Module 03 Course Project Tootsie Roll Industries Inc.-Income Statement

Industries, Inc.

Tootsie Roll Annual Report 2014 On January 20, 2015, Melvin J\f Gordon, \bhairman of the Board of Directors and \bhief Executive Officer of Tootsie Roll Industries, passed away at the age of 95 after a brief illness\f Mr\f  Gordon joined the board of what was then Sweets \bompany of America in 1952 and was elevated to the roles of \bhairman and \bEO in 1962\f Sales at that time were $25 million, profits were $1 million and our product line primarily consisted of Tootsie Rolls and Tootsie Pops\f Mr\f Gordon, a man of great vision and drive, reshaped the \bompany over his long tenure\f Early on, he changed the \bompany’s name to Tootsie Roll Industries in recognition of the flagship brand and relocated the \bompany to a large, centrally located facility in \bhicago which remains the \bompany’s headquarters and its largest plant\f He expanded operations into Mexico and led the \bompany through a series of complementary acquisitions which added Dots, \brows, \bella’s, \bharms, Blow Pop, Junior Mints, \bharleston \bhew, Sugar Daddy, Sugar Babies, Fluffy Stuff, Andes, Dubble Bubble, \bry Baby and Nik-L-Nip to our portfolio of well-known brands\f Mr\f  Gordon embraced change and was quick to adopt rapidly evolving technological developments in manufacturing, material handling and information technology\f He also directed the development of new products and package configurations to meet changing consumer preferences and evolving trade channels\f Throughout his many years as \bhairman, the \bompany saw great growth and success\f Today Tootsie Roll is a leading confectioner with a diverse portfolio of well-known b rands, seven plants across the United States,\i \banada and Mexico, a\ind sales in many coun\itries throughout the world\f Mr\f Gordon’s life represented the very highest values in business, wisdom, generosity, and integrity\f His dedication to Tootsie Roll for over fifty years as Board \bhair, his creativity, his optimism and his r\ielentless determination to succeed we\ire an inspiration to al\il who knew him\f Melvin J. Gordon 1919 - 2015 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105914 | 02-Mar-15 09:16 | 15-2394-1.ba | Sequence: 1 CHKSUM Content: 6671 Layout: 7220 Graphics: 8844 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 7; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: melvin_gordon_ED_4c_photo.eps V1.5 We believe that the\g differences among com\fani\ges are attributable to th\ge caliber of their\g \feo\fle, and therefore we strive to attract and retain su\ferior \feo\fl\ge for each \bob.

We believe that an \go\fen family atmos\fh\gere at work combined with \frofessional manageme\gnt fosters coo\ferat\gion and enables each individual to\g maximize his or h\ger contribution to\g the Com\fany and realize the corres\fonding rewards.

We do not \beo\fardize long-term growth for immediate,\g short-term results.

We maintain a conse\grvative financial \g\fosture in the de\floyment\g and management of o\gur assets.

We run a trim o\ferat\gion and continuall\gy strive to elimin\gate waste, minimize cost and \gim\flement \ferformance im\frovements.

We invest in the la\gtest and most \froductive equi\fment t\go deliver the best quality \froduct to our custo\gmers at the lowest \gcost.

We seek to outsource functions where a\f\fro\friate and to vertically integrate o\g\ferations where it is financiall\gy advantageous to do \gso.

We view our well kno\gwn brands as \frized\g assets to be aggressively advertised and \fromoted to each new \ggeneration of consumers.

We conduct business\g with the highest e\gthical standards and integrity which are codified in the \gCom\fany’s “Code of Busines\gs Conduct and Ethics\g.” Corporate Principl\fies Financial Highligh\fits \g \g \g \g December \g31, \g \g \g \g2014 \g 2013 \g \g \g \g (in thousa\gnds exce\ft \fer shar\ge data) Net Product Sales . . . . . . . . .\g . . . . . . $539,89\g5 \g$539,627 Net Earnings Attributable \gto Tootsie Roll Industries, In\gc. . . . . . . . . .\g . . 63\g,298 \g 60,849 Working Ca\fital . . . . . . . . .\g . . . . . . . 200,1\g62 \g 179,990 Net Pro\ferty, Plant and Equi\fment . . . . . . . . .\g . . . . . . . . .\g 190,0\g81 \g 196,916 Shareholders’ Equity . . . . . . . . .\g . . . . 690,8\g09 \g 680,305 Average Shares Outstanding* . . . . . 60\g,562 \g 61,399 Per Share Items* Net Earnings Attributable \gto Tootsie Roll Industries, In\gc. . . . . . . . . .\g . . \g$1.05 \g $0.99 Cash Dividends Pai\gd . . . . . . . . .\g . . . \g 0.32 \g 0.24 \g \g \g \g *Ad\busted for stock\g dividends.

Corporate Profile Tootsie Roll Indust\gries, Inc. has been\g engaged in the manufacture and sale of conf\gectionery \froducts for 118 yea\grs.

Our \froducts are \frimarily sold un\gder the familiar b\grand names:

Tootsie Roll, Tootsie Roll Po\fs, C\garamel A\f\fle Po\fs, C\ghild’s Play, Charms, Blow Po\f, Blue R\gazz, Cella’s chocolate covered cherries, Tootsie Dots, Tootsie Crows, Junior Mints, J\gunior Caramels, Charlesto\gn Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff cotton candy, Dubble Bubble, Ra\gzzles, Cry Baby, Nik-L-Ni\f and EI \gBubble. Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ba | Sequence: 2 CHKSUM Content: 10175 Layout: 12193 Graphics: 6845 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: Tootsie_roll_candy_lrg_logo.eps V1.5 To Our Shareholders 1Net product sales in 201\44 \fere $53\b.\b million, as c\4ompared to 2013 net product sales of $53\b.6 million. Most of o\4ur core brands posted soli\4d results, and Hallo\feen \fas once a\4gain our largest selling se\4ason of the year.

Net earnings gre\f to $63.3 million in 2014 from $60.8 million i\4n 2013.

Earnings per share \fere $1.05 in 2014, up from $0.\b\b in the 201\43, due to the combina\4tion of higher earnings and fe\fer sha\4res outstanding in 201\44.

The increase in earnings \fas attributable to ma\4rgin improvements stemming from lo\fer input cost\4s in 2014. We are pleased that \fe a\4re making progress on restoring our margins to their h\4istorical levels before the increases in commodity\4 and other input co\4sts in past years.\4 In order to achieve our profit goals and still deliver \4maximum value to our consumers, \fe a\4re challenged to look for every feasible \fay to keep our operation\4s lean and costs in check.As a value oriente\4d confectioner, \fe deem it essentia\4l to be a lo\f cost producer. We actively pursue investments in the\4 latest technology to keep\4 us so. We take a long-term vie\f of our busin\4ess and enact only tho\4se measures that improve our operating \4results \fithout jeopardizing the long-te\4rm strength of the Compa\4ny and its \fell-kno\fn brands.

In this regard, capital expendi\4tures \fere $10.7 million in 2014. In\4 addition to ne\f sta\4te of the art material handling \4and packaging equipment at a num\4ber of our plants, a portion of this figur\4e \fas directed to\fard a significant information technology \4project. We remain committed to\4 enhance productivity through the deploymen\4t of leading edge bu\4siness soft\fare.

During 2014, \fe pai\4d cash dividends of 32 cen\4ts per share and again distribu\4ted a 3% stock dividend. This \fas \4the seventy- second consecutive\4 year the Company has paid c\4ash dividends and the fiftieth c\4onsecutive year that a stock divid\4end \fas distributed. We also repurchased shares of common stock\4 on the open market.

We ended 2014 \fith $\4224.0 million in cash and invest\4ments net of interest bearing debt a\4nd investments that h\4edge deferred compensation liabi\4lities. We remainpoised to continue\4 investing in our business, improving manufacturin\4g productivity and qua\4lity, supporting our brands, paying\4 dividends and repurchasing common sto\4ck. We also continue to s\4eek appropriate complementary business acquisitions. Sales and Marketing Our diverse and hi\4ghly recognizable brand portfolio is popular \4across all trade channels. We have a range of offerings suitable f\4or virtually every major consumer group and retail format. During 2014, \f\4e again used carefully executed an\4d channel- specific promotions to drive \4sales.

These targeted ini\4tiatives, directed both to the trade \4and to consumers, help to move our p\4roducts into distribution and s\4ubsequently to move them off the retail shelf. We find that emphasiz\4ing high sell-through and attractiv\4e profit margins to the tra\4de and a high quality, attractive value\4 to the consumer is a \finni\4ng strategy.

Hallo\feen has long b\4een our largest selling pe\4riod, \fith third quarter sales nearly d\4ouble those of any other quarter in the year. We posted strong results last Hallo\fee\4n in all major trade\4 classes including\4 grocery, mass merchandisers, \farehouse clubs, doll\4ar stores and drug chains. Espec\4ially popular are our large bags of \4Child’s Play and other mixed candy \4assortments, Ellen R. Gordon, Chairman and Chief Executive Officer Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.bc | Sequence: 1 CHKSUM Content: 17732 Layout: 5093 Graphics: 49934 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: ellen_gordon_ED_4c_photo.eps V1.5 which are offered in a variety of\z pack sizes and \ferchandising presentations includi\zng pallet packs\b off-shelf displays an\zd display ready cases.

The candy \farketpla\zce is highly co\fpetitive and we \zare vigilant in keeping our products conte\fporary even as they re\fain iconic. Our product line undergoes\z continual refine\fent in order to retain its appeal to ever-evolving preferences and life styles.

Building on the succ\zess of our Cara\fel Apple Pops\b o\zur Blow Pop line was expanded w\zith the addition of Cara\fel\z Apple Blow Pops. With a candy \zshell of luscious cara\fel entw\zined with tart green apple hard candy and its e\fble\fatic bubble gu\f \zcenter\b this unique new con\zfection is really three treats in one!Caramel Apple Blow Pops The selling power o\zf floor stand displays is well est\zablished\b but so\fe s\faller retail venues \fay lack the floor spac\ze or sales volu\fe to support a traditionally s\zized display. To \feet this need\b w\ze introduced a new one-ei\zghth size pallet of Tootsie Rolls and Tootsie Pops in bonus bags. \zThis display has the dual attrib\zutes of increasing sales velocity for \zthe retailer and attractive feature pricing for the consu\fer.

1/8 Pallet Display The addition of a \znew floor display also contributed ad\zded sales in our penny goods line. T\zhe half pallet Frootie shipper cons\zists of 192 bags of the \fost po\zpular flavors\b Blue Razz\b Fr\zuit Punch\b Green Apple and Straw\zberry\b and was well received in the Cas\zh and Carry class of trade. T\zhe Frootie line was further expanded with\z the addition of tart new Le\fon-Li\fe Frooties. Lemon Lime Frooties For Dots lovers\b th\ze next big thing i\zs here—the BIG BOX! Fea\zturing 20.5 ounces of delicious \zfruit flavored Dots in a reclosable box\b this eye-catching \zpack pro\fises lots of Dots for th\ze whole fa\fily to share!

Dots BIG BOX We put so\fe fizz in g\zu\fball fun with the introduction of Dubble Bubble Fizzers. Pop o\zne of five fizzy soda flavors i\zn your \fouth and bite down for a uni\zque effervescent experience of bubbl\ze-blowing fun! Dubble Bubble Fizzers Consu\fers have beco\z\fe increasingly concerned with protecting the envir\zon\fent\b and \fanufacturers are seeking innovative ways to\z \fini\fize packaging. One such\z solution that we i\fple\fented in 20\z14 was in our gu\fball \fachine refill packs. By replacing bulky\b rigid plastic jar\zs with lightweight resealable flexible pouches\b packaging \zweight was reduced considerably\z without co\fpro\fising product freshness.

Gumball refill pouch Our Andes Crè\fe de Menthe thins\z have a strong selling history during 2 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.bc | Sequence: 2 CHKSUM Content: 47156 Layout: 59002 Graphics: 52142 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: blow_pop_k_photo.eps, db_fizzers_bubble_k_photo.eps, dots_super_k_photo.\ eps, dubble_bubble_bag_k_photo.eps, frooties_lemon_k_ph oto.eps, tootsie_value_bags_k_photo.eps V1.5 4 Management’s Discu\yssion and Analysis \yo\f Financial Condition and Resul\yts o\f \bperations (in thousands exce\fpt per share, percentage and ratio \ffigures\f FINANCIAL REVIEW This financial revie\b discusses the\f Company’s financial conditi\fon, results of operation\fs, liquidity and capital resources, significant accounting policies\f and estimates, ne\b accounting pronouncements, market risks and o\fther matters. It should be read in conjunction\f \bith the Consolidated Fi\fnancial Statements and related footnotes that follo\b this dis\fcussion.

FINANCIAL CONDITION The Company’s overall financial position remains very strong as a result of its improving 2014 gross profit margins, highe\fr net earnings and strong cash flo\bs provided by operating activitie\fs. Cash flo\bs from 2014 operating \factivities totaled $88,769 and\f \bere used to pay cash dividends \fof $19,241, purchase and retire $25,020 of its outstanding shares, make capital expenditures of $10,704, and \fadd to our marketable s\fecurities investments.

The Company’s net \borking capit\fal \bas $200,162 at Dec\fember 31, 2014 compared to $179,990 at December 31, 2013 \f\bhich generally reflects higher cash\f and cash equivalents an\fd short-term investments. As of \fDecember 31, 2014, the Company’\fs aggregate cash, cash equivale\fnts and investments, includ\fing all long-term investments in mark\fetablesecurities, \bas $30\f3,137 compared to $270,387 at Dec\fember 31, 2013, an increase of $32,750. Th\fe aforementioned includes\f $71,682 and $63,215 in tra\fding securities as\f of December 31, 201\f4 and 2013, respectively. The Company inves\fts in trading securit\fies to provide an economic hedge for \fits deferred compensation liabil\fities, as further discussed herein and in Note 7 \fto the Consolidated Fi\fnancial Statements.

Shareholders’ equity in\fcreased from $680,305 at Decemb\fer 31, 2013 to $690,809 as of Dece\fmber 31, 2014, principally reflecting 2014 net earnings of $63,298, l\fess cash dividends of $19,24\f1, share repurchases of $25,020, \fand an increase in accumulated\f other comprehensive loss durin\fg 2014.

The Company has a \frelatively straight-for\bard financial structu\fre and has historicall\fy maintained a conservative financi\fal position.

Except for an immat\ferial amount of operating leases, t\fhe Company has no special financin\fg arrangements or “off-balance sheet” sp\fecial purpose entities. \fCash flo\bs from operations plus mat\furities of short-term investments are expected to be ade\fquate to meet the Company’s overall financing needs, including ca\fpital expenditures, in 2015. Perio\fdically, the Company consid\fers possible acquisitions, and \fif the Company \bere to pursue and co\fmplete suchan acquisition, th\fat could result in bank borro\bings or other fin\fancing.

Resul\fs of Ope\ba\fions 2014 vs. 2013 Net product sales in four\fth quarter 2014 increased by 1.8% to $137,929, and t\belve\f months net product sales increased by $268 or 0.1% to $539,895 i\fn 2014. Our sales results in the Unite\fd States reflect the challenge\fs of certain of our retail customers regarding consumer sales and \fconsumer spending. Overall, 2\f014 sales volumes in the Unit\fed States \bere relatively even \bith 2\f013, and there \bere no significant ch\fanges in selling prices and \fprice realization, or product mix. Lo\ber sa\fles in Mexico and Canada,\f including the effects of a \beaker Me\fxican peso and Canadian dollar\f, respectively, also adversely affected our reported sales during th\fese same comparative periods\f.

Product cost of goods\f sold \bere $340,933 in 2014 c\fompared to $350,960 in 2013, \fa decrease of $10,027 or 2.9%. P\froduct cost of goods sold includes\f $1,140 and $2,457 in certain deferred compensation expen\fses in 2014 and 2013, respectively. These deferred compensation ex\fpenses principally result from changes in the market value of \finvestments and investment income f\from trading securities relating to compensa\ftion deferred in previous years and ar\fenot reflective of current operating results. Adjusting f\for the aforementioned, product cost of goods sold decreased from $348,503 in 2013 t\fo $339,793 in 2014, a decrease of $8,710 or 2.5%. As a percent of net product sales, these adjust\fed costs decreased from 64.6% in 2013 t\fo 62.9% in 2014, a fa\fvorable decrease of 1.7% as a p\fercent of net product sales. Althou\fgh our overall comparative \fingredient costs are more favorable this yea\fr, certain key ingredient costs \bere higher in 2014 com\fpared to 2013.

We are continuing our fo\fcus on cost reductions and savin\fgs, including capital investments\f to achieve manufacturing efficiencies, and are making progress on restoring our margins to their h\fistorical levels before the increases in commodity\f and other input co\fsts in past years.\f Selling, marketing \fand administrative expe\fnses \bere $117,722 in 2014 c\fompared to $119,113 in 2013, \fa decrease of $1,391 or 1.2%. Se\flling, marketing and administrative \fexpenses include $3,761 and \f$8,131 in certain deferred compensation expenses in 2014 a\fnd 2013, respectively. These deferred compensation expen\fses principally result from changes in the \fmarket value of investments\f and investment income f\from trading securities relating to compensa\ftion deferred in previous years and ar\fe not reflective of current operating Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 1 CHKSUM Content: 56577 Layout: 49081 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 the Thanksgiving a\lnd Christmas Holida\f seasons. And\les has also had great su\b\bess selling o\lutside the \band\f aisle with\l Andes Crème de Menthe Baking C\lhips, whi\bh have be\bome the top\l selling mint baking \bhip. In 2014\l, we promoted the mint\f merriment\l of baking with Andes Re\bipe Contes\lt. Visit www.tootsie.\bom to \bhe\l\bk out the winning entries an\ld other deli\bious Andes re\bipes!

Advertising and Public Relations During 2014, we \bon\ltinued our initiative of enga\lging with \bonsumers through so\bial media.

Numerous game experien\be\ls, banner ads and pri\lze \bontest entries on Fa\bebook\l, Twitter, Instagram and Pinte\lrest build and strengthen \bonne\btions\l to our brands and also provide a venue for \bonsumer feedba\l\bk.

Mr. Owl and the long-\lstanding “How Man\f Li\bks” Tootsie Pop message are prominentl\f featured in our so\bial media \lprogram and in our television adve\lrtising \bampaigns. This renowned theme has be\bome part of Ameri\bana, ranging from \brossword puzzles to s\bientifi\b studies. Most re\bentl\f a group of NYU graduate students d\leveloped a model to anal\fze how\l fluids dissolve various ma\lterials, and applied it to the T\lootsie Pop. Their algorithm \bon\bluded t\lhat it would take pre\bisel\f one thousand\l li\bks to get to the \bhew\f Tootsie Roll \benter.

We will add this dat\la point to the thousands of estima\ltes we have re\beived over the ma\ln\f \fears.

Nonetheless, we \ban\l onl\f \bon\blude that the answer to\l this riddle remains “the world ma\f neve\lr know!” Purc\fasing Cost de\breases in sugar, \born s\frup, \bo\boa powder, edible oils and pa\bkaging were partiall\f offset b\f in\breases in \boatings, \ldair\f produ\bts and gum base \bomponents. In pa\bka\lging the de\brease was primaril\f \ldue to lower \borrugated pri\l\bes.

Though the \bost of man\f of the \bommodities we use \lis lower than re\bent re\bord highs, some remain well above their hi\lstori\bal levels and restoring margins \bo\lntinues to be one of our obje\btiv\les. Competitive bidding, sele\btive \lhedging and leveraging our high\l volume of pur\bhases are some of the mean\ls we use to mitigate \linput \bosts to the greatest extent feas\lible. Supply \b\fain We \bontinue to inves\lt \bapital and resour\bes in proje\bts that keep ou\lr produ\btion and distri\lbution fa\bilities as effi\bient as possible\l, support evolving distributi\lon patterns, improve qualit\f and supp\lort growing produ\bt lines. Mu\bh of \lthis investment is driv\len b\f \bontinuing advan\bements in aut\lomation te\bhnolog\f that we \b\lan in\borporate on the shop floor.

Considerable effort is made in designing new inst\lallations to maximize their flex\libilit\f so that we \ban respond to evolving \lpa\bkage \bonfigurations or p\lrodu\bt assortments demanded b\f \lthe market. In\borporatin\lg su\bh flexibilit\f \ban add signifi\bant\l up-front \bosts.

We are fortunate to have suffi\bient finan\bial resour\bes and are able to make these ne\bessar\l\f investments.

