UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ----to----
COMMISSION FILE NUMBER 1-1361
Tootsie Roll Industries, Inc.
(Exact Name of Registrant as Specified in its Charter)
VIRGINIA 22-1318955
(State of Incorporation) (I.R.S. Employer Identification No.)
7401 South Cicero Avenue, Chicago, Illinois 60629
(Address of Primcipal 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 dur-
ing 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 require-
ments for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date (September 28, 2002)
Class Outstanding (In Thousands)
Common Stock, $.69 4/9 par value 34,821
Class B Common Stock, $.69 4/9 par value 16,765
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
SEPTEMBER 28, 2002
I N D E X
Page No
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Statements of Financial Position.......................2
Consolidated Statements of Earnings, Comprehensive
Earnings and Retained Earnings......................................3
Consolidated Statements of Cash Flows................................4
Notes to Consolidated Financial Statements........................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............6
Item 4. Controls and Procedures.......................................6C
Part II - Other Information
Item 5. Other Information.............................................7
Item 6. Exhibits and Reports on Form 8-K
Signatures.............................................................7
Certifications.........................................................7A-C
PART I - FINANCIAL INFORMATION
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of dollars) (UNAUDITED)
ASSETS Sept. 28, Sept. 29, Dec. 31,
CURRENT ASSETS 2002 2001 2001
Cash & Cash Equivalents $ 62,801 $ 76,597 $106,532
Investments 53,582 50,845 68,629
Trade Accounts Receivable,
Less Allowances of
$3,094, $3,181 & $2,037 80,717 80,036 20,403
Other Receivables 3,528 4,003 3,329
Inventories, at Cost
(Last-in,First-out):
Finished Goods & Work in Process 30,091 29,153 24,770
Raw Material & Supplies 17,589 15,917 16,392
Prepaid Expenses 5,336 8,833 4,269
Deferred Income Taxes 1,772 1,351 1,772
Total Current Assets 255,416 266,735 246,096
PROPERTY, PLANT & EQUIPMENT,
(at cost)
Land 8,308 8,358 8,354
Buildings 43,556 37,214 43,613
Machinery & Equipment 195,768 193,953 189,528
247,632 239,525 241,495
Less-Accumulated Depreciation 117,813 106,840 108,920
129,819 132,685 132,575
OTHER ASSETS
Goodwill, Net 38,151 38,520 38,151
Trademarks, Net 79,348 79,924 79,348
Investments 103,608 72,056 71,131
Cash Surrender Value of Life
Insurance and Other Assets 58,265 50,994 51,375
279,372 241,494 240,005
Total Assets $664,607 $640,914 $618,676
(The accompanying notes are an integral part of these statements)
(in thousands of dollars) (UNAUDITED)
LIABILITIES AND SHAREHOLDERS' EQUITY Sept. 28, Sept. 29, Dec. 31,
CURRENT LIABILITIES 2002 2001 2001
Accounts Payable $ 13,096 $ 13,493 $ 9,223
Dividends Payable 3,612 3,536 3,536
Accrued Liabilities 41,371 40,199 34,295
Income Taxes Payable 21,194 36,682 10,792
Total Current Liabilities 79,273 93,910 57,846
NON-CURRENT LIABILITIES
Industrial Development Bonds 7,500 7,500 7,500
Post Retirement Benefits 7,966 7,344 7,450
Deferred Compensation and Other Liabilities 19,927 18,718 20,627
Deferred Income Taxes 16,665 12,226 16,792
Total Non-Current Liabilities 52,058 45,788 52,369
SHAREHOLDERS' EQUITY
Common Stock, $.69-4/9 par value-
120,000 shares authorized
34,821, 34,039 & 34,139
respectively, issued 24,182 23,638 23,708
Class B Common Stock, $.69-4/9 par value-
40,000 shares authorized
16,765, 16,469 & 16,319
respectively, issued 11,642 11,437 11,332
Capital in Excess of Par Value 373,157 325,879 323,981
Retained Earnings 137,596 152,483 161,345
Accumulated Other Comprehensive Earnings (11,309) (10,229) (9,913)
Treasury Stock (at cost)-
55,55, & 55 shares, respectively (1,992) (1,992) (1,992)
Total Shareholders' Equity 533,276 501,216 508,461
Total Liabilities and
Shareholders' Equity $664,607 $640,914 $618,676
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS, COMPREHENSIVE EARNINGS AND RETAINED EARNINGS (NOTE 1)
(in thousands except per share amounts) (UNAUDITED)
13 Weeks Ended
Sept 28, 2002 & Sept 29, 2001
NET SALES (Notes 2 & 5) $146,298 $148,456
Cost of Goods Sold 84,338 82,477
Gross Margin 61,960 65,979
Selling, Marketing & Administrative Expense (Note 5) 22,599 24,685
