AUDIT PRESENTATION BY KPMG

Tootsie Roll Industries

TOOTSIE ROLL REVIEW OF FINANCIAL STATEMENTS

OVERALL EVALUATIONTHE FUTURE

KPMG & TOOTSIECONCLUSION / QUESTIONS

Table of Contents:

Your Company

Favorite candy companyMost popular confectionary brandsDistribution channels – 75 countriesStrong among every age group, culture,

demographicDuring every economic climate – truly

enduringFamily-run corporate culture

Continued…

Fiscally responsible focus – “America’s 200 Best Small Companies” by Forbes Magazine

Highest ethical business standards – “100 Best Corporate Citizens” by Business Ethics Magazine

Focus on high profitabilityEmphasis on ethics and integrity Involvement with the community and national

concerns

Income Statement

Total Revenue increased over $22 millionNet Income decreased $164,000 EPS increased from .93 in 2009 to .94 in

2010Profit margin decreased from 10.87% in 2009

to 10.39% in 2010Gross profit margin decreased from 36.29%

in 2009 to 33.27% in 2010Times interest earned increased from 265.11

in 2009 to 522.75 in 2010

Why did Net Income Decrease?

Net earnings benefited from increased salesCost of Goods Sold increased almost $30

million Cost of sugar and cocoa increase

Provision for income taxes increased over $10 million

Retained Earnings

Retained Earnings at beginning of year 148,582145,123 Net Earnings 53,714 53,878 Cash Dividends (18,078)(17,790) Stock Dividends (46,806)(32,629)Retained Earnings at the end of year $137,412

$148,582Earnings per share $0.94$0.93Average Common and Class B Common shares 56,99757,738 Outstanding

2010 2009

2010: 2009:Dividends paid for the year $64,884 $50,419Percent of net income paid out of cash 33.67% 33.02% dividends

• $0.32 of cash dividends paid out to stockholders in both years

• Paid out cash dividends 86 years in a row

Balance Sheet

Working

CapitalCurrent RatioAcid-Test RatioDebt to Equity

Ratio

2010$179,086

4.062.76

28.62%

2009

155,8123.782.45

27.95%

Major Changes

• Cash and cash equivalents increased almost $25 million

• Added over $10 million in machinery and equipment

• Liability for uncertain tax positions decreased almost $10 million

• Capital in excess of par value increased over $23 million

Cash Flows

Increase in net cash: Operating activities $82,805 - 2010 compared to $76,994 – 2009 Net earnings benefited from increased sales No gain because of increased costs

Investing activities - capital expenditures of $12,813 Showing continual reinvestment Plant, equipment, and information technology Not as must sale and maturity of securities

From financing activities - paid cash dividends of $18,130 and purchased and retired $22,881 of its outstanding shares Treasury stock Able to do more of both

Cash increased because of increased sales (operating activities): Reached new groups of customers New marketing plans Great Halloween season

Our Overall Evaluation

Net product sales in 2010 reached $517 million A record for the Company Increase of $22 million over 2009 net product sales Equals about 4.3%

Another strong Halloween selling seasonOverall financial position remains very strong-

Net product sales Net earnings Related cash flows provided by operating activities

Cash flows from operations plus maturities of short-term investments - adequate to meet the Company’s overall financing needs in 2011

Tootsie’s Future

Key competitive advantage- Well-known brands High volume for Retailers Attractive value for customers

Entry into digital marketing = new opportunities

Kosher certified open new marketsIncrease efficiency & eliminate wasteCash and stock dividends – 86 years in a row

About KPMG

U.S. Audit, Tax, and Advisory services firmPurpose – turn knowledge into value for our clientsComply with changing regulations and professional

standardsProactive coordination and communication –

Chicago officeProvide our teams’ well-built understanding23,000 employees strong / 144 countriesRisk-based, industry specific, and tailored to our

clientsGive you an edge to competitors

Any Questions?