UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September 30, 2015~~March 31, 2016

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

For the transition period from to

COMMISSION FILE NUMBER 1-1361

Tootsie Roll Industries, Inc.

(Exact Name of Registrant as Specified in its Charter)


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


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

773-838-3400

(Registrant’s Telephone Number, Including Area Code)

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

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

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


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date ~~(September 30, 2015)~~(March 31, 2016).


Class		Outstanding

Common Stock, $.69 4/9 par value		~~37,687,773~~38,282,506
Class B Common Stock, $.69 4/9 par value		~~23,554,967~~24,244,622

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TOOTSIE ROLL INDUSTRIES, INC.

~~September 30, 2015~~March 31, 2016

INDEX


		Page No.

Part I —	Financial Information

Item 1.	Financial Statements:

	Condensed Consolidated Statements of Financial Position	3-4

	Condensed Consolidated Statements of Earnings and Retained Earnings	5

	Condensed Consolidated Statements of Comprehensive Earnings	6

	Condensed Consolidated Statements of Cash Flows	7

	Notes to Condensed Consolidated Financial Statements	8~~-15~~-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1615~~-21~~-18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2119

Item 4.	Controls and Procedures	2119

Part II —	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2219

Item 6.	Exhibits	2220

Signatures		23

~~Certifications~~		~~25-27~~ 20

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

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands) (Unaudited)



	September 30, 2015		December 31, 2014		September 27, 2014		March 31, 2016		December 31, 2015		March 31, 2015

ASSETS

CURRENT ASSETS:
Cash & cash equivalents	$	70,726	$	100,108	$	45,142	$	95,057	$	126,145	$	85,430
Restricted cash		1,273		-		-		414		395		-
Investments		53,422		39,450		36,062		38,750		42,155		52,530
Trade accounts receivable, less allowances of $3,349, $1,968 & $3,391		98,088		43,253		102,325
Trade accounts receivable, less allowances of $2,224, $2,225 & $1,976								40,448		51,010		41,511
Other receivables		4,549		3,577		2,732		2,693		2,772		3,965
Inventories:
Finished goods & work-in-process		45,929		44,549		47,854		39,315		35,032		52,591
Raw material & supplies		31,644		25,830		31,187		29,721		27,231		28,262
Prepaid expenses		5,401		6,060		5,307		5,724		5,935		6,198
Deferred income taxes		6,776		1,794		3,161		3,152		3,131		7,094
Total current assets		317,808		264,621		273,770		255,274		293,806		277,581

PROPERTY, PLANT & EQUIPMENT, at cost:
Land		22,214		22,360		22,453		22,223		22,188		22,251
Buildings		113,091		113,279		111,351		114,581		114,562		113,199
Machinery & equipment		348,988		350,929		340,381		355,611		357,627		350,497
Construction in progress		14,162		1,641		10,750		13,492		5,158		3,645
		498,455		488,209		484,935		505,907		499,535		489,592
Less-accumulated depreciation		310,887		298,128		293,642		317,869		314,949		302,877
Net property, plant and equipment		187,568		190,081		191,293		188,038		184,586		186,715

OTHER ASSETS:
Goodwill		73,237		73,237		73,237		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024		175,024		175,024		175,024
Investments		152,491		163,579		160,175		176,483		152,930		156,053
Split dollar officer life insurance		26,042		33,632		40,296		26,042		26,042		33,632
Prepaid expenses		3,722		6,927		7,201		2,041		3,050		5,889
Restricted cash		-		1,589		1,664		-		-		1,225
Deferred income taxes		1,505		1,696		3,858		310		308		1,575
Total other assets		432,021		455,684		461,455		453,137		430,591		446,635
Total assets	$	937,397	$	910,386	$	926,518	$	896,449	$	908,983	$	910,931

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

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(in thousands except per share data) (Unaudited)



	September 30, 2015		December 31, 2014		September 27, 2014		March 31, 2016		December 31, 2015		March 31, 2015

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	16,592	$	11,641	$	15,572	$	12,933	$	11,322	$	14,432
Bank loans		253		124		285		489		231		179
Dividends payable		5,512		4,814		4,835		144		5,486		130
Accrued liabilities		53,119		46,482		52,590		43,273		50,117		43,551
Postretirement health care and life insurance benefits		328		328		111		328		448		328
Income taxes payable		10,737		1,070		5,090		1,935		4,436		2,807
Liability for uncertain tax positions		1,001		-		-
Deferred compensation		13,514		-		-		668		22		14,284
Total current liabilities		101,056		64,459		78,483		59,770		72,062		75,711

NONCURRENT LIABILITIES:
Deferred income taxes		51,608		47,356		53,569		48,240		47,594		51,844
Bank loans		430		694		796		364		383		484
Postretirement health care and life insurance benefits		12,475		11,983		9,519		11,052		10,952		12,154
Industrial development bonds		7,500		7,500		7,500		7,500		7,500		7,500
Liability for uncertain tax positions		6,109		8,584		9,474		4,983		5,101		8,453
Deferred compensation and other liabilities		64,701		78,674		75,751		67,051		66,843		66,678
Total noncurrent liabilities		142,823		154,791		156,609		139,190		138,373		147,113

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 37,688, 37,285 & 37,561, respectively, issued		26,172		25,892		26,084
Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 23,555, 22,887 & 22,897, respectively, issued		16,358		15,894		15,901
Common stock, $.69-4/9 par value- 120,000 shares authorized; 38,283, 37,382 & 38,257, respectively, issued								26,585		25,960		26,567
Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 24,245, 23,542 & 23,571, respectively, issued								16,836		16,348		16,368
Capital in excess of par value		632,667		599,186		607,216		668,864		622,882		650,724
Retained earnings		38,123		64,927		51,709		2,972		52,349		11,922
Accumulated other comprehensive loss		(18,217)		(13,098)		(7,905)		(16,101)		(17,364)		(15,758)
Treasury stock (at cost)- 80, 78 & 78 shares, respectively		(1,992)		(1,992)		(1,992)
Treasury stock (at cost)- 83, 80 & 80 shares, respectively								(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		693,111		690,809		691,013		697,164		698,183		687,831
Noncontrolling interests		407		327		413		325		365		276
Total equity		693,518		691,136		691,426		697,489		698,548		688,107
Total liabilities and shareholders’ equity	$	937,397	$	910,386	$	926,518	$	896,449	$	908,983	$	910,931

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

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TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

EARNINGS AND RETAINED EARNINGS

(in thousands except per share amounts) (Unaudited)



	Quarter Ended				Year to Date Ended				Quarter Ended
	September 30, 2015		September 27, 2014		September 30, 2015		September 27, 2014		March 31, 2016		March 31, 2015

Net product sales	$	183,806	$	191,093	$	396,811	$	401,966	$	103,362	$	105,477
Rental and royalty revenue		819		921		2,571		2,760		1,033		844
Total revenue		184,625		192,014		399,382		404,726		104,395		106,321

Product cost of goods sold		117,046		123,164		252,924		256,211		65,824		67,145
Rental and royalty cost		213		251		671		732		302		228
Total costs		117,259		123,415		253,595		256,943		66,126		67,373