Amortization of Intangible Assets -- 945
Earnings from Operations 39,361 40,349
Other Income, Net 845 1,143
Earnings before Income Taxes 40,206 41,492
Provision for Income Taxes 13,590 14,482
Net Earnings 26,616 27,010
Other Comprehensive Income, before tax:
Foreign Currency Translation Adjustments (377) (854)
Unrealized Gains on Securities:
Unrealized holding gains (losses) arising during period $(423) $(529)
Less: Amounts realized in earnings 6 (417) 17 (512)
Unrealized Gains on Derivatives:
Unrealized holding gains (losses) arising during period (192) (27)
Less: Amounts realized in earnings 405 213 (25) (52)
Other comprehensive income (loss), before tax (581) (1,418)
Income tax benefit related to items of other
Comprehensive Income 76 209
Other Comprehensive Earnings, Net of Tax (505) (1,209)
Comprehensive Earnings $ 26,111 $ 25,801
Retained Earnings at Beginning of Period $114,588 $129,004
Net Earnings 26,616 27,010
Cash Dividends (3,608) (3,531)
Stock Dividends - 3% -- --
Retained Earnings at End of Period $137,596 $152,483
Net Earnings per Share (Note 3) $ .52 $ .52
Dividends per Share * $ .07 $ .07
Average Number of Shares Outstanding (Note 3) 51,557 51,951
*Does not include 3% Stock Dividend to Shareholders of Record on 3/05/02 and 3/06/01
(The accompanying notes are an integral part of the statements)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
EARNINGS, COMPREHENSIVE EARNINGS AND RETAINED EARNINGS (NOTE 1)
(in thousands except per share amounts) (UNAUDITED)
39 Weeks Ended
Sept 28, 2002 & Sept 29, 2001
NET SALES (Notes 2 & 5) $302,420 $304,301
Cost of Goods Sold 168,874 165,505
Gross Margin 133,546 138,796
Selling, Marketing & Administrative Expense (Note 5) 58,144 59,609
Amortization of Intangible Assets -- 2,834
Earnings from Operations 75,402 76,353
Other Income, Net 3,106 5,518
Earnings before Income Taxes 78,508 81,871
Provision for Income Taxes 26,804 28,574
Net Earnings 51,704 53,297
Other Comprehensive Income, before tax:
Foreign Currency Translation Adjustments (1,186) 297
Unrealized Gains on Securities:
Unrealized holding gains (losses) arising during period $(811) $(629)
Less: Amounts realized in earnings 56 (755) 29 (600)
Unrealized Gains on Derivatives:
Unrealized holding gains (losses) arising during period (596) (135)
Less: Amounts realized in earnings 1,018 422 204 69
Other comprehensive income (loss), before tax (1,519) (234)
Income tax benefit related to items of other
Comprehensive Income 123 196
Other Comprehensive Earnings, Net of Tax (1,396) (38)
Comprehensive Earnings $ 50,308 $ 53,259
Retained Earnings at Beginning of Period $161,345 $180,123
Net Earnings 51,704 53,297
Cash Dividends (10,729) (10,493)
Stock Dividends - 3% (64,724) (70,444)
Retained Earnings at End of Period $137,596 $152,483
Net Earnings per Share (Note 3) $1.00 $1.03
Dividends per Share * $ .21 $ .21
Average Number of Shares Outstanding (Note 3) 51,649 51,951
*Does not include 3% Stock Dividend to Shareholders of Record on 3/05/02 and 3/06/01
(The accompanying notes are an integral part of the statements)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands dollars) (UNAUDITED)
39 Weeks Ended
Sept. 28, 2002 & Sept. 29, 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $51,704 $53,297
Adjustments to reconcile net earnings to
net cash provided by (used in)
operating activities:
Depreciation and amortization 8,893 11,670
(Increase) decrease in assets:
Accounts receivable (60,578) (56,394)
Other receivables 69 (2,730)
Inventories (6,837) (3,090)
Prepaid expenses and other assets (8,433) (13,234)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 11,083 10,031
Income taxes payable and deferred 10,213 26,123
Postretirement health care and life
insurance benefits 516 388
Deferred compensation and other liabilities (700) (704)
Other (27) 13
Net cash provided by operating activities 5,903 25,370
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,787) (10,269)
Purchase of held to maturity securities (191,739) (140,392)
Maturity of held to maturity securities 175,824 140,665
Purchase of available for sale securities (26,629) (50,870)
Sale of available for sale securities 25,114 61,850
Net cash provided by (used in)
investing activities (24,217) 984
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares repurchased and retired (14,412) --
Dividends paid in cash (11,005) (10,639)
Net cash used in financing activities (25,417) (10,639)