International In Mexi\bo we manufa\bt\lure and sell produ\bts primaril\f unde\lr the trademark Tutsi. Most of our domesti\b brands are also sold in Canada, though for \l\bertain items the\f are offered in different pa\bkage \bonfiguratio\lns and at different pri\be points wh\li\bh are tailored to that market.\lWe also export our produ\bts to man\f \bountries in Eu\lrope, Asia, and South and Centr\lal Ameri\ba.

During 2014, we in\b\lreased our ownership per\bentage in Fleer Espanola, a Spanish\l manufa\bturer of sugared and sugar free gum. We are \burrentl\f rebranding a number of their sugared offerings under the Dubble Bubble umbrella and hope to expand our presen\be in Europe and the Middle East\l. In Appreciation We wish to express our appre\biation to our man\l\f lo\fal emplo\fees, \bustomers\l, suppliers, sales brokers and distribut\lors throughout the world fo\lr their support in 2014. We also thank our fellow shareholders as we remain \bommitted to the pu\lrsuit of ex\bellen\be in ever\f aspe\bt of our operations and fa\be\l the in\breasing \bhallenges of toda\f’\ls business environment.

Ellen R. Gordon Chairman of the Board and Chief Exe\butive Offi\ber 3 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.bc | Sequence: 3 CHKSUM Content: 63384 Layout: 32257 Graphics: 10063 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: ellen_r_gordon_sig.eps V1.5 cited by Jeremy Siegel in his popular We also undertook a comprehensive We believe that our well known Information Technology and products, including the additions of study to examine our supply chain in book ‘‘The Future for Investors’’ as Internal Controls Dubble Bubble and other Concord 2005. The focus was on having delivered the fourth highest brands, offers a compelling and reengineering the network and return to our shareholders among all broad assortment of items that can patterns of distribution, As a result of surviving S & P 500 firms from the Our principal information technology be extended to additional foreign this study, certain changes were original index first published in 1957, efforts during 2005 were in support markets.

implemented in 2005 and other and the highest among food of the Concord integration and the recommendations that arose from companies. We place a high value supply chain reengineering projects.

this study are expected to be on ethics, corporate leadership and The former involved migrating In Appreciation implemented early in 2006. We creating shareholder value over the Concord onto all of our financial and anticipate cost savings, lower long-term, and are gratified to business systems, while the latter inventories and even better customer receive distinctions such as these. required programming modifications We wish to thank our loyal fulfillment as a result of this project. to support the business processemployees, customers, suppliers, changes that were made. sales brokers, foreign distributors In one of the more unusual stories and fellow shareholders for their As in all aspects of our business, we we learned of in 2005, our El Bubble many years of support. We are also keep a sharp focus on cost bubble gum cigars were used by We consider state of the art grateful to the many consumers who containment. Capital projects, astronaut Mike Fincke to celebrate information technology to be a key buy and use our products for process reengineering and employee the birth of his daughter, Tarali strategic tool to deliver information making them a lasting part of training and development are all vital Paulina. While El Bubble has long and support process refinements Americana.

components of this process.

been a fun and safe way to that enable the Company to remain commemorate such a special competitive in today’s rapidly occasion, this marked the first time a evolving business environment. It is baby was born to an astronaut while also a key component of our internal Purchasing in orbit-and the first time, to ourcontrol system, which was knowledge, that one of our products successfully tested and audited Although 2005 was another year of was brought aboard the international during 2005, our second year of generally low inflation as measured compliance with the requirements of space station!

by the Consumer Price Index, we Melvin J. Gordon Section 404 of the Sarbanes-Oxley Chairman of the Board and experienced cost pressure in certain Act.

Chief Executive Officer ingredients, packaging, Manufacturing and Distribution transportation, fuel and energy. We continue to use hedging programs to International moderate short-term commodity During 2005 we continued working price fluctuations and to use on key projects that were initiated incompetitive bidding, volumeOur international sales increased prior years, including the purchasing and other means toduring 2005 as a result of a full year reengineering and start up of a mitigate costs to the fullest extentof Concord foreign sales in addition major production line. We also Ellen R. Gordon possible. to a strong year in Mexico. We President and approved several new projects to Chief Operating Officer manufacture and sell products in expand capacity in support of Mexico under the Tutsi trademark.

growing product categories in We also completed the integration of We also sell Tootsie, Charms and addition to ongoing efforts to procurement activities related to Concord products to Canada and streamline and automate existing Concord into our bidding processes over 75 other countries in Europe, processes at all of our plants, in and purchasing and MRP systems during 2005. Asia and South and Central America.

order to realize cost savings. 4 6 on approximately $5,400 a\dnd $\f\f,000 of foreign s\bbsidiaries’ \bndistrib\bted earnings as of December 3\f, 20\f4 a\dnd December 3\f, 20\f3, \drespectively, beca\bse s\bch earnings are considered to be permanently reinvested. The Compa\dny estimates that the federal in\dcome tax liability\d on s\bch \bndistrib\bted \dearnings wo\bld approximate 30% of the\dse amo\bnts.

Net earnings attrib\btable t\do Tootsie Roll Ind\bstries, Inc\d. were $63,298 in 20\f4 compared to $60,849 in 20\d\f3, and earnings per share were $\f.05 and $0.99 in 20\f4 a\dnd 20\f3, respectively, an increase of $0.06 or 6.\f%. Net earnings principally benefited from improved gross profit margins which \dare disc\bssed above. Net earnings for the prior\d year 20\f3 benefited\d from a lower effective income tax \drate and a capital gain on the\d sale of an investment sec\brity (\dJefferson Co\bnty Warrants disc\bssed above\d), both of which advers\dely affects the comparison of 20\f4 \dnet earnings to those in 20\f3. Earnings per share in 20\f4 benefited from the red\bction in average shares o\btstanding res\blting from p\brchases of the Company’s common stock in t\dhe open market by the\d Company.

Average shares o\btstanding decreased from 6\f,399 in 20\f3 t\do 60,562 in 20\f4.

D\bring first q\barter 20\f4, the Company gained oper\dating control of its two 50% owne\dd Spanish companies when Comp\dany employee representatives ass\bmed all positions on th\deir boards of directors. This was con\dsidered a step acq\bisition, wh\dereby the Company remeas\bred the previo\bsly held investme\dnt to fair val\be in first q\barter 20\f4. As a res\blt, the Company’\ds first q\barter 20\f4 net earnings incl\bde a net loss of $529, incl\bd\ding an additional income tax provision of $2,350 relating to deferred income taxes.

D\bring 20\f4, the Com\dpany f\brther increased its control and ownership to 83% by p\brchasing and s\bbscribing to additi\donal common shares of its Spanish s\bb\dsidiaries for approximately $\f,400 ($\d\f,200 was paid in 20\f4, an\dd the balance will be paid in 20\f\d5). These Spanish companies h\dad operating losses for each of t\dhe years 2008 thro\bgh 20\f4. Company management has restr\bct\bred the Spanish operations \dand made other changes to its b\bsine\dss plan, and management believes \dthat they sho\bld be nearing br\deak-even cash flows from operating activit\dies going forward. Management belie\dves that the b\bsiness, compet\ditive and economic challenges\d in Spain are likely to contin\be,\d and therefore, additional cash fina\dncing of these Spanish companies m\day be req\bired in the f\bt\bre. Other income, net in pri\dor year 20\f3 incl\bdes the res\blts of the Company’s 50% share of two Spanish companies w\dhich were acco\bnted for \bsing t\dhe eq\bity investment method in\d 20\f3. Eq\bity method losses were $967 for 20\f3.

In addition, a pre-tax impairment charge of $975 was \drecorded in 20\f3 to write-down \dthe Company’s carrying val\be of this eq\d\bity investment to estima\dted fair val\be.Beginning in 20\f2, t\dhe Company received notices from the Bakery, Confectionery, Tobacco Workers and Grain Millers I\dnternational Union (BC&T) Pensio\dn Plan (Plan), a m\blti-employer de\dfined benefit pension plan for ce\drtain Company \bnion employees. Th\de notices indicated that the \dPlan’s act\bary certified the Plan to \dbe in critical stat\bs, the “Red Zon\de”, as defined by the Pension Protection Act (PPA) and the Pension Ben\defit G\baranty Corporation (PBGC)\d, and that a plan of rehabilitation was a\ddopted by the tr\bstees of t\dhe Plan in fo\brth q\barter 20\f2. The rehabilitation plan, which contin\d\bes, req\bires that employer contrib\bti\dons incl\bde 5% compo\bnded ann\bal s\br\dcharge increases each year for\d an \bnspecified period o\df time beginning Jan\bary 20\f3 (in addition to the 5% interim \ds\brcharge initiated in J\bne 20\f2) as wel\dl as certain plan benefit red\bctions. Under the\d plan of rehabilitation, the\d Plan is projected to emerge f\drom critical stat\bs sometime beyo\dnd a 30 year projection period. In\d the event that a plan does not have\d the financial reso\brces to \bltimately p\day benefits at a level specified\d by law, then it m\bst apply to the P\dBGC for government financial ass\distance.

The Tr\bstees have advised th\dat neither the PPA nor reg\blatory g\bidance c\brrently defines the rehabilitation stand\dards for a plan that is not designed \dto emerge from critical stat\bs with\din the prescribed \f0-year rehabilitation peri\dod.

Recently enacted le\dgislation (M\bltiemployer Pens\dion Reform Act of 20\f4) may also a\dffect the f\bt\bre of this Plan.The Company was previo\bsly advised by the Plan t\dhat if the Company had withdra\dwn from the Plan d\bring 20\f2 its \destimated withdrawal liabilit\dy wo\bld have been $37,200. The Compa\dny was recently advised by th\de Plan that its withdrawal liabilit\dy wo\bld have been $56,400 if it had w\dithdrawn from the Plan d\bring 20\f4. Th\de increase from 20\f2 to 20\f4 pri\dncipally reflects changes in k\dey act\barial ass\bmptions, princip\dally the effects of a lower interest rates proscribed by PBGC which were partially \bsed to determine the present val\be of vested benefits, and \da change to a more conservative mortality table.

Based on the Compan\dy’s act\barial st\bdy and certain provisions in ERISA relating to withdraw\dal liability payments, managemen\dt believes that the Company’s liability wo\bld be limited to twent\dy ann\bal payments of $2,999 \dwhich have a present val\be of $35,\f9\d3 based on the minim\bm f\bnding \dinterest rate of 6.5% \bsed by the Pla\dn. Sho\bld the Company act\bally wi\dthdraw from the Plan at a f\bt\br\de date, a withdrawal liabilit\dy, which co\bld be higher than the abo\dve disc\bssed amo\bnts, co\bld be pa\dyable to the Plan.

The Company’s existing labor contract with its B\dC&T local \bnion commits the Company\d’s participation in this \dPlan thro\bgh third q\barter 20\f7. Pension expense, incl\bding s\b\drcharges, for the BC&T Plan for \d20\f4 and 20\f3 was $2,588 and $2,2\d3\f, respectively. The aforementioned expense incl\bdes s\brcharge increases of $342 and $2\d42 in 20\f4 and 20\f3, respectively, related to Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 3 CHKSUM Content: 65070 Layout: 21341 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 5 results. Adjusting \mfor the aforementioned\f selling\m\f marketing and administrative \mex\benses increased from $111\f002 in 2013\m to $113\f961 in 2014\f an\m increase of $2\f959 or 2.7%. As \ma \bercent of net \broduct sales\f these \madjusted ex\benses increased slightly from 20.6% of net \broduct sales in 201\m3 to 21.1% of net \broduct sales in 2014. Selling\f mark\meting and administrative ex\ben\mses include $46\f525 and $45\f367 o\mf freight\f delivery and warehousing ex\benses in 2014 and 2013\f r\mes\bectively\f which increased slightly from 8.4% of net \broduct sales in 201\m3 to 8.6% of net \broduct sales in 201\m4.

The Com\bany believes\m that the carrying values of its \mgoodwill and trademarks have ind\mefinite lives as they are ex\bected to gener\mate cash flows indefinitely\m. In accordance with current accounting gui\mdance\f these indefinite-l\mived intangible assets are assessed at leas\mt annually for im\bair\mment as of December 31 or when\mever events or circumstances indicate\m that the carrying values may not\m be recoverable from future cash flows.

No im\bairments were recorded in 2014 or 2013. The \mfair values of trademarks are assessed each ye\mar using the \bresent value of estimated future cash flows and estimated royalties. Based on\m the Com\bany’s estimate at December 31\f 2014\f t\mhe individual fair values of the \mindefinite lived intangible assets \mexceed the net book value by more than 10%. For certain trademarks\f ho\mlding all other assum\btions constan\mt at the test date\f a 100 basis \b\moint increase in the discount rate \mor a 100 basis \boint decrease in the royalty rate would reduce the fair valu\me of certain trademarks by a\b\broximately 15% and 1\m1%\f res\bectively. Individually\f a 100 basis \boint increase in the discou\mnt rate would indicat\me a \botential im\bairment of a\b\broximately $2\f000 as of December 31\f \m2014. However\f if the royalty rate were decreased by 100 basis \boints\m no im\bairment would be indicated\m as of December 31\f 2014.

Earnings from o\berations were $83\f923 in 2014 com\m\bared to $72\f353 in 2013\f an\m increase of $11\f570. Earnings from o\berations include $4\f901 and \m$10\f588 in certain deferred com\bensation ex\bense in 2014 and\m 2013\f res\bectively\f which are discussed above. Adjusting fo\mr these deferred com\bensation ex\bense\ms\f earnings from o\berations increased from $82\f941 in 2013 to \m$88\f824 in 2014\f an increase of $5\f883 or 7\m.1%. This increase in 2014 earnings from o\berations \brinci\bal\mly reflects more favorable ingredient costs\f \blant\m efficiencies driven b\my ca\bital investments\f and on-\mgoing cost control \brograms.

Management believes\m the com\barisons \bresented in the \breceding \baragra\bhs\f \mafter adjusting for chan\mges in deferred com\bensation\f are more reflective of the underlying \mo\berations of the Com\bany.

Other income\f net w\mas $7\f371 in 2014 com\bared to $12\f130 in 20\m13\f a decrease of $4\f759. Oth\mer income\f net \brinci\ba\mlly reflects $4\f901 and $10\f588 \mof aggregatenet gains and inves\mtment income on trading securit\mies in 2014 and 2013\f res\bectively. These trading securities \brovide an economic hedge of the Com\ban\my’s deferred com\bensation liabil\mities; and the related net gains a\mnd investment income were offset by a like amou\mnt of ex\bense in aggregate \broduct cost of goods sold\m and selling\f marketing\f and admin\mistrative ex\benses in the res\bective years as discussed above. Ot\mher income\f net also includes \mforeign exchange losses of $861 and \m$790 in 2014 and 2013\f res\bectively.

During fourth quarter 2013\f the Com\bany sold its in\mvestment in Jefferson County Alab\mama Sewer Revenue Refunding W\marrants for $10\f840. This was a\mn auction rate security (ARS) ori\mginally \burchased for $13\f550 in 2008\m with an insurance-backed A\mAA rating.

Because the Com\bany\m recorded an other-than-tem\borary \bre-tax im\bairment of $5\f140 in 2\m008 on this ARS investment whic\mh resulted in a carrying value of $8\f41\m0 at that time\f a net gain of $2\f43\m0 was recorded on this sale in fo\murth quarter 2013.

Since recording this initial im\bairment in 2008\f the C\mom\bany carried this ARS i\mnvestment at its estimated fair valu\me utilizing a valuation model wit\mh Level 3 in\buts\f as defined by guid\mance\f and resulting changes i\mn the market value from the date of the \moriginal im\bairment charge in 2008\m to its sale in fourth quarter 2013 have been recorded as changes to accumulated other c\mom\brehensive income (loss) each \myear.

The consolidated e\mffective tax rate was 31.1% and 28.0\m% in 2014 and2013\f res\bectively. This higher effective tax rate in\m 2014 reflects an additional deferred income tax ex\bense of $2\f350 relating the Com\bany’s ste\b acquisition \mof its S\banish subsidiarie\ms which is discussed below. A reconciliation of the differences between the \mU.S.

statutory rate and these e\mffective tax rates is \brovided in Note 4 to\m the Consolidated F\minancial Statements. At Dece\mmber 31\f 2014\f the Com\bany’s deferred tax assets include $10\f880 of \mincome tax benefits relating to its Can\madian subsidiary tax loss carry-forwards which the Com\bany e\mx\bects to realize before their ex\biration \mdates (2027 through 2031). The Co\mm\bany utilized a\b\broximately $600 and $400 of these tax c\marry-forward benefits in 2014 a\mnd 2013\f res\bectively. The Com\bany has concluded that it \mis more-likely- than-not that it w\mould realize these deferred tax assets relating to its Canadian tax o\berat\ming loss carry-forwards because it is ex\bected that sufficient levels of taxable income will\m be generated during the carry-forward \beriods.

The Com\bany has \brovided a full valuation allowance\m on its S\banish subsidiaries’ tax l\moss carry-forward benefits of a\b\broximately $2\f092 as of December 31\f 201\m4 because the Com\bany has conclud\med that it is not more-likely-than-not \mthat these losses will be uti\mlized before their ex\biration dates. T\mhe S\banish subsidiaries have a\m history of net o\berating losses an\md it is not known when and if they w\mill generate taxable income in t\mhe future. The Com\bany has not \brovided for U.S.

federal or foreign withholding t\maxes Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 2 CHKSUM Content: 26966 Layout: 39916 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 8 effective tax rate, \ball of which are discussed above\f Ea\brnings \ber share benefited from the reduction in average shares outstanding resulting from \burchases of the Com\bany’s common stock in t\bhe o\ben market by the C\bom\bany\f Average shares outstanding decreased from 62,248 in 2012 to 61,399 in 2013\f LIQUIDITY AND CAPITAL RESOURCES Cash flows from o\berating activit\bies were $88,769, $109,823\b and $101,418 in 2014, 20\b13 and 2012, res\bectively\f The $21,054 decrease in cash flows from o\berating activities from 2013 to 2014 \brimarily reflects increases in inventories and acco\bunts receivable in 2014, a\bnd changes in \bre\baid ex\benses and o\bther assets in the res\bective years\f Th\be aforementioned increases in inventories and acco\bunts receivable \brinci\ball\by reflect the timing of fourth quarter sales and manufacturing \blanning\b for inventories\f The inc\brease in cash flows from 2012 to 2013 \brima\brily reflects the 2012 inc\brease in net earnings, as well as ch\banges in inventories and \bre\baid ex\benses and other assets in\b the com\barative years\f During fourth quarter 2014 and 2013, the Com\bany co\bntributed $1,000 and $15,000 \bto a VEBA trust, managed and c\bontrolled by the Com\bany, to fund the estim\bated future costs of certain em\bloyee health, welfare and other benefits\b\f The Com\bany is using\b these funds to \bay the actual c\bost of such benefits through 2017\f At December 31, 2014 and 2013, the VEBA trust held $1\b0,845 and $13,991, res\bectively, of aggregate cash and cash equivalents\f T\bhis asset value is incl\buded in \bre\baid ex\benses and long-ter\bm other assets in the Com\ba\bny’s Consolidated Statem\bent of Financial Position\f These assets are categorized as Leve\bl 1 within the fair value hierarchy\f During fourth quarter 2013, the Com\bany restructured and amended its \bost-retirement health benefits \blan \brovided to cor\borate\b office and management \bem\bloyees\f These changes resulted in a negative \blan amendme\bnt, as defined by accountin\bg guidance, resulting in a $10,425\b reduction in the Com\bany’s benefit obligation \bas of December 31, 2013\b\f The \blan changes generally li\bmited future annual cost increases in health benefits to 3%, restricted this benefit to current em\bloyees with long-term service with the\b Com\bany, required retirees to \bay the full cost of l\bife insurance, and eliminated all \bost\b-retirement benefits for future em\bloyees effective A\bril 1, 201\b4\f Post- retirement benefits liabi\blities (as amended) were $12,300 and 8,857 at December 31, 2014\b and 2013, res\bectively\f The aforementioned increase reflects actuarial \blosses relating to an 86 bas\bis \boint decrease in the discoun\bt rate (3\f83% discount rat\be used at December 31, 2014) a\bnd an u\bdate of the mortality table based \bon the Society of Actuari\bes’ research that indicates that retirees are living longer\fCash flows from investing activit\bies reflect ca\bital ex\be\bnditures of $10,704, $15,752, a\bnd $8,886 in 2014, 2013 and 2012, r\bes\bectively\f The changes in amoun\bts each year \brinci\bally reflects the timing \bof ex\benditures relating to \blant manufacturing \brojects\f These ca\bital ex\benditures include $1,676, $1,775 and \b$830 relating to com\buter systems an\bd software and im\blementations \bin 2014, 2013 and 2012, res\bectively\f Ca\bital ex\benditures for 2015 are ex\bected to be in line with h\bistorical annual s\bending but actual e\bx\benditures can vary due to the timing\b of larger \brojects and \bayments\f\b They are to be funded from the Com\bany’s cash flow from o\berations and internal sources\f Other than the bank \bloans and the related restricted cash of \bthe Com\bany’s S\banish subsidiari\bes which are discussed in Note\b 1 to the consolidated fi\bnancial statements, the Com\b\bany had no bank borrowings or re\bayments in 2012, 2013, or 2014, \band had no outstanding bank borr\bowings as of December 31, 2012 or\b 2013\f Nonetheless, the Co\bm\bany would consider bank borrowing or other financing in the even\bt that a business acquisitio\bn is com\bleted\f Financing activities\b include Com\bany common stock\b \burchases and retirements of $25,020, $23,143, and\b $23,803 in 2014, 2013 and 2012, r\bes\bectively\f Cash dividends of $\b19,241, $14,282, and $52,431 \b(includes a s\becial one-time di\bvidend of $29,138 in 2012) were \baid in 2014, 2013 and 2012, res\bectively\f Thefourth quarter 2012 included a s\becial $0\f50 \ber sh\bare cash dividend as well as\b an accelerated \bayment of the regular quarterly dividend of $0\f08 \be\br share which has historically be\ben \baid during the first week in J\banuary\f Both were in res\bonse to the uncer\btainty surrounding the future federal tax treatment of dividend\bs at that time after giving conside\bration to the Com\bany’s cash and investme\bnt \bosition\f SIGNIFICANT ACCOUNTING POLICIES AND ESTI\fATES Pre\baration of the Co\bm\bany’s financial statements\b involves judgments and estima\btes due to uncertainties affecting the a\b\blication of accou\bnting \bolicies, and the likelihood \bthat different amounts would be re\borted under different conditions or us\bing different assum\btions\f The\b Com\bany bases its es\btimates on historical ex\berien\bce and other assum\btions, as dis\bcussed herein, that it believes ar\be reasonable\f If actual amounts are ultimately different from \brevious estimates, the revisions are included in the Com\bany’s results of o\beration\bs for the \beriod in which\b the actual amounts become known\b\f The Com\bany’s significant accoun\bting \bolicies are discussed in Note\b 1 to the Consolidated Fi\bnancial Statements\f Following is a summ\bary and discussion of the m\bore significant accounting \bolicies \bwhich management believes \bto have a significant im\bact o\bn the Com\bany’s o\berating results, Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 5 CHKSUM Content: 11742 Layout: 44105 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 7 the contribution i\.ncreases required under the plan of \.rehabilitation. \fhe Company is currently unable to determine the ultimate o\.utcome of the abo\be discussed\. matter and therefore, is unable to de\.termine the effects on its conso\.lidated financial statements, but, th\.e ultimate outcome could be ma\.terial to its consolidated results of operatio\.ns in one or more future periods.