Product gross margin		66,760		67,929		143,887		145,755		37,538		38,332
Rental and royalty gross margin		606		670		1,900		2,028		731		616
Total gross margin		67,366		68,599		145,787		147,783		38,269		38,948
Selling, marketing and administrative expenses		26,338		31,840		78,161		85,767		24,053		25,984
Earnings from operations		41,028		36,759		67,626		62,016		14,216		12,964
Other income (loss), net		(2,879)		166		(1,085)		4,865		(35)		473
Earnings before income taxes		38,149		36,925		66,541		66,881		14,181		13,437
Provision for income taxes		12,008		10,316		20,077		21,958		4,325		4,334
Net earnings		26,141		26,609		46,464		44,923		9,856		9,103
Less: Net (earnings) loss attributable to noncontrolling interests		30		59		(80)		352
Less: Net earnings (loss) attributable to noncontrolling interests										(40)		(51)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	26,171	$	26,668	$	46,384	$	45,275	$	9,896	$	9,154

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.43	$	0.43	$	0.75	$	0.72	$	0.16	$	0.14
Dividends per share *	$	0.09	$	0.08	$	0.26	$	0.24	$	0.09	$	0.08

Average number of shares outstanding		61,357		62,321		61,593		62,465		62,499		63,645

Retained earnings at beginning of period	$	17,454	$	29,870	$	64,927	$	73,109	$	52,349	$	64,927
Net earnings attributable to Tootsie Roll Industries, Inc.		26,171		26,668		46,384		45,275		9,896		9,154
Cash dividends		(5,502)		(4,829)		(15,829)		(14,394)		(5,457)		(4,800)
Stock dividends		-		-		(57,359)		(52,281)		(53,816)		(57,359)
Retained earnings at end of period	$	38,123	$	51,709	$	38,123	$	51,709	$	2,972	$	11,922

*Does not include 3% stock dividend to shareholders of record on ~~4/10/15~~3/8/16 and ~~4/4/14.~~3/10/15.

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

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TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS

(in thousands except per share amounts) (Unaudited)



	Quarter Ended				Year to Date Ended				Quarter Ended
	September 30, 2015		September 27, 2014		September 30, 2015		September 27, 2014		March 31, 2016		March 31, 2015

Net earnings	$	26,141	$	26,609	$	46,464	$	44,923	$	9,856	$	9,103

Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		(1,995)		(1,004)		(3,706)		(2,184)		205		(1,159)

Pension and postretirement reclassification adjustments:
Unrealized gains (losses) for the period on postretirement and pension benefits		-		-		-		-		-		-
Less: reclassification adjustment for (gains) losses to net earnings		(362)		(451)		(1,088)		(1,353)		(411)		(363)
Unrealized gains (losses) on postretirement and pension benefits		(362)		(451)		(1,088)		(1,353)		(411)		(363)

Investments:
Unrealized gains (losses) for the period on investments		108		(286)		108		(317)		490		371
Less: reclassification adjustment for (gains) losses to net earnings		-		-		-		-		4		-
Unrealized gains (losses) on investments		108		(286)		108		(317)		494		371

Derivatives:
Unrealized gains (losses) for the period on derivatives		(2,022)		(2,254)		(4,537)		(1,699)		961		(3,037)
Less: reclassification adjustment for (gains) losses to net earnings		1,628		408		3,302		918		613		675
Unrealized gains (losses) on derivatives		(394)		(1,846)		(1,235)		(781)		1,574		(2,362)

Total other comprehensive income (loss), before tax		(2,643)		(3,587)		(5,921)		(4,635)		1,862		(3,513)
Income tax benefit (expense) related to items of other comprehensive income		235		934		802		1,368		(599)		853
Total comprehensive earnings		23,733		23,956		41,345		41,656		11,119		6,443
Comprehensive earnings attributable to noncontrolling interests		30		59		(80)		352
Comprehensive earnings (loss) attributable to noncontrolling interests										(40)		(51)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$	23,763	$	24,015	$	41,265	$	42,008	$	11,159	$	6,494

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

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TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)



	Year to Date Ended				Year to Date Ended
	September 30, 2015		September 27, 2014		March 31, 2016		March 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	46,464	$	44,923	$	9,856	$	9,103
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		15,112		15,568		5,152		5,050
Loss on step acquisition		-		529
Deferred income taxes						671		132
Amortization of marketable security premiums		2,349		2,498		748		791
Changes in operating assets and liabilities:
Accounts receivable		(55,672)		(60,434)		10,627		1,450
Other receivables		(966)		3,004		109		(404)
Inventories		(7,804)		(15,694)		(6,706)		(10,847)
Prepaid expenses and other assets		11,364		3,344		1,353		888
Accounts payable and accrued liabilities		11,136		9,153		(4,406)		(968)
Income taxes payable and deferred		8,365		4,982
Income taxes payable						(2,619)		1,909
Postretirement health care and life insurance benefits		(597)		(691)		(312)		(192)
Deferred compensation and other liabilities		509		2,609		507		109
Net cash from operating activities		30,260		9,791		14,980		7,021
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash acquired in step acquisition		-		161
Restricted cash		227		169		1		175
Capital expenditures		(12,421)		(7,315)		(8,376)		(2,418)
Net sales (purchases) of trading securities		(1,058)		(3,062)
Purchases of trading securities						(2,485)		(2,573)
Sales of trading securities						613		501
Purchase of available for sale securities		(45,826)		(37,416)		(23,348)		(9,107)
Sale and maturity of available for sale securities		40,390		26,375		4,871		6,622
Net cash used in investing activities		(18,688)		(21,088)		(28,724)		(6,800)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(22,998)		(16,792)		(6,576)		(4,544)
Dividends paid in cash		(15,269)		(14,415)		(10,943)		(9,613)
Proceeds from bank loans						809		-
Repayment of bank loans		(87)		(130)		(612)		(52)
Net cash used in financing activities		(38,354)		(31,337)		(17,322)		(14,209)
Effect of exchange rate changes on cash		(2,600)		(507)		(22)		(690)
Decrease in cash and cash equivalents		(29,382)		(43,141)		(31,088)		(14,678)
Cash and cash equivalents at beginning of year		100,108		88,283		126,145		100,108
Cash and cash equivalents at end of quarter	$	70,726	$	45,142	$	95,057	$	85,430
Supplemental cash flow information:
Income taxes paid, net	$	11,766	$	14,835	$	6,352	$	2,410
Interest paid	$	15	$	33	$	1	$	11
Stock dividend issued	$	57,220	$	52,165	$	61,671	$	57,230

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

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TOOTSIE ROLL INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2015~~March 31, 2016

(in thousands except per share amounts) (Unaudited)

Note 1 — Significant Accounting Policies

General Information

Foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the Company) and in the opinion of management all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim period have been reflected. Certain amounts previously reported have been reclassified to conform to the current year presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s ~~2014~~2015 Annual Report on Form 10-K.

Results of operations for the period ended ~~September 30, 2015~~March 31, 2016 are not necessarily indicative of results to be expected for the year to end December 31, ~~2015~~2016 because of the seasonal nature of the Company’s operations. Historically, the third quarter has been the Company’s largest sales quarter due to pre-Halloween sales.