Increase (decrease) in cash & cash equivalents (43,731) 15,715
Cash and cash equivalents-beginning of year 106,532 60,882
Cash and cash equivalents-end of quarter $62,801 $76,597
Supplemental cash flow information:
Income taxes paid $16,497 $ 2,558
Interest paid $ 236 $ 319
(The accompanying notes are an integral part of the statements)
TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 28, 2002
(in thousands except per share amounts) (UNAUDITED)
Note 1 - Foregoing data has been prepared from the unaudited
financial records of the Company and in the opinion of
Management, all adjustments necessary for a fair statement
of the results for the interim period have been reflected.
All adjustments were of a normal and recurring nature.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and
the related notes included in the Company's 2001 Annual
Report on Form 10-K.
Note 2 - The Company's unshipped orders amounted to $32,900 and
$35,500 at September 28, 2002 and September 28, 2001,
respectively.
Note 3 - Average shares outstanding for the period ended September
28, 2002 reflects stock repurchases of 70 shares for $2,590
for the three month period and 370 shares for $14,412 and a
3% stock dividend distributed on April 17, 2002 for the nine
month period. Average shares outstanding for the period ended
September 29, 2001 reflects a 3% stock dividend distributed
on April 18, 2001.
Note 4 - Results of operations for the period ended September 28,
2002 are not necessarily indicative of results to be
expected for the year to end December 31, 2002 because of
the seasonal nature of the Company's operations. Histor-
ically, the Third Quarter has been the Company's largest
sales quarter due to Halloween sales.
NOTE 5 - Effective January 1, 2002, the Company adopted EITF 00-14,
"Accounting for Certain Sales Incentives" and EITF 00-25,
"Vendor Income Statement Characterization of Consideration
Paid to a Reseller of the Vendor's Products." These state-
ments required that the Company reclassify its cooperative
advertising and certain sales incentives from selling,
marketing and and administrative expense to a reduction of
net sales. This reclassification has been made for all
periods presented. The effect of these adoptions reduced
both net sales and operating expenses by $9,736 and $10,325
in the Third Quarter of 2002 and 2001, respectively, and
$23,048 and $23,983 in the First Nine Months of 2002 and
2001, respectively. The adoption of such requirements did
not effect the comparative quarterly earnings.
NOTE 6 - The Company adopted SFAS 142, "Goodwill and Other Intangible
Assets," on January 1, 2002. As a result of its adoption, the
Company has reclassified approximately $79.3 million from
intangible assets to trademarks. The remaining amounts relate
to goodwill. All trademarks have been assessed by management
to have indefinite lives because they are expected to generate
cash flows indefinitely. Thus, the Company has ceased amorti-
zation expense on all trademarks and goodwill as of January 1,
2002, resulting in increased reported net income after tax by
approximately $712 for the quarter and by $2,138 for the nine
months ended September 28, 2002, respectively. The amortiza-
tion expense and net income (including any tax effects) of the
Company for the 13 weeks and 39 weeks ended September 28, 2002
and September 29, 2001, respectively, are as follows:
13 Weeks Ended
Sept 28, 2002 & Sept 29,2001
Reported net income $26,616 $27,010
Add back: goodwill amortization 0 369
Add back: trademark amortization 0 576
Less: Tax effect 0 233
Adjusted net income $26,616 $27,722
Reported basic earnings per share $ .52 $ .52
Goodwill amortization - .00
Trademark amortization - .01
Adjusted basic earnings per share $ .52 $ .53
39 Weeks Ended
Sept 28, 2002 & Sept 29,2001
Reported net income $51,704 $53,297
Add back: goodwill amortization 0 1,105
Add back: trademark amortization 0 1,729
Less: Tax effect 0 696
Adjusted net income $51,704 $55,435
Reported basic earnings per share $ 1.00 $ 1.03
Goodwill amortization - .01
Trademark amortization - .03
Adjusted basic earnings per share $ 1.00 $ 1.07
The Company has identified its reporting units related to good-
will and completed step one of the goodwill impairment test
during the first quarter which required that management compare
the fair value of the reporting unit with its carrying value.