2013 vs. 2012 Net product sales were $539,627 in 2013 compared to $545,985 in 2012, a decrease of $6,358 or 1.2%. \fhe decline in\. 2013 sales reflects some specia\.l promotional sales in 2012 that\. were not repeated in 2013.

Product cost of good\.s sold were $350,960 in 2013 co\.mpared to $365,573 in 2012, a\. decrease of $14,613 or 4.0%. Product cost of goods sold include\.s $2,457 and $1,034 in certain deferred compensation expens\.es in 2013 and 2012, respecti\bely. \fhese deferred compensation exp\.enses principally result from changes in the market \balue of\. in\bestments and in\bestment income fr\.om trading securities relating to compensa\.tion deferred in pre\bious years and ar\.e not reflecti\be of current operating results. Adjusting f\.or the aforementioned, product cost of goods sold decreased from $364,539 in 2012 to\. $348,503 in 2013, a decrease of $16,036 or 4.4%. As a percent of net product sales, these adjus\.ted costs decreased from 66.8% in 2012 to 64.6% in 2013, a fa\bo\.rable decrease of 2.2% as a p\.ercent of net product sales. Althou\.gh certain key ingredient costs were higher in 2013, our o\berall c\.omparati\be ingredient costs are more fa\borable this year; howe\ber, our packaging materials and manuf\.acturing plant operating costs di\.d increase in 2013 compared to 2012.

Selling, marketing \.and administrati\be expe\.nses were $119,133 in 2013 c\.ompared to $113,842 in 2012, \.an increase of $5,291 or 4.6%. Sell\.ing, marketing and administrati\be \.expenses include $8,131 and\. $3,582 in certain deferred compensation expenses in 2013 a\.nd 2012, respecti\bely. \fhese deferred compensation expens\.es principally result from changes in the m\.arket \balue of in\bestments\. and in\bestment income fr\.om trading securities relating to compensa\.tion deferred in pre\bious years and ar\.e not reflecti\be of current operating results. Adjusting f\.or the aforementioned, selling\., marketing and administrati\be \.expenses increased from $110,260 in 2012 \.to $111,002 in 2013, \.an increase of $742 or 0.7%. As a \.percent of net product sales, these\. adjusted expenses increased slightly from 20.2% of net product sales in 201\.2 to 20.6% of net product sales in 2013. Selling, mark\.eting and administrati\be expe\.nses include $45,367 and $45,072\. of freight, deli\bery and warehousing expenses in 2013 and 2012, \.respecti\bely, which increased slightly from 8.3% of net product sales in 201\.2 to 8.4% of net product sales in 201\.3.

Earnings from operations were $72,353 in 2013 co\.mpared to$69,479 in 2012, an\. increase of $2,874. Earnings from operations include $10,588 an\.d $4,616 in certain deferred compensation expense in 2013 an\.d 2012, respecti\bely, which are discussed abo\be. Adjusting fo\.r these deferred compensation expens\.es, earnings from operations were $82,941 and $74,095 in 2013 an\.d 2012, respecti\bely, an increase of $8,846 or 11.9%. \fhis increase in 2013 earnings from operations princ\.ipally reflects more fa\borable ingredient costs, plant efficiencies dri\ben b\.y capital in\bestments\., and on-going cost control programs.

Management belie\bes\. the comparisons presented in the preceding paragraphs\. after adjusting for chan\.ges in deferred compensation are more reflecti\be of the underlying oper\.ations of the Company.

Other income, net w\.as $12,130 in 2013 compared to $4,685 in 201\.2, an increase of $7,445. Oth\.er income, net princip\.ally reflects $10,588 and $4,616 o\.f aggregate net gains and in\bes\.tment income on trading securit\.ies in 2013 and 2012, respecti\bely. \fhese net gains and in\bestment inco\.me were offset by a like amount of\. expense in aggregate product cost of good\.s sold and selling, \.marketing, and administrati\be expe\.nses in the respecti\be years as \.discussed abo\be. Other income,\. net also includes foreign exchange gain\.s (losses) of $(790)\. and $442 in 2013 and 2012, respecti\bely, and a net gain of $2,430 on \.the sale of its in\bestment in Jefferson CountyAlabama Warrants as discuss\.ed abo\be.

Other income, net i\.ncludes the results of the Compa\.ny’s 50% share of two Spanish comp\.anies which were accounted for us\.ing the equity method. \fhese equity\. method losses were $967 and $1,019 f\.or 2013 and 2012, respecti\bely. In addition, pre-tax impairment charges of $975 an\.d $850 were recorded in 2013 and 20\.12, respecti\bely, to write-down th\.e Company’s carrying \balue to estimated fair \balu\.e.

\fhe consolidated ef\.fecti\be tax rate was 28.0% and 29.9%\. in 2013 and 2012, respecti\bely; a reconciliation of the differences between the \.U.S.

statutory rate and these ef\.fecti\be tax rates is pro\bided in Note 4 to\.

the Consolidated F\.inancial Statements. At Dece\.mber 31, 2013, the Company’s deferred tax assets include $12,512 of\. income tax benefits relating to its Can\.adian subsidiary tax loss carry-forwards which the Company e\.xpects to realize before their expiration\. dates (2026 through 2031). \fhe Comp\.any utilized approximately $400 and $3,000 of these ca\.rry-forward tax loss benefits in 2\.013 and 2012, respecti\bely.

Net earnings were $60,849 in 2013 compared to $52,004 in 2\.012, and earnings per share were $0.99 and $0.84 in 2013 and 2\.012, respecti\bely, an increase of $0.15 or 17.9%. Net earnings benefited fr\.om impro\bed gross profit margins, as well as a gain on \.the sale of its Jefferson County warra\.nts, as discussed abo\be, an\.d a lower Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 4 CHKSUM Content: 43558 Layout: 27221 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 10 Valuation of investments Investments, prima\orily municipal bon\fs, mutual fun\fs \oan\f equity metho\f investments a\ore revie\be\f for impairment at each reporting perio\f by comparing \othe carrying value or amortize\f cost to the fa\oir market value. The C\oompany may utilize thir\f-party professional valuation firms as necessary to assist in the \feter\omination of the value of investment\os that utilize Level 3 inputs as \fe\ofine\f by gui\fance. In the ev\oent that an investment securit\oy’s fair value is belo\b carrying value or amortize\f cost, the Company \bi\oll recor\f an other-than-temporary impairment or a temporary impairment base\f on accounting gui\fance\o.

Other matters In the opinion of ma\onagement, other than contracts\o for foreign currency for\bar\fs an\f ra\b materials, inclu\fin\og currency an\f commo\fity he\fges an\f outstan\fing purchase or\fers for packaging, ingre\fients, supplies, an\f operational serv\oices, all entere\f into in the or\finary course of business, the Com\opany \foes not have any significan\ot contractual obligations or futur\oe commitments.

The Company’s outstan\fing contractual commitm\oents as of December 31, 2014,\o all of \bhich are generally normal an\f recurring in nature, are summarize\f in the\o chart on page 12, \bhich \ois incorporate\f by reference herein.

RECENT ACCOUNTING PRONOUNCEMENTS See Note 1 of the Co\ompany’s Note to Consoli\fate\f \oFinancial Statements.

MARKET RISKS The Company is expos\oe\f to market risks relate\f to commo\fity p\orices, interest rates, investm\oents in marketable securit\oies, equity price an\f foreign exchange.

The Company’s ability to forecast the \firection an\f scope of \ochanges to its major input \ocosts is impacte\f by significant vola\otility in cru\fe oil\o, sugar, corn, soybean an\f e\fibl\oe oils, cocoa an\f \fairy pro\fucts markets. The prices\o of these commo\fities are influence\f by changes in global \fe\oman\f, changes in \beather a\on\f crop yiel\fs, inclu\fing t\ohe effects of climate change, cha\onges in governments’ farm policies, inclu\fing man\fates \ofor ethanol an\f bio-fuels, environmental matters, an\f fluctuations in\o the U.S. \follar relative to \follar-\fenominate\f commo\fities in \borl\f \omarkets. The Company believes th\oat its competitors face the\o same or similar challenges.\o In or\fer to a\f\fress the impact of rising input an\f ot\oher costs, the Company perio\fically\o revie\bs each item in its pro\fuct portfolio to ascertain if price realization a\fjustments or other\o actions shoul\f be taken. These revie\bs inclu\fe an evaluation of the ri\osk factors relating to market place acc\oeptance of such changes an\f their po\otential effect on future sales volumes. In\o a\f\fition, the estimate\f cost o\of packaging mo\fifications associ\oate\f \bith \beight changes is ev\oaluate\f. The Company also mainta\oins ongoing cost re\fuction an\f pro\fuctivity improvement programs un\fer \bhich cost savings i\onitiatives areencourage\f an\f progress monitore\f. The Company is n\oot able to accurately \opre\fict the outcome of these cost\o savings initiatives an\f the\oir effects on its future results.

Commodity future and foreign currency forward contracts Commo\fity price risk\os relate to ingre\fients, primarily \osugar, cocoa, chocolate, corn syrup, \fextrose, soybean an\f e\fible o\oils, milk, \bhey an\f gum base ingre\fients. The Company believes it\os competitors face similar risks\o, an\f the in\fustry has historically a\fj\ouste\f prices to compensate for a\fver\ose fluctuations in com\omo\fity costs.

The Company, as \bell as competitors in the c\oonfectionery in\fustry, has historically t\oaken actions, inclu\fing \ohigher price realization to mitig\oate rising input costs for ingre\fients, energy, freight an\f \felivery. Although management seeks t\oo substantially recover cost increases over the long-term, there is risk that highe\or price realization cannot b\oe fully passe\f on to custome\ors an\f, to the extent they are passe\f on, they coul\f a\fversely affect customer an\f consumer accept\oance an\f resulting sales volu\ome.

The Company utilize\os commo\fity futures contracts an\f com\omo\fity options contracts, a\os \bell as annual supply agreements, to he\fge an\o\f plan for anticipate\o\f purchases of certain ingre\fients, inclu\fing \osugar, in or\fer to mitigate comm\oo\fity cost fluctuation. The Com\opany also may purchase for\bar\f foreign exchange contracts to he\fge i\ots costs of manufacturing certain pro\fucts inCana\fa for sale an\f \o\fistribution in the Unite\f States, \oan\f perio\fically \foes so for purchases of equipment or ra\b mat\oerials from foreign suppliers. Su\och commo\fity futures, commo\fity options\o an\f currency for\bar\f contracts are cash flo\b he\fges an\f \oare effective as he\fges as \fefine\f\o by accounting gui\fance\o. The unrealize\f gains an\f l\oosses on such contracts are \feferre\f as a component of accumul\oate\f other comprehensive loss (or ga\oin) an\f are recognize\f as a compo\onent of pro\fuct cost of goo\fs so\ol\f \bhen the relate\f inventory is sol\f.

The potential change\o in fair value of commo\fity an\f foreign currency \ferivative instrume\onts hel\f by the Company at December\o 31, 2014, assuming a 10% chan\oge in the un\ferlying contract\o price, \bas $3,303. The analysi\os only inclu\fes commo\fity an\f foreign currency \ferivative instrume\onts an\f, therefore, \foes not consi\fer \othe offsetting effect of changes in \othe price of the un\ferly\oing commo\fity or foreign currency. This amount is not significant com\opare\f \bith the net earnings an\f sharehol\fers’ equity of the Compan\oy.

Interest rates Interest rate risks pri\omarily relate to the Company’s investments in t\oax exempt marketable \osecurities \bith maturities or aucti\oon \fates of generally up to thr\oee years.

The majority of the \oCompany’s investments, \bhich a\ore classifie\f as available for sale,\o have historically been hel\f until they\o mature, \bhich limits the Company’\os exposure to Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 7 CHKSUM Content: 241 Layout: 21435 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 9 financial position\., cash flows and footnote disclosur\.e.

Revenue recognition \fevenue, net of app\.licable provisions for disco\.unts, returns, allowances and cer\.tain advertising and pro\botional costs, is\.

recognized when products are delivered to custo\bers bas\.ed on a custo\ber purchase order, and collectability is r\.easonably assured.

The accounting for \.pro\botional costs is discussed\. under “Custo\ber incentive\. progra\bs, advertising and \barketin\.g” below.

Provisions for bad de\.bts are recorded as selling, \bar\.keting and ad\binistrative expe\.nses. Write-offs of bad debts did no\.t exceed 0.1% of net product sales in eac\.h of 2014, 2013 and 201\.2, and accordingly, have not been significant to the \.Co\bpany’s financial position\. or results of operations.

Intangible assets The Co\bpany’s intangible assets\.

consist pri\barily o\.f goodwill and acquired trade\barks. All trade\barks have bee\.n assessed by \banage\bent to have i\.ndefinite lives because they are expected to generate cash flows\. indefinitely. In accordance with account\.ing guidance, goodwill \.and other indefinite-lived a\.ssets are not a\bortized, but are instead subjected to annual\. testing for i\bpair\bent unless certain triggering events or circu\bstances are noted.

The Co\bpany perfor\bs its annual i\bpair\bent testing as of Dece\bber 31. The Co\b\.pany \bay utilize third-party professional valuation fir\bs to assist in the\.

deter\bination of valuati\.on of certain trade\barks.

With respect to i\bpair\bent testing of goodwill, the fi\.rst step co\bpares the reporting unit’s esti\bated fair value with its car\.rying value. We esti\bate a reporting unit’s fair value using projected discounted\. cash flows. If the carrying value of a reporting unit’s net assets excee\.ds its fair value, th\.e second step is applied to \beasure the difference between the carrying value and i\bplied fair value \.of goodwill. If the\.

carrying value of goodw\.ill exceeds its i\bplied fair va\.lue, the goodwill i\.s considered i\bpaired and reduced to its i\bplied fair\. value.

We test non-a\bortizable intangible assets, trade\barks,\. for i\bpair\bent by co\bparing the fai\.r value of each trade\bark with\. its carrying value. We deter\bine fair value of trade\barks using di\.scounted cash flows and esti\bates\. of royalty rates. If the carrying value exceeds fair value, the tr\.ade\bark is considered i\bpaired and is reduced to fair val\.ue.

The cash flow projections discussed above requires us to \bake assu\bptions an\.d esti\bates regarding our future plans, including sales projections and profit \bargins, \barket\. based discount rates, co\.\bpetitive factors, and econo\bic condit\.ions; and our actual results and conditi\.ons \bay differ over ti\be. A ch\.ange in the assu\bptions relating to the i\bpair\bent analysis of go\.odwill and trade\barks, includi\.ng but not li\bited to a reduction in projected cash flows, the us\.e of a differentdiscount rate to d\.iscount future cash flows or a di\.fferent royalty rate applied to the Co\bp\.any’s trade\barks, could c\.ause i\bpair\bent in the future.

Customer incentive programs, advertising and marketing Advertising and \barketin\.g costs are recorded in the period \.to which such costs relate. The Co\bpany does not defer the\. recognition of any a\bounts on its \.consolidated balance sheet with \.respect to such costs. Custo\ber inc\.entives and other pro\botional costs are recorded at the ti\be of \.sale based upon incentive progra\b ter\bs and historical utiliza\.tion statistics, w\.hich are generally consist\.ent fro\b year to year.

The liabilities ass\.ociated with these\.

progra\bs are reviewed quarterly and adjusted if ut\.ilization rates differ fro\b \banage\bent’s original esti\bates. Such adj\.ust\bents have not historically be\.en \baterial to the Co\bpany’s operating results.

Split dollar officer life insurance The Co\bpany provides split dolla\.r life insurance bene\.fits to certain executive officers and records an asset principally \.equal to the cu\bulative pre\biu\bs paid. The Co\bpany will fully \.recover these pre\biu\bs in future years under the ter\bs of the plan. The\. Co\bpany retains a collatera\.l assign\bent of the cash surrender values and policy death benefi\.ts payable to insure recovery of these pre\biu\bs.

Valuation of long-lived assets Long-lived assets, \.pri\barily property, plant and equip\be\.nt arereviewed for i\bpair\bent as events or changes in busin\.ess circu\bstances occur in\.dicating that the carrying value of the a\.sset \bay not be recoverable. The est\.i\bated cash flows produced by assets or\.

asset groups, are co\bpared to the asset carrying value to deter\.\bine whether i\bpair\bent exists. Such esti\bates involve c\.onsiderable \banage\bent judg\bent a\.nd are based upon assu\bpti\.ons about expected future operating perfor\bance. As a result, actual cash flows could d\.iffer fro\b \banage\bent’s esti\bates due to changes in business\. conditions, operating perfor\bance, and econo\bic and co\bpet\.itive conditions.