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

Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it may have on the ~~condensed~~ consolidated financial statements.

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

In November 2015, the FASB issued ASU 2015-17 which requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in the standard. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01 which modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose

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additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. This guidance will be effective for the Company on January 1, 2019. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized over time or at a point in time. This new standard has the same effective date and transition requirements as ASU 2014-09. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

Note 2 — Average Shares Outstanding

The average number of shares outstanding for year to date ended ~~September 30, 2015~~March 31, 2016 reflect stock purchases of ~~728~~214 shares for ~~$22,998~~$6,576 and a 3% stock dividend distributed on April ~~10, 2015.~~8, 2016. The average number of shares outstanding for year to date ended ~~September 27, 2014~~March 31, 2015 reflect stock purchases of ~~575~~143 shares for ~~$16,792~~$4,544 and a 3% stock dividend distributed on April ~~4, 2014.~~10, 2015.

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Note 3 — Income Taxes

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years ~~2012~~2013 through 2014. With few exceptions, ~~including audit examinations of the Company’s amended U.S. income tax returns for 2009 and 2010, and its 2011 and 2012 U.S. income tax returns,~~ the Company is no longer subject to examination by tax authorities for the year ~~2011~~2012 and prior. The consolidated effective tax rates were ~~31.5%~~30.5% and ~~27.9%~~32.3% in ~~third~~first quarter ~~2015~~2016 and ~~2014, respectively, and 30.2% and 32.8% in nine months~~ 2015, ~~and 2014,~~ respectively. The lower effective tax rate in ~~third~~first quarter ~~2014 benefited from a release~~2016 compared to first quarter 2015 reflects the effective settlement of ~~a valuation allowance relating to capital loss carry-forwards and the filing of federal amended~~certain income tax returns. The lower effective tax rates in nine months 2015 principally reflect a $1,066 release of an uncertain income tax liability and resulting income tax benefit due to a decision by a foreign court issued in second quarter 2015, and the reversal of deferred tax assets of $2,350 inaudits during first quarter ~~2014 relating to the step acquisition of the Spanish companies as discussed in Note 10.~~2016.

Note 4 — Fair Value Measurements

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

As of ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 27, 2014,~~March 31, 2015, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities. The Company’s available for sale and trading securities principally consist of corporate and municipal bonds that are publicly traded.

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The following table presents information about the Company’s financial assets and liabilities measured at fair value as of ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 27, 2014~~March 31, 2015 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:



	Estimated Fair Value September 30, 2015								Estimated Fair Value March 31, 2016
	Total		Input Levels Used						Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	70,726	$	70,726	$	-	$	��-	$	95,057	$	95,057	$	-	$	-
Available for sale securities		134,542		2,453		132,089		-		152,724		2,441		150,283		-
Foreign currency forward contracts		(2,977)		-		(2,977)		-		(1,350)		-		(1,350)		-
Commodity futures contracts		(932)		(932)		-		-		569		569		-		-
Trading securities		71,371		71,371		-		-		62,509		62,509		-		-
Total assets measured at fair value	$	272,730	$	143,618	$	129,112	$	-	$	309,509	$	160,576	$	148,933	$	-


	Estimated Fair Value December 31, 2014								Estimated Fair Value December 31, 2015
		Total	Input Levels Used							Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	100,108	$	100,108	$	-	$	-	$	126,145	$	126,145	$	-	$	-
Available for sale securities		131,347		2,446		128,901		-		134,501		2,430		132,071		-
Foreign currency forward contracts		(1,939)		-		(1,939)		-		(2,626)		-		(2,626)		-
Commodity futures contracts, net		(737)		(737)		-		-		271		271		-		-
Trading securities		71,682		71,682		-		-		60,584		60,584		-		-
Total assets measured at fair value	$	300,461	$	173,499	$	126,962	$	-	$	318,875	$	189,430	$	129,445	$	-


	Estimated Fair Value September 27, 2014								Estimated Fair Value March 31, 2015
		Total	Input Levels Used							Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	45,142	$	45,142	$	-	$	-	$	85,430	$	85,430	$	-	$	-
Available for sale securities		126,870		-		126,870		-		133,412		2,461		130,951		-
Foreign currency forward contracts		(1,238)		-		(1,238)		-		(3,328)		-		(3,328)		-
Commodity futures contracts		(377)		(377)		-		-		(1,709)		(1,709)		-		-
Trading securities		69,367		69,367		-		-		75,171		75,171		-		-
Total assets measured at fair value	$	239,764	$	114,132	$	125,632	$	-	$	288,976	$	161,353	$	127,623	$	-

The fair value of the Company’s industrial revenue development bonds at ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 27, 2014~~March 31, 2015 were valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. Interest rates on these bonds are reset weekly based on current market conditions.

Note 5 — Derivative Instruments and Hedging Activities

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

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

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~~hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items~~ and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

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

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at ~~September 30, 2015,~~March 31, 2016, December 31, ~~2014~~2015 and ~~September 27, 2014:~~March 31, 2015:



	September 30, 2015						March 31, 2016
	Notional						Notional
	Amounts		Assets		Liabilities		Amounts		Assets		Liabilities

Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	22,500	$	-	$	(2,977)	$	12,339	$	-	$	(1,350)
Commodity futures contracts		10,263		49		(981)		12,029		648		(79)
Total derivatives designated as hedging instruments				49		(3,958)
Derivatives not designated as hedging instruments:
Commodity futures contracts		-		-		-
Total derivatives not designated as hedging instruments				-		-
Total derivatives			$	49	$	(3,958)			$	648	$	(1,429)


	December 31, 2014						December 31, 2015
	Notional						Notional
	Amounts		Assets		Liabilities		Amounts		Assets		Liabilities

Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	27,603	$	-	$	(1,939)	$	15,668	$	-	$	(2,626)
Commodity futures contracts		5,422		23		(760)		13,202		484		(213)
Total derivatives designated as hedging instruments				23		(2,699)
Derivatives not designated as hedging instruments:
Commodity futures contracts				-		-
Total derivatives not designated as hedging instruments				-		-
Total derivatives			$	23	$	(2,699)			$	484	$	(2,839)

	September 27, 2014						March 31, 2015
	Notional						Notional
	Amounts		Assets		Liabilities		Amounts		Assets		Liabilities

Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	33,291	$	20	$	(1,258)	$	23,443	$	-	$	(3,328)
Commodity futures contracts		3,352		-		(377)		15,966		31		(1,740)
Total derivatives designated as hedging instruments				20		(1,635)
Derivatives not designated as hedging instruments:
Commodity futures contracts		-		-		-
Total derivatives not designated as hedging instruments				-		-
Total derivatives			$	20	$	(1,635)			$	31	$	(5,068)

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The effects of derivative instruments on the Company’s Condensed Consolidated Statements of Earnings and Retained Earnings and the Condensed Consolidated Statements of Comprehensive Earnings for periods ended ~~September 30,~~March 31, 2016 and March 31, 2015 ~~and September 27, 2014~~ are as follows:



	For Quarter Ended September 30, 2015						For Quarter Ended March 31, 2016
					Gain (Loss)						Gain (Loss)
			Gain (Loss)		on Amount Excluded				Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness		Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized		Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings		in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(1,195)	$	(712)	$	-	$	670	$	(606)	$	-
Commodity futures contracts		(827)		(916)		-		291		(7)		-
Total	$	(2,022)	$	(1,628)	$	-	$	961	$	(613)	$	-

	For Quarter Ended September 27, 2014						For Quarter Ended March 31, 2015
					Gain (Loss)						Gain (Loss)
			Gain (Loss)		on Amount Excluded				Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness		Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized		Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings		in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(1,492)	$	(173)	$	-	$	(1,903)	$	(513)	$	-
Commodity futures contracts		(762)		(235)		-		(1,134)		(162)		-
Total	$	(2,254)	$	(408)	$	-	$	(3,037)	$	(675)	$	-

	For Year to Date Ended September 30, 2015
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(2,772)	$	(1,733)	$	-
Commodity futures contracts		(1,765)		(1,569)		-
Total	$	(4,537)	$	(3,302)	$	-

	For Year to Date Ended September 27, 2014
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain(Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(1,178)	$	(624)	$	-
Commodity futures contracts		(521)		(294)		-
Total	$	(1,699)	$	(918)	$	-

During the quarters and years to date ended September 30, 2015 and September 27, 2014, the Company recognized losses of $0 and $0, and $0 and $20 respectively, related to mark-to-market accounting for certain commodity option and future contracts.

Note 6 — Pension Plans

~~Beginning in 2012,~~During 2015 and 2016, the Company received updated notices ~~from~~that 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~~employees, is in “critical and declining status”~~, the “Red Zone”~~, as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation

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(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 2014) may also affect the future of this Plan.

become insolvent in 14 years. The Company ~~was previously~~has been 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 ~~$56,400~~$61,000 if it had withdrawn from the Plan during 2014. The increase from 2012 to 2014 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.2015. 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 payable to the Plan. Pension expense, including surcharges as discussed above, for the BC&T Plan for nine months 2015 and 2014 was $2,013 and $2,028, respectively. The aforementioned includes surcharge of $349 and $268 in nine months 2015 and 2014, respectively, related to contribution increases under the plan of rehabilitation.

During second quarter 2015, the Company received new notices that the Plan is in “critical and declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015, and that the Plan is projected to have an accumulated funding deficiency for the 2017 through 2024 plan years. The recent notices advised that the Plan’s actuarially determined asset values would fund 65.11%, 66.41% and 66.86% of its liabilities as of its January 1, 2014, 2013, and 2012 plan valuation dates, respectively. The aforementioned funding percentages are based on actuarially determined asset valuations which differ from the market values of the Plan’s assets on these dates. Based on the market values of the Plan’s investments, its funded percentages were 60.2% and 55.3% as of January 1, 2014 and 2013, respectively. The notice also indicates that as of the January 1, 2014 valuation date, 20.8% of plan participants were active participants working for a participating employer, 51.4% were retired and receiving benefits, and 27.8% were retired or separated from service and entitled to future benefits.

~~The Company’s existing labor contract with the local BC&T commits the Company’s participation in this Plan through third quarter 2017.~~ 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 or the effects of any modifications to the current rehabilitation plan could be material to its consolidated results of operations or cash flows in one or more future periods. See also the Company’s Condensed Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations incorporated into the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014 (the “2014 Form 10-K”).~~2015.

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Note 7 — Accumulated Other Comprehensive Earnings (Loss)

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



																							Accumulated
													Foreign				Foreign				Postretirement		Other
													Currency				Currency		Commodity		and Pension		Comprehensive
													Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2015													$	(21,644)	$	(605)	$	(1,675)	$	173	$	6,387	$	(17,364)
Other comprehensive earnings (loss) before reclassifications														205		312		427		187		-		1,131
Reclassifications from accumulated other comprehensive loss														-		3		387		4		(262)		132
Other comprehensive earnings (loss) net of tax														205		315		814		191		(262)		1,263
Balance at March 31, 2016													$	(21,439)	$	(290)	$	(861)	$	364	$	6,125	$	(16,101)

											Accumulated												Accumulated
	Foreign				Foreign				Postretirement		Other		Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive		Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)		Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2014	$	(17,499)	$	(332)	$	(1,236)	$	(470)	$	6,439	$	(13,098)	$	(17,499)	$	(332)	$	(1,236)	$	(470)	$	6,439	$	(13,098)
Other comprehensive earnings (loss) before reclassifications		(3,706)		69		(1,769)		(1,125)		-		(6,531)		(1,159)		237		(1,214)		(722)		-		(2,858)
Reclassifications from accumulated other comprehensive loss		-		-		1,106		1,000		(694)		1,412		-		-		327		103		(232)		198
Other comprehensive earnings (loss) net of tax		(3,706)		69		(663)		(125)		(694)		(5,119)		(1,159)		237		(887)		(619)		(232)		(2,660)
Balance at September 30, 2015	$	(21,205)	$	(263)	$	(1,899)	$	(595)	$	5,745	$	(18,217)

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2013	$	(13,527)	$	54	$	(436)	$	(96)	$	9,367	$	(4,638)
Other comprehensive earnings (loss) before reclassifications		(1,703)		(202)		(752)		(332)		-		(2,989)
Reclassifications from accumulated other comprehensive loss		-		-		398		188		(864)		(278)
Other comprehensive earnings (loss) net of tax		(1,703)		(202)		(354)		(144)		(864)		(3,267)
Balance at September 27, 2014	$	(15,230)	$	(148)	$	(790)	$	(240)	$	8,503	$	(7,905)
Balance at March 31, 2015													$	(18,658)	$	(95)	$	(2,123)	$	(1,089)	$	6,207	$	(15,758)

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


	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)


Details about Accumulated Other	Quarter Ended				Year to Date Ended					Quarter Ended
Comprehensive Income Components	September 30, 2015		September 27, 2014		September 30, 2015		September 27, 2014		Location of (Gain) Loss Recognized in Earnings	March 31, 2016		March 31, 2015		Location of (Gain) Loss Recognized in Earnings
Investments										$	4	$	-	Other income, net
Foreign currency derivatives	$	712	$	173	$	1,733	$	624	Other income, net		606		513	Other income, net
Commodity derivatives		916		235		1,569		294	Product cost of goods sold		7		162	Product cost of goods sold
Postretirement and pension benefits		(185)		(230)		(555)		(690)	Selling, marketing and administrative expenses		(210)		(185)	Selling, marketing and administrative expenses
Postretirement and pension benefits		(177)		(221)		(533)		(663)	Product cost of goods sold		(201)		(178)	Product cost of goods sold
Total before tax		1,266		(43)		2,214		(435)			206		312
Tax (expense) benefit		(458)		15		(802)		157			(74)		(114)
Net of tax	$	808	$	(28)	$	1,412	$	(278)		$	132	$	198

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Note 8 — Restricted Cash

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

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Note 9 — Bank Loans

Long term bank loans comprise borrowings by the Company’s ~~less than wholly owned~~majority-owned Spanish companies ~~(see Note 10)~~ which are held by international banks. The average weighted interest rate at ~~September 30,~~March 31, 2016 and March 31, 2015 ~~and September 27, 2014~~ was ~~2.5~~2.2 % and ~~2.7%~~2.5%, respectively, and maturity dates range from 12 to 43 years for both periods. Short term bank loans also relate to the Company’s ~~less than wholly owned~~majority-owned Spanish companies.

