred compensation liabilities.

Foreign Exchange

Foreign exchange risk principally relates to the Company's foreign operations in Canada and Mexico, and periodic purchase commitments of machinery and equipment from foreign sources. Prior to the acquisition of Concord, the Company's operations outside of the United States represented less than 10% of its consolidated operations. Accordingly, the Company did not use derivative financial instruments to hedge its foreign currency assets or liabilities or its overall investments in its foreign subsidiaries.

Concord's operations are principally structured as a Canadian manufacturing plant for the Company's U.S. sales and distribution. Certain of Concord's manufacturing costs, including local payroll and a portion of its packaging, ingredients and supplies are sourced in Canadian dollars. The Company uses its Canadian dollar collections on Canadian sales as a partial hedge of its overall Concord obligations sourced in Canadian dollars as described above.

From time to time the Company may use forward foreign exchange contracts and derivative instruments to mitigate its exposure to foreign exchange risk, as well as those related to firm commitments to purchase equipment from foreign vendors. As of December 31, 2005 the Company did not have any significant outstanding foreign exchange contracts.

CRITICAL ACCOUNTING POLICIES

Preparation of the Company's financial statements involves judgments due to uncertainties affecting the application of accounting policies, and the likelihood that different amounts would be reported under different conditions or using different assumptions. In the opinion of management, the Company does not have any individual accounting policy that is "critical." However, following is a summary of the more significant accounting policies and methods where estimates are used.

Revenue Recognition

Revenue, net of applicable provisions for discounts, returns, allowances, and certain advertising and promotional costs, is recognized when products are delivered to customers and collectibility is reasonably assured.

8

The accounting for such promotional programs is discussed below.

Provisions for bad debts are recorded as selling, marketing and administrative expenses. Such provisions have not exceeded 0.2% of net sales for 2005, 2004 and 2003 and, accordingly, have not been significant to the Company's financial position or results of operations.

Intangible assets

The Company's intangible assets consist primarily of acquired trademarks and related goodwill. In accordance with SFAS No. 142, goodwill and other indefinite lived assets are not amortized, but are instead subjected to annual testing for impairment.

This determination is made by comparing the carrying value of the asset with its estimated fair value, which is calculated using discounted projected future cash flows. These projected future cash flows are dependent on a number of factors including future business plans and projected operating results. Although the majority of the Company's trademarks relate to well established brands with a long history of consumer acceptance, projected cash flows are inherently uncertain. A change in the assumptions underlying the impairment analysis, such as a reduction in projected cash flows or the use of a different discount rate, could cause an impairment in the future. As a result of its impairment testing, the Company recorded a pre-tax impairment charge of $4,743 during 2005 with respect to a minor trademark and related goodwill.

Customer incentive programs, advertising and marketing

Advertising and marketing costs are recorded in the period to which such costs relate. The Company does not defer the recognition of any amounts on its consolidated balance sheet with respect to such costs. Customer incentives and other promotional costs are recorded at the time of sale based upon incentive program terms and historical utilization statistics, which are generally consistent from year to year.

The liabilities associated with these programs are reviewed quarterly and adjusted if utilization rates differ from management's original estimates. Such adjustments have not historically been material to the Company's operating results.

Investments

The Company principally invests in certain high-quality debt securities primarily Aa or better rated municipal bonds. The accounting for such investments is outlined in Note 1 and does not involve any significant estimates on the part of management. Due to their relatively short maturities, changes in interest rates do not have a significant effect on the principal value of these investments and no credit losses have been incurred.

Guarantees

The Financial Accounting Standards Board issued Interpretation No. 45 relating to the accounting for and disclosure of certain types of guarantees. No disclosures were required for the Company as a result of this standard, as it has no such guarantees outstanding.

Other matters

In the opinion of management, other than contracts for raw materials, including commodity hedges and outstanding purchase orders for packaging, ingredients and supplies, all entered into in the ordinary course of business, the Company does not have any significant contractual obligations

Open Contractual Commitments as of December 31, 2005

Payable in	Total	Less than 1 year	1 to 3 Years	3 to 5 Years	More than 5 Years
Commodity hedges	$6,371	$6,133	$238	$     —	$     —
Purchase obligations	61,511	61,511	—	—	—
Split dollar insurance	4,815	3,097	1,718	—	—
Interest bearing debt	39,501	32,001	—	—	7,500
Operating leases	5,645	1,245	1,423	1,000	1,977
Total	$117,843	$103,987	$3,379	$1,000	$9,477

Note: the above amounts exclude deferred income tax liabilities of $32,088, post retirement health care and life insurance benefits of $10,783 and deferred compensation and other liabilities of $32,264 because the timing of payments relating to these items cannot be reasonably determined.

or future commitments. The Company's outstanding contractual commitments as of December 31, 2005, all of which are normal and recurring in nature, are summarized in the accompanying chart.

The Company provides split dollar insurance benefits to certain executive officers and records an asset equal to the cumulative premiums paid on the related policies, as the Company will fully recover these premiums under the terms of the plan.

The results of the Company's operations and its financial condition are expressed in the following financial statements.

9

CONSOLIDATED STATEMENT OF
Earnings, Comprehensive Earnings and Retained Earnings

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)

		For the year ended December 31,
		2005		2004		2003
Net sales		$487,739		$420,110		$392,656
Cost of goods sold		299,156		244,501		222,547
Gross margin		188,583		175,609		170,109
Selling, marketing and administrative expenses		96,936		85,705		77,756
Impairment charges		4,743		—		—
Gain on sale of real estate		(21,840	)	—		—
Earnings from operations		108,744		89,904		92,353
Other income, net		4,908		4,784		5,594
Earnings before income taxes		113,652		94,688		97,947
Provision for income taxes		36,425		30,514		32,933
Net earnings		$  77,227		$  64,174		$  65,014
Net earnings		$  77,227		$  64,174		$  65,014
Other comprehensive earnings (loss)		2,984		778		(657	)
Comprehensive earnings		$  80,211		$  64,952		$  64,357
Retained earnings at beginning of year		$149,055		$156,786		$148,705
	Net earnings	77,227		64,174		65,014
	Cash dividends ($.29, $.27 and $.25 per share, respectively)	(15,406	)	(14,547	)	(14,362	)
	Stock dividends	(46,640	)	(57,358	)	(42,571	)
Retained earnings at end of year		$164,236		$149,055		$156,786
Earnings per share		$       1.44		$      1.19		$      1.19
Average common and class B common shares outstanding		53,542		53,921		54,861

(The accompanying notes are an integral part of these statements.)