The reporting units were not considered to be impaired. The
Company also completed its impairment test of the indefinite
lived trademarks which required management to compare the fair
value of the trademarks to the carrying value. The trademarks
were not considered to be impaired.
The impairment tests performed require that the Company deter-
mine the fair market value of its trademarks and the fair market
value of its reporting units for comparison to the carrying
value of such net assets to assess whether an impairment
exists. The methodologies used to estimate fair market value
involve the use of estimates and assumptions, including
projected revenues, earnings and cash flows.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion of the Company's operating results and
analysis of factors which have affected the accompanying Statement of Earnings.
NET SALES:
Third Quarter, 2002
Third Quarter vs.
2002 2001 Third Quarter, 2002
$146,298 $148,456 - 1.5%
Nine Months, 2002
Nine Months vs.
2002 2001 Nine Months, 2001
$302,420 $304,301 - 0.6%
Third quarter 2002 net sales of $146,298 were down 1.5% from third quarter 2001
net sales of $148,456. Nine months 2002 net sales of $302,420 were down 0.6%
from nine months 2001 net sales of $304,301. Effective January 1, 2002, the
Company adopted the reporting requirements of the Emerging Issues Task Force of
the Financial Accounting Standards Board (FASB) which require that certain con-
sumer and trade promotion expenses, including off invoice allowances and market-
ing performance fund payments, be recorded as a reduction of net sales and not
as a component of Selling, Marketing and Administrative expense. The effect of
the above was to reduce net sales and operating expenses by $9,736 and $10,325
in the third quarter of 2002 and 2001, respectively, and by $23,048 and $23,983
in the first nine months of 2002 and 2001, respectively. The adoption of such
requirements did not affect the Company's comparative quarterly and nine months
earnings or financial position.
Although some of the Company's core brands showed sales increases, lower
Mexican Sales, slower retail sales traffic and retail bankruptcies, as well as
overall competitive activity, adversely affected sales for the quarter and nine
month periods. In addition, third quarter sales were adversely affected by more
cautious retail ordering reflecting the overall economic climate and the lower
prior year candy industry sell-through rates of Halloween sales caused by the
events of September 11, 2001.
Third quarter 2002 net sales of $146,298 were up 89.7% from second quarter 2002
net sales of $77,131. Historically, the third quarter includes pre-Halloween
sales and is the Company's largest quarterly sales period of the year.
COST OF SALES:
Cost of Sales as a
Third Quarter Percentage of Net Sales
2002 2001 3rd Qtr. 2002 3rd Qtr. 2001
$84,338 $82,477 57.6% 55.6%
Cost of Sales as a
Nine Months Percentage of Net Sales
2002 2001 Nine Months 2002 Nine Months 2001
$168,874 $165,505 55.8% 54.4%
Cost of sales as a percentage of net sales increased from 55.6% in the third
quarter 2001 to 57.6% in the third quarter 2002. Nine months cost of sales as
a percentage of net sales also increased from 54.4% to 55.8% in 2002. These
higher costs were principally the result of higher ingredient costs, including
sugar, corn syrup and cocoa. The effects of product mix and higher plant over-
head costs also contributed to these higher costs.
NET EARNINGS:
Third Quarter, 2002
Third Quarter vs.
