10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2014

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

COMMISSION FILE NUMBER 1-1361

Tootsie Roll Industries, Inc.

(Exact Name of Registrant as Specified in its Charter)

VIRGINIA	22-1318955
(State of Incorporation)	(I.R.S. Employer Identification No.)

7401 South Cicero Avenue, Chicago, Illinois	60629
(Address of Principal Executive Offices)	(Zip Code)

773-838-3400

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ☒  No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date (September 27, 2014).

Class	Outstanding
Common Stock, $.69 4/9 par value	37,560,992
Class B Common Stock, $.69 4/9 par value	22,897,204

TOOTSIE ROLL INDUSTRIES, INC.

September 27, 2014

INDEX

		Page No.
Part I —	Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Statements of Financial Position	3-4
	Condensed Consolidated Statements of Earnings and Retained Earnings	5
	Condensed Consolidated Statements of Comprehensive Earnings	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8-16
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
Part II —	Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6.	Exhibits	23
Signatures		24
Certifications		25-27

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  See “Forward-Looking Statements” under Part I — Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands)  (UNAUDITED)

	September 27, 2014		December 31, 2013		September 28, 2013
ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	45,142	$	88,283	$	32,734
Investments		36,062		33,572		31,579
Trade accounts receivable, less allowances of $3,391, $2,042 & $3,446		102,325		40,721		102,786
Other receivables		2,732		4,616		3,466
Inventories:
Finished goods & work-in-process		47,854		37,012		40,437
Raw material & supplies		31,187		24,844		29,044
Prepaid expenses		5,307		5,581		1,463
Deferred income taxes		3,161		5,482		4,942
Total current assets		273,770		240,111		246,451
PROPERTY, PLANT & EQUIPMENT, at cost:
Land		22,453		21,683		21,679
Buildings		111,351		111,044		108,376
Machinery & equipment		340,381		340,405		328,520
Construction in progress		10,750		3,403		12,878
		484,935		476,535		471,453
Less-accumulated depreciation		293,642		279,619		274,448
Net property, plant and equipment		191,293		196,916		197,005
OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		160,175		148,532		162,371
Split dollar officer life insurance		40,296		40,296		41,394
Prepaid expenses		7,201		10,260		—
Restricted cash		1,664		—		—
Deferred income taxes		3,858		4,033		6,026
Total other assets		461,455		451,382		458,052
Total assets	$	926,518	$	888,409	$	901,508

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

3

(in thousands except per share data) (UNAUDITED)

	September 27, 2014		December 31, 2013		September 28, 2013
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	15,572	$	9,153	$	14,801
Bank loans		285		—		—
Dividends payable		4,835		4,742		4,770
Accrued liabilities		52,590		45,580		49,539
Postretirement health care and life insurance benefits		111		319		555
Income taxes payable		5,090		327		11,113
Total current liabilities		78,483		60,121		80,778
NONCURRENT LIABILITIES:
Deferred income taxes		53,569		54,939		43,423
Bank loans		796		—		—
Postretirement health care and life insurance benefits		9,519		8,857		29,401
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		9,474		7,167		7,794
Deferred compensation and other liabilities		75,751		69,520		64,988
Total noncurrent liabilities		156,609		147,983		153,106
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 37,561, 37,011 & 37,376, respectively, issued		26,084		25,702		25,955
Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 22,897, 22,256& 22,259, respectively, issued		15,901		15,455		15,458
Capital in excess of par value		607,216		572,669		584,128
Retained earnings		51,709		73,109		60,478
Accumulated other comprehensive loss		(7,905)		(4,638)		(16,403)
Treasury stock (at cost)- 78, 76 & 76 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		691,013		680,305		667,624
Noncontrolling interests		413		—		—
Total equity		691,426		680,305		667,624
Total liabilities and shareholders’ equity	$	926,518	$	888,409	$	901,508

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

4

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

EARNINGS AND RETAINED EARNINGS

(in thousands except per share amounts)    (UNAUDITED)

	Quarter Ended				Year to Date Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Net product sales	$	191,093	$	191,807	$	401,966	$	404,074
Rental and royalty revenue		921		902		2,760		2,807
Total revenue		192,014		192,709		404,726		406,881
Product cost of goods sold		123,164		125,833		256,211		264,974
Rental and royalty cost		251		223		732		698
Total costs		123,415		126,056		256,943		265,672
Product gross margin		67,929		65,974		145,755		139,100
Rental and royalty gross margin		670		679		2,028		2,109
Total gross margin		68,599		66,653		147,783		141,209
Selling, marketing and administrative expenses		31,840		33,166		85,767		87,620
Earnings from operations		36,759		33,487		62,016		53,589
Other income, net		166		3,105		4,865		7,401
Earnings before income taxes		36,925		36,592		66,881		60,990
Provision for income taxes		10,316		10,549		21,958		17,509
Net earnings		26,609		26,043		44,923		43,481
Less: Net loss attributable to noncontrolling interests		59		-		352		-
Net earnings attributable to Tootsie Roll Industries, Inc.		26,668		26,043		45,275		43,481
Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.44	$	0.42	$	0.75	$	0.71
Dividends per share *	$	0.08	$	0.08	$	0.24	$	0.24
Average number of shares outstanding		60,525		61,343		60,668		61,487
Retained earnings at beginning of period	$	29,870	$	39,199	$	73,109	$	80,210
Net earnings attributable to Tootsie Roll Industries, Inc.		26,668		26,043		45,275		43,481
Cash dividends		(4,829)		(4,764)		(14,394)		(14,185)
Stock dividends		-		-		(52,281)		(49,028)
Retained earnings at end of period	$	51,709	$	60,478	$	51,709	$	60,478

*Does not include 3% stock dividend to shareholders of record on 4/4/14 and 4/5/13.

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

5

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS

(in thousands except per share amounts) (UNAUDITED)

	Quarter Ended				Year to Date Ended
	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013
Net earnings	$	26,609	$	26,043	$	44,923	$	43,481
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		(1,004)		(144)		(2,184)		(245)
Pension and post-retirement reclassification adjustments:
Unrealized gains (losses) for the period on postretirement and pension benefits		-		-		-		-
Less: reclassification adjustment for (gains) losses to net income		(451)		-		(1,353)		-
Unrealized gains (losses) on postretirement and pension benefits		(451)		-		(1,353)		-
Investments:
Unrealized gains (losses) for the period on investments		(286)		400		(317)		219
Less: reclassification adjustment for (gains) losses to net income		-		-		-		-
Unrealized gains (losses) on investments		(286)		400		(317)		219
Derivatives:
Unrealized gains (losses) for the period on derivatives		(2,254)		768		(1,699)		(964)
Less: reclassification adjustment for (gains) losses to net income		408		315		918		1,216
Unrealized gains (losses) on derivatives		(1,846)		1,083		(781)		252
Total other comprehensive income (loss), before tax		(3,587)		1,339		(4,635)		226
Income tax benefit (expense) related to items of other comprehensive income		934		(560)		1,368		(182)
Total comprehensive earnings		23,956		26,822		41,656		43,525
Comprehensive earnings attributable to noncontrolling interests		59		-		352		-
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$	24,015	$	26,822	$	42,008	$	43,525

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

6

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)   (UNAUDITED)

	Year to Date Ended
	September 27, 2014		September 28, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	44,923	$	43,481
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		15,568		14,863
Loss on step acquisition		529		-
Loss from equity method investment		-		733
Amortization of marketable security premiums		2,498		2,274
Changes in operating assets and liabilities:
Accounts receivable		(60,434)		(60,765)
Other receivables		3,004		2,315
Inventories		(15,694)		(7,141)
Prepaid expenses and other assets		3,344		28,193
Accounts payable and accrued liabilities		9,153		10,301
Income taxes payable and deferred		4,982		5,124
Postretirement health care and life insurance benefits		(691)		2,575
Deferred compensation and other liabilities		2,609		2,801
Net cash from operating activities		9,791		44,754
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash acquired in step acquisition		161		-
Restricted cash		169		-
Capital expenditures		(7,315)		(10,593)
Net sales (purchases) of trading securities		(3,062)		(2,612)
Purchase of available for sale securities		(37,416)		(63,992)
Sale and maturity of available for sale securities		26,375		22,436
Net cash used in investing activities		(21,088)		(54,761)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(16,792)		(11,429)
Dividends paid in cash		(14,415)		(9,517)
Repayment of bank loans		(130)		-
Net cash used in financing activities		(31,337)		(20,946)
Effect of exchange rate changes on cash		(507)		(175)
Decrease in cash and cash equivalents		(43,141)		(31,128)
Cash and cash equivalents at beginning of year		88,283		63,862
Cash and cash equivalents at end of quarter	$	45,142	$	32,734
Supplemental cash flow information:
Income taxes paid, net	$	14,835	$	13,173
Interest paid	$	33	$	19
Stock dividend issued	$	52,165	$	48,925

7

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

TOOTSIE ROLL INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 27, 2014

(in thousands except per share amounts) (UNAUDITED)

Note 1 — Significant Accounting Policies

General Information

Foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the Company) and in the opinion of management all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim period have been reflected.  Certain amounts previously reported have been reclassified to conform to the current year presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s 2013 Annual Report on Form 10-K.

Results of operations for the period ended September 27, 2014 are not necessarily indicative of results to be expected for the year to end December 31, 2014 because of the seasonal nature of the Company’s operations. Historically, the third quarter has been the Company’s largest sales quarter due to Halloween sales.

The results of the Company’s twoless than wholly owned Spanish companies are consolidated and a noncontrolling interest has been recorded. (See Note 10.)

Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15 which provides guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not expect the adoption of this guidance to have a significant impact on our condensed consolidated financial statements.

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on the condensed consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, which includes amendments that change the requirements for reporting discontinued operations. The new guidance requires that the disposal of a component of an entity be reported as discontinued operations only if the action represents a strategic shift that will have a major effect on an entity’s operations and financial results, and would require expanded disclosures. This guidance will be effective beginning in the first quarter 2015. We do not expect the adoption of this guidance to have a significant impact on the condensed consolidated financial statements.