10

CONSOLIDATED STATEMENT OF
Financial Position

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands)

Assets				December 31,
				2005	2004
CURRENT ASSETS:
	Cash and cash equivalents			$  69,006	$  56,989
	Restricted cash			22,330	—
	Investments			54,892	32,369
	Accounts receivable trade, less allowances of $2,255 and $2,440			30,856	28,456
	Other receivables			2,768	9,001
	Inventories:
		Finished goods and work-in-process		34,311	37,384
		Raw materials and supplies		20,721	21,393
	Prepaid expenses			5,840	5,719
	Deferred income taxes			5,872	1,382
			Total current assets	246,596	192,693
PROPERTY, PLANT AND EQUIPMENT, at cost:
	Land			14,857	14,973
	Buildings			63,544	61,714
	Machinery and equipment			250,841	244,367
				329,242	321,054
	Less—Accumulated depreciation			150,482	142,304
				178,760	178,750
OTHER ASSETS:
	Goodwill			74,194	74,002
	Trademarks			189,024	193,342
	Investments			44,851	96,640
	Split dollar officer life insurance			69,772	66,094
	Investment in joint venture			10,499	10,232
				388,340	440,310
				$813,696	$811,753

(The accompanying notes are an integral part of these statements.)

11

(in thousands except per share data)

Liabilities and Shareholders' Equity			December 31,
			2005		2004
CURRENT LIABILITIES:
	Bank loan		$  32,001		$    6,333
	Accounts payable		17,482		19,315
	Dividends payable		4,263		3,659
	Accrued liabilities		44,969		44,722
	Income taxes payable		14,941		8,288
		Total current liabilities	113,656		82,317
NONCURRENT LIABILITIES:
	Bank loan		—		85,667
	Deferred income taxes		32,088		25,995
	Postretirement health care and life insurance benefits		10,783		10,075
	Industrial development bonds		7,500		7,500
	Deferred compensation and other liabilities		32,264		30,020
		Total noncurrent liabilities	82,635		159,257
SHAREHOLDERS' EQUITY:
	Common stock, $.69-4/9 par value— 120,000 shares authorized— 35,255 and 34,760, respectively, issued		24,483		24,139
	Class B common stock, $.69-4/9 par value— 40,000 shares authorized— 18,000 and 17,515, respectively, issued		12,500		12,163
	Capital in excess of par value		426,125		397,745
	Retained earnings, per accompanying statement		164,236		149,055
	Accumulated other comprehensive loss		(7,947	)	(10,931	)
	Treasury stock (at cost)— 60 shares and 58 shares, respectively		(1,992	)	(1,992	)
			617,405		570,179
			$813,696		$811,753

12

CONSOLIDATED STATEMENT OF
Cash Flows

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands)

				For the year ended December 31,
				2005		2004		2003
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net earnings			$ 77,227		$   64,174		$  65,014
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization		14,687		11,680		11,379
		Gain on sale of real estate		(21,840	)	—		—
		Impairment charges		4,743		—		—
		Excess of earnings from joint venture over dividends received		(267	)	(232	)	—
		Amortization of marketable securities		1,680		1,885		2,534
		Purchase of trading securities		(2,081	)	(2,507	)	(3,154	)
		Changes in operating assets and liabilities:
			Accounts receivable	(1,846	)	673		4,266
			Other receivables	1,519		1,574		490
			Inventories	3,947		(4,567	)	(2,579	)
			Prepaid expenses and other assets	(4,357	)	(4,822	)	(4,864	)
			Accounts payable and accrued liabilities	(1,868	)	2,478		2,582
			Income taxes payable and deferred	8,423		2,712		3,827
			Postretirement health care and life insurance benefits	708		773		1,151
			Deferred compensation and other liabilities	2,191		2,227		2,651
			Other	(342	)	180		169
	Net cash provided by operating activities			82,524		76,228		83,466
CASH FLOWS FROM INVESTING ACTIVITIES:
	Acquisition of business, net of cash acquired			—		(218,229	)	—
	Working capital adjustment from acquisition			6,755		—		—
	Proceeds from sale of real estate and other assets			22,559		—		—
	Increase in restricted cash			(22,330	)	—		—
	Capital expenditures			(14,690	)	(17,948	)	(12,150	)
	Purchase of held to maturity securities			—		(22,049	)	(57,823	)
	Maturity of held to maturity securities			—		44,113		25,643
	Purchase of available for sale securities			(16,772	)	(83,987	)	(57,578	)
	Sale and maturity of available for sale securities			46,350		134,061		51,525
	Net cash provided by (used in) investing activities			21,872		(164,039	)	(50,383	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from bank loan			38,401		154,000		—
	Repayment of bank loan			(98,400	)	(62,000	)	—
	Shares repurchased and retired			(17,248	)	(16,407	)	(40,096	)
	Dividends paid in cash			(15,132	)	(14,877	)	(14,410	)
	Net cash provided by (used in) financing activities			(92,379	)	60,716		(54,506	)
Increase (decrease) in cash and cash equivalents				12,017		(27,095	)	(21,423	)
Cash and cash equivalents at beginning of year				56,989		84,084		105,507
Cash and cash equivalents at end of year				$ 69,006		$   56,989		$  84,084
Supplemental cash flow information:
	Income taxes paid			$ 26,947		$   28,966		$  31,561
	Interest paid			$    2,537		$         879		$       172
	Stock dividend issued			$ 46,310		$   56,959		$  42,513

(The accompanying notes are an integral part of these statements.)

13

Notes to Consolidated Financial Statements
($ in thousands except per share data)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES

NOTE 1—SIGNIFICANT ACCOUNTING POLICIES:

Basis of consolidation:

    The consolidated financial statements include the accounts of Tootsie Roll Industries, Inc. and its wholly-owned subsidiaries (the Company), which are primarily engaged in the manufacture and sale of candy products. All significant intercompany transactions have been eliminated.