Income taxes Deferred inco\be taxes are recognized for futur\.e tax effects of te\bporary differences between financial and inco\.\be tax reporting using tax rates in \.effect for the years in which the\. differences are expected to reverse. The Co\bpany\.

records valuation allow\.ances in situations where the realization of deferred tax assets, inc\.luding those relating to net oper\.ating tax losses, is not \bore-likely-than-not;\. and the Co\bpany adjusts and\. releases such valuation all\.owances when realization beco\bes \.\bore-likely- than-not as define\.d by accounting guidance. The Co\bpan\.y periodically reviews assu\bptions and esti\bates of th\.e Co\bpany’s probable tax obligatio\.ns and effects on its liability fo\.r uncertain tax positions, using in\.for\bed judg\bent which \bay include t\.he use of third- party consultants, ad\.visors and legal counsel, and \.historical experience. Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 6 CHKSUM Content: 14392 Layout: 63953 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Open Contractual Commitments as of D\becember\f31, \b014 \i \i Less tha\in 1 to 3 3 to 5 More than Payable in \i \fotal 1 Year Years Years 5 Years Commo\bity he\bges . . . . . . . $ 5,422 $ 5,422 $ — $ — $ — Foreign currency he\bges . . . . . . . 27,604 16,641 10,963 — — Purchase obligations . . . . 8,406 8,406 — — — Interest bearing \bebt . . . . . . . . .\i 7,500 — — — 7,500 Operating leases . . . . . . . . 1,428 978 449 1 — \i \fotal . . . . . . . . .\i . $50,360 $31,447 $11,412 $ 1 $7,500 \i Note: Commo\bity he\bge\is an\b foreign currency he\bges reflect the amounts at which th\ie Company will settl\ie the relate\b contracts. \f\ihe above amounts exclu\i\be \beferre\b income tax liabili\ities of $47,356, liabilities for unce\irtain tax positions o\if $8,584, postretirement health care benefits of $11,9\i83 an\b \beferre\b compensation an\b \iother liabilities of $78,674 because\i the timing of payme\ints relating to these it\iems cannot be reasonably \betermine\b. 1\b effects shoul\b the Co\impany either voluntarily or invo\iluntarily recall its pro\buct(s) from the marketplace;\i (xvi) the risk that\i the market value o\if Company’s investments coul\b \becline inclu\bing bei\ing classifie\b as “other-than-temporary” as \befine\b; (xvii) the C\iompany’s \bepen\bence on its en\iterprise resource planning compute\ir system to manage its suppl\iy chain an\b customer \beliveries,\i an\b the risk that the Company’s information technology systems \ifail to perform a\bequately; (xviii) \ithe a\bverse effects if the Company\i is unable to protect such information technology systems against \bata\i corruption, cyber-base\b attacks or n\ietwork security breaches; (xix) the potential a\bverse e\iffects on the Company as to chang\ies to improve the fun\bing status \iof the Bakery an\b Confectionery Union an\b In\bustry Pension Plan, a m\iulti- employer plan which\i covers certain Company union employ\iees; (xx) the a\bverse effects if restructuring efforts an\b changes in b\iusiness plans with respect to the Company’s Spanish subsi\biarie\is are not fully succes\isful; an\b (xxi) the potential effects of current an\b future macroeconomic con\bitions an\b geopolitical eve\ints.

Forward-looking statements \fhis \biscussion an\b c\iertain other sections contain fo\irwar\b-looking statements that are base\b largely on the Company’s current expectations an\b ar\ie ma\be pursuant to the sa\ife harbor provision of the Priva\ite Securities Litigation Reform Act of 1995.

Forwar\b-looking statements\i can be i\bentifie\b by the use\i of wor\bs such as “anticipate\b,” “b\ielieve,” “expect,” “inten\b,”\i “estimate,” “project,” an\b other w\ior\bs of similar meaning in connectio\in with a \biscussion of future operating or financial performance an\b are subject to certain factors, risks\i, tren\bs an\b uncertainties that coul\b cause actual results an\b achievements to \biffer materially from those expresse\b in the forwar\b-looking statements\i. Such factors, risks, tren\bs an\b uncertainties which in so\ime instances are beyon\b the Company’s control, inclu\be the overall competitive \ienvironment in the Company’s in\bustry, changes in assumptions an\b ju\bg\iments \biscusse\b above un\be\ir the hea\bing “Significant \iAccounting Policies an\b Estimate\is”, an\b factors i\bentifie\b an\b referre\b to above un\ber the hea\bing “R\iisk Factors.” \fhe risk factors i\be\intifie\b an\b referre\b to above are believe\b to be significant factors,\i but not necessarily all of \ithe significant factors that coul\b \icause actual results to \biffer from those expresse\b in any forwar\i\b-looking statement. Rea\bers \iare cautione\b not to place un\bue \ireliance on such forwar\b-looking statements\i, which are ma\be only as of t\ihe \bate of this report. \fhe Company un\ber\itakes no obligation to up\i\bate such forwar\b-looking statements\i. Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 9 CHKSUM Content: 27024 Layout: 8540 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 11 interest rate fluctuati\yons. The accompanyin\f chart summarizes the maturities of \ythe Company’s in\bestments in debt\y securities at December 31, 2014.

Less than 1 year . . . . . $ 39,436 1 – 2 years . . . . . . . . .\y . 42,491 2 – 3 years . . . . . . . . .\y . 48,691 O\ber 3 years . . . . . . . . 714 Total . . . . . . . . .\y . . . . . . $131,332 The Company’s outstandin\f debt \yat December 31, 2014 a\ynd 2013 was $7,500 in an indus\ytrial re\benue bond in which inte\yrest rates reset each week based on\y the current market rate. Therefore, the Company does not be\ylie\be that it has si\fnificant int\yerest rate risk with\y respect to its inte\yrest bearin\f debt.

Investment in marketable securities As stated abo\be, th\ye Company in\bests primarily i\yn tax exempt marketable securit\yies with maturities or auct\yion dates \fenerally up to thr\yee years. The Company utilizes pr\yofessional money mana\fers and \ymaintains in\bestment policy \fu\yidelines which emphasize quality a\ynd liquidity in order to minimize th\ye potential loss exposures that could result in the e\bent of a default \yor other ad\berse e\bent, includin\f fa\yiled auctions. The\y Company continues t\yo monitor these in\bestments a\ynd markets, as well as its in\bestm\yent policies, howe\ber, the financial ma\yrkets could experience u\ynanticipated or unprecedented e\bents as\y it did be\finnin\f in 2008, a\ynd future outcomes may be les\ys predictable than in the past.

Equity price Equity price risk r\yelates to the Company’s in\bestments in mu\ytual funds which are principally used \yto fund and hed\fe the \yCompany’s deferred compensation li\yabilities. At December 31, 2014, \ythe Company has in\bestments in \ymutual funds, classified as trad\yin\f securities, of $71,682. Any chan\fe \yin the fair \balue of these trad\yin\f securities is completely offset by a correspondin\f chan\fe in\y the respecti\be hed\fed de\yferred compensation liabi\ylity.

Foreign currency Forei\fn currency risk principal\yly relates to the Compa\yny’s forei\fn operations in Canad\ya, Mexico and Spain, as well as \yperiodic purchase commitments of mac\yhinery and equipment from forei\fn sources.

Certain of the Company\y’s Canadian manufacturin\f costs\y, includin\f local payroll and plant oper\yations, and a portion of its packa\fi\yn\f and in\fredients are sourced in Canadian dollars. The Compan\yy may purchase Canadian forw\yard contracts to recei\be Canadian dollars at a speci\yfied date in the future and uses its Cana\ydian dollar collections on Cana\ydian sales as a partial hed\fe of its o\y\berall Canadian manufacturin\f obli\f\yations sourced in Canadian dollars\y. The Company also periodically p\yurchases and holds Canadian doll\yars to facilitate the risk mana\fement\y of these currency chan\fes.

From time to time, t\yhe Company may use forei\fn exchan\fe forwa\yrd contracts and deri\y\bati\be instruments to mit\yi\fate its exposureto forei\fn exchan\fe risks\y, as well as those related to firm commitments to pur\ychase equipment from forei\fn \bendors.

See Note 10, Fair \yValue Measurements, for outsta\yndin\f forei\fn exchan\fe forwa\yrd contracts as of December 31,\y 2014.

RISK FACTORS The Company’s operations and financial results are subject to a number of risks an\yd uncertainties that could ad\bersel\yy affect the Company’s operatin\f results and financial conditio\yn. Si\fnificant risk\y factors, without l\yimitation, that co\yuld impact the Company, are the followin\f: (i) si\fn\yificant competiti\be\y acti\bity, includin\f ad\bertisin\f, promotional and pric\ye competition, and chan\fes in cons\yumer demand for the Company’s products; (ii) fluctuations \yin the cost and a\bailability of com\ymodities and in\fredients, includin\f \ythe effects ad\berse weather and\y climate chan\fe, and disease\y in west Africa which could affect cocoa supplie\ys; and the ability to \yreco\ber cost increases throu\fh product sales price increases; (iii) inher\yent risks in the marketplace, i\yncludin\f uncertainties about tra\yde and consumer acceptanc\ye of product pricin\f chan\fes and\y seasonal e\bents such as Hall\yoween, the Company’s lar\fest sales sea\yson; (i\b) the effect of acquisitio\yns on the Company’s results of operatio\yns and financial cond\yition; (\b) the effect of chan\fes in \yforei\fn currencies on the Compa\yny’s forei\fn subsidiaries o\yperatin\f results, and the ef\yfect of the fluctuation of the\y Canadian dollaron products manufactured in Canada and marketed\y and sold in the United States \yin U.S. dollars; (\bi) the Company’s reliance on third party \bendors for \bario\yus \foods and ser\bices, inclu\ydin\f commodities used f\yor in\fredients that are primarily \frown or sourced from forei\fn locations; (\bi\yi) the Company’s ability to succes\ysfully implement new production processes and manufa\ycturin\f automation and com\yputer systems without disruption\y or quality problems; (\biii) the \yeffect of chan\fes in assumpti\yons, includin\f discount rates, sa\yles \frowth and profit mar\fins, which\y could affect the Company’s impairment testin\f and analysis of its\y \foodwill and trademarks; (ix) c\yhan\fes in the confectionery marketplace includin\f actions t\yaken by major retailers and custo\ymers; (x) customer, consumer and competitor response to marketi\yn\f pro\frams and price an\yd product wei\fht adjustments,\y and new products; (xi) depen\ydence on si\fnificant custome\yrs, includin\f the \bolume and timin\f o\yf their purchases, a\bailabilit\yy of shelf space, and competi\yti\be products; (xii) increases in ener\fy cos\yts, includin\f frei\fht and deli\bery, that cannot be passed a\ylon\f to customers throu\fh increased price realization due to \ycompetiti\be reasons; (xiii) any \ysi\fnificant labor stoppa\fes, strikes \yor production interruptions; (xi\y\b) chan\fes in \fo\bernmental laws or re\fulations that affect in\fredients used in products, or taxes, \ytariffs or other \fo\bernment restrictions on products sold; (x\b) t\yhe ad\berse Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:27 | 15-2394-1.ca | Sequence: 8 CHKSUM Content: 28925 Layout: 18343 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 14 CONSOLIDATED STATEMENTS OF Comprehensive Earnings TOOTSIE ROLL INDUSTRIES, INC. AND SU\fSIDIARIES \. \. \. \. \. \. (in thousands except per share data) \, \, \, \, \, \, \, \, \, For the yea\,r ended December 3\,1, \, \, \, \, \, \, \, \, \f014 \, \f013 \, \f01\f \, \, \, \, \, \, \, \, Net earn\bngs . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . \, $ 6\f,860 \, $ 60,849 \, $ 5\f,004 \, \, \, \, \, \, \, \, Other comprehens\bve \bncome (lo\,ss), before tax:

Fore\bgn currency translat\bon ad\,justments . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \, (4,453) \, (10\f) \, 1,303 \, \, \, \, \, \, \, \, Pens\bon and postret\brement reclass\bf\bcat\bon adju\,stment: Unreal\bzed ga\bns (loss\,es) for the per\bod \,on postret\brement and pens\bon b\,enef\bts . . (\f,746) \, \f0,037 \, 1,066 Less: reclass\bf\bcat\bon adju\,stment for (ga\bns) \,losses to net earn\bngs . . . . . . . . .\, . \, (1,804) \, 671 \, 1,036 \, \, \, \, \, \, \, \, Unreal\bzed ga\bns (loss\,es) on postret\brement and pens\bon b\,enef\bts . . . . . . . . .\, . . \, (4,550) \f0,\,708 \, \f,10\f \, \, \, \, \, \, \, \, Investments: Unreal\bzed ga\bns (loss\,es) for the per\bod \,on \bnvestments . . . . . . . . .\, . . . . . . . . .\, . \, (606) \, 1,091 \, 1,980 Less: reclass\bf\bcat\bon adju\,stment for (ga\bns) \,losses to net earn\bngs . . . . . . . . .\, . \, — \, (\f,430) \, — \, \, \, \, \, \, \, \, Unreal\bzed ga\bns (loss\,es) on \bnvestments . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . \, (606) \, (1,339) \, 1,980 \, \, \, \, \, \, \, \, Der\bvat\bves: Unreal\bzed ga\bns (loss\,es) for the per\bod \,on der\bvat\bves . . . . . . . . .\, . . . . . . . . .\, . . \, (3,137) \, (\f,107) \, (339) Less: reclass\bf\bcat\bon adju\,stment for (ga\bns) \,losses to net earn\bngs . . . . . . . . .\, . \, 1,\f95 \, 1,446 \, (\f43) \, \, \, \, \, \, \, \, Unreal\bzed ga\bns (loss\,es) on der\bvat\bves . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . \, (1,84\f) \, (661) \, (58\f) \, \, \, \, \, \, \, \, Total other comprehens\bve \bncome (lo\,ss), before tax . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . \, (11,451) \, 18,606 \, 4,803 Income tax benef\bt \,(expense) related to \btems of \,other comprehens\bve \bncome . . . . . \, \f,991 (6\,,797) \, (1,\f97) \, \, \, \, \, \, \, \, Total comprehens\bve earn\bngs . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . \, 54,400 \, 7\f,658 \, 55,510 Comprehens\bve earn\bngs attr\bbutable \,to noncontroll\bng \bnterests . . . . . . . . .\, . . . . . . . \, 438 \, — \, — \, \, \, \, \, \, \, \, Total comprehens\bve earn\bngs attr\bbutable \,to Toots\be Roll Industr\,\bes, Inc. . . . . . . \, $ 54,838 $ 7\f,658 \, $ 55,510 \, \, \, \, \, \, \, \, Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.da | Sequence: 2 CHKSUM Content: 17785 Layout: 10706 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 CONSOLIDATED STATEMENTS OF Earnings and Retained\ Earnings TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES \1 \1 \1 \1 \1 \1 (in thousands except per share data) \, \, \, \, \, \, \, \, \, For the yea\,r ended December 3\,1, \, \, \, \, \, \, \, \, \f014 \, \f013 \, \f01\f \, \, \, \, \, \, \, \, Net \broduct sales . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . $\,539,895 \, $539,6\f7 \, $545,985 Rental and royalty revenue . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . \,3,630 \, 3,756 \, 3,885 \, \, \, \, \, \, \, \, Total revenue . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \, 543,5\f5 \, 543,383 \, 549,870 \, \, \, \, \, \, \, \, Product cost of good\,s sold . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, 340,933\, \, 350,960 \, 365,573 Rental and royalty cost . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . \, 947 \, 937 \, 976 \, \, \, \, \, \, \, \, Total costs . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . \, 341,880 \, 351,897 \, 366,549 \, \, \, \, \, \, \, \, Product gross margin . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . 19\,8,96\f \, 188,667 \, 180,41\f Rental and royalty gross margin . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . \f,683\, \, \f,819 \, \f,909 \, \, \, \, \, \, \, \, Total gross margin . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \,\f01,645 \, 191,486 \, 183,3\f1 Selling, marketing \,and administrative\, ex\benses . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \, 117,7\f\f \, 119,133 \, 113,84\f \, \, \, \, \, \, \, \, Earnings from o\berations . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . 83,9\,\f3 \, 7\f,353 \, 69,479 \, \, \, \, \, \, \, \, Other income, net . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . \, 7,371 \, 1\f,130 \, 4,685 \, \, \, \, \, \, \, \, Earnings before income taxes . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . 91,\f94 \, 84,483 \, 74,164 \, \, \, \, \, \, \, \, Provision for income\, taxes . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . \f8,43\,4 \, \f3,634 \, \f\f,160 \, \, \, \, \, \, \, \, Net earnings . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . \, 6\f,860 \, 60,849 \, 5\f,004 \, \, \, \, \, \, \, \, Less: Net loss attr\,ibutable to noncon\,trolling interests . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \, 438 \, — \, — Net earnings attributable\, to Tootsie Roll Indust\,ries, Inc. . . . . . . . . .\, . . . . . . . . .\, . . . . . \, $ 63,\f98 \, $ 60,849 \, $ 5\f,004 \, \, \, \, \, \, \, \, Net earnings attributable\, to Tootsie Roll Indust\,ries, Inc. \ber shar\,e . . . . . . . . .\, . . . . . . \, $ 1.05 \, $ 0.99 \, $ 0.84 Average number of s\,hares outstanding . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, \, 60,56\f \, 61,399 \, 6\f,\f48 \, \, \, \, \, \, \, \, Retained earnings at beginning\, of \beriod . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \, $ 73,109 \, $ 80,\f10 \, $114,\f69 Net earnings attributable\, to Tootsie Roll Indust\,ries, Inc. . . . . . . . . .\, . . . . . . . . .\, . . \, 63,\f98 \, 60,849 \, 5\f,004 Cash divide\,nds . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . \, (19,199) \, (18,9\f\f) \, (47,7\f9) Stock divid\,ends . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . \, (5\f,\f81) \, (49,0\f8) \, (38,334) \, \, \, \, \, \, \, \, Retained earnings at end of \ber\,iod . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . $ 64,9\f7 \, $ 73,109 \, $ 80,\f10 \, \, \, \, \, \, \, \, (The accom\banying n\,otes are an integral \bart of these stateme\,nts.) 1\f Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.da | Sequence: 1 CHKSUM Content: 16362 Layout: 63042 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 16 \ \ \ \ \ \ \ \ \ \ \ \ \ (in thousands except per share data) Liabilities and Sh\uareholders’ Equit\f \N \N \N December \N31, \N \N \N \N \N \N \N \N \N \N 2014 \N 2013 \N \N \N \N \N \N \N \N \N \N CURREN\f LIA\bILI\fIES: Accounts paya\Nble . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . .\N . . . . . . \N $ 11,641 \N $ 9,153 \bank loans . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . .\N . . . . . . . . .\N \N 124 \N — Dividends pa\Nyable . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . \N. . . . . . . \N 4,814 \N 4,742 Accrued liab\Nilities . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . \N. . . . . . . . . \N 46,482 \N 45,580 Postretirement health care benefits . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . \N. . . \N 328 \N 319 Income taxes\N payable . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . .\N . . . . . \N 1,070 \N 327 \N \N \N \N \N \N \N \N \N \N \fotal current liabilities . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . \N 64,459 \N 60,121 \N \N \N \N \N \N \N \N \N \N NONCURREN\f LIA\bILI\fIES: Deferred income taxes . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . \N. . . . . . \N 47,356 \N 54,939 \bank loans . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . .\N . . . . . . . . .\N \N 694 \N — Postretirement health care benefits . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . \N. . . \N 11,983 \N 8,857 Industrial d\Nevelopment bonds . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . .\N . . . \N 7,500 \N 7,500 Liability f\Nor uncertain tax positions . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . \N. . . . . \N 8,584 \N 7,167 Deferred compensation and\N other liabilities\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . \N 78,674 \N 69,520 \N \N \N \N \N \N \N \N \N \N \fotal noncurrent liabilities . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . \N 154,791 \N 147,983 \N \N \N \N \N \N \N \N \N \N \fOO\fSIE ROLL INDUS\fRIE\NS, INC. SHAREHOLDERS\N’ EQUI\fY: Common stoc\Nk, $.69-4/9 par val\Nue—120,000 shares authorized— 37,285 a\Nnd 37,011, respectively, issued . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . .\N \N 25,892 \N 25,702 Class \b comm\Non stock, $.69-4/9\N par value—40,000 s\Nhares authorized— 22,887 a\Nnd 22,256, respectively, issued . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . .\N \N 15,894 \N 15,455 Capital in e\Nxcess of par value . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . \N 599,186 \N 572,669 Retained ea\Nrnings . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . \N. . . . . . . \N 64,927 \N 73,109 Accumulated \Nother comprehensive loss . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . \N (13,098) \N (4,638) \freasury stock (at cost)—\N78 shares and 76 shares, respectively . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . \N (1,992) \N (1,992) \N \N \N \N \N \N \N \N \N \N \fotal \footsie Roll Industr\Nies, Inc. shareholders’ equity . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . 69\N0,809 \N 680,305 \N \N \N \N \N \N \N \N \N \N Noncontrolling interests . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . \N 327 \N — \N \N \N \N \N \N \N \N \N \N \fotal equity . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . \N 691,136 \N 680,305 \N \N \N \N \N \N \N \N \N \N \fotal liabilities a\Nnd shareholders’ equity . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . .\N . . \N $910,386 \N $888,409 \N \N \N \N \N \N \N \N \N \N Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.da | Sequence: 4 CHKSUM Content: 52961 Layout: 16569 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 15 CONSOLIDATED STATEMENTS OF Financial Position\ TOOTSIE ROLL INDUSTRIES, INC. AND SU\fSIDIARIES \. \. \. \. \. \. \. \. (in thousands) Assets \N \N \N \N \N \N \N \N \N De\Ncember 31, \N \N \N \N \N \N \N \N \N \N 2014 \N 2013 \N \N \N \N \N \N \N \N \N \N CURREN\f ASSE\fS: C\bsh \bnd c\bsh\N equiv\blents . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . \N. . . . \N $100,108 \N $ 88,283 Investments . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . \N. . . . . . . . . \N 39,450 \N 33,572 Accounts receiv\bble tr\bde, les\Ns \bllow\bnces of $1,\N968 \bnd $2,042 . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . \N 43,253 \N 40,721 Other receiv\bbles . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . \N. . . . . . . . \N 3,577 \N 4,616 Inventories: Fini\Nshed goods \bnd work\N-in-process . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . \N. \N 44,549 \N 37,012 R\bw m\N\bteri\bls \bnd supplie\Ns . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . . \N. . . . \N 25,830 \N 24,844 Prep\bid expenses . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . .\N . . . . . . \N 6,060 \N 5,581 Deferred income t\bxes . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . \N. . . . . . \N 1,794 \N 5,482 \N \N \N \N \N \N \N \N \N \N \fot\bl current \bssets . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . \N 264,621 \N 240,111 \N \N \N \N \N \N \N \N \N \N PROPER\fY, PLAN\f AND EQUIPMEN\N\f, \bt cost: L\bnd . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . .\N . . . . . . . . .\N . . \N 22,360 \N 21,683 Buildings . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . \N. . . . . . . . . \N. \N 113,279 \N 111,044 M\bchinery \bnd equipment . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . \N. . . . \N 350,929 \N 340,405 Constructio\Nn in progress . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . .\N . . . . . \N 1,641 \N 3,403 \N \N \N \N \N \N \N \N \N \N \N \N \N \N \N \N \N \N \N \N 488,\N209 \N 476,535 \N \N \N \N \N \N \N \N \N \N Less—Accumu\Nl\bted depreci\btion . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . \N. \N 298,128 \N 279,619 \N \N \N \N \N \N \N \N \N \N Net property, pl\bnt \bnd equipme\Nnt . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . \N 190,081 \N 196,916 \N \N \N \N \N \N \N \N \N \N O\fHER ASSE\fS: Goodwill . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . .\N . . . . . . . . .\N . \N 73,237 \N 73,237 \fr\bdem\brks . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . .\N . . . . . . . . \N 175,024 \N 175,024 Investments . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . \N. . . . . . . . . \N 163,579 \N 148,532 Split doll\br\N officer life insur\bnc\Ne . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . \N. . . . . . \N 33,632 \N 40,296 Prep\bid expenses . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . .\N . . . . . . \N 6,927 \N 10,260 Restricted \Nc\bsh . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . . . . \N. . . . . . . . \N 1,589 \N — Deferred income t\bxes . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . . . . . . \N. . . . . . \N 1,696 \N 4,033 \N \N \N \N \N \N \N \N \N \N \fot\bl other \bssets . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . \N 455,684 \N 451,382 \N \N \N \N \N \N \N \N \N \N \fot\bl \bssets . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N . . . . . . . . .\N \N $910,386 \N $888,409 \N \N \N \N \N \N \N \N \N \N (\fhe \bccomp\bnying no\Ntes \bre \bn integr\bl p\brt of these st\btemen\Nts.) Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.da | Sequence: 3 CHKSUM Content: 41590 Layout: 1797 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 18 NOTE 1—SIGNIFICANT ACCOUNTING POLICIES\B:

B\fsis o\b consolid\ftion:

The consolidated financial statements include the accounts of Tootsie Roll Industries\f Inc.

and its wholly\bowned and majority\bowned subsidiaries (the Company)\f which are primarily engaged in the manufacture and sales of candy products. Non\bcontrolling interests relating to majority\bowned subsidiaries are reflected in the consolidated financial statements and all significant intercompany transaction\rs have been elimin\rated.

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

Revenue recognition:

Products are sold to customers based on accepted purchase orders which include quantity\f sales price and other relevant terms of sale. Revenue\f net of applicable provisions for discounts\f returns\f allowances and certain advertising and promotional costs\f is recognized when products are delivered to customers and collectability is reasonably assured. Shipping and handling costs of $46\f525\f $45\f367\f and $45\f072 in 2014\f 2013 and 2012\f respectively\f are included in selling\f marketing \rand administrative \rexpenses. Accounts\r receivable are unsecured.

C\fsh \fnd c\fsh equiv\flents:

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

Investments:

Investments consist of various marketable securities with maturities of generally up to three years. The Company classifies debt and equity securities as either available for sale or trading.

Available for sale securities are not actively traded by the Company and are carried at fair value. The Company follows current fair value measurement guidance and unrealized gains and losses on these securities are excluded from earnings and are reported as a separate component of shareholders’ equity\f net of applicable taxes\f until realized or other\bthan\b temporarily impaired. Trading securities relate to deferred compensation arrangements and are carried at fair value with gains or losses included in other income\f net. The Company invests in trading securiti\res to economically \rhedge changes in i\rts deferred compensation li\rabilities.

The Company regularly reviews its investments to determine whether a decline in fair value below the cost basis is other\bthan\btemporary. If the decline in fair value is judged to be other\b than\btemporary\f the cost basis of the security is written down to fair value and the amount of the write\bdown is included in other income\f net. Further information regarding the fair value of the Company’s investments is i\rncluded in Note 10 \rto the Consolidate\rd Financial Statem\rents.

Deriv\ftive instruments \fnd hedging \B\fctivities:

Authoritative guidance requires qualitative disclosures about objectives and strategies for using derivatives\f quantitative disclosures about fair value amounts of derivative instruments and related gains and losses\f and disclosures about credit\brisk\brelated contingent features in derivative agreements.

From time to time\f the Company enters into commodity futures\f commodity options contracts and foreign currency forward contracts. Commodity futures and options are intended and are 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 are effective as hedges of the Company’s exposure to the variability of cash flows\f primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States\f and periodic equipment purchases from foreign suppliers denominated in a foreign currency. The Company does not engage in trading or other speculative use of derivative instruments. Further information regarding derivative instruments and hedging activities is included in Note 11\r to the Consolidat\red Financial State\rments. Inventories:

Inventories are stated at cost\f not to exceed market. The cost of substantially all of the Company’s inventories ($65\f545 and $58\f038 at December  31\f 2014 and 2013\f respectively) has been determined by the last\bin\f first\bout (LIFO) method. The excess of current cost over LIFO cost of inventories approximates $18\f117 and $20\f926 at December 31\f 2014 and 2013\f respectively. The cost of certain foreign inventories ($4\f834 and $3\f818 at December 31\f 2014 and 2013\f respectively) has been determined by the first\bin\f first\bout (FIFO) method. Rebates\f discounts and other cash consideration received from vendors related to inventory purchases is reflected as a reduction in the cost of the related inventory item\f and is therefore reflected in cost of sales when \rthe related inventory item is sold.

Property, pl\fnt \fnd equipmen\Bt:

Depreciation is computed for financial reporting purposes by use of the straight\bline method based on useful lives of 20 to 35 years for buildings and 5 to 20 years for machinery and equipment. Depreciation expense was $20\f758\f $20\f050 and $19\f925 in 2014\f 2013 and 2012\f respectively.

C\frrying v\flue o\b long-lived \fssets:

The Company reviews long\blived assets to determine if there are events or circumstances indicating that the amount of the asset reflected in the Company’s balance sheet may not be recoverable. When such indicators are present\f the Company compares the carrying value of the long\blived asset\f or asset group\f to the future undiscounted cash flows of the underlying assets to determine if impairment exists. If applicable\f an impairment charge would be recorded to write down the carrying value to its fair value. The determination of fair value involves the use of estimates of future cash flows that involve considerable management judgment and are based upon assumptions about expected future operating performance. The actual cash flows could differ from management’s estimates due to changes in business conditions\f operating performance\f and economic conditions. No impairment charges of long\blived assets were recorded by the Company \rduring 2014\f 2013 a\rnd 2012.

Postretirement he\flth c\fre bene\bits:

The Company provides certain postretirement health care benefits to corporate office and management employees. The cost of these postretirement benefits is accrued during employees’ working careers. See Note 7 for changes to these benefits and the resulting effects of the negative amendment\f as defined by guidance. The Company also provides split dollar life benefits to certain executive officers. The Company records an asset equal to the cumulative insurance premiums paid that will be recovered upon the death of covered employees or earlier under the terms of the plan. No premiums were paid in 2014\f 2013 and 2012. Certain split dollar agreements were terminated during 2014 and 2013 which resulted in the full repayment to the Company of all of the cumulative premiums previously paid on these policies. During 2014 and 2013\f the \rCompany received $6\f496 and \r$26\f477\f respectively\f of such repayments which were recorded as a reduction in the ca\rrrying value of Split\r Dollar Officer Life Insuranc\re. Notes to Consolida\ ted Financial Stat\ ements ($ in thousands ex\ cept per share data) TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 1 CHKSUM Content: 506 Layout: 31688 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 17 CONSOLIDATED STATEMENTS OF Cash Flows TOOTSIE ROLL INDUSTRIES, INC. AND SU\fSIDIARIES \. \. \. \. \. \. \. (in thousands) \, \, \, \, \, \, \, \, \, For the yea\,r ended December 3\,1, \, \, \, \, \, \, \, \, \f014 \, \f013 \, \f01\f \, \, \, \, \, \, \, \, C\bSH FLOWS FROM OPER\,\bTING \bCTIVITIES: Net earnings . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . \, $ 6\f,860 \, $ 60,849 \, $ 5\f,004 \bdjustments \,to reconcile net earnings to net cash \,provided by operatin\,g activities:

Depr\,eciation . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . \, \f0,758 \, \f0,050 \, 19,9\f5 Net \,loss on step acqui\,sition . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \, 5\f9 \, — \, — Impa\,irment of equity met\,hod investment . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . \, — \, 975 \, 850 Loss\, from equity method i\,nvestment . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . — \, 967 \, 1,019 \bmortization of market\,able security premiums . . . . . . . . .\, . . . . . . . . .\, . . . . . \, 3,\f61 \, 3,035 \, 1,770 Chang\,es in operating as\,sets and liabiliti\,es: \, \bccounts receivable . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . \, (\f,007) \, 1,330 \, \f7\f \, Other receivables . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . \, 1,\f89 \, \f53 \, (\f,7\f0) \, Inventories . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \, (7,3\f9) \, 503 \, 9,588 \, Prepaid expenses and\, other assets . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . 9,5\f4 \, 14,9\f\f \, 11,\f95 \, \bccounts payable\, and accrued liabi\,lities . . . . . . . . .\, . . . . . . . . .\, . . . . . \, (1,\f68) \, 418 \, 199 \, Income taxes pa\,yable and deferred . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, \, (1,0\f4) \, 68 \, 1,369 \, Postretirement health care benefits . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . (1,\f89) \, \f,861 \, \f,8\f9 \, Deferred compensation an\,d other liabilitie\,s . . . . . . . . .\, . . . . . . . . .\, . . . . \, 3,465 \, 3,59\f \, 3,018 \, \, \, \, \, \, \, \, Net cash pr\,ovided by operatin\,g activities . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . \, 88,769 \, 109,8\f3 \, 101,418 \, \, \, \, \, \, \, \, C\bSH FLOWS FROM INV\,ESTING \bCTIVITIES: Net cash ac\,quired in step acquisi\,tion . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . 161 \, — \, — Change in restricted cash . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \, \f\f4 \, — \, — Capital expe\,nditures . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \,(10,704) \, (15,75\f) \, (8,886) Net sales (\,purchases) of trading\, securities . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \, (3,567) \, (5,500) \, (\f,994) Purchase of available\, for sale securiti\,es . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . (54,88\f) \, (66,3\f4) \, (39,016) Sale and ma\,turity of availabl\,e for sale securit\,ies . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \, 38,309 \, 39,613 \, 10,461 \, \, \, \, \, \, \, \, Net cash us\,ed in investing ac\,tivities . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . (30,459)\, \, (47,963) \, (40,435) \, \, \, \, \, \, \, \, C\bSH FLOWS FROM FIN\,\bNCING \bCTIVITIES: Shares purchased and retired . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . (\f5,0\f0) \, (\f3,143) \, (\f3,803) Dividends p\,aid in cash . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, (1\,9,\f41) \, (14,\f8\f) \, (5\f,431) Repayment o\,f bank loans . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \,(403) \, — \, — \, \, \, \, \, \, \, \, Net cash us\,ed in financing ac\,tivities . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . (44,664) \, (37,4\f5) \, (76,\f34) \, \, \, \, \, \, \, \, Effect of exchange r\,ate changes on cas\,h . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . \, (1,8\f1) \, (14) \, 501 \, \, \, \, \, \, \, \, Increase (decrease) in cash and \,cash equivalents . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, \, 11,8\f5 \, \f4,4\f1 \, (14,750) \, \, \, \, \, \, \, \, Cash and cash equiv\,alents at beginnin\,g of year . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . \, 88,\f83 \, 63,86\f \, 78,61\f \, \, \, \, \, \, \, \, Cash and cash equiv\,alents at end of y\,ear . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . \, $100,108 \, $ 88,\f83 \, $ 63,86\f \, \, \, \, \, \, \, \, Supplemental cash \,flow information: Income taxe\,s paid . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . $ \f6,599 \, $ \f4,\f\f5 \, $ \f1,31\f Interest paid . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . \, $ 34 \, $ \f1 \, $ 31 Stock divid\,end issued . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . . . . . . . . .\, . $ 5\f,165 \, $ 48,9\f5 \, $ 38,\f36 (The accompanying \,notes are an integral part of these stateme\,nts.) Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.da | Sequence: 5 CHKSUM Content: 44647 Layout: 48602 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Use of estimates:

The preparation of consolidated financial statements in conformity with acco\fnting principles generally accepted in the U.\b. req\fires management to make estimates and ass\fmptions that affect the amo\fnts reported. Estimates are \fsed when acco\fnting for sales disco\fnts, allowances and incentives, prod\fct liabilities, assets recorded at fair val\fe, income taxes, depreciation, amortization, employee benefits, contingencies and intangible asset and liability val\fations. Act\fal r\wes\flts may or may n\wot differ from those estimates\w.

Recent accounting p\Nronouncements:

In A\fg\fst 2014, the FA\bB iss\fed A\bU 2014-15 which provides g\fidance abo\ft management’s responsibility to eval\fate whether there is s\fbstantial do\fbt abo\ft an entity’s ability to contin\fe as a going concern and to provide related footnote disclos\fres. This g\fidance will be effective for the ann\fal period ending after December  15, 2016, and for ann\fal periods and interim periods thereafter. We do not expect the adoption of this g\fidance to have a significant impact on o\fr condensed co\wnsolidated financi\wal statements.

In May  2014, the Financial Acco\fnting \btandards Board (“FA\bB”) iss\fed Acco\fnting \btandards Update (“A\bU”) 2014-09 that introd\fces a new five-step reven\fe recognition model in which an entity sho\fld recognize reven\fe to depict the transfer of promised goods or services to c\fstomers in an amo\fnt that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This A\bU also req\fires disclos\fres s\ffficient to enable \fsers to \fnderstand the nat\fre, amo\fnt, timing, and \fncertainty of reven\fe and cash flows arising from contracts with c\fstomers, incl\fding q\falitative and q\fantitative disclos\fres abo\ft contracts with c\fstomers, significant j\fdgments and changes in j\fdgments, and assets recognized from the costs to obtain or f\flfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, incl\fding interim periods within that reporting period. The Company is c\frrently eval\fating the new g\fidance to determine the impact it may have on the condensed consolid\wated financial sta\wtements.

In April  2014, the FA\bB iss\fed A\bU 2014-08, which incl\fdes amendments that change the req\firements for reporting discontin\fed operations. The new g\fidance req\fires that the disposal of a component of an entity be reported as discontin\fed operations only if the action represents a strategic shift that will have a major effect on an entity’s operations and financial res\flts, and wo\fld req\fire expanded disclos\fres. This g\fidance will be effective beginning in the first q\farter 2015. We do not expect the adoption of this g\fidance to have a significant impact on the condensed consolid\wated financial sta\wtements.

N\fTE 2\bACCRUED LIABILITIES:

Accr\fed liabilities\w are comprised of the\w following:

\w \w \w \w \w \w \w Decem\wber 31, \w \w \w \w \w \w \w 2014 201\w3 \w \w \w \w \w \w \w \w Compensation . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . $ 9,788 $ 9,445 Other employee ben\wefits . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . 7,18\w5 7,825\w Taxes, other than i\wncome . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 3,28\w4 2,776 Advertising and promotions . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . 19,805\w 19,133 Other . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . 6,420 6,40\w1 \w \w \w \w \w \w \w \w \w \w \w \w \w \w \w $46,482 $45,580 \w \w \w \w \w \w \w \w N\fTE 3\bINDUSTRIAL DEVEL\fPMENT B\fNDS:

Ind\fstrial development bonds are d\fe in 2027. The average floating interest rate, which is reset weekly, was 0.1% and 0.2% in 2014 and 2013, respectively. \bee Note  10 to the Consolidated Finan\wcial \btatements for\w fair val\fe disclos\w\fres. N\fTE 4\bINC\fME TAXES:

The domestic and f\woreign components of\w pretax income are as follows:

\w \w \w \w \w \w 2014 2013 2012\w \w \w \w \w \w \w \w Domestic . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . $81,255 $73,362 $64,173 Foreign . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . 10,\w039 11,121 9,991\w \w \w \w \w \w \w \w \w \w \w \w \w \w $91,294 $84,483 $74,164 \w \w \w \w \w \w \w The provision for income\w taxes is comprise\wd of the following:\w \w \w \w \w \w \w 2014 2013 2012\w \w \w \w \w \w \w \w C\frrent: Federal . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . $25,173 $16,192 $24,312 Foreign . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . \w 549 219 23\w1 \btate . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . 1\w,538 891 1,914\w \w \w \w \w \w \w \w \w \w \w \w \w \w 27,260 17,302 26,457 \w \w \w \w \w \w \w Deferred: Federal . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . \w (172) 4,286 (6,857\w) Foreign . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 2\w,032 1,823 1,710\w \btate . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . \w (686) 223 85\w0 \w \w \w \w \w \w \w \w \w \w \w \w \w 1,174 6,332 (4,297\w) \w \w \w \w \w \w \w \w \w \w \w \w \w $28,434 $23,634 $22,160 \w \w \w \w \w \w \w \bignificant components of the Company’s net deferred tax liability at year end were as follows:

\w \w \w \w \w \w \w Decem\wber 31, \w \w \w \w \w \w \w \w \w \w \w \w \w \w \w 2014 201\w3 \w \w \w \w \w \w \w \w Deferred tax assets: Accr\fed c\fstomer\w promotions . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w $ 3,219 $ 3,156 Deferred compensation . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 28,099\w 25,103 Postretirement benefits . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 4,89\w5 3,84\w7 Other accr\fed ex\wpenses . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . 7,66\w0 6,158 Foreign s\fbsidiary tax loss carry forward . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . 12,972\w 12,512 Tax credit carry forward . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 1,53\w0 1,24\w3 Realized capital\w losses . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . \w — 5\w81 Unrealized capital los\ws . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . — \w — \w \w \w \w \w \w \w \w \w \w \w \w \w \w \w 58,375 52,600\w \w \w \w \w \w \w \w \w Val\fation allowance . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . (2,478) (957\w) \w \w \w \w \w \w \w \w Total deferred tax assets . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . $55,897 $51,643 \w \w \w \w \w \w \w \w Deferred tax liabilities\w:

Depreciation . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . $31,520 $ 33,129 Ded\fctible goodw\will and trademarks\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . 43,960\w 42,073 Accr\fed export company commissi\wons . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . 5,55\w5 5,391 Employee benefi\wt plans . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 3,90\w7 5,100\w Inventory reserves . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . 3,422 1,64\w6 Prepaid ins\france . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . 867 7\w85 Unrealized capital gai\wn . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . 2,36\w4 7\w09 Deferred gain on sale of\w real estate . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . 8,16\w8 8,234 \w \w \w \w \w \w \w \w Total deferred tax liabilities\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . $99,763 $ 97,067 \w \w \w \w \w \w \w \w Net deferred tax liability . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . . . . . . . .\w . . . . . $43,866 $ 45,424 \w \w \w \w \w \w \w \w At December  31, 2014, the Company has recognized $386 of benefits related to its Mexican s\fbsidiary tax credit carry-forwards. The carry-forward credits expire in 2017. A val\fation allowance has been established for the carry-forward losses to red\fce the f\ft\fre income tax benefits to amo\fnts expected to be realized. The Company has also recognized $1,144 of benefits related to state tax credit carry-forwards. The state credit carry-forward expires in 2021. The Company expects that these state c\wredit carry-forwards will be \ftilized \wbefore their expiration\w. 20 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 3 CHKSUM Content: 44516 Layout: 65305 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Goodwill and indef\Iinite-lived intangible assets:

In accordance with authoritative guidance, goodwill and intangible a\f\fet\f with indefinite live\f are not amortized, but rather te\fted for im\bairment at lea\ft annually unle\f\f certain interim triggering event\f or circum\ftance\f require more frequent te\fting. All trademark\f have been a\f\fe\f\fed by management to have indefinite live\f becau\fe they are ex\bected to generate ca\fh flow\f indefinitely. Management believe\f that all a\f\fum\btion\f u\fed for the im\bairment te\ft\f are con\fi\ftent with tho\fe utilized by market \bartici\bant\f \berforming \fimilar valuation\f The Com\bany ha\f com\bleted it\f annual im\bairment te\fting of it\f goodwill and trademark\f at December 31 of each of the year\f \bre\fented. No im\bairment\f of intangible\f, including goodwill were recorded in 2014, 2013 and \b2012.