8

Note 2 — Average Shares Outstanding

The average number of shares outstanding for year to date ended September 27, 2014 reflect stock purchases of 575 shares for $16,792 and a 3% stock dividend distributed on April 4, 2014. The average number of shares outstanding for year to date ended September 28, 2013 reflect stock purchases of 384 shares for $11,429 and a 3% stock dividend distributed on April 5, 2013.

Note 3 — Income Taxes

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years 2010 through 2013. With few exceptions, the Company is no longer subject to examination by tax authorities for the year 2009 and prior. The consolidated effective tax rates were 27.9% and28.8% in third quarter 2014 and 2013, respectively, and 32.8% and 28.7% in nine months 2014 and 2013, respectively. The higher effective income tax rate in nine months 2014 reflects the reversal of deferred tax assets of $2,350 in first quarter 2014 relating to the step acquisition of the Spanish companies as discussed in Note 10.

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received on the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of September 27, 2014, December 31, 2013 and September 28, 2013, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities, including an auction rate security. The Company’s available for sale and trading securities principally consist of municipal bonds and mutual funds that are publicly traded.

9

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of September 27, 2014, December 31, 2013 and September 28, 2013, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value September 27, 2014
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	45,142	$	45,142	$	-	$	-
Available for sale securities		126,870		-		126,870		-
Foreign currency forward contracts		(1,238)		-		(1,238)		-
Commodity futures contracts		(377)		(377)		-		-
Trading securities		69,367		69,367		-		-
Total assets measured at fair value	$	239,764	$	114,132	$	125,632	$	-
	Estimated Fair Value December 31, 2013
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	88,283	$	88,283	$	-	$	-
Available for sale securities		118,647		-		118,647		-
Foreign currency forward contracts		(684)		-		(684)		-
Commodity futures contracts, net		(130)		(130)		-		-
Trading securities		63,215		63,215		-		-
Total assets measured at fair value	$	269,331	$	151,368	$	117,963	$	-
	Estimated Fair Value September 28, 2013
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	32,734	$	32,734	$	—	$	—
Auction rate security		10,162		—		—		10,162
Available for sale securities excluding the auction rate security		123,391		—		123,391		—
Foreign currency forward contracts		29		—		29		—
Commodity futures contracts		97		97		—		—
Trading securities		58,968		58,968		—		—
Total assets measured at fair value	$	225,381	$	91,799	$	123,420	$	10,162

During the fourth quarter 2013, the Company sold its investment in Jefferson County Alabama Sewer Revenue Refunding Warrants for $10,840. This was an auction rate security (ARS) originally purchased for $13,550 in 2008 with an insurance-backed AAA rating. The Company recorded an other-than-temporary pre-tax impairment of $5,140 in 2008 on this ARS investment which resulted in a carrying value of $8,410 at that time. Since recording the initial impairment in 2008, the Company carried this ARS investment at its estimated fair value utilizing a valuation model with Level 3 inputs, as defined by guidance, and resulting changes in the market value since the original impairment charge in 2008 were recorded as changes to accumulated other comprehensive income (loss) each year. The fair value of this instrument at September  28, 2013 was $10,162, with an unrealized loss in other comprehensive earnings of $677 recorded during nine months 2013.

The fair value of the Company’s industrial revenue development bonds at September  27, 2014, December 31, 2013 and September 28, 2013 were valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. Interest rates on these bonds are reset weekly based on current market conditions.

10

Note 5 — Derivative Instruments and Hedging Activities

From time to time, the Company uses derivative instruments, including foreign currency forward contracts, commodity futures contracts and commodity option contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures contracts and most commodity option contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States. The Company does not engage in trading or other speculative use of derivative instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses either hedge accounting or mark-to-market accounting for its derivative instruments. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, 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 loss for commodity derivatives are expected to be reclassified to cost of goods sold. Substantially all amounts reported in accumulated other comprehensive loss for foreign currency derivatives are expected to be reclassified to other income, net.

11

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at September 27, 2014, December 31, 2013 and September 28, 2013:

	September 27, 2014
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	33,291	$	20	$	(1,258)
Commodity futures contracts		3,352		-		(377)
Total derivatives designated as hedging instruments				20		(1,635)
Derivatives not designated as hedging instruments:
Commodity futures contracts		-		-		-
Total derivatives not designated as hedging instruments				-		-
Total derivatives			$	20	$	(1,635)
	December 31, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	34,244	$	-	$	(684)
Commodity futures contracts		5,601		41		(191)
Total derivatives designated as hedging instruments				41		(875)
Derivatives not designated as hedging instruments:
Commodity futures contracts		321		20		-
Total derivatives not designated as hedging instruments				20		-
Total derivatives			$	61	$	(875)
	September 28, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	30,181	$	29	$	-
Commodity futures contracts		4,376		114		(66)
Total derivatives designated as hedging instruments				143		(66)
Derivatives not designated as hedging instruments:
Commodity futures contracts		871		49		-
Total derivatives not designated as hedging instruments				49		-
Total derivatives			$	192	$	(66)

The effects of derivative instruments on the Company’s Condensed Consolidated Statement of Earnings and Retained Earnings, and the Condensed Consolidated Statement of Comprehensive Earnings for periods ended September 27, 2014 and September 28, 2013 are as follows:

12

	For Quarter Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(1,492)	$	(173)	$	-
Commodity futures contracts		(762)		(235)		-
Commodity option contracts		-		-		-
Total	$	(2,254)	$	(408)	$	-
	For Quarter Ended September 28, 2013
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	626	$	(162)	$	-
Commodity futures contracts		142		(153)		-
Commodity option contracts		-		-		-
Total	$	768	$	(315)	$	-
	For Year to Date Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(1,178)	$	(624)	$	-
Commodity futures contracts		(521)		(294)		-
Commodity option contracts		-		-		-
Total	$	(1,699)	$	(918)	$	-
	For Year to Date Ended September 28, 2013
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(241)	$	(270)	$	-
Commodity futures contracts		(723)		(946)		-
Commodity option contracts		-		-		-
Total	$	(964)	$	(1,216)	$	-

13

During the quarters and years to date ended September 27, 2014 and September 28, 2013, the Company recognized earnings (loss) of $(0) and $92, and $(20)and $53 respectively, related to mark-to-market accounting for certain commodity option and future contracts.

Note 6 — Pension Plans

During 2012 and 2013, the Company received notices from the Bakery and Confectionery Union and Industry International (BC&T) Pension Fund (Plan), a multi-employer defined benefit pension plan for certain Company union employees. The notices indicate that the Plan’s actuary has certified that the Plan is in critical status, the “Red Zone”, as defined by the Pension Protection Act (PPA), and that a plan of rehabilitation was adopted by the trustees of the Plan in the fourth quarter of 2012. The rehabilitation plan adopted requires that employer contributions include 5% compounded annual surcharges each year for an unspecified period of time beginning January 2013 (in addition to the 5% interim surcharge initiated in June 2012) as well as certain plan benefit reductions. The Company was advised by the Plan that if the Company had withdrawn from the Plan during 2012 its estimated withdrawal liability would have been $37,200. The Company does not have any updated information as to its withdrawal liability. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than $37,200, would be payable to the Plan. The Company’s existing labor contract with its BC&T local union commits the Company’s participation in this Plan through third quarter 2017. Pension expense, including surcharges as discussed above, for the BC&T Plan for nine months 2014 and 2013 was $2,028and $1,758, respectively. The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore, is unable to determine the effects on its consolidated financial statements, but, the ultimate outcome could be material to its consolidated results of operations in one or more future periods. See also the Company’s consolidated financial statements and related notes and Management and Discussion and Analysis and Results of Operations incorporated into the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”).

14

Note 7 — Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings (Loss) consists of the following components:

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2013	$	(13,527)	$	54	$	(436)	$	(96)	$	9,367	$	(4,638)
Other comprehensive earnings (loss) before reclassifications		(1,703)		(202)		(752)		(332)		-		(2,989)
Reclassifications from accumulated other comprehensive loss		-		-		398		188		(864)		(278)
Other comprehensive earnings (loss) before tax		(1,703)		(202)		(354)		(144)		(864)		(3,267)
Balance at September 27, 2014	$	(15,230)	$	(148)	$	(790)	$	(240)	$	8,503	$	(7,905)
											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2012	$	(13,406)	$	908	$	-	$	(111)	$	(3,838)	$	(16,447)
Other comprehensive earnings (loss) before reclassifications		(257)		140		(154)		(461)		-		(732)
Reclassifications from accumulated other comprehensive loss		-		-		173		603		-		776
Other comprehensive earnings (loss) before tax		(257)		140		19		142		-		44
Balance at September 28, 2013	$	(13,663)	$	1,048	$	19	$	31	$	(3,838)	$	(16,403)

The amounts reclassified from accumulated other comprehensive income (loss) consisted of the following:

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other	Quarter Ended				Year to Date Ended
Comprehensive Income Components	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013		Location of (Gain) Loss Recognized in Earnings
Foreign currency derivatives	$	173	$	162	$	624	$	270	Other income, net
Commodity derivatives		235		153		294		946	Product cost of goods sold
Postretirement and pension benefits		(230)		-		(690)		-	Selling, marketing and administrative expenses
Postretirement and pension benefits		(221)		-		(663)		-	Product cost of goods sold
Total before tax		(43)		315		(435)		1,216
Tax (expense) benefit		15		(114)		157		(440)
Net of tax	$	(28)	$	201	$	(278)	$	776

15

Note 8 — Restricted Cash

Restricted cash comprises certain cash deposits of the Company’s less than wholly owned Spanish companies (see Note 10) with international banks that are pledged as collateral for letters of credit and bank borrowings.