    The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

    Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation.

Revenue recognition and other accounting pronouncements:

    Products are sold to customers based on accepted purchase orders which include quantity, sales price and other relevant terms of sale. Revenue, net of applicable provisions for discounts, returns, allowances, and certain advertising and promotional costs, is recognized when products are delivered to customers and collectibility is reasonably assured. Shipping and handling costs of $37,836, $31,795 and $28,217 in 2005, 2004 and 2003, respectively, are included in selling, marketing and administrative expenses. Accounts receivable are unsecured. Revenues from a major customer aggregated approximately 24.0%, 20.8% and 20.6% of total net sales during the years ended December 31, 2005, 2004 and 2003, respectively.

Cash and cash equivalents:

    The Company considers temporary cash investments with an original maturity of three months or less to be cash equivalents.

    Restricted cash represents the net proceeds received from the sale of surplus real estate in 2005 which is held by a third party intermediary and earmarked for reinvestment in like-kind real estate as provided under U.S. Internal Revenue Code Section 1031.

Investments:

    Investments consist of various marketable securities with maturities of generally up to four years. The Company classifies debt and equity securities as either held to maturity, available for sale or trading. Held to maturity securities represent those securities that the Company has both the positive intent and ability to hold to maturity and are carried at amortized cost. Available for sale securities represent those securities that do not meet the classification of held to maturity, are not actively traded and are carried at fair value. Unrealized gains and losses on these securities are excluded from earnings and are reported as a separate component of shareholders' equity, net of applicable taxes, until realized. Trading securities relate to deferred compensation arrangements and are carried at fair value.

Hedging activities:

    From time to time, the Company enters into commodities futures contracts that are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). To qualify as a hedge, the Company evaluates a variety of characteristics of these transactions, including the probability that the anticipated transaction will occur. If the anticipated transaction were not to occur, the gain or loss would then be recognized in current earnings. The Company does not engage in trading or other speculative use of derivative instruments. The Company does assume the risk that counter parties may not be able to meet the terms of their contracts. The Company does not expect any losses as a result of counter party defaults.

    The Company's derivative instruments are being accounted for as cash flow hedges and are recorded on the balance sheet at fair value. Changes therein are recorded in other comprehensive earnings and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially all amounts reported in accumulated other comprehensive earnings (loss) are expected to be reclassified to cost of goods sold.

Inventories:

    Inventories are stated at cost, not to exceed market. The cost of substantially all of the Company's inventories ($51,969 and $54,794 at December 31, 2005 and 2004, respectively) has been determined by the last-in, first-out (LIFO) method. The excess of current cost over LIFO cost of inventories approximates $6,530 and $5,868 at December 31, 2005 and 2004, respectively. The cost of certain foreign inventories ($3,063 and $3,983 at December 31, 2005 and 2004, respectively) has been determined by the first-in, first-out (FIFO) method. Rebates, discounts and other cash consideration received from a vendor related to inventory purchases is reflected as a reduction in the cost of the related inventory item, and is therefore reflected in cost of sales when the related inventory item is sold.

Property, plant and equipment:

    Depreciation is computed for financial reporting purposes by use of the straight-line method based on useful lives of 20 to 35 years for buildings and 5 to 20 years for machinery and equipment. Depreciation expense was $14,687, $11,680, and $11,379 in 2005, 2004 and 2003, respectively.

Carrying value of long-lived assets:

    The Company reviews long-lived assets to determine if there are events or circumstances indicating that the amount of the asset reflected in the Company's balance sheet may not be recoverable. When such indicators are present, the Company compares the carrying value of the long-lived asset, or asset group, to the future undiscounted cash flows of the underlying assets to determine if an impairment exists. If applicable, an impairment charge would be recorded to write down the carrying value to its fair value. The determination of fair value involves the use of estimates of future cash flows that involve considerable management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management's estimates due to changes in business conditions, operating performance, and economic conditions. No impairment charges were recorded by the Company during 2005, 2004 or 2003.

Postretirement health care and life insurance benefits:

    The Company provides certain postretirement health care and life insurance benefits. The cost of these postretirement benefits is accrued during employees' working careers. The Company also provides split dollar life insurance benefits to certain executive officers. The Company records an asset equal to the cumulative insurance premiums that will be recovered upon the death of a covered employee(s) or earlier under the terms of the plan. Split dollar premiums paid were $3,678, $3,620, and $4,237 in 2005, 2004 and 2003, respectively.

Intangible assets:

    The Company accounts for intangible assets in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," In accordance with this statement, goodwill and intangible assets with indefinite lives are not amortized, but rather tested for impairment at least annually. All trademarks have been assessed by management to have indefinite lives because they are expected to generate cash flows indefinitely. The Company has completed its annual impairment testing of its goodwill and trademarks during the fourth quarter of each of the years presented, and recorded an impairment of $4,743 in the fourth quarter of 2005 relating to a minor trademark and related goodwill. No impairments were recorded in 2004 or 2003.

Income taxes:

    Deferred income taxes are recorded and recognized for future tax effects of temporary differences between financial and income tax reporting. Federal income taxes are provided on the portion of income of foreign subsidiaries that is expected to be remitted to the U.S. and become taxable, but not on the portion that is considered to be permanently invested in the foreign subsidiary.

Foreign currency translation:

    The Company has determined the functional currency for each foreign subsidiary. The U.S. dollar is used as the functional currency where a substantial portion of the subsidiary's business is indexed to the U.S. dollar or where its manufactured products are principally sold in the U.S. All other foreign subsidiaries use the local currency as their functional currency. Where the U.S. dollar is used as the functional currency, foreign currency translation adjustments are recorded as a charge or credit to other income in the statement of earnings. Where the foreign currency is used as the functional currency, translation adjustments are recorded as a separate component of comprehensive earnings (loss).

Joint venture:

    The Company's 50% interest in two companies is accounted for using the equity method. The Company records an increase in its investment in the joint venture to the extent of its share of the joint venture's earnings, and reduces its investment to the extent of dividends received. During 2005, $651 of dividends were received; no dividends were received in 2004.

Comprehensive earnings:

    Comprehensive earnings includes net earnings, foreign currency translation adjustments and unrealized gains/losses on commodity hedging contracts and changes in the fair market value of marketable securities.