With re\f\bect to im\bairment te\fting of goodwill, the fir\ft \fte\b com\bare\f the re\borting unit’\f e\ftimated fair value with it\f carrying value. Projected di\fcounted ca\fh flow\f are u\fed to determine the fair value of the re\borting unit. If the carrying value of a re\borting unit’\f net a\f\fet\f exceed\f it\f fair value, the \fecond \fte\b i\f a\b\blied to mea\fure the difference between the carrying value and im\blied fair value of goodwill. If the carrying value of goodwill exceed\f it\f im\blied fair value, the goodwill i\f con\fidered im\baired and reduced to it\f im\blied fair value. Non-amortizable intangible a\f\fet\f, trademark\f, are te\fted for im\bairment by com\baring the fair value of each trademark with it\f carrying value. The fair value of trademark\f i\f determined u\fing di\fcounted ca\fh flow\f and e\ftimate\f of royalty rate\f. If the carrying value exceed\f fair value, the trademark i\f con\fidered im\baired and i\f reduced to fair val\bue.

In\fome taxes:

Deferred income taxe\f are recorded and recognized for future tax effect\f of tem\borary difference\f between financial and income tax re\borting. The Com\bany record\f valuation allowance\f in \fituation\f where the realization of deferred tax a\f\fet\f i\f not more-likely-than-not.\b Federal income taxe\f are \brovided on the \bortion of income of foreign \fub\fidiarie\f that i\f ex\bected to be remitted to the U.S. and become taxable, but not on the \bortion that i\f con\fidered to be \bermanently reinve\fted in the fo\breign \fub\fidiary.

Fo\beign \fu\b\ben\fy t\banslation:

The U.S. dollar i\f u\fed a\f the functional currency where a \fub\ftantial \bortion of the \fub\fidiary’\f bu\fine\f\f i\f indexed to the U.S. dollar or where it\f manufactured \broduct\f are \brinci\bally \fold in the U.S. All other foreign \fub\fidiarie\f u\fe the local currency a\f their functional currency.

Where the U.S. dollar i\f u\fed a\f the functional currency, foreign currency remea\furement\f are recorded a\f a charge or credit to other income, net in the \ftatement of earning\f. Where the foreign local currency i\f u\fed a\f the \bfunctional currency, tran\flation adju\f\btment\f are recorded a\f a \fe\barate com\bone\bnt of accumulated o\bther com\brehen\five income (lo\b\f\f).

Equity method investment and majo\bity-owned subsidia\bies:

The 2013 and 2012 financial re\fult\f include the Com\bany’\f 50% intere\ft in two S\bani\fh com\banie\f that wa\f accounted for u\fing the equity method. The Com\bany recorded an increa\fe in it\f inve\ftment to the extent of it\f \fhare of earning\f, and reduced it\f inve\ftment to the extent of lo\f\fe\f and divide\bnd\f received. No divide\bnd\f were \baid in 2013 and \b2012.

A\f of December 31, 2013 and 2012, management determined that the carrying value of thi\f equity method inve\ftment wa\f im\baired a\f a re\fult of accumulated lo\f\fe\f from o\beration\f and review of future ex\bectation\f. The Com\bany recorded a \bre-tax im\bairment charge of $975 and $850 in 2013 and 2012, re\f\bectively. The fair value wa\f a\f\fe\f\fed \brimarily u\fing the di\fcounted ca\fh flow method and liquidation valuation. The key in\but\f to thi\f method include \brojection\f of future ca\fh flow\f, determination\f of a\b\bro\briate di\fcount rate\f, and other a\f\fum\btion\f of the equity method inve\ftee which are con\fidered rea\fonable and inherent in the di\fcounted ca\fh flow analy\fi\f. The Com\bany’\f carrying value of thi\f inve\ftment at December 31, 2013 w\ba\f not \fignificant.\b During fir\ft quarter 2014, the Com\bany gained o\berating control of it\f two 50% owned S\bani\fh com\banie\f when Com\bany em\bloyee re\bre\fentative\f a\f\fumed all \bo\fition\f on their board\f of director\f. Thi\f wa\f con\fidered a \fte\b acqui\fition, whereby the Com\bany remea\fured the \breviou\fly held inve\ftment to fair value in fir\ft quarter 2014. A\f a re\fult, the Com\bany’\f fir\ft quarter 2014 net earning\f include a net lo\f\f of $529, including an additional income tax \brovi\fion of $2,350 relating to deferred income taxe\f. During 2014, the Com\bany further increa\fed it\f control and owner\fhi\b to 83% by \fub\fcribing to additional common \fhare\f of the\fe S\bani\fh \fub\fidiarie\f for a\b\broximately $1,400 ($1,200 wa\f \baid in 2014, and the balance will be \baid in 2015). The accom\banying con\folidated financial \ftatement\f for the year ended December  31, 2014 include the\fe S\bani\fh com\banie\f and related minority intere\ft\f. The\fe S\bani\fh \fub\fidiarie\f \bare not material to t\bhe Com\bany’\f con\folidated fina\bncial \ftatement\f. Rest\bi\fted \fash:

Re\ftricted ca\fh com\bri\fe\f certain ca\fh de\bo\fit\f of the Com\bany’\f majority-owned S\bani\fh \fub\fidiarie\f with international bank\f that are \bledged a\f collateral for letter\f of credit and bank borrowing\f.

VEBA t\bust:

During fourth quarter 2014 and 2013, the Com\bany contributed $1,000 and $15,000 to a VEBA tru\ft, managed and controlled by the Com\bany, to fund the e\ftimated future co\ft\f of certain em\bloyee health, welfare and other benefit\f. The Com\bany i\f u\fing the\fe fund\f to \bay the actual co\ft of \fuch benefit\f through 2017. At December 31, 2014 and 2013, the VEBA tru\ft held $10,845 and $13,991, re\f\bectively, of aggregate ca\fh and ca\fh equivalent\f. Thi\f a\f\fet value i\f included in \bre\baid ex\ben\fe\f and long-term other a\f\fet\f in the Com\bany’\f Con\folidated Statement of Financial Po\fition. The\fe a\f\fet\f are categorized a\f Level 1 within the fair value hie\brarchy.

Bank loans:

Long term bank loan\f com\bri\fe borrowing\f by the Com\bany’\f majority-owned S\bani\fh \fub\fidiarie\f which are held by international bank\f. The average weighted intere\ft rate in 2014 wa\f of 3.0% and maturity date\f range from 1 to 4 year\f. Short term bank loan\f al\fo relate to the Com\bany’\f majority-owned S\ba\bni\fh \fub\fidiarie\f.

Comp\behensive ea\bnings:

Com\brehen\five earning\f include\f net earning\f, foreign currency tran\flation adju\ftment\f and unrealized gain\f/lo\f\fe\f on commodity and/or foreign currency hedging contract\f, available for \fale \fecuritie\f and \bcertain \bo\ftretirement benefit obliga\btion\f.

Ea\bnings pe\b sha\be:

A dual \bre\fentation of ba\fic and diluted earning\f \ber \fhare i\f not required due to the lack of \botentially dilutive \fecuritie\f under the Com\bany’\f \fim\ble ca\bital \ftructure. Therefore, all earning\f \ber \fhare amount\f re\bre\fent ba\fic earning\f \ber \fhare.

The Cla\f\f B Common Stock ha\f e\f\fentially the \fame right\f a\f Common Stock, exce\bt that each \fhare of Cla\f\f B Common Stock ha\f ten vote\f \ber \fhare (com\bared to one vote \ber \fhare of Common Stock), i\f not traded on any exchange, i\f re\ftricted a\f to tran\ffer and i\f convertible on a \fhare-for-\fhare ba\fi\f, at any time and at no co\ft to the holder\f, into \fhare\f of Common Stock which are traded on the Ne\bw York Stock Exchange\b. 19 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 2 CHKSUM Content: 51371 Layout: 24359 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 NOTE 6—OTHER INCOME, NET:

Other income, net \gis comprised of th\ge following\f \g \g \g \g \g \g 201\b 2013 2012 \g \g \g \g \g \g \g Interest and dividend i\gncome . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . $1,582 $ 1,\b\b5 $ 1,369 Gains on trading se\gcurities relating to deferred compensation pl\gans . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . \b,901 10,588 \b,616 Interest expense . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . (9\g9) (92) (137) Pretax gain on step a\gcquisition . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . 1,821 —\g — Impairment of equity inv\gestment . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g —\g (975\g) (850) Equity method inve\gstment loss . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . —\g (967\g) (1,019) Foreign exchange gains \g(losses) . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g (861) (790) \b\b2 Capital gains (loss\ges) . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g (219)\g 2,576 (59\g) Miscellaneous, net\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . 2\b6 3\b5 323 \g \g \g \g \g \g \g \g \g \g \g \g \g $7,371 $12,130 $ \b,685 \g \g \g \g \g \g \g NOTE 7—EMPLOYEE BENE\fIT PLANS:

Pe\bsio\b pla\bs:

The Company sponsors defined contribution pension plans covering certain non-union employees with over one year of credited service. The Company’s policy is to fund pension costs accrued based on compensation levels. Total pension expense for 201\b, 2013 and 2012 approximated $\b,391, $\b,\b37 and $\b,327, respectively. The Company also maintains certain profit sharing and retirement savings-investment \gplans. Company contributions in 201\b, 2013 and 2012 to these p\glans were $1,117, $1,121 and $1,\g107, respectively.

The Company also contributes to a multi-employer defined benefit pension plan for certain of its union employees under a collective bargaining agreement which is currently under negotiation, as fol\glows\f Plan name\f Bakery and Confectioner\gy Union and Indust\gry International Pension F\gund Employer Identific\gation Number and p\glan number\f 52-611857\g2, plan number 001 Funded Status as o\gf the most recent year availab\gle\f 66.\b1% funded as\g of January 1, 2013 The Company’s contributions to such plan\f $2,588, $2,231 and $2,131 in 201\b, 2013 and2012, respectively Plan status\f Critic\gal as of December \g31, 2013 Beginning in 2012, the Company received notices from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BC&T) Pension Plan (Plan), a multi-employer defined benefit pension plan for certain Company union employees. The notices indicated that the Plan’s actuary certified the Plan to be in critical status, the “Red Zone”, as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC), and that a plan of rehabilitation was adopted by the trustees of the Plan in fourth quarter 2012. The rehabilitation plan, which continues, requires that employer contributions include 5% compounded annual surcharge increases 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. Under the plan of rehabilitation, the Plan is projected to emerge from critical status sometime beyond a 30 year projection period. In the event that a plan does not have the financial resources to ultimately pay benefits at a level specified by law, then it must apply to the PBGC for government financial assistance. The Trustees have advised that neither the PPA nor regulatory guidance currently defines the rehabilitation standards for a plan that is not designed to emerge from critical status within the prescribed 10-year rehabilitation period.

Recently enacted legislation (Multiemployer Pension Reform Act of 201\b) may also affect the future of this Plan.

The Company was previously 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 was recently advised by the Plan that its withdrawal liability would have been $56,\b00 if it had withdrawn from the Plan during 201\b. The increase from 2012 to 201\b principally reflects changes in key actuarial assumptions, principally the effects of a lower interest rates proscribed by PBGC which were partially used to determine the present value of vested benefits, and a change to a more conservative mortality table. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than the above discussed amounts, could be \gpayable to the Pla\gn.

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 201\b and 2013 was $2,588 and $2,231, respectively. The aforementioned expense includes surcharge increases of $3\b2 and $2\b2 in 201\b and 2013, respectively, related to the contribution increases required under the plan of rehabilitation. 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. Deferred compe\bsatio\b:

The Company sponsors three deferred compensation plans for selected executives and other employees\f (i)  the Excess Benefit Plan, which restores retirement benefits lost due to IRS limitations on contributions to tax-qualified plans, (ii) the Supplemental Plan, which allows eligible employees to defer the receipt of eligible compensation until designated future dates and (iii) the Career Achievement Plan, which provides a deferred annual incentive award to selected executives. Participants in these plans earn a return on amounts due them based on several investment options, which mirror returns on underlying investments (primarily mutual funds).

The Company economically hedges its obligations under the plans by investing in the actual underlying investments. These investments are classified as trading securities and are carried at fair value. At December 31, 201\b and 2013, these investments totaled $71,682 and $63,215, respectively. All gains and losses and related investment income from these investments, which are recorded in other income, net, are equally offset by corresponding increases and decreases in the Company’s deferred compensation li\gabilities.

Postretireme\bt health care be\befit pla\bs:

During fourth quarter 2013, the Company restructured and amended its post-retirement health benefits plan provided to corporate office and management employees. These changes resulted in a negative plan amendment, as defined by accounting guidance, resulting in a $10,\b25 reduction in the Company’s benefit obligation as of December  31, 2013. The plan changes generally limited future annual cost increases in health benefits to 3%, restricted this benefit to current employees with long-term service with the Company, eliminated the Company provided life insurance benefit and required retirees to pay the full cost of life insurance, and eliminated all post-retirement benefits for future employees effective April 1, 201\b. Post-retirement benefits liabilities (as amended) were $12,311 and $9,176 at December 31, 201\b and 2013, respectively.

The aforementioned increase reflects actuarial losses relating to an 86 basis point decrease in the discount rate (3.83% discount rate used at December  31, 201\b) which generally reflects lower market interest rates, and an update of the mortality table based on the Society of Actuaries’ research that indicates \gthat retirees are living longer.

Amounts recognized in accumulated other comprehensive loss (pre-tax) at December  31, 201\b are as follows\f Prior service credit . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g $ (9,\b\b9) Net actuarial loss\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . . . . . . . . .\g . (892) \g \g \g \g \g \g \g \g Net amount recognized in accumu\glated other comprehensive (gain) los\gs . . $(10,3\b1) \g \g \g \g \g \g \g \g The estimated actuarial loss (gain) and prior service credit (gain) to be amortized from accumulated other comprehensive loss (gain) into net periodic benefit cost during 2015 are $(101) and $(1,352),\g respectively. 22 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 5 CHKSUM Content: 23746 Layout: 19628 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 At December 31, 2014, the tax be\fefits \bf the C\bmpa\fy’s Ca\fadia\f subsidiary tax l\bss carry- f\brwards expiri\fg by year are as f\bll\bws: $289 i\f 2027, $5,767 i\f 2028, $4,104 i\f 2029 a\fd $720 i\f 2031. The C\bmpa\fy expects that these carry-f\brwards will be realized bef\bre their expirati\b\f.

At December 31, 2014, the am\bu\fts \bf the C\bmpa\fy’s Spa\fish subsidiary l\bss carry-f\brwards expiri\fg by year are as f\bll\bws: $304 i\f 2026, $64 i\f 2027, $223 i\f 2028, $110 i\f 2029, $341 i\f 2030, $445 i\f 2031 a\fd $605 i\f 2032. A full valuati\b\f all\bwa\fce has bee\f pr\bvided f\br these Spa\fish l\bss carry-f\brwards as the C\bmpa\fy expects that the l\bsses will \f\bt be utilized bef\bre their expirati\b\f.

The effective i\fc\bme tax ra\xte differs fr\bm the statut\bry rate as f\bll\bws:

\x \x \x \x \x \x \x 2014 2013 2012 \x \x \x \x \x \x \x \x U.S. statut\bry rate . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . 35.0%\x 35.0% 35.0% State i\fc\bme taxes, \f\xet . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . 1.0\x 1.0 1.1 Exempt mu\ficipal b\b\fd\x i\fterest . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . (0.5\x) (0.4) (0.5) F\breig\f tax rates . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . (1.5\x) (2.0) (1.6) Qualified d\bmestic pr\x\bducti\b\f activities de\xducti\b\f . . . . . . . . .\x . . . . . . . (2.8\x) (2.2) (3.1) Tax credits receivable . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . (0.6\x) (0.9) (0.9) Adjustme\ft \bf deferr\xed tax bala\fces . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x 1.9\x (1.1) (0.5) Reserve f\br u\fcertai\f tax be\fefits . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . — (0.7) (0.3) Other, \fet . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . (1.4\x) (0.7) \x 0.7 \x \x \x \x \x \x \x \x Effective i\fc\bme tax ra\xte . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . 31.1%\x 28.0% 29.9% \x \x \x \x \x \x \x \x The C\bmpa\fy has \f\bt pr\bvided f\br U.S. federal \br f\breig\f withh\bldi\fg taxes \b\f $5,393 a\fd $10,988 \bf f\breig\f subsidiaries’ u\fdistributed ear\fi\fgs as \bf December  31, 2014 a\fd December  31, 2013, respectively, because such ear\fi\fgs are c\b\fsidered t\b be perma\fe\ftly rei\fvested. The C\bmpa\fy estimates that the federal i\fc\bme tax liability \b\f such remitta\fces w\buld appr\bximate 30%. This f\breig\f subsidiary h\blds $15,986 a\fd $11,674 \bf cash a\fd sh\brt term i\fvestme\fts as \bf De\xcember 31, 2014 a\fd\x 2013, respectively.

At December 31, 2014 a\fd 2013, the C\bmpa\fy had u\frec\bg\fized tax be\fefits \bf $6,993 a\fd $6,010, respectively. I\fcluded i\f this bala\fce is $4,805 a\fd $3,539, respectively, \bf u\frec\bg\fized tax be\fefits that, if rec\bg\fized, w\buld fav\brably affect the a\f\fual effective i\fc\bme tax rate. As \bf December 31, 2014 a\fd 2013, $1,591 a\fd $1,157, respectively, \bf i\fterest a\fd pe\falties were i\fcluded i\f the lia\xbility f\br u\fcertai\f tax p\bsiti\b\fs.

A rec\b\fciliati\b\f \bf the begi\f\fi\fg a\fd e\fdi\fg bala\fces \bf the t\btal am\bu\fts \bf u\frec\bg\fized tax be\fefits is as f\bl\xl\bws:

\x \x \x \x \x \x 201\x4 2013 2012 \x \x \x \x \x \x \x U\frec\bg\fized tax be\fefit\xs at Ja\fuary 1 . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . $ 6,010 $6,677 $6,804 I\fcreases i\f tax p\bsiti\b\fs f\x\br the curre\ft year . . . . . . . . .\x . . . . . . . . .\x . . . . 1,827 1,163 727 I\fcreases i\f tax p\bsiti\b\fs f\x\br \few u\fcertai\f tax p\bsiti\b\f . . . . . . . . .\x . . . . 609 — — Reducti\b\fs i\f tax p\bsit\xi\b\fs f\br lapse \bf stat\xute \bf limitati\b\fs . . . . . . . . .\x . (1,050) (867) (854) Reducti\b\fs i\f tax p\bsit\xi\b\fs relati\fg t\b settleme\ft\xs with taxi\fg auth\brit\xies . . (403) (140) — Reducti\b\fs i\f tax p\bsit\xi\b\fs f\br effective settleme\fts . . . . . . . . .\x . . . . . . . . — (823) — \x \x \x \x \x \x \x U\frec\bg\fized tax be\fefit\xs at December 31 . . . . . . . . .\x . . . . . . . . .\x . . . . . $ 6,993 $6,010 $6,677 \x \x \x \x \x \x \x The C\bmpa\fy rec\bg\fizes i\fterest a\fd pe\falties related t\b u\frec\bg\fized tax be\fefits i\f the pr\bvisi\b\f f\br i\fc\bme taxes \b\f the C\b\fs\blidated Stateme\fts \bf Ear\fi\fgs a\fd Retai\fed Ear\fi\fgs.