Note 9 — Bank Loans

Long term bank loans comprise borrowings by the Company’s less than wholly owned Spanish companies (see Note 10) which are held by international banks. The average weighted interest rate in third quarter 2014 was of 2.7% and maturity dates range from 1 to 4 years. Short term bank loans also relate to the Company’s less than wholly owned Spanish companies.

Note 10 — Step Acquisition

During first quarter 2014, the Company gained operating control of its two50% owned Spanish companies when Company employee representatives assumed all positions on their boards of directors. This was considered a step acquisition, whereby the Company remeasured the previously held investment to fair value in first quarter 2014. As a result, the Company’s first quarter 2014 net earnings include a net loss of $529, including an income tax provision of $2,350 relating to deferred income taxes. The Company purchased newly issued capital stock of the Spanish companies for $736 which further increased the Company’s ownership and control to 75% at the end of second quarter 2014.

16

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources, new accounting pronouncements and other matters. Dollars are presented in thousands, except per share amounts. This review should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes and with the Company’s Condensed Consolidated Financial Statements and related notes and Management’s Discussion and Analysis included in the Company’s 2013 Form 10-K.

Net product sales were $191,093 in third quarter 2014 compared to $191,807 in third quarter 2013, adecrease of $714 or 0.4%. Nine months 2014 net product sales were $401,966 compared to $404,074 in nine months 2013, a decrease of $2,108 or 0.5%.The third quarter reflects our historical pre-Halloween sales period which is our largest quarterly sales period. Our third quarter and nine months 2014 sales in the United States were off slightly from the prior year comparative periods which reflect the challenges of certain of our retail customers regarding consumer sales and consumer spending. Lower sales in Mexico and Canada, including the effects of a weaker Canadian dollar, also adversely affected our reported sales during these same comparative periods.

Product cost of goods sold were $123,164 in third quarter 2014 compared to $125,833 in third quarter 2013, and nine months 2014 product cost of goods sold were $256,211 compared to $264,974 in nine months 2013. Product cost of goods sold includes $84 and $668 of certain deferred compensation expenses in third quarter 2014 and 2013, respectively, and $716 and $1,605 of certain deferred compensation expenses in nine months 2014 and 2013, respectively. These deferred compensation expenses principally result from the changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, product cost of goods sold decreased from $125,165 in third quarter 2013 to $123,080 in third quarter 2014, a decrease of $2,085 or 1.7%; and decreased from $263,369 in nine months 2013 to $255,495 in nine months 2014, a decrease of $7,874 or 3.0%. As a percentage of net product sales, adjusted product cost of goods sold was 64.4% and 65.3% in third quarter 2014 and 2013, respectively, a favorable decrease of 0.9%; and adjusted product cost of goods sold was 63.6% and 65.2% in nine months 2014 and 2013, respectively, a favorable decrease of 1.6%. These favorable changes reflect lower ingredient costs as well as manufacturing plant efficiencies driven by capital investments and ongoing cost containment programs. Although overall comparative ingredient costs were more favorable in third quarter and nine months 2014 compared to the corresponding periods in the prior year, certain key ingredient costs are higher this year. The Company is continuing to make progress on restoring its margins to their historical levels before the increases in commodity and other input costs that occurred in recent years.

Selling, marketing and administrative expenses were $31,840 in third quarter 2014 compared to $33,166 in third quarter 2013, and nine months 2014 selling, marketing and administrative expenses were $85,767 compared to $87,620 in nine months 2013. Selling, marketing and administrative expenses includes $265 and $2,204 of certain deferred compensation expenses in third quarter 2014 and 2013, respectively, and $2,374 and $5,372 of certain deferred compensation expenses in nine months 2014 and 2013, respectively. As discussed above, these expenses principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years, and are not reflective of current operating results. Adjusting for the aforementioned, selling, marketing and administrative expenses increased from $30,962 in third quarter 2013 to $31,575 in third quarter 2014, an increase of $613 or 2.0%; and selling, marketing and administrative expenses increased from $82,248 in nine months 2013 to $83,393 in nine months 2014, an increase of $1,145 or 1.4%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 16.1% in third quarter 2013 to 16.5% in third quarter 2014, an unfavorable increase of 0.4% as a percent of net sales; and adjusted selling, marketing and administrative expenses increased from 20.4% in nine months 2013 to 20.7% in nine months 2014, an unfavorable increase of 0.3%. Selling, marketing and administrative expenses include $12,930 and $12,637 for freight, delivery and warehousing expenses in third quarter 2014 and 2013, respectively, and $33,819 and $33,141 for freight, delivery and warehousing expenses in nine months 2014 and 2013,

17

respectively. These expenses were 6.7% and 6.6% of net product sales in third quarter 2014 and 2013, respectively, and 8.4% and 8.2% of net product sales in nine months 2014 and 2013, respectively, and contributed to the above discussed increases in selling, marketing and administrative expenses in both third quarter and nine months 2014. In addition, certain marketing expenses also increased in third quarter and nine months 2014 compared to the corresponding periods in the prior years.

Earnings from operations were $36,759 in third quarter 2014 compared to $33,487 in third quarter 2013, and were $62,016 in nine months 2014 compared to $53,589 in nine months 2013. Earnings from operations include $349 and $2,872 of certain deferred compensation expenses in third quarter 2014 and 2013, respectively, and include $3,090 and $6,977 of certain deferred compensation expenses in nine months 2014 and 2013, respectively. As discussed above, these deferred compensation expenses relate to changes in deferred compensation liabilities resulting from corresponding changes in the market value of trading securities and related investment income that hedge these liabilities. Adjusting for the aforementioned, operating earnings were $37,108 and $36,359 in third quarter 2014 and 2013, respectively, an increase of $749 or 2.1%; and adjusted operating earnings were $65,106 and $60,566 in nine months 2014 and 2013, respectively, an increase of $4,540 or 7.5%. As a percentage of net product sales, these adjusted operating earnings were 19.4% and 19.0% in third quarter 2014 and 2013, respectively, a favorable increase of 0.4% as a percentage of net product sales; and adjusted operating earnings were 16.2% and 15.0% in nine months 2014 and 2013, respectively, a favorable increase of 1.2% as a percentage of net product sales. The above discussedincreases in adjusted operating earnings principally reflect more favorable gross profit margins which are discussed above. Management believes the presentation in this and the preceding paragraphs relating to amounts adjusted for deferred compensation expense are more reflective of the underlying operations of the Company.

Other income (expense) net, was $166 in third quarter 2014 compared to $3,105 in third quarter 2013, an  unfavorable decrease of $2,939; and other income (expense), net, was $4,865 in nine months 2014 compared to $7,401 in nine months 2013, anunfavorable decrease of $2,536. Other income (expense), net for third quarter 2014 and 2013 includes aggregate net gains and investment income of $349 and $2,872, respectively, on trading securities relating to deferred compensation programs as discussed above; and other income, net for nine months 2014 and 2013 includes aggregate net gains and investment income of $3,090 and $6,977, respectively, on trading securities relating to these programs. As discussed above, these increases in trading securities were substantially offset by a like amount of deferred compensation expense included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above. Other income (expense) net, includes gains (losses) on foreign exchange of $(380) and $39 in third quarter 2014 and 2013, respectively, and includes gains (losses) on foreign exchange of $(1,169) and $(284) in nine months 2014 and 2013, respectively. In addition, first quarter and nine months 2014 other income, net includes a pre-tax gain of approximately $1,800 resulting from the step acquisition of the two Spanish companies discussed in Note 10 of the Notes to the Condensed Consolidated Financial Statements.

The consolidated effective tax rates were 27.9% and 28.8% in third quarter 2014 and 2013, respectively, and 32.8% and 28.7% in nine months 2014 and 2013, respectively. The higher effective income tax rate in nine months 2014 reflects a reversal of deferred tax assets of $2,350 relating to the step acquisition of the Spanish companies discussed above.

Net earnings attributable to Tootsie Roll Industries, Inc. were $26,668 (after $59 net loss attributed to non-controlling interests) in third quarter 2014 compared to $26,043 in third quarter 2013, and earnings per share were $0.44 and $0.42 in third quarter 2014 and third quarter 2013, respectively, an increase of $0.02per share or 5%. Nine months 2014 net earnings attributable to Tootsie Roll Industries, Inc. were $45,275 (after $352 net loss attributed to non-controlling interests) compared to nine months net earnings of $43,481, and net earnings per share were $0.75 and $0.71 in nine months 2014 and nine months 2013, respectively. an increase of $0.04 per share or 6%. The increase in earnings per share in third quarter and nine months 2014 principally results from the improvements in gross profit margins as discussed above. The prior year comparative third quarter and nine months 2013 periods also benefited from a lower effective income tax rate as discussed above. Earnings per share attributable to Tootsie Roll Industries, Inc. for third quarter and nine months 2014 did benefit from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock. As a result, average shares outstanding decreased

18

from 61,343 in third quarter 2013 to 60,525 in third quarter 2014, and from 61,487 in nine months 2013 to 60,668 in nine months 2014.

Goodwill and intangibles are assessed annually as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. The Company has not identified any triggering events, as defined, or other adverse information that would indicate a material impairment of its goodwill or intangibles in nine months 2014. There were also no impairments in the comparative nine months 2013 period.

During first quarter 2014, the Company gained operating control of its two 50% owned Spanish companies when Company employee representatives assumed all positions on their boards of directors. This was considered a step acquisition, whereby the Company remeasured the previously held investment to fair value in first quarter 2014.As a result, the Company’s first quarter 2014 net earnings include a net loss of $529, including an additional income tax provision of $2,350 relating to deferred income taxes. The Company further increased its ownership and control to 75% at the end of second quarter 2014.