~~Note 10 — Step Acquisition~~

During first quarter 2014, the Company gained operating control of its two 50% owned Spanish companies when Company employee representatives assumed all positions on their boards of directors. This was considered a step acquisition, whereby the Company remeasured the previously held investment to fair value in first quarter 2014. As a result, the Company’s first quarter 2014 net earnings include a net loss of $529, including an additional income tax provision of $2,350 relating to deferred income taxes. During 2014, the Company further increased its control and ownership to 83% by subscribing to additional common shares of these Spanish subsidiaries for approximately $1,400 ($1,200 was paid in 2014, and the balance was paid in 2015). The consolidated financial statements for the year ended December 31, 2014 and nine months ended September 30, 2015 include these Spanish companies and related minority interests. These Spanish subsidiaries are not material to the Company’s consolidated ~~financial statements.~~

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

This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources, new accounting pronouncements and other matters. Dollars are presented in thousands, except per share amounts. This review should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes included in this Form 10-Q and with the Company’s Condensed Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s ~~2014~~ Form ~~10-K.~~10-K for the year ended December 31, 2015 (the “2015 Form 10-K”).

Net product sales were ~~$183,806~~$103,362 in ~~third~~first quarter ~~2015~~2016 compared to ~~$191,093~~$105,477 in ~~third~~first quarter ~~2014,~~2015, a decrease of ~~$7,287~~$2,115 or ~~3.8%~~2.0%. ~~Nine months 2015 net product sales were $396,811 compared to $401,966 in nine months 2014, a decrease of $5,155 or 1.3%. Third~~First quarter ~~and nine months 2015 net~~2016 sales were adversely affected by ~~currency translation~~$1,202 of ~~$2,900~~lower export sales from the U.S. to foreign markets, and ~~$5,800 respectively, due to~~$630 of lower sales by foreign subsidiaries. Because much of these sales were made in foreign currencies, a stronger U.S. dollar and currency translation contributed $829 to these lower foreign sales in ~~2015 compared to 2014. The timing of certain sales between third and fourth quarters in the comparative 2015 and 2014 periods also contributed to lower reported sales for third~~first quarter ~~and nine months 2015.~~2016.

Product cost of goods sold were ~~$117,046~~$65,824 in ~~third~~first quarter ~~2015~~2016 compared to ~~$123,164~~$67,145 in ~~third~~first quarter ~~2014, and nine months 2015 product cost of goods sold were $252,924 compared to $256,211 in nine months 2014.~~2015. Product cost of goods sold includes ~~$(671)~~$13 and ~~$84~~$332 of certain deferred compensation expenses ~~(credits)~~ in ~~third~~first quarter ~~2015~~2016 and ~~2014, respectively, and $(253) and $716 of certain deferred compensation expenses (credits) in nine months~~ 2015, ~~and 2014,~~ respectively. These deferred compensation expenses ~~(credits)~~ principally result from the changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, product cost of goods sold decreased from ~~$123,080~~$66,813 in ~~third~~first quarter ~~2014~~2015 to ~~$117,717~~$65,811 in ~~third~~first quarter ~~2015,~~2016, a decrease of ~~$5,363~~$1,002 or ~~4.4%; and decreased from $255,495 in nine months 2014 to $253,177 in nine months 2015, a decrease of $2,318 or 0.9%~~1.5%. As a percentage of net product sales, adjusted product cost of goods sold was ~~64.0%~~63.7% and ~~64.4%~~63.3% in ~~third~~first quarter ~~2015~~2016 and ~~2014, respectively, a favorable decrease of 0.4%; and adjusted product cost of goods sold was 63.8% and 63.6% in nine months~~ 2015, ~~and 2014,~~ respectively, an unfavorable increase of ~~0.2%~~0.4%. ~~Third quarter and nine months net earnings benefited from more favorable ingredient costs, however, higher plant manufacturing overhead costs adversely affected product~~Adjusted cost of goods sold ~~because these~~as a percent of sales benefited from higher price realization in first quarter 2016 compared to first quarter 2015, however, increased manufacturing costs had an adverse impact in first quarter 2016. These higher manufacturing costs reflect the effects of lower production volumes in first quarter 2016 in order to reduce finished goods inventory levels to meet nearer term sales demands. This inventory reduction was in response to uncertainties surrounding changes in state and national labeling regulations and requirements, and facilitates the Company’s compliance and readiness to respond to possible changes under consideration. These higher plant manufacturing costs in first quarter 2016 result from reduced efficiencies relating to decreased production volumes and reflect the adverse effects of plant overhead costs which are generally fixed and do not change in proportion to changes in ~~sales and~~ production volumes. ~~Although our overall comparative ingredient~~Increases in certain ingredients costs, ~~in both third quarter~~wages and nine months 2015 were more favorable compared to the corresponding periods in the prior year, certain key ingredient costs are higher this year, and we expect higher overall ingredient costs in 2016. Although higher plant manufacturing overhead contributed to higher productbenefits also adversely affected adjusted cost of goods sold ~~as a percent of sales~~ in ~~2015, efficiencies driven by capital investments and ongoing~~first quarter 2016 compared to first quarter 2015. Ongoing cost containment programs ~~mitigated~~and the benefits of certain capital investments did mitigate some of these increased costs.

Selling, marketing and administrative expenses were ~~$26,338~~$24,053 in ~~third~~first quarter ~~2015~~2016 compared to ~~$31,840~~$25,984 in ~~third~~first quarter ~~2014, and nine months 2015 selling, marketing and administrative expenses were $78,161 compared to $85,767 in nine months 2014.~~2015. Selling, marketing and administrative expenses includes ~~$(2,485)~~$40 and ~~$265~~$1,086 of certain deferred compensation expenses ~~(credits)~~ in ~~third~~first quarter ~~2015~~2016 and ~~2014, respectively, and $(1,117) and $2,374 of certain deferred compensation expenses (credits) in nine months~~ 2015, ~~and 2014,~~ respectively. As discussed above, these expenses ~~(credits)~~ principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years, and are not reflective of current operating results. Adjusting for the aforementioned, selling, marketing and administrative expenses decreased from ~~$31,575~~$24,898 in ~~third~~first quarter ~~2014~~2015 to ~~$28,823~~$24,013 in ~~third~~first quarter ~~2015,~~2016, a decrease of ~~$2,752~~$885 or ~~8.7%; and selling, marketing and administrative expenses decreased from $83,393 in nine months 2014 to $79,278 in nine months 2015, a decrease of $4,115 or 4.9%~~3.6%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses decreased from ~~16.5%~~23.6% in ~~third~~first quarter ~~2014~~2015 to ~~15.7%~~23.2% in ~~third~~first quarter ~~2015,~~2016, a favorable decrease of ~~0.8%~~0.4% as a percent of net ~~sales; and selling, marketing and administrative expenses decreased from 20.7% in nine months 2014 to 20.0% in nine months 2015, a decrease of 0.7% as a percent of net~~product sales. Selling, marketing and administrative expenses include ~~$11,624~~$9,186 and ~~$12,930~~$9,924 for freight, delivery and warehousing expenses in ~~third~~first quarter ~~2015~~2016 and ~~2014, respectively, and $30,706 and $33,819 for freight, delivery and warehousing expenses in nine months~~ 2015, ~~and 2014,~~ respectively. These expenses were ~~6.3%~~8.9% and ~~6.8%~~9.4% of net product sales in ~~third~~first quarter ~~2015~~

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2016 and ~~2014, respectively, and 7.7% and 8.4% of net product sales in nine months~~ 2015, ~~and 2014,~~ respectively. Lower freight and delivery expenses reflect the effects of internal cost savings programs and initiatives as well as more favorable energy and diesel fuel costs, ~~and internal cost savings programs and initiatives,~~ and principally contributed to the above discussed decrease in selling, marketing and administrative expenses in ~~both third~~first quarter ~~and nine months 2015.~~2016.