The C\bmpa\fy is subject t\b taxati\b\f i\f the U.S. a\fd vari\bus state a\fd f\breig\f jurisdicti\b\fs.

The C\bmpa\fy remai\fs subject t\b exami\fati\b\f by U.S. federal a\fd state a\fd f\breig\f tax auth\brities f\br the years 2011 thr\bugh 2013. With few excepti\b\fs, the C\bmpa\fy is \f\b l\b\fger subject t\b exami\fati\b\f\xs by tax auth\brities \xf\br the years 2010 \xa\fd pri\br. The C\bmpa\fy is curre\ftly subject t\b a federal i\fc\bme tax exami\fati\b\f \bf tax years 2011 a\fd 2012. The C\bmpa\fy’s Ca\fadia\f subsidiary is curre\ftly subject t\b exami\fati\b\f by the Ca\fada Reve\fue Age\fcy f\br tax years 2005 a\fd 2007. The C\bmpa\fy’s Spa\fish subsidiaries are curre\ftly subject t\b a c\burt heari\fg relati\fg t\b a tax exami\fati\b\f by the Spa\fish tax auth\brities.

I\f additi\b\f, the C\bmpa\fy is curre\ftly subject t\b vari\bus state tax exami\fati\b\fs. Alth\bugh the C\bmpa\fy is u\fable t\b determi\fe the ultimate \butc\bme \bf the \b\fg\bi\fg exami\fati\b\fs a\fd c\burt heari\fg, the C\bmpa\fy believes that its liability f\br u\fcertai\f tax p\bsiti\b\fs relati\fg t\b these jurisdicti\b\fs f\br such \xyears is adequate. NOTE 5—SHARE CAPITAL AND CAPITAL IN EXCESS OF PAR VAL\fE:

\x \x \x \x \x \x \x \x Capital i\f \x \x \x \x \x C\xlass B \x Excess \x \x \x \x C\bmm\b\f St\bck C\bmm\b\f St\bck Treasury St\bck \bf Par \x \x \x \x \x \x \x \x Shares Am\bu\ft Shares Am\bu\ft Shares Am\bu\ft Value \x \x \x \x \x \x \x \x (000’s) (000’s) (000’s) Bala\fce at Ja\fuary 1, 2012 . . . . . . . . .\x . . . 36,479 $25,333 21,025 $14,601 71 $(1,992) $533,677 Issua\fce \bf 3% st\bck \xdivide\fd . . . . . . . . .\x 1,085 753 631 437 2 — 37,046 C\b\fversi\b\f \bf Class B c\x\bmm\b\f shares t\b c\bmm\b\f shares . . . . . . . . .\x . . . . . . . . .\x . . 29 20 (29) (20) — — — Purchase a\fd retireme\ft \bf c\bmm\b\f shares . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . (944) (656) — — — — (23,147) Bala\fce at December\x 31, 2012 . . . . . . . . .\x 36,649 25,450 21,627 15,018 73 (1,992) 5\x47,576 Issua\fce \bf 3% st\bck \xdivide\fd . . . . . . . . .\x 1,095 761 648 450 3 — 47,714 C\b\fversi\b\f \bf Class B c\x\bmm\b\f shares t\b c\bmm\b\f shares . . . . . . . . .\x . . . . . . . . .\x . . 19 13 (19) (13) — — — Purchase a\fd retireme\ft \bf c\bmm\b\f shares . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . (752) (522) — — — — (22,621) Bala\fce at December\x 31, 2013 . . . . . . . . .\x 37,011 25,702 22,256 15,455 76 (1,992) 5\x72,669 Issua\fce \bf 3% st\bck \xdivide\fd . . . . . . . . .\x 1,099 763 667 464 2 — 50,939 C\b\fversi\b\f \bf Class B c\x\bmm\b\f shares t\b c\bmm\b\f shares . . . . . . . . .\x . . . . . . . . .\x . . 36 25 (36) (25) — — — Purchase a\fd retireme\ft \bf c\bmm\b\f shares . . (861) (598) — — — — \x (24,422) \x \x \x \x Bala\fce at December\x 31, 2014 . . . . . . . . .\x 37,285 $25,892 22,887 $15,894 78 $(1,992) $599,186 \x \x \x \x Average shares \butsta\fdi\fg a\fd all per share am\bu\fts i\fcluded i\f the fi\fa\fcial stateme\fts a\fd \f\btes theret\b have bee\f adjusted retr\bactively t\b reflect a\f\fual three perce\ft st\bck divide\fds.

While the C\bmpa\fy d\bes \f\bt have a f\brmal \br publicly a\f\f\bu\fced C\bmpa\fy C\bmm\b\f St\bck purchase pr\bgram, the C\bmpa\fy’s b\bard \bf direct\brs peri\bdically auth\brizes a d\bllar am\bu\ft f\br such share purchases.

Based up\b\f this p\blicy\x, shares were purchased a\fd retired as f\bll\bws:

\x \x \x \x T\btal Number \bf Shar\xes Year \x \x \x \x Purchased (000’s) Average Price Paid Per Share \x \x \x \x 2014 . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . \x 861 \x \x $29.02 2013 . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . \x 752 \x $30.73 2012 . . . . . . . . .\x . . . . . . . . .\x . . . . . . . . .\x . . . . . \x 944 \x $25.16 21 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 4 CHKSUM Content: 937 Layout: 3919 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Available for sale securities which utilize Level\f 2 inputs consist pri\barily of \bunicipal and corporate bonds, which are valued based on quoted \barket prices or alternative pricing sources with reasonable levels of\L price transparency.

A su\b\bary of the aggregate fair value, gross unrealized gains, gross unrealized losses, realized losses and a\bortized cost basis of the Co\bpany’s invest\bent portfolio by \bajor security type is as follows:\L \z \z \z \z \z \z \zDecember 31, 2014 \z \z \z \z \zAmortize\f Fair U\brealize\f Realize\f Available for Sale: \z \z \z Cost V\zalue Gai\bs Losses Losses \L \L \L Municipal bonds . . . . . . . . .\L . . . . . . . . .\L . . . . $ 51,797 $ 51,804 $ 7 $ — $— Corporate bonds . . . . . . . . .\L . . . . . . . . .\L . . . . 72,587 72,075 — \L (512) — Govern\bent securities . . . . . . . . .\L . . . . . . . . .\L 2,450 2,446\L \L (4) Certificates of deposi\Lt . . . . . . . . .\L . . . . . . . . .\L 5,014 5,007\L \L (7) Mutual funds . . . . . . . . .\L . . . . . . . . .\L . . . . . . . 20 \L15 — \L (5 ) — \L \L \L \L \L \L \L \L $131,868 $131,347 $ 7 $(528) $— \L \L \L \L \z \z \z \z \z \z \zDecember 31, 2013 \z \z \z \z \zAmortize\f Fair U\brealize\f Realize\f Available for Sale: \z \z \z Cost V\zalue Gai\bs Losses Losses \L \L \L Municipal bonds . . . . . . . . .\L . . . . . . . . .\L . . . . $ 75,488 $ 75,622 $134 $ — $— Corporate bonds . . . . . . . . .\L . . . . . . . . .\L . . . . 37,258 37,214 — \L (44) — Certificates of deposi\Lt . . . . . . . . .\L . . . . . . . . .\L 5,796 5,794\L \L (2) Mutual funds . . . . . . . . .\L . . . . . . . . .\L . . . . . . . 20 \L17 — \L (3 ) — \L \L \L \L \L \L \L \L $118,562 $118,647 $134 $ (49) $— \L \L \L \L During the fourth quarter 2013, the Co\bpany sold its invest\bent in Jefferson County Alaba\ba 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. Because the Co\bpany recorded an other-than-te\bporary pre-tax i\bpair\bent of $5,140 in 2008 on this ARS invest\bent which resulted in a carrying value of $8,410 at that ti\be, a net gain of $2,430 was recorded on this sale in fourth quarter 2013. Since recording this initial i\bpair\bent in 2008, the Co\bpany has carried this ARS invest\bent at its esti\bated fair value utilizing a valuation \bodel with Level\f3 inputs, as defined by guidance, and resulting changes in the \barket value since the original i\bpair\bent charge in 2008 have been recorded as changes to accu\bulated other co\bprehensive inco\be (los\Ls) each year.

The fair value of the Co\bpany’s industrial revenue develop\bent bonds at Dece\bber\f31, 2014 and 2013 were valued using Level\f 2 inputs which approxi\bates the carrying value of $7,500 for both periods. Interest rates on these bonds reset weekly based on current \barket conditions.

NOTE 11—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:

Fro\b ti\be to ti\be, the Co\bpany uses derivative instru\bents, including foreign currency forward contracts, co\b\bodity futures contracts and co\b\bodity option contracts, to \banage its exposures to foreign exchange and co\b\bodity prices. Co\b\bodity futures contracts and \bost co\b\bodity option contracts are intended and effective as hedges of \barket price risks associated with the anticipated purchase of certain raw \baterials (pri\barily sugar). Foreign currency forward contracts are intended and effective as hedges of the Co\bpany’s exposure to the variability of cash flows, pri\barily related to the foreign exchange rate changes of products \banufactured in Canada and sold in the United States, and periodic equip\bent purchases fro\b foreign suppliers deno\binated in a foreign currency. The Co\bpany does not engage in trading or other sp\Leculative use of d\Lerivative instru\bent\Ls. The Co\bpany recognizes all derivative instru\bents as either assets or liabilities at fair value in the Consolidated State\bents of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Co\bpany uses either hedge accounting or \bark-to-\barket accounting for its derivative instru\bents. Derivatives that qualify for hedge accounting are designated as cash flow hedges by for\bally docu\benting the hedge relationships, including identification of the hedging instru\bents, the hedged ite\bs and other critical ter\bs, as well as the Co\bpany’s risk \banage\bent objectives and strategies for undertaking the hedge tr\Lansaction.

Changes in the fair value of the Co\bpany’s cash flow hedges are recorded in accu\bulated other co\bprehensive loss, net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged ite\b. Substantially all a\bounts reported in accu\bulated other co\bprehensive loss for co\b\bodity derivatives are expected to be reclassified to cost of goods sold. Substantially all a\bounts reported in accu\bulated other co\bprehensive loss for foreign currency derivatives ar\Le expected to be reclassified to oth\Ler inco\be, net.

The following table su\b\barizes the Co\bpany’s outstanding derivative contracts and their effects on its Consoli\Ldated State\bents of\L Financial Position \Lat Dece\bber\f31, 201\L4 and 2013: \L \L \L \L \L \L \L Dece\bber\f31, 2014 \L \L \L \L \L \L Notional \L \L \L \L \L \L A\bounts Assets Liabilities\L \L \L \L \L \L \L \L Derivatives designa\Lted as hedging inst\Lru\bents:

Foreign currency forward contracts . . . . . . . . .\L . . . . . . . . .\L . . . . $27,603 $— $(1,939) Co\b\bodity futures contracts . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L 5,42\L2 23 (760) \L \L \L \L \L \L \L \L \L Total derivatives d\Lesignated as hedgin\Lg instru\bents: . . . . . . . . \L \L23 (2,6\L99) \L \L \L \L \L \L \L \L \L Derivatives not des\Lignated as hedging \Linstru\bents: Co\b\bodity futures contracts . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L \L \L— — \L \L \L \L \L \L \L \L \L Total derivatives no\Lt designated as hed\Lging instru\bents: . . . . . \L \L— \L — \L \L \L \L \L \L \L \L \L Total derivatives . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L . . \L $23 $(2,699) \L \L \L \L \L \L \L \L \L \L \L \L \L \L \L \L Dece\bber\f31, 2013 \L \L \L \L \L \L Notional \L \L \L \L \L \L A\bounts Assets Liabilities\L \L \L \L \L \L \L \L Derivatives designa\Lted as hedging inst\Lru\bents:

Foreign currency forward contracts . . . . . . . . .\L . . . . . . . . .\L . . . . $34,244 $— $ (684) Co\b\bodity futures contracts . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L 5,60\L1 41 (191) \L \L \L \L \L \L \L \L \L Total derivatives d\Lesignated as hedgin\Lg instru\bents: . . . . . . . . \L \L41 (\L875) \L \L \L \L \L \L \L \L \L Derivatives not des\Lignated as hedging \Linstru\bents: Co\b\bodity futures contracts . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L 3\L21 20 — \L \L \L \L \L \L \L \L \L Total derivatives no\Lt designated as hed\Lging instru\bents: . . . . . \L \L20 \L — \L \L \L \L \L \L \L \L \L Total derivatives . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L . . \L $61 $ (875) \L \L \L \L \L \L \L \L \L The effects of derivative instru\bents on the Co\bpany’s Consolidated State\bent of Earnings, Co\bprehensive Earnings and Retained Earnings for years ended Dece\bber\f 31, 2014 and 2013 are as follows:

\L \L \L \L \L \L For\L Year Ended Dece\bber\f3\L1, 2014 \L \L \L \L \L \L \L \L \L \L \L \L \L \L Gain (Loss)\L \L \L \L \L \L \L \L Gain (Loss)\L on A\bount E\Lxcluded \L \L \L \L \L G\Lain (Loss) Reclassified fro\b fro\b Effectiveness \L \L \L \L \L Re\Lcognized Accu\bulated OCI Testing Recognized \L \L \L \L \L \L in OCI into Earnings in \LEarnings \L \L \L \L \L Foreign currency forward contracts . . . . . . . . .\L . . . . . $(2,256) \L$(1,001) \L $— Co\b\bodity futures contracts . . . . . . . . .\L . . . . . . . . .\L . (881)\L (2\L94) \L — \L \L \L \L \L \L \L Total . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L . . . . . . . . .\L . . $(3,137) \L$(1,295) $— \L \L \L \L \L \L \L 24 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 7 CHKSUM Content: 56469 Layout: 39664 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 The changes in the accumulated postretirement bene\fit obligation at December 3\b, 20\b4 and 20\b3 consist o\f the \b\following:

\b \b \b \b \b \b \b Dece\bmber 3\b, \b \b \b \b \b \b \b \b \b \b \b \b \b \b \b 20\b4 20\b3 \b \b \b \b \b \b \b \b Bene\fit obligation,\b beginning o\f year . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . $ 9,\b76 $ 27,38\b Service cost . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . 342 \b,036\b Interest cost . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . 423 \b,060\b Plan amendments . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . \b — (\b0,425) Actuarial (gain)/l\boss . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b 2,6\b\b (9,734)\b Bene\fits paid . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . (24\b) (\b42)\b \b \b \b \b \b \b \b \b Bene\fit obligation,\b end o\f year . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . $\b2,3\b\b $ 9,\b76 \b \b \b \b \b \b \b \b Net periodic postr\betirement bene\fit cost \bincluded the \follow\bing components:

\b \b \b \b \b \b 20\b4 \b 20\b3 20\b2 \b \b \b \b \b \b \b Service cost—bene\fi\bts attributed to se\brvice during the p\beriod . . . . . . . $ 342 $\b,036 $\b,034 Interest cost on the ac\bcumulated postretirement bene\fit obliga\btion . . . 423 \b,060 \b,\b\b3 Net amortization . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . (\b,804) 67\b \b,036 \b \b \b \b \b \b \b Net periodic postr\betirement bene\fit cost \b(income) . . . . . . . . .\b . . . . . . . . $(\b,039) $2,767 $3,\b83 \b \b \b \b \b \b \b The Company estimates \future bene\fit payments will be $328, $367, $4\b2, $45\b and $50\b in 20\b5 through 20\b9, respectively, and a total o\f $3,\b\b9 in 2020 through 2024. As a result o\f the plan changes, the Company will no longer quali\fy \for the Medicare Part D retiree drugs subsidy which have histori\bcally not been signi\b\ficant.

NOTE 8—COMMITMENTS:

Rental expense agg\bregated $749, $793 a\bnd $967 in 20\b4, 20\b\b3 and 20\b2, respectively.

Future operating lease \bcommitments are not signi\ficant.

NOTE 9—SEGMENT AND GEOGRAPHIC IN\fO\HRMATION:

The Company operates as a single reportable segment encompassing the manu\facture and sale o\f con\fectionery products. Its principal manu\facturing operations are located in the United States and Canada, and its principal market is the United States. The Company also manu\factures and sells con\fectionery products in Mexico, and exports products to Canada and other countrie\bs worldwide.

The \following geographic data includes net product sales summarized on the basis o\f the customer location \band long-lived ass\bets based on their \bphysical location:

\b \b \b \b \b \b 20\b4 20\b3 2\b0\b2 \b \b \b \b \b \b Net product sales:

United States . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . $488,795 $495,082 $499,660 Canada and Othe\br . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . 5\b,\b0\b0 44,5\b45 46,325 \b \b \b \b \b \b \b \b \b \b \b $539,895 $539,627 $545,985 \b \b \b \b \b \b Long-lived assets:\b United States . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . $\b53,444 $\b60,099 $\b6\b,504 Canada and Othe\br . . . . . . . . .\b . . . . . . . . .\b . . . . . . . . .\b . . . . 36,63\b7 36,8\b\b7 39,786 \b \b \b \b \b \b \b \b \b \b \b $\b90,08\b $\b96,9\b6 $20\b,290 \b \b \b \b \b \b Sales revenues \from Wal-Mart Stores, Inc. aggregated approximately 23.7%, 23.8%, and 23.5% o\f net product sales during the years ended December  3\b, 20\b4, 20\b3 and 20\b2, respectively. Some o\f the a\forementioned sales to Wal-Mart are sold to McLane Company, a large national grocery wholesaler, which services and delivers certain o\f the Company products to Wal-Mart and other retailers in the U.S.A. Net product sales revenues \from McLane, which includes these Wal-Mart sales as well as sales and deliveries to other Company customers, were \b5.3% in 20\b4 and \b5.\b% in 20\b3; such revenues \from McLane were less than \b0% in 20\b2. NOTE 10—\fAIR VA\bUE MEASUREMENTS:

Current accounting guidance de\fines \fair value as the price that would be received in the sale o\f an asset or paid to trans\fer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure o\f the extent to which \fair value is used to measure \financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the e\f\fect o\f the measurement o\f signi\ficant unobservable inputs on earnings, or changes in net assets, as o\f the measurement date. Guidance establishes a three- level valuation hierarchy based upon the transparency o\f inputs utilized in the measurement and valuation o\f \financial assets or liabilities as o\f the measurement date. Level \b 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 o\f observable and unobservable inputs is re\flected in the hie\brarchy assessment disc\blosed in the table \bbelow.

As o\f December  3\b, 20\b4 and 20\b3, the Company held certain \financial assets that are required to be measured at \fair value on a recurring basis. These include derivative hedging instruments related to the \foreign currency \forward contracts and purchase o\f certain raw materials, investments in trading securities and available \for sale securities. The Company’s available \for sale and trading securities principally consist o\f municipal bonds and mutual \funds that are publicly traded.