14

Earnings per share:

    A dual presentation of basic and diluted earnings per share is not required due to the lack of potentially dilutive securities under the Company's simple capital structure. Therefore, all earnings per share amounts represent basic earnings per share.

    The Class B Common Stock has essentially the same rights as Common Stock, except that each share of Class B Common Stock has ten votes per share (compared to one vote per share of Common Stock), is not traded on any exchange, is restricted as to transfer and is convertible on a share-for-share basis, at any time and at no cost to the holders, into shares of Common Stock which are traded on the New York Stock Exchange.

NOTE 2—ACCRUED LIABILITIES:

    Accrued liabilities are comprised of the following:

	December 31,
	2005		2004
Compensation	$	15,756	$	13,839
Other employee benefits		5,213		5,261
Taxes, other than income		1,765		2,248
Advertising and promotions		14,701		13,710
Other		7,534		9,664
	$	44,969	$	44,722

NOTE 3—BANK LOAN AND INDUSTRIAL DEVELOPMENT BONDS:

    The $32,001 bank loans are demand notes issued in December 2005 and collateralized by certain investments in marketable securities. The Company intends to repay the loans by April, 2006. Interest is LIBOR based, and the average rate was 4.625%. The bank loan presented in 2004 financials was retired in December 2005.

    Industrial development bonds are due in 2027. The average floating interest rate was 2.5% and 1.3% in 2005 and 2004, respectively.

NOTE 4—INCOME TAXES:

    The domestic and foreign components of pretax income are as follows:

	2005		2004		2003
Domestic	$	103,725	$	89,164	$	96,170
Foreign		9,927		5,524		1,777
	$	113,652	$	94,688	$	97,947

    The provision for income taxes is comprised of the following:

		2005			2004			2003
Current:
	Federal	$	33,036		$	26,303		$	27,904
	Foreign		1,151			731			485
	State		1,990			1,070			1,202
			36,177			28,104			29,591
Deferred:
	Federal		1,038			2,907			3,465
	Foreign		(849	)		(605	)		(252	)
	State		59			108			129
			248			2,410			3,342
		$	36,425		$	30,514		$	32,933

    Significant components of the Company's net deferred tax liability at year end were as follows:

		December 31,
		2005			2004
Deferred tax assets:
	Deferred compensation	$	10,759		$	9,937
	Post retirement benefits		3,759			3,493
	Reserve for uncollectible accounts		506			480
	Other accrued expenses		2,822			2,380
	Foreign subsidiary tax loss carry forward		5,796			1,164
	Foreign subsidiary tax credit carry forward		2,312			2,039
	Inventory reserves		701			1,106
	Other		1,206			1,512
			27,861			22,111
	Valuation reserve		(1,464	)		(1,183	)
	Total deferred tax assets	$	26,397		$	20,928
Deferred tax liabilities:
	Depreciation	$	21,992		$	19,638
	Deductible goodwill and trademarks		19,373			15,840
	Accrued export Company commissions		3,353			3,087
	VEBA funding		748			711
	Inventory reserves		2,287			2,233
	Prepaid insurance		587			985
	Other comprehensive income		1,423			342
	Other		2,850			2,705
	Total deferred tax liabilities	$	52,613		$	45,541
	Net deferred tax liability	$	26,216		$	24,613

    At December 31, 2005, the tax benefit of foreign subsidiary tax loss carry forwards expiring by year are as follows: $873 in 2014 and $4,923 in 2015.

    Also at December 31, 2005, the amounts of the foreign subsidiary tax credit carry forwards expiring by year are as follows: $265 in 2007, $226 in 2008, $164 in 2009, $319 in 2010, $373 in 2011, $359 in 2012, $306 in 2013, $54 in 2014 and $246 in 2015. A valuation allowance has been established for these carry forward credits to reduce the future income tax benefits to amounts expected to be realized.

    The effective income tax rate differs from the statutory rate as follows:

	2005		2004		2003
U.S. statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net	1.2		0.8		0.9
Exempt municipal bond interest	(0.6	)	(1.2	)	(1.6	)
Foreign tax rates	(2.8	)	(1.9	)	—
Qualified domestic production activities	(0.9	)	—		—
Repatriation of accumulated foreign earnings	0.7		—		—
Other, net	(0.3	)	(0.5	)	(0.7	)
Effective income tax rate	32.3	%	32.2	%	33.6	%

    The Company has not provided for U.S. federal or foreign withholding taxes on $8,831 and $13,411 of foreign subsidiaries' undistributed earnings as of December 31, 2005 and December 31, 2004, respectively, because such earnings are considered to be permanently reinvested. It is not practicable to determine the amount of income taxes that would be payable upon remittance of the undistributed earnings.

    On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the "Act"). The Act created 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. In 2005 the Company repatriated accumulated income earned abroad by its controlled foreign corporations in the amount of $21,200 and incurred a U.S. tax expense of $800 net of foreign tax credits.

NOTE 5—SHARE CAPITAL AND CAPITAL IN EXCESS OF PAR VALUE:

						Class B Common Stock
	Common Stock										Treasury Stock
																Capital in excess of par value
	Shares		Amount			Shares		Amount			Shares		Amount
	(000's)					(000's)					(000's)
Balance at January 1, 2003	34,248		$	23,783		16,759		$	11,638		(55	)	$	(1,992	)	$	355,658
Issuance of 3% stock dividend	1,017			706		502			349		(1	)		—			41,458
Conversion of Class B common shares to common shares	116			81		(116	)		(81	)	—			—			—
Purchase and retirement of common shares	(1,299	)		(902	)	—			—		—			—			(39,194	)
Balance at December 31, 2003	34,082			23,668		17,145			11,906		(56	)		(1,992	)		357,922
Issuance of 3% stock dividend	1,009			701		513			356		(2	)		—			55,901
Conversion of Class B common shares to common shares	143			99		(143	)		(99	)	—			—			—
Purchase and retirement of common shares	(474	)		(329	)	—			—		—			—			(16,078	)
Balance at December 31, 2004	34,760			24,139		17,515			12,163		(58	)		(1,992	)		397,745
Issuance of 3% stock dividend	1,033			717		524			364		(2	)		—			45,229
Conversion of Class B common shares to common shares	39			27		(39	)		(27	)	—			—			—
Purchase and retirement of common shares	(577	)		(400	)	—			—		—			—			(16,849	)
Balance at December 31, 2005	35,255		$	24,483		18,000		$	12,500		(60	)	$	(1,992	)	$	426,125

    Average shares outstanding and all per share amounts included in the financial statements and notes thereto have been adjusted retroactively to reflect annual three percent stock dividends.