During 2012 and 2013, the Company received notices from the Bakery and Confectionery Union and Industry International (BC&T) Pension Plan (Plan), a multi-employer defined benefit pension plan for certain Company union employees. The notices indicate that the Plan’s actuary has certified that the Plan is in critical status, the “Red Zone”, as defined by the Pension Protection Act (PPA), and that a plan of rehabilitation was adopted by the trustees of the Plan in the fourth quarter of 2012.  The rehabilitation plan requires that employer contributions include 5% compounded annual surcharges each year for an unspecified period of time beginning January 2013 (in addition to the 5% interim surcharge initiated in June 2012) as well as certain plan benefit reductions.  The Company was advised by the Plan that if the Company had withdrawn from the Plan during 2012 its estimated withdrawal liability would have been $37,200. The Company does not have any updated information as to its withdrawal liability.  Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than $37,200, would be payable to the Plan.  The Company’s existing labor contract with its BC&T local union commits the Company’s participation in this Plan through third quarter 2017. Pension expense, including surcharges, for the BC&T Plan for nine months 2014 and 2013 was $2,028 and $1,758, respectively. The aforementioned expense includes surcharges of $268 and $163 in nine months 2014 and 2013, respectively. The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore, is unable to determine the effects on its consolidated financial statements, but, the ultimate outcome could be material to its consolidated results of operations in one or more future periods. See also the Company’s consolidated financial statements and related notes and Management and Discussion and Analysis and Results of Operations incorporated into the Company’s 2013 Form 10-K.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows provided by operating activities were $9,791 and $44,754 in nine months 2014 and 2013, respectively. Nine months 2014 operating cash flows were adversely affected by the timing of our seasonal production resulting in higher inventories. In addition, changes in prepaid expenses and other assets in the nine months 2013 favorably affected the net cash flows from operating activities in the prior year nine month period.

Net cash used in investing activities was $21,088 in nine months 2014 compared to $54,761 in nine months 2013. Cash flows from investing activities reflect $37,416 and $63,992 relating to the purchase of available for sale securities during nine months 2014 and 2013, respectively. Nine months 2014 and 2013 investing activities also include capital expenditures of $7,315 and $10,593, respectively.  Capital expenditures for the 2014 year are anticipated to be generally in line with historical annualized spending, and are to be funded from the Company’s cash flow from operations and internal sources.

The Company’s consolidated financial statements include bank borrowings of $1,081 as of the end of third quarter 2014, all of which relates to its two majority owned and controlled Spanish companies. The Company had no other outstanding bank borrowings as of the end of third quarter 2014.

19

Financing activities include Company common stock purchases and retirements of $16,792 and $11,429 in nine months 2014 and 2013, respectively. Cash dividends of $14,415 and $9,517 were paid in nine months 2014 and 2013, respectively. Fourth quarter 2012 included an accelerated payment (from first quarter 2013) of the regular quarterly dividend of $4,656 ($0.08 per share) which has historically been paid during the first week in January. This was in response to the uncertainty surrounding the future federal tax treatment of dividends at that time after giving consideration to the Company’s cash and investment positions.

The Company’s current ratio (current assets divided by current liabilities) was 3.5 to 1 as of the end of third quarter 2014 as compared to 4.0 to 1 as of the end of fourth quarter 2013 and 3.1 to 1 as of the end of third quarter 2013. Net working capital was $195,287as of the end of third quarter 2014 as compared to $179,990 and $165,673 as of the end of fourth and third quarter 2013, respectively.

The aforementioned net working capital amounts are principally reflected in aggregate cash and cash equivalents and short-term investments which totaled $81,204 as of the end of third quarter 2014 compared to $121,855 and $64,313 as of the end of fourth and third quarters 2013, respectively. In addition, long term investments, principally debt securities comprising municipal bonds and trading securities, were $160,175 as of the end of third quarter 2014, as compared to $148,532 and $162,371 as of the end of fourth and third quarters 2013, respectively. Aggregate cash and cash equivalents and short and long-term investments were $241,379, $270,387, and $226,684, as of the end of third quarter 2014, and as of the end of fourth and third quarters 2013, respectively. The aforementioned includes $69,367, $63,215, and $58,968 as of the end of the third quarter 2014, and fourth and third quarters 2013, respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities. Investments in municipal bonds and other debt securities that matured during nine months 2014 and 2013 were generally used to purchase the Company’s common stock or were replaced with debt securities of similar maturities.

During fourth quarter 2013, the Company contributed $15,000 to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company is using these funds, as well as investment income in this VEBA trust, to pay the actual cost of such benefits beginning in fourth quarter 2013.  As of the end of third quarter 2014, the VEBA trust holds $10,758of aggregate cash, cash equivalents and investments. This asset is included in prepaid expenses in current and long-term assets on the Company’s condensed consolidated statement of financial position.

As discussed above, Company management gained operating control of its two 50% owned Spanish companies in first quarter 2014, and further increased its control and ownership to 75% as of the end of second quarter 2014. The Company invested approximately $750 in the Spanish companies during second quarter 2014 resulting in its 75% ownership, and is likely to contribute approximately $750 in additional monies in fourth quarter 2014 or 2015. These Spanish companies had operating losses for each of the years 2008 through 2013 and for nine months 2014. Company management has restructured the Spanish operations and management believes that they should be nearing break-even cash flows from operating activities going forward as a result of this restructuring and other changes in business plans. Management believes that the business, competitive and economic challenges in Spain are likely to continue, and therefore, additional cash financing of these Spanish companies may be required in the future.

ACCOUNTING PRONOUNCEMENTS

See Note 1 of the Company’s condensed consolidated financial statements.

RISK FACTORS

The Company’s operations and financial results are subject to a number of risks and uncertainties that could adversely affect the Company’s operating results and financial condition. Significant risk factors, without limitation, that could impact the Company, 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 commodities and ingredients, including the effects adverse weather, climate change, and disease in west Africa which could affect cocoa supplies; and the ability to recover cost increases through product sales price increases; (iii) inherent risks in the marketplace,

20

including uncertainties about trade and consumer acceptance of product pricing changes and seasonal events such as Halloween, the Company’s largest sales season; (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 operating results, and the effect of the fluctuation of the Canadian dollar on products manufactured in Canada and marketed and sold in the United States in U.S. dollars; (vi) the Company’s reliance on third party vendors for various goods and services, including commodities used for ingredients that are primarily grown or sourced from foreign locations; (vii) the Company’s ability to successfully implement new production processes and manufacturing automation without disruption or quality problems; (viii) the effect of changes in assumptions, including discount rates, sales growth and profit margins, which could affect the Company’s impairment testing and analysis of its goodwill and trademarks; (ix) changes in the confectionery marketplace including actions taken by major retailers and customers; (x) customer, consumer and competitor response to marketing programs, price, product weight adjustments, and new products; (xi) dependence on significant customers, including the volume and timing of their purchases, availability of shelf space, and competitive products; (xii) increases in energy costs, including freight and delivery, that cannot generally be passed along to customers throughincreased price realization due to competitive reasons; (xiii) any significant labor stoppages, strikes or production interruptions; (xiv) changes in governmental laws or regulations that affect ingredients used in products, or taxes, tariffs or other government restrictions on products sold; (xv) the adverse effects should the Company either voluntarily or involuntarily recall its product(s) from the marketplace; (xvi) the risk that the market value of Company’s investments could decline, including being classified as “other-than-temporary” as defined; (xvii) the Company’s dependence on its enterprise resource planning (ERP) computer system to manage its supply chain and customer deliveries, and the risk that the Company’s information technology systems fail to perform adequately; (xviii)the adverse effects if the Company is unable to protect its information technology systems against data corruption, cyber-based attacks or network security breaches; (xix)  the potential adverse effects on the Company as to changes to improve the funding status of the Bakery and Confectionery Union and Industry Pension Plan, a multi-employer plan which covers certain Company union employees; (xx) the adverse effects if restructuring efforts and changes in business plans with respect to the Company’s Spanish operations are not fully successful; and (xxi) the potential effects of current and future macroeconomic conditions and geopolitical events.

FORWARD-LOOKING STATEMENTS

This discussion and certain other sections contain forward-looking statements that are based largely on the Company’s current expectations and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “anticipated,” “believe,” “expect,” “intend,” “estimate,” “project,” and other words of similar meaning in connection with a discussion of future operating or financial performance and are subject to certain factors, risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. Such factors, risks, trends and uncertainties, which in some instances are beyond the Company’s control, include the overall competitive environment in the Company’s industry, changes in assumptions and judgments discussed above under the heading “Significant Accounting Policies and Estimates,” and factors identified and referred to above under the heading “Risk Factors.”

The risk factors identified and referred to above are believed to be significant factors, but not necessarily all of the significant factors that could cause actual results to differ from those expressed in any forward-looking statement. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made only as of the date of this report. The Company undertakes no obligation to update such forward-looking statements.

21

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to various market risks, including fluctuations in and sufficient availability of sugar, corn syrup, edible oils, including soybean and palm oils, cocoa, dextrose, milk and whey, and gum-base input ingredients and packaging, and fuel costs principally relating to freight and delivery fuel surcharges. The Company is exposed to exchange rate fluctuations in the Canadian dollar which is the currency used for a portion of the raw material and packaging material costs and operating expenses at its Canadian plants.  The Company invests in securities with maturities dates of up to approximately three years, the majority of which are held to maturity, which limits the Company’s exposure to interest rate fluctuations.Except for the market risks associated with the Ebola epidemic and potential adverse effects on cocoa (one of the companies key product ingredients) producing countries in west Africa, there has been no material change in the Company’s market risks that would significantly affect the disclosures made in the Form 10-K for the year ended December 31, 2013.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, the Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 27, 2014 and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 27, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

22

PART II — OTHER INFORMATION

TOOTSIE ROLL INDUSTRIES, INC.