The \following tables present in\formation about the Company’s \financial assets and liabilities measured at \fair value as o\f December 3\b, 20\b4 and 20\b3, and indicate the \fair value hierarchy and the valuation \btechniques utilize\bd by the Company to \bdetermine such \fair valu\be:

\b \b \b \b \b \b Estimated Fair\b Value December 3\b, 20\b\b4 \b \b \b \b \b \b \b \b \b \b Total \b Inpu\bt Levels Used \b \b \b \b \b Fair Value Leve\bl \b Le\bvel 2 Level\b 3 \b \b \b \b \b Cash and equivalen\bts . . . . . . . . .\b . . . . . . . . .\b . . . $\b00,\b08 $\b00,\b08 $ — $— Available \for sale s\becurities . . . . . . . . .\b . . . . . . . . \b3\b,347 2,4\b46 \b28,90\b — Foreign currency \forward contracts . . . . . . . . .\b . . (\b,939) \b — (\b,939\b) — Commodity \futures contracts, net . . . . . . . . .\b . . . (737) \b (737)\b \b — — Trading securities . . . . . . . . .\b . . . . . . . . .\b . . . . . . . 7\b,682 7\b,682\b \b — — \b \b \b \b \b Total assets measur\bed at \fair value . . . . . . . . .\b . . $300,46\b $\b73,499 $\b26,962 $— \b \b \b \b \b \b \b \b \b \b \b Estimated Fair\b Value December 3\b, 20\b\b3 \b \b \b \b \b \b \b \b \b \b Total \b Inpu\bt Levels Used \b \b \b \b \b Fair Value Leve\bl \b Le\bvel 2 Level\b 3 \b \b \b \b \b Cash and equivalen\bts . . . . . . . . .\b . . . . . . . . .\b . . . $ 88,283 $ 88,283 $ — $— Available \for sale s\becurities . . . . . . . . .\b . . . . . . . . \b\b8,647 \b — \b\b8,647 — Foreign currency \forward contracts . . . . . . . . .\b . . (684) \b — (6\b84) — Commodity \futures contracts, net . . . . . . . . .\b . . . (\b30) \b (\b30)\b \b — — Trading securities . . . . . . . . .\b . . . . . . . . .\b . . . . . . . 63,2\b5 63,2\b5\b \b — — \b \b \b \b \b Total assets measur\bed at \fair value . . . . . . . . .\b . . $269,33\b $\b5\b,368 $\b\b7,963 $— \b \b \b \b \b 23 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 6 CHKSUM Content: 60559 Layout: 49095 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 26 To the Board of Directors and Shareholders of Tootsie Roll \fndustr\Ries, \fnc.\b \fn our opinion, the accompanying consolidated statements of financial position and the related consolidated statements of earnings, comprehensive earnings and retained earnings, and of cash flows present fairly, in all material respects, the financial position of Tootsie Roll \fndustries, \fnc. and its subsidiaries at December  31, 2014 and December 31, 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on criteria established in \fnternal Control—\fntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effe ctive internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Re port on \fnternal Control over Financial Reporting on page 27 of the 2014 Annual Report to Shareholders. Our responsibility is to express opinions on these financial statements a nd on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Comp any Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used an d significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis fo\Rr our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the relia bility of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii)  provide reasonable assurance that transactions are recorded as necessary to permit preparation of f inancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could \Rhave a material ef\Rfect on the financ\Rial statements.

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

Chicago, \fL February 27, 2015 Report of Independ\cent Registered Public \fccounting\c Firm Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.fa | Sequence: 1 CHKSUM Content: 11428 Layout: 64242 Graphics: 17745 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: pwc_ed_k_sig.eps V1.5 \2 \2 \2 \2 \2 \2 For\2 Year Ended December\2 31, 2\f13 \2 \2 \2 \2 \2 \2 \2 \2 \2 \2 \2 \2 \2 \2 Gain (\boss) \2 \2 \2 \2 \2 \2 \2 Gain (\boss) on Amount\2 Excluded \2 \2 \2 \2 \2 G\2ain (\boss) Reclassified from from Effectiveness \2 \2 \2 \2 \2 Rec\2ognized Accumulated OCI Testing Recognized \2 \2 \2 \2 \2 \2 in OCI into Earnings in \2Earnings \2 \2 \2 \2 \2 Foreign currency forward contracts . . . . . . . . .\2 . . . . . $(1,144) $\2 (46\f) \2 $— Commodity futures contracts . . . . . . . . .\2 . . . . . . . . .\2 . (963) (98\26) \2 — \2 \2 \2 \2 \2 \2 \2 Total . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . $(2,1\f7) $(1,446) $— \2 \2 \2 \2 \2 \2 \2 For the years ended December 31, 2\f14 and 2\f13, the Company recognized a gain (loss) of $\f and $(42) in earnings, respectively, related to mark-to-market accounting for certain commodity futures contracts that \2did not receive hedge accoun\2ting.

NOTE 12—COMPREHENSIVE EA\(RNINGS (\fOSS):

The following table sets forth information with respect to accumulated other comprehensive earnings (loss): \2 \2 \2 \2 \2 \2 Accumulated Foreign \2 For\2eign \2 Postretirement Other Currency \2 Currency Commodity and Pension Comprehensive Translation Investments Derivatives Derivatives Benefits Earnings (\boss) Balance at December 31, 2\f12 . . . . . . . $ (13,4\f6) $ 9\f8 $ — $ (111) $ (3,838) $(16,447) Other comprehensive earnings (loss) before reclassifications . . . . . . . . .\2 . (121) (854) (73\f) (614) 12,777 1\f,45\28 Reclassifications from accumulated other \2 comprehensive loss . . . . . . . — — 294 629 428\2 1,\2351 Other comprehensive earnings (loss) net of\2 tax . . . (121) (854) (436) 15 13,2\f5 11,8\2\f9 Balance at December 31, 2\f13 . . . . . . . $ (13,527) $ 54 $(436) $ (96) $ 9,367 $ (4,638) \2 \2 \2 \2 \2 \2 Accumulated Foreign \2 For\2eign \2 Postretirement Other Currency \2 Currency Commodity and Pension Comprehensive Translation Investments Derivatives Derivatives Benefits Earnings (\boss) Balance at December 31, 2\f13 . . . . . . . $ (13,527) $ 54 $ (436) $ (96) $ 9,367 $ (4,638) Other comprehensive earnings (loss) before reclassifications . . . . . . . . .\2 . (3,155) (386) (1,439) (562) (1,776) (7,318\2) Reclassifications from accumulated other \2 comprehensive loss . . . . . . . (817) — 639\2 188 (1,152)\2 (1,142\2) Other comprehensive earnings (loss) net of\2 tax . . . (3,972) (386) (8\f\f) (374) (2,928) (8,46\f\2) Balance at December 31, 2\f14 . . . . . . . $ (17,499) $(332) $(1,236) $ (47\f) $ 6,439 $ (13,\f98) The amounts reclassified from accumulated oth\2er comprehensive income (los\2s) consisted of the following: Year to Date Ended Details about Accum\2ulated Other December 31, December 31, Comprehensive Income Com\2ponents 2\f142\f13 \bocation of (Gain) \bo\2ss Recognized in Ear\2nings Foreign currency derivatives . . . . . $ 1,\f\f1 $ 459 Other income, net Commodity derivative\2s . . . . . . . . .\2 . 294 987 Product cost of good\2s sold Foreign currency translation (1,298) — Other income, net Postretirement and pension Selling, marketing \2and administrative benefits . . . . . . . . .\2 . . . . . . . . .\2 . . (992) 342 expenses Postretirement and pension benefits . . . . . . . . .\2 . . . . . . . . .\2 . . (812) 329 Product cost of good\2s sold Total before tax . . . . . . . . .\2 . . . . . . . (1,8\f7) 2,117 Tax expense (benefit) . . . . . . . . .\2 . . 665 (766) Net of tax . . . . . . . . .\2 . . . . . . . . .\2 . . . $ (1,142) $1,351 NOTE 13—GOO\bWI\f\f AN\b INTANGIB\fE ASSETS:

All of the Company\2’s intangible indefin\2ite-lived assets ar\2e trademarks.

The changes in the \2carrying amount of trad\2emarks for 2\f14 and\2 2\f13 were as follows:

\2 \2 \2 \2 \2 \2 \2 2\f14 2\f13 \2 \2 \2 \2 \2 \2 \2 \2 Original cost . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . $193,767 $193,767 Accumulated impairment losses as of \2January 1 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . (18,743) (18,743) \2 \2 \2 \2 \2 \2 \2 \2 Balance at January 1 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . $175,\f24 $175,\f24 \2 \2 \2 \2 \2 \2 \2 \2 Current year impairment losses . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . —\2 — \2 \2 \2 \2 \2 \2 \2 \2 Balance at Decembe\2r 31 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . $175,\f24 $175,\f24 \2 \2 \2 \2 \2 \2 \2 \2 Accumulated impairment losses as of \2December 31 . . . . . . . . .\2 . . . . . . . . .\2 . . . . $ (18,743) $ (18,743) \2 \2 \2 \2 \2 \2 \2 \2 The fair value of indefinite-lived intangible assets was primarily assessed using the present value of estimated \2future cash flows and r\2elief-from-royalty method.

The Company has no\2 accumulated impair\2ment losses of goo\2dwill. 25 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ea | Sequence: 8 CHKSUM Content: 16420 Layout: 3942 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 28 \) \) \) \) \) \) \) \) (Thousands of d\)ollars except per \)share data) \f014 \) \) \) \) \) \) \birst Second\) Third \bourth Year Net product sales . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . $106,81\f $104,061 $191,093 $137,9\f9 $539,895 Product gross margin . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) 39,947 37,879 67,9\f9 53,\f07 198,96\f Net earnings attributable\) to Tootsie Roll Indust\)ries, Inc. . . . . . . . . .\) . . . . . . . . .\) 9,581 9,0\f6 \f6,668 18,0\f3 63,\f98 Net earnings attributable\) to Tootsie Roll Indust\)ries, Inc. per shar\)e . . . . . . . . .\) . 0.16\) 0.15\) 0.44 0.3\)0 1.05\) \f013 Net product sales . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . $110,\f79 $101,988 $191,807 $135,553 $539,6\f7 Product gross margin . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) 38,110 35,016 65,974 49,567 188,667 Net earnings attributable\) to Tootsie Roll Indust\)ries, Inc. . . . . . . . . .\) . . . . . . . . .\) 9,069 8,369 \f6,043 17,368 60,849 Net earnings attributable\) to Tootsie Roll Indust\)ries, Inc. per shar\)e . . . . . . . . .\) . 0.15\) 0.14\) 0.4\f 0.\f8\) 0.9\)9 Net earnings per share is based upon av\)erage outstanding \)shares as adjusted for\) 3% stock dividend\)s issued during th\)e second quarter of each year as discussed \)above. The sum of \)the quarterly per share amounts may not \)equal annual amoun\)ts due to rounding.

\f014-\f013 QUARTERLY SUMMARY O\b TOOTSIE ROLL I\)NDUSTRIES, INC. STO\)CK PRICES AND DIVI\)DENDS PER SHARE STOCK PRICES* \) \) \f014 \) \) \f013 \) High Lo\)w Hi\)gh Lo\)w 1st Qtr . . . . . $3\f.4\f $\f8.80 $30.00\) $\f6.09 \fnd Qtr . . . . $30.11 $\f7.40 $3\f.81 $\f9.30 3rd Qtr . . . . . $30.1\f $\f6.15 $35.1\f $\f9.50 4th Qtr . . . . . $30.99 $\f7.98 $33.40 $\f9.36 *NYSE - Closing Pr\)ice Estimated number of shareholders at \bebruar\)y \f015: Common Stock . . . . . . . . .\) . . . . . . . . .\) . . . . . . . . .\) . . . . . 11,800 Class B Common Sto\)ck . . . . . . . . .\) . . . . . . . . .\) . . . . . . . 4,300 DIVIDENDS DECLARED\) \) \f014 \f013\) 1st Qtr . . . . . $0.08 $0.0\)8 \fnd Qtr . . . . $0.08 $0.0\)8 3rd Qtr . . . . . $0.08 $0.0\)8 4th Qtr . . . . . $0.08 $0.0\)8 NOTE: In addition \)to the above cash \)dividends, a 3% stock dividend was\) issued on April 4, \)\f014 and April 5, \f013. Cash \)dividends are restated to reflect 3% stock dividends\). Quarterly Financia\ l Data (Unaudited)\ TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ga | Sequence: 1 CHKSUM Content: 10900 Layout: 48964 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 27 The following performance graph compares the cumulati\fe to\utal shareholder return on the Company\bs Common Stock for \ua fi\fe-year period (D\uecember 31, 2009 to December 31\u, 2014) with the cumulati\fe total\u return of Standard & Poor\bs 500 Stock Index (“S&P 500”) and th\ue Dow Jones Industry Food Index (“Peer\u Group,” which includes the \uCompany), assuming (i) $100 i\un\fested on December 31 of the \ufirst year of the chart in each of the Co\umpany\bs Common Stock, S&P 5\u00 and the Dow Jones Industry Food Index and (ii) the rein\festment of di\fi\udends. $0 $50 $100 $150 $200 $250 12/09 12/1012/11 12/1212/13 12/14 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Tootsie Roll Industries, the S&P 500 Index and the Dow Jones US Food Producers Index Tootsie Roll Industries S&P 500 Dow Jones US Food Producers *$100 invested on 12/31/09 in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Copyright© 2015 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

Copyright© 2015 Dow Jones & Co. All rights reserved. Management’s Repor\vt on Internal Control Over \financial Reporting The management of Tootsie Roll Industries, Inc. is responsible for establishing and maintaining adequate internal control o\fer financial reporting, as such term is defined in the Securities Exchange Act of 1934 (SEC) Rule  13a-15(f). Our management conducted an e\faluation of the effe cti\feness of the Company\bs internal control o\fer financial reporting as of December 31, 2014 as required by SEC Rule 13a-15(c). In making this a ssessment, we used the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Based on our e\faluation under the COSO criteria, our management concluded that our internal control o\fer financial reporting was effecti\fe as of Decem\uber 31, 2014.

The effecti\feness of the Company\bs internal control o\fer financial reporting as of December 31, 2014 has been audited by Pricew aterhouseCoopers LLP, an independent registered public accountin\ug firm, as stated in th\ueir report which appears on\u page 26.

Tootsie Roll Industr\uies, Inc.

Chicago, Illinois February 27, 2015 Per\bormance Graph Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.fa | Sequence: 2 CHKSUM Content: 63327 Layout: 53338 Graphics: 53003 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: 2394-1_total_return_k_line.eps V1.5 29 Five Year Summary of Ear\dnings and Finan\fial\d Highligh\bs TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES \( \( \( \( \( \( \( \( \( \( (T\fous\bnds of doll\brs except per s\f\bre, percent\bge \bnd r\btio figures) (See management’s comments starting on page 4) \2 \2 2\f14 \2 2\f13 2\f12 \2 2\f11 \2 2\f1\f \2 \2 \2 \2 \2 \2 \2 Sales an\b Earnings Data (2) Net pro\buct sales . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . $539,895 $ 539,627 $545,985 $528,369 $517,149 Pro\buct gross margin . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 198,\2962 188\2,667 18\f,412 163,\2144 167\2,815 Interest expense . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . \2 99 \2 92 \2 137 \2 121 \2 142 Provision for income\2 taxes . . . . . . . . .\2 . . . . . . . . .\2 . . . . . 28\2,434 23\2,634 22,16\f 1\26,974 2\f\2,\f\f5 Net earnings attributable to Tootsie Roll In\bustries, Inc. . 63,298 6\2\f,849 5\22,\f\f4 4\23,938 5\23,\f63 % of net pro\buct sales . . . . . . . . .\2 . . . . . . . . .\2 . . . . . \2 11.7% \211.3% 9.5% \2 8.3% \21\f.3% % of sharehol\bers’ equity . . . . . . . . .\2 . . . . . . . . .\2 . . \2 9.2% \2 8.9% 8.\f% \2 6.6% \2 8.\f% Per Common Share Data (1)(3) Net earnings attributable to Tootsie Roll In\bustries, Inc. . $ 1.\f5 $ \f.99 $ \f.84 $ \f.7\f $ \f.83 Cash \bivi\ben\bs \beclar\2e\b . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . \2 \f.32 \2 \f.32 \f.82\2 \2 \f.32 \2 \f.32 Stock \bivi\ben\bs . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . \2 3% \2 3% \2 3% \2 3% \2 3% A\b\bitional Financial\2 Data (1)(2) Working capital . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . $2\f\f,162 $ 179,99\f $136,476 $153,272 $176,662 Net cash provi\be\b by operating\2 activities . . . . . . . . .\2 . . 8\28,769 1\f9,8\223 1\f1,\2418 5\21,\f98 8\22,495 Net cash provi\be\b by (use\b in) \2investing activiti\2es . . . . (3\f,\2459) (47\2,963) (4\f,4\235) (51,\2157) (16,\28\f8) Net cash use\b in fi\2nancing activities\2 . . . . . . . . .\2 . . . . . . (44\2,664) (37,\2425) (76,234) (36,5\297) (41,\2\f11) Property, plant & equipment\2 a\b\bitions . . . . . . . . .\2 . . . . . 1\2\f,7\f4 1\25,752 8,886 1\26,351 1\22,813 Net property, plant & equipment\2 . . . . . . . . .\2 . . . . . . . . .\2 19\f,\f\281 196,\2916 2\f1,29\f 212,\2162 215,\2492 Total assets . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . 91\f,3\286 888\2,4\f9 846,\2737 857\2,856 857\2,959 Long-term \bebt . . . . . . . . .\2 . . . . . . . . .\2 . . . . . . . . .\2 . . . . \2 7,5\f\f \2 7,5\f\f 7,\25\f\f \2 7,5\f\f \2 7,5\f\f Total Tootsie Roll In\bustries, Inc. sharehol\bers’ equity . . 69\f,8\f9 68\f,\23\f5 649,\2815 665,\2935 667\2,4\f8 Average shares outstan\bing . . . . . . . . .\2 . . . . . . . . .\2 . . . 6\2\f,562 6\21,399 62,248 6\23,111 6\23,9\f4 (1) Per Common sha\2re \bata an\b average \2shares outstan\bing a\bju\2ste\b for annual 3% s\2tock \bivi\ben\bs.

(2) Certain reclassifications ha\2ve been ma\be to pri\2or year numbers to\2 conform to current year presentation.

(3) The fourth quarter 2\f12 inclu\bes a $\2\f.5\f special \bivi\ben\b\2. Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:28 | 15-2394-1.ga | Sequence: 2 CHKSUM Content: 57827 Layout: 26903 Graphics: No Graphics CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, ~note-color 2, ~note-color 3 GRAPHICS: none V1.5 Board of Directors (1)Executive Committe\3e (2)Audit Committee (3)Com\fensation Committee Officers Offices, Plants Ot\fer Information E\b\ben R. Gordon (1) Chairman of the Board and Chief Executive Officer Richard P. Bergeman (2)(3) Retired Senior Vice President, Bestfoods Lana Jane Lewis-Brent (2)(3) President, Pau\b Brent Designer, Inc., an art \fub\bishing, design\3 and \bicensing com\fany Barre A. Seibert (2)(3) Retired First Vice President, Washington Mutua\b Bank\3 E\b\ben R. Gordon Chairman of the Board and Chief Executive Officer G. Howard Ember, Jr. Vice President, Finance & \3Chief Financia\b Officer John W. New\bin, Jr. Vice President, Manufacturi\3ng Thomas E. Corr Vice President, Marketing \3& Sa\bes John P. Majors Vice President, Physica\b Di\3stribution Barry P. Bowen Treasurer & Assistant Secretary Richard F. Berezewski Contro\b\ber Executive Offices 7401 S. Cicero Ave.

Chicago, I\b\binois 60\3629 www.tootsie.com P\bants/Warehouses I\b\binois Tennessee Massachusetts Pennsy\bvania Wisconsin Ontario, Canada Mexico City, Mexico Barce\bona, S\fain Foreign Sa\bes Offices Mexico City, Mexico Ontario, Canada Barcelona, Spain Stock ExchangeNew York Stock Exchange,\3 Inc.

(Since 1922) Stock Identification\3 Ticker Symbo\b: TR CUSIP No. 890516 1\30-7 Stock Transfer Agent and Stock Registrar American Stock Transfer and Trust Com\fany O\ferations Center 6201 15th Avenue Brook\byn, NY 11219 1-800-710-0932 www.amstock.com Inde\fendent Registe\3red Pub\bic Accounting F\3irm PricewaterhouseCoo\fe\3rs LLP One North Wacker Chicago, IL 60606 Genera\b Counse\b Aronberg Go\bdgehn Dav\3is & Garmisa 330 North Wabash Avenue Chicago, IL 60611 Annua\b Meeting May 4, 2015 Mutua\b Bui\bding, Roo\3m 1200 909 East Main Street Richmond, VA 23219 Printed on recyc\bed \fa\fer. 30 Merrill Corp - Tootsie Roll 10-K ED [AUX] | 105969 | 27-Feb-15 18:29 | 15-2394-1.za | Sequence: 1 CHKSUM Content: 54131 Layout: 22591 Graphics: 39181 CLEAN JOB: 15-2394-1 CYCLE#;BL#: 6; 0 TRIM: 11" x 8.5" COMPOSITE COLORS: Black, Cyan, Magenta, Yellow, ~note-color 2, ~note-color 3 GRAPHICS: recycled_logo.eps, tootsie_com_4c_photo.eps, tr_listed_nyse_k_logo.eps \ V1.5 Industries, Inc.

Tootsie Roll Annual Report 2014