Earnings from operations were ~~$41,028~~$14,216 in ~~third~~first quarter ~~2015~~2016 compared to ~~$36,759~~$12,964 in ~~third~~first quarter ~~2014, and were $67,626 in nine months 2015 compared to $62,016 in nine months 2014.~~2015. Earnings from operations include ~~$(3,156)~~$53 and ~~$349~~$1,418 of certain deferred compensation expenses ~~(credits)~~ in ~~third~~first quarter ~~2015~~2016 and ~~2014, respectively, and include $(1,370) and $3,090 of certain deferred compensation expenses (credits) in nine months~~ 2015, ~~and 2014,~~ respectively which are discussed above. Adjusting for these deferred compensation costs and expenses, ~~(credits),~~ operating earnings were ~~$37,872~~$14,269 and ~~$37,108~~$14,382 in ~~third~~first quarter 2016 and 2015, ~~and 2014,~~ respectively, ~~an increase~~a decrease of ~~$764~~$113 or ~~2.1%; and adjusted operating earnings were $66,256 and $65,106 in nine months 2015 and 2014, respectively, an increase of $1,150 or 1.8%~~0.8%. As a percentage of net product sales, these adjusted operating earnings were ~~20.6%~~13.8% and ~~19.4%~~13.6% in ~~third~~first quarter ~~2015~~2016 and ~~2014,~~2015, respectively, a favorable increase of ~~1.2%~~0.2% as a percentage of net product ~~sales; and were 16.7% and 16.2% in nine months 2015 and 2014, respectively, a favorable increase~~sales. First quarter 2016 operating

Table of ~~0.5%. The above discussed increases in adjusted operating~~ Contents

earnings principally reflect the ~~effects~~benefits of ~~more favorable product cost~~higher price realization on sales, but were adversely impacted by lower export sales and results of ~~goods sold~~foreign subsidiaries, as well as increased manufacturing and ~~selling, marketing and administrative expenses~~other costs as discussed above. Management believes the presentation in this and the preceding paragraphs relating to amounts adjusted for deferred compensation expense are more reflective of the underlying operations of the Company.

Other income (expense), net was ~~$(2,879)~~$(35) in ~~third~~first quarter ~~2015~~2016 compared to ~~$166~~$473 in ~~third~~first quarter ~~2014, and other income (expense) net, was $(1,085) in nine months 2015 compared to $4,865 in nine months 2014.~~2015. Other income (expense), net for ~~third~~first quarter ~~2015~~2016 and ~~2014~~2015 includes net gains ~~(losses)~~ and investment income of ~~$(3,156)~~$53 and ~~$349,~~$1,418, respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities; and other income (expense), net for nine months 2015 and 2014 includes net gains (losses) and investment income of $(1,370) and $3,090, respectively, on trading securities relating to these programs.liabilities. These changes in trading securities were substantially offset by a like amount of deferred compensation expense or credits included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above. Other income (expense), net includes ~~gains (losses)~~losses on foreign exchange of ~~$(51)~~$634 and ~~$(380)~~$1,354 in ~~third quarter 2015 and 2014, respectively, and $(818) and $(1,169) in nine months 2015 and 2014, respectively. In addition, prior year~~ first quarter 2016 and nine months 2014 other income, net includes a pre-tax gain of approximately $1,800 ($529 after-tax loss) resulting from the step acquisition of the two Spanish companies discussed below and in Note 10 of the Notes to the Condensed Consolidated Financial Statements.2015, respectively.

The consolidated effective tax rates were ~~31.5%~~30.5% and ~~27.9%~~32.3% in ~~third~~first quarter 2016 and 2015, ~~and 2014, respectively, and 30.2% and 32.8% in nine months 2015 and 2014,~~ respectively. ~~The effective tax rate in third quarter 2014 benefited from a release of a valuation allowance relating to capital loss carry-forwards and the filing of federal amended income tax returns.~~ The lower effective tax rate for nine months 2015 principally reflects a $1,066 release of an uncertain income tax liability, and resulting income tax benefit, due to a decision by a foreign court issued in second quarter 2015, and the reversal of deferred tax assets of $2,350 in first quarter ~~2014 relating~~2016 compared to first quarter 2015 reflects the ~~step acquisition~~effective settlement of ~~the Spanish companies as discussed in Note 10.~~certain income tax audits during first quarter 2016.

Net earnings attributable to Tootsie Roll Industries, Inc. were ~~$26,171~~$9,896 (after ~~$30~~$40 net loss attributed to non-controlling interests) in ~~third~~first quarter ~~2015~~2016 compared to ~~$26,668~~$9,154 (after ~~$59~~$51 net loss attributed to non-controlling interests) in ~~third~~first quarter ~~2014,~~2015, and earnings per share were ~~$0.43~~$0.16 and $0.14 in ~~both third~~first quarter ~~2015~~2016 and ~~2014. Nine months~~ 2015, net earnings attributable to Tootsie Roll Industries, Inc. were $46,384 (after $80 net earnings attributed to non-controlling interests) compared to nine months 2014 net earnings of $45,275 (after $352 net loss attributed to non-controlling interests), and net earnings per share were $0.75 and $0.72 in nine months 2015 and nine months 2014, respectively, an increase of ~~$0.03~~$0.02 per share, or 4%14%. As discussed above, net earnings were favorably impacted by the release of an uncertain income tax liability which added $1,066 or approximately $0.02 per share to nine months 2015 net earnings attributable to Tootsie Roll Industries, Inc. Earnings per share attributable to Tootsie Roll Industries, Inc. for ~~third~~first quarter ~~and nine months 2015~~2016 did benefit from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock. Average shares outstanding decreased from ~~62,321~~63,645 in ~~third quarter 2014 to 61,357 in third~~first quarter 2015 ~~and from 62,465~~to 62,499 in ~~nine months 2014 to 61,593 in nine months 2015.~~first quarter 2016.

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Goodwill and intangibles are assessed annually as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. The Company has not identified any triggering events, as defined, or other adverse information that would indicate a material impairment of its goodwill or intangibles in ~~nine months 2015.~~first quarter 2016. There were also no impairments in the comparative ~~nine months 2014~~first quarter 2015 period.