AND SUBSIDIARIES

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes the Company’s purchases of its common stock during the quarter ended September 27, 2014:

					Approximate Dollar
	(a) Total			Shares	Value of Shares that
	Number of	(b) Average		Purchased as Part of	May Yet Be Purchased
	Shares	Price Paid per		Publicly Announced Plans	Under the Plans
Period	Purchased	Share		Or Programs	or Programs
Jun 29 to Jul 26	45,346	$	28.32	Not Applicable	Not Applicable
Jul 27 to Aug 23	18,500		27.77	Not Applicable	Not Applicable
Aug 24 to Sep 27	164,959		27.90	Not Applicable	Not Applicable
Total	228,805	$	27.97	Not Applicable	Not Applicable

While the Company does not have a formal or publicly announced stock purchase program, the Company’s board of directors periodically authorizes a dollar amount for share purchases. The treasurer executes share purchase transactions according to these guidelines.

ITEM 6. EXHIBITS

Exhibits 31.1 and 31.2 — Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 — Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS - XBRL Instance Document.

Exhibit 101.SCH - XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL - XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.LAB - XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE - XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 101.DEF - XBRL Taxonomy Extension Definition Linkbase Document.

23

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		TOOTSIE ROLL INDUSTRIES, INC.
Date:	November5, 2014	BY:	/S/MELVIN J. GORDON
			Melvin J. Gordon
			Chairman and Chief
			Executive Officer
Date:	November5, 2014	BY:	/S/G. HOWARD EMBER, JR.
			G. Howard Ember, Jr.
			Vice President Finance and
			Chief Financial Officer

24

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Melvin J. Gordon, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Tootsie Roll Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the 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 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 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:	November5, 2014
By:	/S/MELVIN J. GORDON
	Melvin J. Gordon
	Chairman and Chief
	Executive Officer

25

EX-31.2

Exhibit 31.2

CERTIFICATION

I, G. Howard Ember, Jr. certify that:

1.I have reviewed this quarterly report on Form 10-Q of Tootsie Roll Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the 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 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 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:	November5, 2014
By:	/S/G. HOWARD EMBER, JR.
	G. Howard Ember, Jr.
	Vice President Finance and
	Chief Financial Officer

26

EX-32

Exhibit 32

Certificate Pursuant to Section 1350 of Chapter 63

Of Title 18 of the United States Code

Each of the undersigned officers of Tootsie Roll Industries, Inc. certifies that (i) the Quarterly Report on Form 10-Q of Tootsie Roll Industries, Inc. for the quarterly period ended September 27, 2014 (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Tootsie Roll Industries, Inc.

Dated:	Novembert5, 2014	/S/MELVIN J. GORDON
		Melvin J. Gordon
		Chairman and Chief
		Executive Officer
Dated:	November5, 2014	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer

27

XML

Fair Value Measurements - Investments (Details) (USD $) In Thousands, unless otherwise specified										3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 27, 2014	Dec. 31, 2013	Sep. 28, 2013	Sep. 27, 2014 Cost Basis Level 2	Dec. 31, 2013 Cost Basis Level 2	Sep. 28, 2013 Cost Basis Level 2	Sep. 27, 2014 Estimated Fair Value Level 2	Dec. 31, 2013 Estimated Fair Value Level 2	Sep. 28, 2013 Estimated Fair Value Level 2	Dec. 31, 2013 Jefferson County Alabama Sewer Revenue Refunding Warrants Auction rate security	Sep. 28, 2013 Jefferson County Alabama Sewer Revenue Refunding Warrants Auction rate security Level 3	Dec. 31, 2008 Jefferson County Alabama Sewer Revenue Refunding Warrants Auction rate security Level 3	Dec. 31, 2008 Jefferson County Alabama Sewer Revenue Refunding Warrants AAA rating Auction rate security Level 3
Fair value on a recurring basis
Sale value of investment										$ 10,840
Purchase cost of investment													13,550
Other-than-temporary pre-tax impairment on investment												5,140
Carrying value of investment											10,162		8,410
Unrealized loss in other comprehensive earnings											677
Industrial revenue development bonds, carrying amount, approximates fair value	$ 7,500	$ 7,500	$ 7,500	$ 7,500	$ 7,500	$ 7,500	$ 7,500	$ 7,500	$ 7,500

XML

Average Shares Outstanding

9 Months Ended

Sep. 27, 2014

Average Shares Outstanding

Average Shares Outstanding

Note 2 — Average Shares Outstanding

The average number of shares outstanding for year to date ended September 27, 2014 reflect stock purchases of 575 shares for $16,792 and a 3% stock dividend distributed on April 4, 2014. The average number of shares outstanding for year to date ended September 28, 2013 reflect stock purchases of 384 shares for $11,429 and a 3% stock dividend distributed on April 5, 2013.

XML

Accumulated Other Comprehensive Earnings (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended								3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended					3 Months Ended	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014 Reclassified from Accumulated OCI into Earnings	Sep. 28, 2013 Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Reclassified from Accumulated OCI into Earnings	Sep. 28, 2013 Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Foreign Currency Translation Adjustment	Sep. 28, 2013 Foreign Currency Translation Adjustment	Sep. 27, 2014 Investments	Sep. 28, 2013 Investments	Sep. 27, 2014 Foreign Currency Derivatives	Sep. 28, 2013 Foreign Currency Derivatives	Sep. 27, 2014 Foreign Currency Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 28, 2013 Foreign Currency Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Foreign Currency Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 28, 2013 Foreign Currency Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Commodity Derivatives	Sep. 28, 2013 Commodity Derivatives	Sep. 27, 2014 Commodity Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 28, 2013 Commodity Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Commodity Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 28, 2013 Commodity Derivatives Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Postretirement and Pension Benefits	Sep. 28, 2013 Postretirement and Pension Benefits	Dec. 31, 2012 Postretirement and Pension Benefits	Sep. 27, 2014 Postretirement and Pension Benefits Reclassified from Accumulated OCI into Earnings	Sep. 27, 2014 Postretirement and Pension Benefits Reclassified from Accumulated OCI into Earnings
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period			$ (4,638)	$ (16,447)					$ (13,527)	$ (13,406)	$ 54	$ 908	$ (436)						$ (96)	$ (111)					$ 9,367	$ (3,838)	$ (3,838)
Other comprehensive earnings (loss) before reclassifications			(2,989)	(732)					(1,703)	(257)	(202)	140	(752)	(154)					(332)	(461)
Reclassifications from accumulated other comprehensive loss			(278)	776									398	173					188	603					(864)
Net other comprehensive earnings (loss) net of tax			(3,267)	44					(1,703)	(257)	(202)	140	(354)	19					(144)	142					(864)
Balance at the end of the period	(7,905)	(16,403)	(7,905)	(16,403)					(15,230)	(13,663)	(148)	1,048	(790)	19					(240)	31					8,503	(3,838)	(3,838)
Reclassification from Accumulated Other Comprehensive Income
Other Income	166	3,105	4,865	7,401											173	162	624	270
Product cost of goods sold	123,164	125,833	256,211	264,974																	235	153	294	946				(221)	(663)
Selling, marketing and administrative expenses	31,840	33,166	85,767	87,620																								(230)	(690)
Total before tax	36,925	36,592	66,881	60,990	(43)	315	(435)	1,216
Tax (expense) benefit	(934)	560	(1,368)	182	15	(114)	157	(440)
Net income	$ 26,609	$ 26,043	$ 44,923	$ 43,481	$ (28)	$ 201	$ (278)	$ 776

XML

Pension Plans (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		1 Months Ended	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Jun. 30, 2012 Multi-employer defined benefit pension plan	Sep. 27, 2014 Multi-employer defined benefit pension plan
Pension Plans
Percentage of compounded annual surcharge each year				5.00%
Percentage of interim surcharge			5.00%
Estimated liability upon withdrawal from plan in current year				$ 37,200
Pension plans
Pension expense	$ 2,028	$ 1,758

XML

Bank Loans (Details) (Spanish Companies)	9 Months Ended
	Sep. 27, 2014
Bank Loans
Average weighted interest rate (as a percent)	2.70%
Minimum
Bank Loans
Maturity period	1 year
Maximum
Bank Loans
Maturity period	4 years

XML

Step Acquisition (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended	6 Months Ended	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014 company	Sep. 28, 2013	Mar. 29, 2014 Spanish companies	Jun. 28, 2014 Spanish companies	Sep. 27, 2014 Spanish companies company
Spanish companies
Number of Spanish companies			2				2
Ownership interest in Spanish companies (as a percent)					50.00%	75.00%
Net loss related to acquired companies					$ 529
Income Tax Expense (Benefit)	10,316	10,549	21,958	17,509	2,350
Purchase of capital stock						$ 736

XML

Significant Accounting Policies

9 Months Ended

Sep. 27, 2014

Significant Accounting Policies

Significant Accounting Policies

Note 1 — Significant Accounting Policies

General Information

Foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the Company) and in the opinion of management all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim period have been reflected.  Certain amounts previously reported have been reclassified to conform to the current year presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s 2013 Annual Report on Form 10-K.

Results of operations for the period ended September 27, 2014 are not necessarily indicative of results to be expected for the year to end December 31, 2014 because of the seasonal nature of the Company’s operations. Historically, the third quarter has been the Company’s largest sales quarter due to Halloween sales.

The results of the Company’s twoless than wholly owned Spanish companies are consolidated and a noncontrolling interest has been recorded. (See Note 10.)

Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15 which provides guidance about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. This guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. We do not expect the adoption of this guidance to have a significant impact on our condensed consolidated financial statements.

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on the condensed consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, which includes amendments that change the requirements for reporting discontinued operations. The new guidance requires that the disposal of a component of an entity be reported as discontinued operations only if the action represents a strategic shift that will have a major effect on an entity’s operations and financial results, and would require expanded disclosures. This guidance will be effective beginning in the first quarter 2015. We do not expect the adoption of this guidance to have a significant impact on the condensed consolidated financial statements.