2002 2001 Third Quarter, 2001
$26,616 $27,010 -1.5%
Nine Months, 2002
Nine Months vs
2002 2001 Nine Months, 2001
$51,704 $27,010 -3.0%
Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangibles," which changed the financial accounting and reporting for
acquired goodwill and intangibles. SFAS 142 specifies that goodwill and indef-
inite-lived intangibles will not be amortized but rather will be tested for im-
pairment. The Company has completed its impairment tests under the provisions
of SFAS No. 142 for its indefinite-lived trademarks and goodwill and has con-
cluded that neither is impaired. The adoption of SFAS No. 142 had the effect of
eliminating amortization expense of $945 and $2,834 relating to the Company's
acquired goodwill and indefinite-lived trademarks during the Third Quarter of
2002 and Nine Months of 2002, respectively.
Third quarter earnings from operations were $39,361 and $40,349 in 2002 and
2001, respectively; and nine months earnings from operations were $75,402 and
$76,353 in 2002 and 2001, respectively. However, after adjusting the prior
year's operating earnings for the effects of SFAS 142, third quarter 2002 and
2001 operating earnings were $39,361 and $41,294, respectively, a decrease of
$1,933 or 4.7%; and nine months operating earnings were $75,402 and $79,187 in
2002 and 2001, respectively, a decrease of $3,785 or 4.8%. The decrease in ad-
justed operating earnings for the quarter and nine months principally results
from higher ingredient costs, lower earnings from export and international oper-
ations, principally Mexico, and the effects of sales volumes and product mix as
discussed above. However, cost containment programs, which reduced Selling,
Marketing and Administrative expense for the quarter and nine month periods,
mitigated some of these higher costs and expenses.
The consolidated effective income tax rate for the comparative nine month period
favorably decreased from 34.9% in the nine months of 2001 to 34.1% in the nine
months of 2002. The effective tax rate for the comparative quarterly periods de-
creased from 34.9% in 2001 to 33.8% in 2002. This improvement generally reflects
the effects of eliminating a portion of acquired goodwill that was not tax de-
ductible as well as some reduction in state income taxes.
Third quarter net earnings were $26,616, compared to $27,010 in the third
quarter 2001. Third quarter 2002 earnings per share were $.52 and were equal
to third Quarter 2001 earnings per share. Nine month 2002 net earnings were
$51,704 compared to the prior year's nine month 2001 net earnings of $53,297.
Nine months 2002 earnings per share were $1.00 compared to nine months 2001
earnings per share of $1.03, a decrease of $.03 or 2.9%.
As discussed above, the adoption of SFAS 142 had the effect of increasing re-
ported earnings by approximately $712 or $.01 per share in the third quarter,
and by $2,138 or $.04 per share in the nine months 2002. Nine months 2002 com-
parative earnings were adversely affected by a $962 capital gain, net of tax,
in the second quarter of 2001, which added approximately $.02 per share to the
prior year second quarter and nine months reported earnings per share. Exclud-
ing the effects of this investment gain and adjusting for the effects of SFAS
No. 142 in 2001, net earnings per share in the third quarter of 2002 and 2001
were $.52 and $.53, respectively, a decrease of 1.9%; and net earnings per
share in the nine month 2002 and 2001 were $1.00 and $1.05, respectively, a de-
crease of 4.8%. The aforementioned comparative third quarter and nine month
earning per share were adversely affected by lower sales and higher ingredient
costs as discussed above, as well as lower investment income resulting from
lower interest rates.
LIQUIDITY AND CAPITAL RESOURCES:
The Company's current ratio (current assets divided by current liabilities) is
3.2 to 1 as of the end of the third quarter 2002 as compared to 2.8 to 1 as of
the third quarter 2001 and 4.3 to 1 as of the fourth quarter 2001. Net working
capital was $176,143 as of the end of the third quarter 2002 as compared to
$172,825 as of the third quarter 2001 and $188,250 as of the end of the fourth
quarter 2001. Net cash provided by operating activities was $5,903 for the nine
months ended September 28, 2002 compared to $25,370 for the nine months ended
September 29, 2001. The change primarily reflects the timing of quarterly
estimated income tax payments, the use of tax overpayments from the prior years,
and payment of an Internal Revenue Service settlement; in addition, higher
increases in accounts receivable and inventories for the comparative nine month
periods also contributed to lower cash provided by operating activities.