During first quarter 2014, the Company gained operating control of its two 50% owned Spanish companies when Company employee representatives assumed all positions on their boards of directors. This was considered a step acquisition, whereby the Company remeasured the previously held investment to fair valueBeginning in first quarter 2014. As a result, the Company’s first quarter 2014 net earnings include a net after-tax loss of $529, including an additional income tax provision of $2,350 relating to deferred income taxes. The Company further increased its ownership and control to 83% in fourth quarter 2014 by subscribing to additional common shares for approximately $1,400. These Spanish companies had operating losses for each of the years 2008 through 2014 and for nine months 2015. The Spanish companies were restructured during 2014 to reduce costs and expenses, but they have not achieved their business plan and financial objectives in third quarter and nine months 2015. Company management believes that it is likely that additional financing and investment will be required in 2015 and 2016 in light of the competitive challenges and economic conditions in Spain.

~~As discussed in Note 6 to the Company’s Condensed Consolidated Financial Statements,~~2012, the Company received periodic notices ~~beginning in 2012~~ 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~~employees, 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. ~~In fourth quarter 2014,~~During 2015, the Company received notices that the Plan’s status was ~~advised~~changed to “critical and declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015, and that the Plan was projected to have an accumulated funding deficiency for the 2017 through 2024 plan years. A designation of “critical and declining status” implies that the Plan is expected to become insolvent in the next 20 years. In April 2016, the Company received new notices that the Plan’s trustees adopted an updated Rehabilitation Plan effective January 1, 2016, and that the Plan remains in “critical and declining status” and is projected to become insolvent in 14 years. These new notices also advise that the Plan trustees are considering the reduction or elimination of certain retirement benefits and may seek assistance from the PBGC.

Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were 62.8%, 65.1% and 66.4% as of the most recent valuation dates available, January 1, 2015, 2014, and 2013, respectively (these valuation dates are as of the beginning of each Plan year). These funded percentages are based on actuarial values, as defined, and do not reflect the actual market value of Plan investments as of these dates. If the market value of investments had been used as of January 1, 2015 the funded percentage would be 59.8% (not 62.8%). As of the January 1, 2015 valuation date, 20% of Plan participants were current active employees, 51% were retired or separated from service and receiving benefits, and 29% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, 2015 fell 3% from the previous year and 6% over the past two years. When compared to the Plan valuation date of January 1, 2011 (four years earlier), current active employees participants have declined 30%, whereas participants who were retired or separated from service and receiving benefits increased 6% and participants who were retired or separated from service and entitled to future benefits increased 9%. The bankruptcy of a major participating employer in the Plan contributed to the above discussed Plan results.

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The Company has been advised that its withdrawal liability would have been $61,000 and $56,400 if it had withdrawn from the Plan during ~~2014. 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.~~2015 and 2014, respectively. The increase from ~~2012~~2014 to ~~2014~~2015 principally reflects ~~changes in key actuarial assumptions,~~a higher share of the Plan’s unfunded vested benefits allocated to the Company. Based on the above, including the ~~effects of a lower interest rates proscribed by PBGC which were partially used to determine~~Plan’s projected insolvency in 14 years, management believes that the ~~present value of vested benefits, and a change to a more conservative mortality table.~~Company’s withdrawal liability will likely increase further in 2016. Based on the Company’s actuarial study and certain provisions in ERISA and the law relating to withdrawal liability payments, management believes that the Company’s liability would be limited to twenty annual payments of ~~$2,999~~$2,966 which have a present value in the range of ~~$35,193~~$34,800 to $45,400 based on a range of valuation interest rates which management understands is provided under the ~~minimum funding interest rate of 6.5%.~~statute. 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 payable to the Plan. During second quarter 2015, the Company received new notices that the Plan is in “critical and declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015, and that the Plan is projected to have an accumulated funding deficiency for the 2017 through 2024 plan years.

The Company’s existing labor contract with the local ~~BC&T~~union commits the Company’s participation in this Plan through third quarter 2017. The amended 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. The Company’s pension expense for this Plan for first quarter 2016 and 2015 was $499 and $552, respectively. The aforementioned expense includes surcharges of $106 and $96 in first quarter 2016 and 2015, respectively, as required under the plan of rehabilitation as amended.

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 or the effects of any modifications to the current rehabilitation plan could be material to its consolidated results of operations or cash flows in one or more future periods. See also the Company’s Condensed Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations incorporated into the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2014 (the “2014 Form 10-K”).~~2015.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows provided by operating activities were ~~$30,260~~$14,980 and ~~$9,791~~$7,021 in ~~nine months~~first quarter 2016 and 2015, ~~and 2014,~~ respectively, an increase of ~~$20,469. This increase principally reflects higher net earnings~~$7,959. First quarter 2016 operating cash flows were favorably affected by the timing of sales and resulting changes in accounts receivable in the comparative periods, as well as a smaller increase in inventories ~~and accounts receivable~~ during ~~nine months 2015~~first quarter 2016 compared to ~~nine months 2014,~~first quarter 2015 as ~~well as changes~~discussed above. Cash flows from operating activities were adversely affected in ~~prepaid expense and other assets, and~~first quarter 2016 by the timing of payments of income ~~taxes payable and deferred during the comparative periods.~~taxes.

Net cash used in investing activities was ~~$18,688~~$28,724 in ~~nine months 2015~~first quarter 2016 compared to ~~$21,088~~$6,800 in ~~nine months 2014.~~first quarter 2015. Cash flows from investing activities reflect ~~$45,826~~$23,348 and ~~$37,416~~$9,107 relating to the purchase of available for sale securities during ~~nine months~~first quarter 2016 and 2015, respectively. First quarter 2016 and ~~2014, respectively. Nine months~~ 2015 ~~and 2014~~ investing activities ~~also~~

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include capital expenditures of ~~$12,421~~$8,376 and ~~$7,315,~~$2,418, respectively. ~~Capital~~The increase in capital expenditures ~~for~~in first quarter 2016 reflects the ~~2015 year are likely~~timing of certain expenditures relating to ~~be higher than historical annualized spending reflecting~~new equipment and related automation of a ~~significant production line replacement and renovation of approximately $10,000 planned for second half 2015 and early 2016 ($2,980 was spent as of September 30, 2015).~~larger manufacturing equipment line. All capital expenditures in ~~2015~~2016 are expected to be funded from the Company’s cash flow from operations and internal sources.

The Company’s consolidated financial statements include bank borrowings of ~~$683~~$853 and ~~$1,081~~$663 as of the end of ~~third~~first quarter ~~2015~~2016 and ~~2014,~~2015, respectively, all of which relates to its two majority-owned and controlled Spanish companies. The Company had no other outstanding bank borrowings as of the end of ~~third~~first quarter ~~2015.~~2016.

Financing activities include Company common stock purchases and retirements of ~~$22,998~~$6,576 and ~~$16,792~~$4,544 in ~~nine months~~first quarter 2016 and 2015, ~~and 2014,~~ respectively. Cash dividends of ~~$15,269~~$10,943 and ~~$14,415~~$9,613 were paid in ~~nine months~~first quarter 2016 and 2015, ~~and 2014,~~ respectively. The cash dividend paid in ~~second and third~~first quarter 2015 of $0.09 per share ~~reflects~~reflected an increase in the quarterly cash dividend per share of $0.01 per share (the prior ~~quarterly~~year first quarter dividend was $0.08 per share).