XML

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013	Sep. 28, 2013
CURRENT ASSETS:
Cash & cash equivalents	$ 45,142	$ 88,283	$ 32,734
Investments	36,062	33,572	31,579
Trade accounts receivable, less allowances of $3,391, $2,042 & $3,446	102,325	40,721	102,786
Other receivables	2,732	4,616	3,466
Inventories:
Finished goods & work-in-process	47,854	37,012	40,437
Raw material & supplies	31,187	24,844	29,044
Prepaid expenses	5,307	5,581	1,463
Deferred income taxes	3,161	5,482	4,942
Total current assets	273,770	240,111	246,451
PROPERTY, PLANT & EQUIPMENT, at cost:
Land	22,453	21,683	21,679
Buildings	111,351	111,044	108,376
Machinery & equipment	340,381	340,405	328,520
Construction in progress	10,750	3,403	12,878
Property, plant and equipment, gross	484,935	476,535	471,453
Less-accumulated depreciation	293,642	279,619	274,448
Net property, plant and equipment	191,293	196,916	197,005
OTHER ASSETS:
Goodwill	73,237	73,237	73,237
Trademarks	175,024	175,024	175,024
Investments	160,175	148,532	162,371
Split dollar officer life insurance	40,296	40,296	41,394
Prepaid expenses	7,201	10,260
Restricted cash	1,664
Deferred income taxes	3,858	4,033	6,026
Total other assets	461,455	451,382	458,052
Total assets	926,518	888,409	901,508
CURRENT LIABILITIES:
Accounts payable	15,572	9,153	14,801
Bank loan	285
Dividends payable	4,835	4,742	4,770
Accrued liabilities	52,590	45,580	49,539
Postretirement health care and life insurance benefits	111	319	555
Income taxes payable	5,090	327	11,113
Total current liabilities	78,483	60,121	80,778
NONCURRENT LIABILITIES:
Deferred income taxes	53,569	54,939	43,423
Bank loans	796
Postretirement health care and life insurance benefits	9,519	8,857	29,401
Industrial development bonds	7,500	7,500	7,500
Liability for uncertain tax positions	9,474	7,167	7,794
Deferred compensation and other liabilities	75,751	69,520	64,988
Total noncurrent liabilities	156,609	147,983	153,106
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY:
Capital in excess of par value	607,216	572,669	584,128
Retained earnings	51,709	73,109	60,478
Accumulated other comprehensive loss	(7,905)	(4,638)	(16,403)
Treasury stock (at cost)-78, 76 & 76 shares, respectively	(1,992)	(1,992)	(1,992)
Total Tootsie Roll Industries, Inc. shareholders' equity	691,013	680,305	667,624
Noncontrolling interests	413
Total equity	691,426	680,305	667,624
Total liabilities and shareholders' equity	926,518	888,409	901,508
Common Stock
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 37,561, 37,011 & 37,376, respectively, issued Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 22,897, 22,256 & 22,259, respectively, issued	26,084	25,702	25,955
Class B Common Stock
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 37,561, 37,011 & 37,376, respectively, issued Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 22,897, 22,256 & 22,259, respectively, issued	$ 15,901	$ 15,455	$ 15,458

XML

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS
Net earnings	$ 26,609	$ 26,043	$ 44,923	$ 43,481
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	(1,004)	(144)	(2,184)	(245)
Pension and postretirement reclassification adjustment:
Less: reclassification adjustment for (gains) losses to net income	(451)		(1,353)
Unrealized gains (losses) on postretirement and pension benefits	(451)		(1,353)
Investments:
Unrealized gains (losses) for the period on investments	(286)	400	(317)	219
Unrealized gains (losses) on investments	(286)	400	(317)	219
Derivatives:
Unrealized gains (losses) for the period on derivatives	(2,254)	768	(1,699)	(964)
Less: reclassification adjustment for (gains) losses to net income	408	315	918	1,216
Unrealized gains (losses) on derivatives	(1,846)	1,083	(781)	252
Total other comprehensive income (loss), before tax	(3,587)	1,339	(4,635)	226
Income tax benefit (expense) related to items of other comprehensive income	934	(560)	1,368	(182)
Total comprehensive earnings	23,956	26,822	41,656	43,525
Comprehensive earnings attributable to noncontrolling interests	59		352
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$ 24,015	$ 26,822	$ 42,008	$ 43,525

XML

Average Shares Outstanding (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended		9 Months Ended
	Apr. 04, 2014	Apr. 05, 2013	Sep. 27, 2014	Sep. 28, 2013
Average Shares Outstanding
Stock purchases (in shares)			575	384
Purchase of common shares			$ 16,792	$ 11,429
Stock dividends (as a percent)	3.00%	3.00%

XML

Fair Value Measurements (Details) (Fair value measured on a recurring basis, USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013	Sep. 28, 2013
Estimated Fair Value
Fair value measurements
Cash and cash equivalents	$ 45,142	$ 88,283	$ 32,734
Auction rate security			10,162
Available for sale securities, excluding the auction rate security			123,391
Available for sale securities	126,870	118,647
Trading securities	69,367	63,215	58,968
Total assets measured at fair value	239,764	269,331	225,381
Estimated Fair Value | Foreign currency forward contracts
Fair value measurements
Derivative instruments, net	(1,238)	(684)	29
Estimated Fair Value | Commodity futures contracts
Fair value measurements
Derivative instruments, net	(377)	(130)	97
Level 1
Fair value measurements
Cash and cash equivalents	45,142	88,283	32,734
Trading securities	69,367	63,215	58,968
Total assets measured at fair value	114,132	151,368	91,799
Level 1 | Commodity futures contracts
Fair value measurements
Derivative instruments, net	(377)	(130)	97
Level 2
Fair value measurements
Available for sale securities, excluding the auction rate security			123,391
Available for sale securities	126,870	118,647
Total assets measured at fair value	125,632	117,963	123,420
Level 2 | Foreign currency forward contracts
Fair value measurements
Derivative instruments, net	(1,238)	(684)	29
Level 3
Fair value measurements
Auction rate security			10,162
Total assets measured at fair value			$ 10,162

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 44,923	$ 43,481
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization	15,568	14,863
Loss on step acquisition	529
Loss from equity method investment		733
Amortization of marketable security premiums	2,498	2,274
Changes in operating assets and liabilities:
Accounts receivable	(60,434)	(60,765)
Other receivables	3,004	2,315
Inventories	(15,694)	(7,141)
Prepaid expenses and other assets	3,344	28,193
Accounts payable and accrued liabilities	9,153	10,301
Income taxes payable and deferred	4,982	5,124
Postretirement health care and life insurance benefits	(691)	2,575
Deferred compensation and other liabilities	2,609	2,801
Net cash from operating activities	9,791	44,754
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash acquired in step acquisition	161
Restricted cash	169
Capital expenditures	(7,315)	(10,593)
Net sales (purchases) of trading securities	(3,062)	(2,612)
Purchase of available for sale securities	(37,416)	(63,992)
Sale and maturity of available for sale securities	26,375	22,436
Net cash used in investing activities	(21,088)	(54,761)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired	(16,792)	(11,429)
Dividends paid in cash	(14,415)	(9,517)
Repayment of bank loans	(130)
Net cash used in financing activities	(31,337)	(20,946)
Effect of exchange rate changes on cash	(507)	(175)
Decrease in cash and cash equivalents	(43,141)	(31,128)
Cash and cash equivalents at beginning of year	88,283	63,862
Cash and cash equivalents at end of quarter	45,142	32,734
Supplemental cash flow information:
Income taxes paid, net	14,835	13,173
Interest paid	33	19
Stock dividend issued	$ 52,165	$ 48,925

XML

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013	Sep. 28, 2013
Trade accounts receivable, allowances	$ 3,391	$ 2,042	$ 3,446
Treasury stock, shares	78,000	76,000	76,000
Common Stock
Common stock, par value (in dollars per share)	$ 0.6944	$ 0.6944	$ 0.6944
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.6944	$ 0.6944	$ 0.6944
Common stock, shares issued		22,256,000	22,259,000

XML

Step Acquisition

9 Months Ended

Sep. 27, 2014

Step Acquisition

Step Acquisition

Note 10 — Step Acquisition

During first quarter 2014, the Company gained operating control of its two50% owned Spanish companies when Company employee representatives assumed all positions on their boards of directors. This was considered a step acquisition, whereby the Company remeasured the previously held investment to fair value in first quarter 2014. As a result, the Company’s first quarter 2014 net earnings include a net loss of $529, including an income tax provision of $2,350 relating to deferred income taxes. The Company purchased newly issued capital stock of the Spanish companies for $736 which further increased the Company’s ownership and control to 75% at the end of second quarter 2014.

XML

Document and Entity Information	9 Months Ended
	Sep. 27, 2014
Entity Registrant Name	TOOTSIE ROLL INDUSTRIES INC
Entity Central Index Key	0000098677
Document Type	10-Q
Document Period End Date	Sep. 27, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Common Stock
Entity Common Stock, Shares Outstanding	37,560,992
Class B Common Stock
Entity Common Stock, Shares Outstanding	22,897,204

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 27, 2014

Fair Value Measurements

Schedule of financial assets and liabilities measured at fair value

	Estimated Fair Value September 27, 2014
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	45,142	$	45,142	$	-	$	-
Available for sale securities		126,870		-		126,870		-
Foreign currency forward contracts		(1,238)		-		(1,238)		-
Commodity futures contracts		(377)		(377)		-		-
Trading securities		69,367		69,367		-		-
Total assets measured at fair value	$	239,764	$	114,132	$	125,632	$	-
	Estimated Fair Value December 31, 2013
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	88,283	$	88,283	$	-	$	-
Available for sale securities		118,647		-		118,647		-
Foreign currency forward contracts		(684)		-		(684)		-
Commodity futures contracts, net		(130)		(130)		-		-
Trading securities		63,215		63,215		-		-
Total assets measured at fair value	$	269,331	$	151,368	$	117,963	$	-
	Estimated Fair Value September 28, 2013
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	32,734	$	32,734	$	—	$	—
Auction rate security		10,162		—		—		10,162
Available for sale securities excluding the auction rate security		123,391		—		123,391		—
Foreign currency forward contracts		29		—		29		—
Commodity futures contracts		97		97		—		—
Trading securities		58,968		58,968		—		—
Total assets measured at fair value	$	225,381	$	91,799	$	123,420	$	10,162