    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.

15

    Based upon this policy, shares were purchased and retired as follows:

Year	Total Number Of Shares Purchased	Average Price Paid Per Share
2005	577	$	29.87
2004	474	$	34.56
2003	1,299	$	30.82

NOTE 6—OTHER INCOME, NET:

    Other income (expense) is comprised of the following:

	2005			2004			2003
Interest and dividend income	$	2,632		$	3,784		$	4,465
Interest expense		(2,537	)		(912	)		(172	)
Joint venture income		918			232			—
Foreign exchange gains (losses)		852			453			(78	)
Royalty income		1,381			698			542
Capital gains (losses)		166			(163	)		112
Rental income		1,107			413			88
Miscellaneous, net		389			279			637
	$	4,908		$	4,784		$	5,594

NOTE 7—EMPLOYEE BENEFIT PLANS:
Pension plans:

    The Company sponsors defined contribution pension plans covering certain nonunion employees with over one year of credited service. The Company's policy is to fund pension costs accrued based on compensation levels. Total pension expense for 2005, 2004 and 2003 approximated $3,249, $3,135 and $3,073, respectively. The Company also maintains certain profit sharing and savings-investment plans. Company contributions in 2005, 2004 and 2003 to these plans were $905, $806 and $796, respectively.

    The Company also contributes to multi-employer defined benefit pension plans for its union employees. Such contributions aggregated $1,011, $1,007 and $1,048 in 2005, 2004 and 2003, respectively. The relative position of each employer associated with the multi-employer plans with respect to the actuarial present value of benefits and net plan assets is not determinable by the Company.

    For 2006 the Company plans to add a defined benefit pension plan covering its employees in Mexico. This addition did not significantly affect the amounts disclosed for 2005.

Deferred compensation:

    The Company sponsors three deferred compensation plans for selected executives and other employees: (i) the Excess Benefit Plan, which restores retirement benefits lost due to IRS limitations on contributions to tax-qualified plans, (ii) the Supplemental Plan, which allows eligible employees to defer the receipt of eligible compensation until designated future dates and (iii) the Career Achievement Plan, which provides a deferred annual incentive award to selected executives. Participants in these plans earn a return on amounts due them based on several investment options, which mirror returns on underlying investments (primarily mutual funds). The Company hedges its obligations under the plans by investing in the actual underlying investments. These investments are classified as trading securities and are carried at fair value. At December 31, 2005 and 2004, these investments totaled $27,500 and $25,300, respectively. All gains and losses in these investments are equally offset by corresponding gains and losses in the Company's deferred compensation liabilities.

Postretirement health care and life insurance benefit plans:

    The Company provides certain postretirement health care and life insurance benefits for corporate office and management employees. Employees become eligible for these benefits based upon their age and service and if they agree to contribute a portion of the cost. The Company has the right to modify or terminate these benefits. The Company does not fund postretirement health care and life insurance benefits in advance of payments for benefit claims.

    The changes in the accumulated postretirement benefit obligation at December 31, 2005 and 2004 consist of the following:

	December 31,
	2005			2004
Benefit obligation, beginning of year	$	10,075		$	9,302
Net periodic postretirement benefit cost		919			992
Benefits paid		(211	)		(219	)
Benefit obligation, end of year	$	10,783		$	10,075

    Net periodic postretirement benefit cost included the following components:

	2005			2004			2003
Service cost—benefits attributed to service during the period	$	474		$	521		$	638
Interest cost on the accumulated postretirement benefit obligation		519			514			604
Amortization of unrecognized net (gain) loss		(74	)		(43	)		85
Net periodic postretirement benefit cost	$	919		$	992		$	1,327

    For measurement purposes, a 8.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2005; the rate was assumed to decrease gradually to 5.5% for 2011 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 5.50% and 5.75% at December 31, 2005 and 2004, respectively.

    Increasing or decreasing the health care trend rates by one percentage point in each year would have the following effect on:

	1% Increase		1% Decrease
Postretirement benefit obligation	$	1,506	$	(1,225	)
Total of service and interest cost components	$	177	$	(141	)

    The Company estimates future benefit payments will be $341, $361, $384, $393 and $402 in 2006 through 2010, respectively, and a total of $2,590 in 2011 through 2015.

    The future benefit payments are net of the annual Medicare Part D subsidy of approximately $780 beginning in 2006.

NOTE 8—COMMITMENTS:

    Rental expense aggregated $1,090, $1,012 and $962 in 2005, 2004 and 2003, respectively.

    Future operating lease commitments are not significant.

NOTE 9—SEGMENT AND GEOGRAPHIC INFORMATION:

    The Company operates as a single reportable segment encompassing the manufacture and sale of confectionery products. Its principal manufacturing operations are located in the United States and Canada, and its principal market is the United States. The Company also manufactures and sells confectionery products in Mexico, and exports products to Canada as well as to over 30 countries worldwide.

    The following geographic data include net sales summarized on the basis of the customer location and long-lived assets based on their physical location.

		2005		2004		2003
Net Sales:
	United States	$	445,405	$	387,280	$	362,373
	Foreign		42,334		32,830		30,283
		$	487,739	$	420,110	$	392,656
Long-lived assets:
	United States	$	246,721	$	293,618	$	283,362
	Foreign		57,160		58,098		5,013
		$	303,881	$	351,716	$	288,375

NOTE 10—DISCLOSURES ABOUT THE FAIR VALUE AND CARRYING AMOUNT OF FINANCIAL INSTRUMENTS:

    The carrying amount approximates fair value of cash and cash equivalents because of the short maturity of those instruments. The fair values of investments are estimated based on quoted market prices. The fair value of the Company's bank loan and industrial development bonds approximates their carrying value because they have a floating interest rate.