The Company’s current ratio (current assets divided by current liabilities) was ~~3.1~~4.3 to 1 as of the end of ~~third~~first quarter ~~2015~~2016 as compared to 4.1 to 1 as of the end of fourth quarter ~~2014~~2015 and ~~3.5~~3.7 to 1 as of the end of ~~third~~first quarter ~~2014.~~2015. Net working capital was ~~$216,752~~$195,504 as of the end of ~~third~~first quarter ~~2015~~2016 as compared to ~~$200,162~~$221,744 and ~~$195,287~~$201,870 as of the end of fourth and ~~third~~first quarters ~~2014,~~2015, respectively.

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The aforementioned net working capital amounts are principally reflected in aggregate cash and cash equivalents and short-term investments of ~~$124,148 (including $13,514 of short-term trading securities) as of the end of third quarter 2015~~$133,807 at March 31, 2016 compared to ~~$139,558~~$168,300 and ~~$81,204 as of the end of fourth~~$137,960 at December 31, 2015 and ~~third quarters 2014,~~March 31, 2015, respectively. In addition, long term investments, principally debt securities comprising corporate and municipal bonds and long-term trading securities, were ~~$152,491 as of the end of third quarter 2015,~~$176,483 at March 31, 2016, as compared to ~~$163,579~~$152,930 and ~~$160,175 as of the end of fourth~~$156,053 at December 31, 2015 and ~~third quarters 2014,~~March 31, 2015, respectively. Aggregate cash and cash equivalents and short and long-term investments were ~~$276,639, $303,137,~~$310,290, $321,230, and ~~$241,379,~~$294,013, as of ~~the end of third quarter~~March 31, 2016, December 31, 2015 and ~~as of the end of fourth and third quarters 2014,~~March 31, 2015, respectively. The aforementioned includes ~~$71,371, $71,682,~~$62,509, $60,584, and ~~$69,367~~$75,171 as of ~~the end of the third quarter~~March 31, 2016, December 31, 2015 and ~~fourth and third quarters 2014,~~March 30, 2015, respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities. ~~The~~At March 31, 2015, the Company ~~expects~~expected to ~~payout~~pay out approximately ~~$13,500~~$14,300 of deferred compensation liabilities and sell a like amount of trading securities during fourth quarter 2015, and therefore, ~~has~~had included approximately ~~$13,500~~$14,300 in both current investments and current deferred compensation in the Company’s Consolidated Statement of Financial Position. Investments in corporate and municipal bonds and other debt securities that matured during ~~nine months~~first quarter 2016 and 2015 ~~and 2014~~ were generally used to purchase the Company’s common stock or were replaced with debt securities of similar maturities.

~~During fourth quarter 2014 and 2013, respectively, the~~The Company ~~contributed $1,000 and $15,000~~periodically contributes to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company is currently using these VEBA funds to pay the actual cost of such benefits in 2015 and 2016, and through part of 2017. The VEBA trust held ~~$7,364, $10,845~~$5,216, $6,727 and ~~$10,758~~$9,739 of aggregate cash and cash equivalents as of ~~the end of third quarter~~March 31, 2016, December 31, 2015 and ~~as of the end of fourth and third quarters 2014,~~March 31, 2015, respectively. This asset value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position. These assets are categorized as Level 1 within the fair value hierarchy.

ACCOUNTING PRONOUNCEMENTS

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

RISK FACTORS

~~The Company’s operations and financial results are subject~~There were no material changes to ~~a number of risks and uncertainties that could adversely affect~~the risk factors disclosed in the Company’s operating results and financial condition. Significant risk factors that could impact the Company include, but are not limited to, the following: (i) significant competitive activity, including advertising, promotional and price competition, and changes in consumer demandAnnual Report on Form 10-K for the Company’s products; (ii) fluctuations in the cost and availability of commodities and ingredients, including the effects of adverse weather and climate change, (iii) the risk that the Company may not be successful in passing on higher ingredients and other year ended December 31, 2015.

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

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FORWARD-LOOKING STATEMENTS

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

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to various market risks, including fluctuations in and sufficient availability of sugar, corn syrup, edible oils, including soybean and palm oils, cocoa, dextrose, milk and whey, and gum-base input ingredients and packaging, and fuel costs principally relating to freight and delivery fuel surcharges. The Company is exposed to exchange rate fluctuations in the Canadian dollar which is the currency used for a portion of the raw material and packaging material costs and operating expenses at its Canadian plants. The Company is exposed to exchange rate fluctuations in Mexico, Canada, and Spain where its subsidiaries sell products in their local currencies. The Company invests in securities with maturities dates of up to approximately three years, the majority of which are held to maturity, which limits the Company’s exposure to interest rate fluctuations. There have been no material changes in the Company’s market risks that would significantly affect the disclosures made in the Form 10-K for the year ended December 31, ~~2014.~~2015.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, the Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of ~~September 30, 2015~~March 31, 2016 and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended ~~September 30, 2015~~March 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~Table of Contents~~

PART II — OTHER INFORMATION

~~TOOTSIE ROLL INDUSTRIES, INC.~~

~~AND SUBSIDIARIES~~

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

The following table summarizes the Company’s purchases of its common stock during the quarter ended ~~September 30, 2015:~~March 31, 2016:

Approximate Dollar

(a) Total

Shares

Value of Shares that

Number of

(b) Average

Purchased as Part of

May Yet Be Purchased

Shares

Price Paid per

Publicly Announced Plans

Under the Plans
Period

Purchased

Share

Or Programs

or Programs

Jul 1 to Jul 31

73,857

$
31.96

Not Applicable

Not Applicable

Aug 1 to Aug 31

126,987

31.34

Not Applicable

Not Applicable

Sep 1 to Sep 30

149,662

31.08

Not Applicable

Not Applicable

Total

350,506

$
31.36

Not Applicable

Not Applicable



					Approximate Dollar
	(a) Total			Shares	Value of Shares that
	Number of	(b) Average		Purchased as Part of	May Yet Be Purchased
	Shares	Price Paid per		Publicly Announced Plans	Under the Plans
Period	Purchased	Share		Or Programs	or Programs

Jan 1 to Jan 31	208,118	$	30.71	Not Applicable	Not Applicable

Feb 1 to Feb 29	5,688		31.21	Not Applicable	Not Applicable

Mar 1 to Mar 31	-		-	Not Applicable	Not Applicable

Total	213,806	$	30.72	Not Applicable	Not Applicable

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

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ITEM 6. EXHIBITS

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

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

Exhibit 101.INS - XBRL Instance Document.

Exhibit 101.SCH - XBRL Taxonomy Extension Schema Document.

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

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

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

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

~~Table of Contents~~

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


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	~~November 6, 2015~~May 9, 2016	BY:	/S/ELLEN R. GORDON
			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	~~November 6, 2015~~May 9, 2016	BY:	/S/G. HOWARD EMBER, JR.
			G. Howard Ember, Jr.
			Vice President Finance and
			Chief Financial Officer

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