XML

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 27, 2014		Sep. 28, 2013		Sep. 27, 2014		Sep. 28, 2013
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
Net product sales	$ 191,093		$ 191,807		$ 401,966		$ 404,074
Rental and royalty revenue	921		902		2,760		2,807
Total revenue	192,014		192,709		404,726		406,881
Product cost of goods sold	123,164		125,833		256,211		264,974
Rental and royalty cost	251		223		732		698
Total costs	123,415		126,056		256,943		265,672
Product gross margin	67,929		65,974		145,755		139,100
Rental and royalty gross margin	670		679		2,028		2,109
Total gross margin	68,599		66,653		147,783		141,209
Selling, marketing and administrative expenses	31,840		33,166		85,767		87,620
Earnings from operations	36,759		33,487		62,016		53,589
Other income, net	166		3,105		4,865		7,401
Earnings before income taxes	36,925		36,592		66,881		60,990
Provision for income taxes	10,316		10,549		21,958		17,509
Net earnings	26,609		26,043		44,923		43,481
Less: Net loss attributable to noncontrolling interests	59				352
Net earnings attributable to Tootsie Roll Industries, Inc.	26,668		26,043		45,275		43,481
Net earnings attributable to Tootsie Roll Industries, Inc. per share (in dollars per share)	$ 0.44		$ 0.42		$ 0.75		$ 0.71
Dividends per share (in dollars per share)	$ 0.08	[1]	$ 0.08	[1]	$ 0.24	[1]	$ 0.24	[1]
Average number of shares outstanding (in shares)	60,525		61,343		60,668		61,487
Retained earnings at beginning of period	29,870		39,199		73,109		80,210
Net earnings attributable to Tootsie Roll Industries, Inc.	26,668		26,043		45,275		43,481
Cash dividends	(4,829)		(4,764)		(14,394)		(14,185)
Stock dividends					(52,281)		(49,028)
Retained earnings at end of period	$ 51,709		$ 60,478		$ 51,709		$ 60,478

[1] Does not include 3% stock dividend to shareholders of record on 4/4/14 and 4/5/13.

XML

Derivative Instruments and Hedging Activities

9 Months Ended

Sep. 27, 2014

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Note 5 — Derivative Instruments and Hedging Activities

From time to time, the Company uses derivative instruments, including foreign currency forward contracts, commodity futures contracts and commodity option contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures contracts and most commodity option contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States. The Company does not engage in trading or other speculative use of derivative instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses either hedge accounting or mark-to-market accounting for its derivative instruments. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, 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 loss for commodity derivatives are expected to be reclassified to cost of goods sold. Substantially all amounts reported in accumulated other comprehensive loss for foreign currency derivatives are expected to be reclassified to other income, net.

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at September 27, 2014, December 31, 2013 and September 28, 2013:

	September 27, 2014
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	33,291	$	20	$	(1,258)
Commodity futures contracts		3,352		-		(377)
Total derivatives designated as hedging instruments				20		(1,635)
Derivatives not designated as hedging instruments:
Commodity futures contracts		-		-		-
Total derivatives not designated as hedging instruments				-		-
Total derivatives			$	20	$	(1,635)
	December 31, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	34,244	$	-	$	(684)
Commodity futures contracts		5,601		41		(191)
Total derivatives designated as hedging instruments				41		(875)
Derivatives not designated as hedging instruments:
Commodity futures contracts		321		20		-
Total derivatives not designated as hedging instruments				20		-
Total derivatives			$	61	$	(875)
	September 28, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	30,181	$	29	$	-
Commodity futures contracts		4,376		114		(66)
Total derivatives designated as hedging instruments				143		(66)
Derivatives not designated as hedging instruments:
Commodity futures contracts		871		49		-
Total derivatives not designated as hedging instruments				49		-
Total derivatives			$	192	$	(66)

The effects of derivative instruments on the Company’s Condensed Consolidated Statement of Earnings and Retained Earnings, and the Condensed Consolidated Statement of Comprehensive Earnings for periods ended September 27, 2014 and September 28, 2013 are as follows:

	For Quarter Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(1,492)	$	(173)	$	-
Commodity futures contracts		(762)		(235)		-
Commodity option contracts		-		-		-
Total	$	(2,254)	$	(408)	$	-
	For Quarter Ended September 28, 2013
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	626	$	(162)	$	-
Commodity futures contracts		142		(153)		-
Commodity option contracts		-		-		-
Total	$	768	$	(315)	$	-
	For Year to Date Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(1,178)	$	(624)	$	-
Commodity futures contracts		(521)		(294)		-
Commodity option contracts		-		-		-
Total	$	(1,699)	$	(918)	$	-
	For Year to Date Ended September 28, 2013
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(241)	$	(270)	$	-
Commodity futures contracts		(723)		(946)		-
Commodity option contracts		-		-		-
Total	$	(964)	$	(1,216)	$	-

During the quarters and years to date ended September 27, 2014 and September 28, 2013, the Company recognized earnings (loss) of $(0) and $92, and $(20)and $53 respectively, related to mark-to-market accounting for certain commodity option and future contracts.

XML

Fair Value Measurements

9 Months Ended

Sep. 27, 2014

Fair Value Measurements

Fair Value Measurements

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received on the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of September 27, 2014, December 31, 2013 and September 28, 2013, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities, including an auction rate security. The Company’s available for sale and trading securities principally consist of municipal bonds and mutual funds that are publicly traded.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of September 27, 2014, December 31, 2013 and September 28, 2013, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value September 27, 2014
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	45,142	$	45,142	$	-	$	-
Available for sale securities		126,870		-		126,870		-
Foreign currency forward contracts		(1,238)		-		(1,238)		-
Commodity futures contracts		(377)		(377)		-		-
Trading securities		69,367		69,367		-		-
Total assets measured at fair value	$	239,764	$	114,132	$	125,632	$	-
	Estimated Fair Value December 31, 2013
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	88,283	$	88,283	$	-	$	-
Available for sale securities		118,647		-		118,647		-
Foreign currency forward contracts		(684)		-		(684)		-
Commodity futures contracts, net		(130)		(130)		-		-
Trading securities		63,215		63,215		-		-
Total assets measured at fair value	$	269,331	$	151,368	$	117,963	$	-
	Estimated Fair Value September 28, 2013
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	32,734	$	32,734	$	—	$	—
Auction rate security		10,162		—		—		10,162
Available for sale securities excluding the auction rate security		123,391		—		123,391		—
Foreign currency forward contracts		29		—		29		—
Commodity futures contracts		97		97		—		—
Trading securities		58,968		58,968		—		—
Total assets measured at fair value	$	225,381	$	91,799	$	123,420	$	10,162

During the fourth quarter 2013, the Company sold its investment in Jefferson County Alabama Sewer Revenue Refunding Warrants for $10,840. This was an auction rate security (ARS) originally purchased for $13,550 in 2008 with an insurance-backed AAA rating. The Company recorded an other-than-temporary pre-tax impairment of $5,140 in 2008 on this ARS investment which resulted in a carrying value of $8,410 at that time. Since recording the initial impairment in 2008, the Company carried this ARS investment at its estimated fair value utilizing a valuation model with Level 3 inputs, as defined by guidance, and resulting changes in the market value since the original impairment charge in 2008 were recorded as changes to accumulated other comprehensive income (loss) each year. The fair value of this instrument at September  28, 2013 was $10,162, with an unrealized loss in other comprehensive earnings of $677 recorded during nine months 2013.

The fair value of the Company’s industrial revenue development bonds at September  27, 2014, December 31, 2013 and September 28, 2013 were valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. Interest rates on these bonds are reset weekly based on current market conditions.

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 27, 2014	Mar. 29, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Income Taxes
Consolidated effective tax rates (as a percent)	27.90%		28.80%	32.80%	28.70%
Reversal of deferred tax assets		$ 2,350

XML

Derivative Instruments and Hedging Activities (Tables)

9 Months Ended

Sep. 27, 2014

Derivative Instruments and Hedging Activities

Summary of the Company's outstanding derivative contracts and their effects on the Condensed Consolidated Statements of Financial Position

	September 27, 2014
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	33,291	$	20	$	(1,258)
Commodity futures contracts		3,352		-		(377)
Total derivatives designated as hedging instruments				20		(1,635)
Derivatives not designated as hedging instruments:
Commodity futures contracts		-		-		-
Total derivatives not designated as hedging instruments				-		-
Total derivatives			$	20	$	(1,635)
	December 31, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	34,244	$	-	$	(684)
Commodity futures contracts		5,601		41		(191)
Total derivatives designated as hedging instruments				41		(875)
Derivatives not designated as hedging instruments:
Commodity futures contracts		321		20		-
Total derivatives not designated as hedging instruments				20		-
Total derivatives			$	61	$	(875)
	September 28, 2013
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	30,181	$	29	$	-
Commodity futures contracts		4,376		114		(66)
Total derivatives designated as hedging instruments				143		(66)
Derivatives not designated as hedging instruments:
Commodity futures contracts		871		49		-
Total derivatives not designated as hedging instruments				49		-
Total derivatives			$	192	$	(66)

Effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Retained Earnings, and the Condensed Consolidated Statement of Comprehensive Earnings

	For Quarter Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(1,492)	$	(173)	$	-
Commodity futures contracts		(762)		(235)		-
Commodity option contracts		-		-		-
Total	$	(2,254)	$	(408)	$	-
	For Quarter Ended September 28, 2013
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	626	$	(162)	$	-
Commodity futures contracts		142		(153)		-
Commodity option contracts		-		-		-
Total	$	768	$	(315)	$	-
	For Year to Date Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(1,178)	$	(624)	$	-
Commodity futures contracts		(521)		(294)		-
Commodity option contracts		-		-		-
Total	$	(1,699)	$	(918)	$	-
	For Year to Date Ended September 28, 2013
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	(241)	$	(270)	$	-
Commodity futures contracts		(723)		(946)		-
Commodity option contracts		-		-		-
Total	$	(964)	$	(1,216)	$	-

XML

Restricted Cash

9 Months Ended

Sep. 27, 2014

Restricted Cash

Restricted Cash

Note 8 — Restricted Cash

Restricted cash comprises certain cash deposits of the Company’s less than wholly owned Spanish companies (see Note 10) with international banks that are pledged as collateral for letters of credit and bank borrowings.