    During the third quarter of 2004 approximately $36,000 of held to maturity investments were liquidated in connection with financing the acquisition of Concord Confections. As a result, the $101,000 balance of held to maturity securities was reclassified to available for sale. This change in classification was not significant to the Company's 2004 net earnings or comprehensive earnings.

16

    The carrying amount and estimated fair values of the Company's financial instruments are as follows:

	2005				2004
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Cash and cash equivalents	$	69,006	$	69,006	$	56,989	$	56,989
Restricted cash		22,330		22,330		—		—
Investments available for sale		72,270		72,270		103,676		103,676
Investments in trading securities		27,473		27,473		25,332		25,332
Bank loan and industrial development bonds		39,501		39,501		99,500		99,500

    A summary of the aggregate fair value, gross unrealized gains, gross unrealized losses and amortized cost basis of the Company's investment portfolio by major security type is as follows:

	December 31, 2005
					Unrealized
Available for Sale:
	Amortized Cost		Fair Value		Gains		Losses
Municipal bonds	$	69,560	$	68,723	$	—	$	(837	)
Mutual funds		2,527		3,547		1,020		—
	$	72,087	$	72,270	$	1,020	$	(837	)
	December 31, 2004
					Unrealized
Available for Sale:	Amortized Cost		Fair Value
					Gains		Losses
Municipal bonds	$	100,630	$	100,008	$	—	$	(622	)
Mutual funds		2,714		3,668		954		—
	$	103,344	$	103,676	$	954	$	(622	)

    There were no securities with maturities greater than four years and gross realized gains and losses on the sale of available for sale securities in 2005 and 2004 were not significant.

NOTE 11—COMPREHENSIVE INCOME:

    The following table sets forth information with respect to accumulated other comprehensive income (loss):

		Foreign Currency Translation Adjustment			Unrealized Gain (Loss) On Investments			Unrealized Gain (Loss) on Derivatives			Accumulated Other Comprehensive Earnings (Loss)
Balance at January 1, 2003		$	(11,510	)	$	(16	)	$	474		$	(11,052	)
	Unrealized gains (losses)		(647	)		784			890			1,027
	(Gains) losses reclassified to net earnings		—			2			(1,690	)		(1,688	)
	Tax effect		—			(290	)		294			4
	Net of tax amount		(647	)		496			(506	)		(657	)
Balance at December 31, 2003			(12,157	)		480			(32	)		(11,709	)
	Unrealized gains (losses)		193			(585	)		2,594			2,202
	(Gains) losses reclassified to net earnings		—			155			(1,237	)		(1,082	)
	Tax effect		—			159			(501	)		(342	)
	Net of tax amount		193			(271	)		856			778
Balance at December 31, 2004			(11,964	)		209			824			(10,931	)
	Unrealized gains (losses)		1,036			(184	)		4,186			5,038
	(Gains) losses reclassified to net earnings		—			36			(946	)		(910	)
	Tax effect		—			55			(1,199	)		(1,144	)
	Net of tax amount		1,036			(93	)		2,041			2,984
Balance at December 31, 2005		$	(10,928	)	$	116		$	2,865		$	(7,947	)

NOTE 12—ACQUISITION:

    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 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 acquisition has been accounted for under SFAS 141, "Business Combinations," and accordingly the purchase method of accounting has been used. The allocation of purchase price is based on management's determination and professional valuations of the fair value of the assets acquired and liabilities to be assumed. The final adjusted purchase price was allocated as follows:

Calculation of adjusted purchase price:
	Cash consideration paid for net assets acquired	$218,229
	Direct transactions fees and expenses	1,000
	Less—Adjustment to purchase relating to minimum working capital required	(6,755)
Total purchase price		$212,474
Allocation of purchase price:
	Net working capital	$    6,818
	Step up of inventories	1,622
	Investment in joint venture	10,000
	Property, plant and equipment	43,572
	Indefinite lived trademarks	113,994
	Goodwill—deductible for income tax	36,468
Total purchase price		$212,474

    The following table includes the unaudited pro forma net sales, net earnings and net earnings per share for 2004 and 2003 as if the Company had acquired Concord as of January 1, 2003. Pro forma adjustments are necessary to reflect costs and expenses of financing the purchase, including additional interest expense relating to bank borrowings and the 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 unaudited pro forma combined financial information presented does 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 approximately $3,872 and $10,283 net of income taxes for the twelve months of 2004 and 2003, respectively. The pro forma results also reflect $495 and $12,007 of historical foreign exchange gains net of tax for 2004 and 2003, respectively.

UNAUDITED PRO FORMA COMBINED
INCOME STATEMENT OF TOOTSIE ROLL AND CONCORD
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003

	2004 Combined Pro forma		2003 Combined Pro forma
Net sales	$	479,278	$	467,522
Net earnings	$	64,673	$	71,802
Earnings per share	$	1.20	$	1.31

    The pro forma results are not necessarily indicative of what actually would have occurred if the acquisition had been completed as of the beginning of the presented periods, nor are they necessarily indicative of future consolidated results.

NOTE 13—GAIN ON SALE OF REAL ESTATE:

    During 2005, the Company sold surplus real estate and realized a pre-tax gain of $21,840. The Company intends to reinvest the net proceeds, $22,330 of restricted cash as of December 31, 2005, in new real estate investments during 2006 in compliance with U.S. Internal Revenue Code (IRC) Section 1031. As of December 31, 2005, the Company has recorded a current income tax expense and related current income tax payable of $7,972 relating to this gain. Upon reinvestment of these proceeds in 2006 and fulfillment of the requirements of IRC Section 1031, Like-Kind Exchange, the Company will reclassify this current income tax payable to deferred income tax liability, since the income tax on such gain will be deferred.

17

Management's Report on Internal Control Over Financial Reporting

The management of Tootsie Roll Industries, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 (SEC) Rule 13a-15(f). Our management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2005 as required by SEC Rule 13a-15(c). In making this assessment, we used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on our evaluation under the COSO criteria, our management concluded that our internal control over financial reporting was effective as of December 31, 2005.

Our management's assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by PricewaterhouseCoopers, LLP an independent registered public accounting firm, as stated in their report which appears on page 19.

Tootsie Roll Industries, Inc.

Chicago, Illinois
March 14, 2006

Required Certifications

In 2005, the Company's Chief Executive Officer submitted to the New York Stock Exchange the required Annual CEO Certification certifying that he was not aware of any violation by the Company of the exchange's corporate governance listing standards.

The Company filed with the Securities and Exchange Commission the certifications required of the Company's Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes–Oxley Act of 2002 as exhibits to the Form 10-K for the year ended December 31, 2005.

18

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Tootsie Roll Industries, Inc.:

We have completed integrated audits of Tootsie Roll Industries, Inc.'s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005 and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, comprehensive earnings, retained earnings, and cash flows present fairly, in all material respects, the financial position of Tootsie Roll Industries, Inc. and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the COSO. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A Company's internal control over financial reporting is a process designed 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. A Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Chicago, Illinois
March 14, 2006

19

Quarterly Financial Data (Unaudited)

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES

	(Thousands of dollars except per share data)
2005	First	Second	Third	Fourth	Total
Net sales	$97,925	$103,627	$173,692	$112,495	$487,739
Gross margin	39,449	41,741	67,495	39,898	188,583
Net earnings	12,506	13,731	27,665	23,325	77,227
Net earnings per share	.23	.26	.52	.44	1.44
2004
Net sales	$80,046	$77,157	$156,971	$105,936	$420,110
Gross margin	34,730	34,992	64,804	41,083	175,609
Net earnings	11,493	11,828	26,976	13,877	64,174
Net earnings per share	.21	.22	.50	.26	1.19
2003
Net sales	$75,570	$77,725	$147,201	$92,160	$392,656
Gross margin	32,601	35,541	61,932	40,035	170,109
Net earnings	10,909	12,317	26,945	14,843	65,014
Net earnings per share	.20	.23	.49	.27	1.19

Net earnings per share is based upon average outstanding shares as adjusted for 3% stock dividends issued during the second quarter of each year. The sum of the per share amounts may not equal annual amounts due to rounding.

2005-2004 QUARTERLY SUMMARY OF TOOTSIE ROLL INDUSTRIES, INC. STOCK PRICE AND DIVIDENDS PER SHARE

STOCK PRICES*

	2005				2004
	High		Low		High		Low
1st Qtr	$	33.82	$	29.05	$	37.86	$	35.00
2nd Qtr	$	32.30	$	29.25	$	37.60	$	32.41
3rd Qtr	$	32.44	$	29.55	$	32.60	$	29.08
4th Qtr	$	32.05	$	28.93	$	34.63	$	29.24

*NYSE — Closing Price

Estimated Number of shareholders at March 2006:
	Common Stock	18,000
	Class B Common Stock	5,000

DIVIDENDS

	2005		2004
1st Qtr	$	.0700	$	.0661
2nd Qtr	$	.0700	$	.0680
3rd Qtr	$	.0700	$	.0680
4th Qtr	$	.0800	$	.0680

NOTE: In addition to the above cash dividends, a 3% stock dividend was issued on April 14, 2005 and April 14, 2004. Cash dividends are restated to reflect 3% stock dividends.

20

Five Year Summary of Earnings and Financial Highlights

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
	(Thousands of dollars except per share, percentage and ratio figures)

(See Management's Comments starting on page 5)
			2005			2004			2003			2002			2001
Sales and Earnings Data (2)
	Net sales		$	487,739		$	420,110		$	392,656		$	393,185		$	391,755
	Gross margin			188,583			175,609			170,109			170,981			173,858
	Interest expense			2,537			912			172			309			356
	Provision for income taxes			36,425			30,514			32,933			34,300			35,100
	Net earnings			77,227			64,174			65,014			66,388			65,687
		% of sales		15.8	%		15.3	%		16.6	%		16.9	%		16.8	%
		% of shareholders' equity		12.5	%		11.3	%		12.1	%		12.6	%		12.9	%
Per Common Share Data (1)
	Net earnings		$	1.44		$	1.19		$	1.19		$	1.18		$	1.16
	Cash dividends declared			.29			.27			.25			.25			.25
	Stock dividends			3	%		3	%		3	%		3	%		3	%
Additional Financial Data (2)
	Working capital		$	132,940		$	110,376		$	180,818		$	161,852		$	188,250
	Net cash provided by operating activities			82,524			76,228			83,466			75,473			80,915
	Net cash provided by (used in) investing activities			21,872			(164,039	)		(50,383	)		(29,571	)		(19,165	)
	Net cash provided by (used in) financing activities			(92,379	)		60,716			(54,506	)		(46,927	)		(16,100	)
	Property, plant & equipment additions			14,690			17,948			12,150			10,308			14,148
	Net property, plant & equipment			178,760			178,750			129,163			128,869			132,575
	Total assets			813,695			811,753			665,297			646,080			618,676
	Long term debt			7,500			93,167			7,500			7,500			7,500
	Shareholders' equity			617,405			570,179			536,581			526,740			508,461
	Average shares outstanding (1)			53,542			53,921			54,861			56,147			56,540

(1)

Adjusted for annual 3% stock dividends.

(2)

Certain reclassifications have been made to prior year numbers to conform to current year presentation.

21

Board of Directors
Melvin J. Gordon(1)	Chairman of the Board and Chief Executive Officer
Ellen R. Gordon(1)	President and Chief Operating Officer
Barre A. Seibert(2)(3)	First Vice President, Washington Mutual Bank
Lana Jane Lewis-Brent(2)(3)	President, Paul Brent Designer, Inc., an art publishing, design and licensing company
Richard P. Bergeman(2)(3)	Retired Senior Vice President, Bestfoods
(1)Executive Committee        (2)Audit Committee        (3)Compensation Committee
Officers
Melvin J. Gordon	Chairman of the Board and Chief Executive Officer
Ellen R. Gordon	President and Chief Operating Officer
G. Howard Ember, Jr.	Vice President, Finance & Chief Financial Officer
John W. Newlin, Jr.	Vice President, Manufacturing
Thomas E. Corr	Vice President, Marketing & Sales
John P. Majors	Vice President, Physical Distribution
Barry P. Bowen	Treasurer & Asst. Secy.
Richard F. Berezewski	Controller
Offices, Plants
Executive Offices	7401 S. Cicero Ave. Chicago, Illinois 60629 www.tootsie.com
Plants	Illinois Tennessee Massachusetts Wisconsin Concord, Ontario Mexico City, Mexico
Foreign Sales Offices	Mexico City, Mexico Concord, Ontario