XML

Pension Plans

9 Months Ended

Sep. 27, 2014

Pension Plans

Pension Plans

Note 6 — Pension Plans

During 2012 and 2013, the Company received notices from the Bakery and Confectionery Union and Industry International (BC&T) Pension Fund (Plan), a multi-employer defined benefit pension plan for certain Company union employees. The notices indicate that the Plan’s actuary has certified that the Plan is in critical status, the “Red Zone”, as defined by the Pension Protection Act (PPA), and that a plan of rehabilitation was adopted by the trustees of the Plan in the fourth quarter of 2012. The rehabilitation plan adopted requires that employer contributions include 5% compounded annual surcharges each year for an unspecified period of time beginning January 2013 (in addition to the 5% interim surcharge initiated in June 2012) as well as certain plan benefit reductions. The Company was advised by the Plan that if the Company had withdrawn from the Plan during 2012 its estimated withdrawal liability would have been $37,200. The Company does not have any updated information as to its withdrawal liability. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than $37,200, would be payable to the Plan. The Company’s existing labor contract with its BC&T local union commits the Company’s participation in this Plan through third quarter 2017. Pension expense, including surcharges as discussed above, for the BC&T Plan for nine months 2014 and 2013 was $2,028and $1,758, respectively. The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore, is unable to determine the effects on its consolidated financial statements, but, the ultimate outcome could be material to its consolidated results of operations in one or more future periods. See also the Company’s consolidated financial statements and related notes and Management and Discussion and Analysis and Results of Operations incorporated into the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”).

XML

Accumulated Other Comprehensive Earnings (Loss)

9 Months Ended

Sep. 27, 2014

Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings (Loss)

Note 7 — Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings (Loss) consists of the following components:

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2013	$	(13,527)	$	54	$	(436)	$	(96)	$	9,367	$	(4,638)
Other comprehensive earnings (loss) before reclassifications		(1,703)		(202)		(752)		(332)		-		(2,989)
Reclassifications from accumulated other comprehensive loss		-		-		398		188		(864)		(278)
Other comprehensive earnings (loss) before tax		(1,703)		(202)		(354)		(144)		(864)		(3,267)
Balance at September 27, 2014	$	(15,230)	$	(148)	$	(790)	$	(240)	$	8,503	$	(7,905)
											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2012	$	(13,406)	$	908	$	-	$	(111)	$	(3,838)	$	(16,447)
Other comprehensive earnings (loss) before reclassifications		(257)		140		(154)		(461)		-		(732)
Reclassifications from accumulated other comprehensive loss		-		-		173		603		-		776
Other comprehensive earnings (loss) before tax		(257)		140		19		142		-		44
Balance at September 28, 2013	$	(13,663)	$	1,048	$	19	$	31	$	(3,838)	$	(16,403)

The amounts reclassified from accumulated other comprehensive income (loss) consisted of the following:

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other	Quarter Ended				Year to Date Ended
Comprehensive Income Components	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013		Location of (Gain) Loss Recognized in Earnings
Foreign currency derivatives	$	173	$	162	$	624	$	270	Other income, net
Commodity derivatives		235		153		294		946	Product cost of goods sold
Postretirement and pension benefits		(230)		-		(690)		-	Selling, marketing and administrative expenses
Postretirement and pension benefits		(221)		-		(663)		-	Product cost of goods sold
Total before tax		(43)		315		(435)		1,216
Tax (expense) benefit		15		(114)		157		(440)
Net of tax	$	(28)	$	201	$	(278)	$	776

XML

Bank Loans

9 Months Ended

Sep. 27, 2014

Bank Loans

Bank Loans

Note 9 — Bank Loans

Long term bank loans comprise borrowings by the Company’s less than wholly owned Spanish companies (see Note 10) which are held by international banks. The average weighted interest rate in third quarter 2014 was of 2.7% and maturity dates range from 1 to 4 years. Short term bank loans also relate to the Company’s less than wholly owned Spanish companies.

XML

Significant Accounting Policies (Details)	9 Months Ended
	Sep. 27, 2014 company
Significant Accounting Policies
Number of Spanish companies consolidated in financial statements	2

XML

Derivative Instruments and Hedging Activities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 27, 2014	Dec. 31, 2013	Sep. 28, 2013
Derivative contracts
Assets	$ 20	$ 61	$ 192
Liabilities	(1,635)	(875)	(66)
Derivatives designated as hedging instruments:
Derivative contracts
Assets	20	41	143
Liabilities	(1,635)	(875)	(66)
Derivatives designated as hedging instruments: | Foreign currency forward contracts
Derivative contracts
Notional Amounts	33,291	34,244	30,181
Assets	20		29
Liabilities	(1,258)	(684)
Derivatives designated as hedging instruments: | Commodity futures contracts
Derivative contracts
Notional Amounts	3,352	5,601	4,376
Assets		41	114
Liabilities	(377)	(191)	(66)
Derivatives not designated as hedging instruments:
Derivative contracts
Assets		20	49
Derivatives not designated as hedging instruments: | Commodity futures contracts
Derivative contracts
Notional Amounts		321	871
Assets		$ 20	$ 49

XML

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (Parenthetical)	0 Months Ended
	Apr. 04, 2014	Apr. 05, 2013
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
Stock dividends (as a percent)	3.00%	3.00%

XML

Income Taxes

9 Months Ended

Sep. 27, 2014

Income Taxes

Income Taxes

Note 3 — Income Taxes

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years 2010 through 2013. With few exceptions, the Company is no longer subject to examination by tax authorities for the year 2009 and prior. The consolidated effective tax rates were 27.9% and28.8% in third quarter 2014 and 2013, respectively, and 32.8% and 28.7% in nine months 2014 and 2013, respectively. The higher effective income tax rate in nine months 2014 reflects the reversal of deferred tax assets of $2,350 in first quarter 2014 relating to the step acquisition of the Spanish companies as discussed in Note 10.

XML

Derivative Instruments and Hedging Activities (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 27, 2014	Sep. 28, 2013	Sep. 27, 2014	Sep. 28, 2013
Effect of derivative instruments on earnings
Gain (Loss) Recognized in OCI	$ (2,254)	$ 768	$ (1,699)	$ (964)
Gain (Loss) Reclassified from Accumulated OCI into Earnings	26,668	26,043	45,275	43,481
Reclassified from Accumulated OCI into Earnings
Effect of derivative instruments on earnings
Gain (Loss) Reclassified from Accumulated OCI into Earnings	(408)	(315)	(918)	(1,216)
Foreign currency forward contracts
Effect of derivative instruments on earnings
Gain (Loss) Recognized in OCI	(1,492)	626	(1,178)	(241)
Foreign currency forward contracts | Reclassified from Accumulated OCI into Earnings
Effect of derivative instruments on earnings
Gain (Loss) Reclassified from Accumulated OCI into Earnings	(173)	(162)	(624)	(270)
Commodity futures contracts
Effect of derivative instruments on earnings
Gain (Loss) Recognized in OCI	(762)	142	(521)	(723)
Commodity futures contracts | Reclassified from Accumulated OCI into Earnings
Effect of derivative instruments on earnings
Gain (Loss) Reclassified from Accumulated OCI into Earnings	(235)	(153)	(294)	(946)
Commodity option and future contracts
Effect of derivative instruments on earnings
Recognized earnings (loss) related to mark-to-market accounting	$ 0	$ 92	$ (20)	$ 53

XML

Accumulated Other Comprehensive Earnings (Loss) (Tables)

9 Months Ended

Sep. 27, 2014

Accumulated Other Comprehensive Earnings (Loss)

Schedule of components of accumulated other comprehensive earnings (loss), net of tax

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2013	$	(13,527)	$	54	$	(436)	$	(96)	$	9,367	$	(4,638)
Other comprehensive earnings (loss) before reclassifications		(1,703)		(202)		(752)		(332)		-		(2,989)
Reclassifications from accumulated other comprehensive loss		-		-		398		188		(864)		(278)
Other comprehensive earnings (loss) before tax		(1,703)		(202)		(354)		(144)		(864)		(3,267)
Balance at September 27, 2014	$	(15,230)	$	(148)	$	(790)	$	(240)	$	8,503	$	(7,905)
											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2012	$	(13,406)	$	908	$	-	$	(111)	$	(3,838)	$	(16,447)
Other comprehensive earnings (loss) before reclassifications		(257)		140		(154)		(461)		-		(732)
Reclassifications from accumulated other comprehensive loss		-		-		173		603		-		776
Other comprehensive earnings (loss) before tax		(257)		140		19		142		-		44
Balance at September 28, 2013	$	(13,663)	$	1,048	$	19	$	31	$	(3,838)	$	(16,403)

Amount reclassified from accumulated other comprehensive income

	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)
Details about Accumulated Other	Quarter Ended				Year to Date Ended
Comprehensive Income Components	September 27, 2014		September 28, 2013		September 27, 2014		September 28, 2013		Location of (Gain) Loss Recognized in Earnings
Foreign currency derivatives	$	173	$	162	$	624	$	270	Other income, net
Commodity derivatives		235		153		294		946	Product cost of goods sold
Postretirement and pension benefits		(230)		-		(690)		-	Selling, marketing and administrative expenses
Postretirement and pension benefits		(221)		-		(663)		-	Product cost of goods sold
Total before tax		(43)		315		(435)		1,216
Tax (expense) benefit		15		(114)		157		(440)
Net of tax	$	(28)	$	201	$	(278)	$	776