Subsidiaries

Andes Candies Inc. Andes Manufacturing LLC Andes Services LLC C.C.L.P., INC. C.G.P., INC. Cambridge Brands Manufacturing, Inc. Cambridge Brands Services, Inc. Cambridge Brands, Inc. Cella's Confections, Inc. Charms LLC Concord (GP) Inc. Concord Brands, Ltd. Concord Canada Holdings ULC Concord Confections Holdings USA, Inc. Concord Confections Ltd. Concord Partners LP

JT Company, Inc. The Sweets Mix Company, Inc. Tootsie Roll Company, Inc. Tootsie Roll Industries, LLC Tootsie Roll Management, Inc Tootsie Roll Mfg., LLC Tootsie Roll of Canada Ltd. Tootsie Roll Worldwide, Ltd. Tootsie Rolls—Latin America TRI de Latinoamerica S.A. de C.V. TRI Finance, Inc. TRI International Inc. TRI Sales Co. TRI Sales Finance LLC TRI-MASS, Inc. Tutsi S.A. de C.V. World Trade & Marketing Ltd.

Other Information
Stock Exchange	New York Stock Exchange, Inc. (Since 1922)
Stock Identification	Ticker Symbol: TR CUSIP No. 890516 10-7
Stock Transfer Agent and Stock Registrar	Mellon Investor Services Newport Office Center VII 480 Washington Boulevard Jersey City, NJ 07310 1-800-710-0932 www.melloninvestor.com
Independent Accountants	PricewaterhouseCoopers LLP One North Wacker Chicago, IL 60606
General Counsel	Becker Ross, LLP 317 Madison Avenue New York, NY 10017
Annual Meeting	May 1, 2006 Mutual Building, Room 1200 909 East Main Street Richmond, VA 23219

Printed on recycled paper.

22

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To Our Shareholders
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Statement of Earnings, Comprehensive Earnings and Retained Earnings
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Management's Report on Internal Control Over Financial Reporting
Required Certifications
Report of Independent Registered Public Accounting Firm
Quarterly Financial Data (Unaudited)
Five Year Summary of Earnings and Financial Highlights

EX-21

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EXHIBIT 21

LIST OF SUBSIDIARIES OF THE COMPANY

NAME	JURISDICTION OF INCORPORATION
Andes Candies, Inc.	Illinois
Andes Manufacturing LLC	Illinois
Andes Services LLC	Illinois
C. C. L. P., Inc.	Delaware
C. G. C. L. P., Inc.	Delaware
C. G. P., Inc.	Delaware
Cambridge Brands, Inc.	Delaware
Cambridge Brands Manufacturing., Inc.	Delaware
Cambridge Brands Services, Inc.	Delaware
Candy Realty, Inc.	New Jersey
Cella's Confections, Inc.	Virginia
Charms LLC	Illinois
Concord (GP) Inc.	Ontario
Concord Brands, Ltd	Alberta
Concord Canada Holdings ULC	Nova Scotia
Concord Confections Holdings USA, Inc.	Delaware
Concord Confections Ltd.	Ontario
Concord Partners LP	Ontario
Concord Wax, Inc.	Delaware
General Magnetics, Inc.	New Jersey
Henry Eisen Advertising Agency, Inc.	New Jersey
Impel Movie Line, Inc	Delaware
J. T. Company, Inc.	Delaware
O'Tec Industries, Inc.	Delaware
Sweets Company of New York, Inc.	New York
Tootsie Roll Industries LLC	Delaware
Tootsie Roll of Canada Ltd.	Ontario
Tootsie Roll Central Europe Ltd.	Delaware
The Tootsie Roll Company, Inc.	Illinois
Tootsie Roll Management, Inc.	Illinois
Tootsie Roll Manufacturing., LLC	Illinois
Tootsie Rolls—Latin America, Inc.	Delaware
Tootsie Roll Worldwide Ltd.	Illinois
The Sweets Mix Company, Inc.	Illinois
TRI de Latino America S.A. de C.V.	Mexico
TRI Finance, Inc.	Delaware
TRI International Co.	Illinois
TRI-MASS., Inc.	Massachusetts
TRI Sales Co.	Delaware
TRI Sales Finance LLC	Delaware
Tutsi S. A. de C. V.	Mexico
World Trade & Marketing Ltd.	British West Indies

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EXHIBIT 21

LIST OF SUBSIDIARIES OF THE COMPANY

EX-31.1

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Exhibit 31.1

CERTIFICATIONS

        I, Melvin J. Gordon, Chairman and Chief Executive Officer of Tootsie Roll Industries, Inc., certify that:

1.

I have reviewed this annual report on Form 10-K 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 statements 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 information 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(s) 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 disclosure 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 internal control 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(s) 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: March 14, 2006

By: /s/ Melvin J. Gordon Melvin J. Gordon
Chairman and Chief Executive Officer

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Exhibit 31.1

CERTIFICATIONS

EX-31.2

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Exhibit 31.2

CERTIFICATIONS

        I, G. Howard Ember, Jr., Vice President/Finance and Chief Financial Officer of Tootsie Roll Industries, Inc., certify that:

1.

I have reviewed this annual report on Form 10-K 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 statements 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 information 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(s) 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 disclosure 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 internal control 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(s) 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: March 14, 2006

By: /s/ G. Howard Ember, Jr. G. Howard Ember, Jr.
Vice President/Finance and Chief Financial Officer

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Exhibit 31.2

CERTIFICATIONS

EX-32

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Exhibit 32

Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Each of the undersigned officers of Tootsie Roll Industries, Inc. certifies that (i) the Annual Report on Form 10-K of Tootsie Roll Industries, Inc. for the year ended December 31, 2005 (the Form 10-K) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Tootsie Roll Industries, Inc.

Dated:	March 14, 2006	/s/ Melvin J. Gordon Melvin J. Gordon Chairman and Chief Executive Officer
Dated:	March 14, 2006	/s/ G. Howard Ember, Jr. G. Howard Ember, Jr. Vice President/Finance and Chief Financial Officer

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Exhibit 32

Certificate Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002