Capital expenditures for 2002 are anticipated to be generally in line with
historical spending and are to be funded from the Company's cash flow from
operations and internal sources. The Company purchased and retired $14,412 of
its shares during the nine months ended September 28, 2002, whereas no shares
were repurchased and retired in the prior year comparative period.
Debt securities that matured during the quarters ended September 28, 2002 and
September 29, 2001 were replaced with debt securities of similar maturities.
QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK:
The Company is exposed to various market risks, including fluctuations in major
ingredients including sugar, corn, edible oils, and cocoa, and packaging costs.
The Company also invests in securities with maturities of up to three years, the
majority of which are held to maturity, which limits the Company's exposure to
interest rate fluctuations. There has been no material change in the Company's
market risks that would significantly affect the disclosures made in the Form
10-K for the year ended December 31, 2001.
FORWARD-LOOKING STATEMENTS
This discussion, the information contained in the preceding notes to the finan-
cial statements and the information contained in "Quantitative and Qualitative
Disclosures Of Market Risk," contain certain forward-looking statements that
are based largely on the Company's current expectations. Forward-looking state-
ments are subject to certain risks, trends and uncertainties that could cause
actual results and achievements to differ materially from those expressed in the
forward-looking statements. Such risks, trends and uncertainties, which in some
instances are beyond the Company's control, include changes in demand and consu-
mer preferences, including seasonal events such as Halloween; ingredient costs;
the effect of acquisitions on the Company's results of operations and financial
condition; the Company's reliance on third-party vendors for various goods and
services; changes in the confectionary environment including action taken by
major retailers and customer accounts; and the overall competitive environment.
The words "believe," "expect," "anticipate," "estimate," "intend" and similar
expressions generally identify forward-looking statements. Readers are cautioned
not to place undue reliance on such forward-looking statements, which are as of
the date of this filing.
Item 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of management, the chief execu-
tive 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 within 90 days of the filing date of this quarterly report and,
based on their evaluation, the chief executive officer and chief financial
officer have concluded that these controls and procedures are effective. There
were no significant changes in internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation.
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 manage-
ment, including the chief executive officer and chief financial officer, as
appropriate to allow timely decisions regarding required disclosure.
PART II - OTHER INFORMATION
TOOTSIE ROLL INDUSTRIES, INC
AND SUBSIDIARIES
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 99 -Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed for the quarter ended September
28, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Regis-
trant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
TOOTSIE ROLL INDUSTRIES, INC.
Date: _November 08, 2002 BY: _/S/ Melvin J. Gordon
Melvin J. Gordon
Chairman of the Board
BY: _/S/ G. Howard Ember, Jr.
G. Howard Ember
Vice President - Finance
Section 302 Certification
1. I, Melvin J. Gordon, Chairman and Chief Executive Officer of Tootsie
Roll Industries, Inc., certify that I have reviewed this Form 10-Q of Tootsie
Roll Industries, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial inform-
ation included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for estab-
lishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and pro-
cedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subse-
quent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: November 08, 2002 /S/ MELVIN J GORDON
Melvin J Gordon
Chairman and Chief
Executive officer
Section 302 Certification
1. I, G. Howard Ember, Vice President/Finance and Chief Financial Officer of
Tootsie Roll Industries, Inc., certify that I have reviewed this Form 10-Q of
Tootsie Roll Industries, Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial inform-
ation included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for estab-
lishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and pro-
cedures as of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subse-
quent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: November 08, 2002 /S/ G. Howard Ember, Jr.
G. Howard Ember, Jr.
Vice President/Finance and
Chief Financial Officer
Exhibit 99
Certificate Pursuant to Section 1350 of Chapter 63
of Title 18 of the United States Code
Each of the undersigned officers of Tootsie Roll Industries, Inc. certifies
that (i) the Quarterly Report on Form 10-Q of Tootsie Roll Industries, Inc. for
the quarterly period ended September 28, 2002 (the Form 10-Q) fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange Act
of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in
all material respects, the financial condition and results of operations of
Tootsie Roll Industries, Inc. and its subsidiaries.
Dated: November 08, 2002 /S/ MELVIN J GORDON
MELVIN J GORDON
Chairman and Chief
Executive officer
Dated: November 08, 2002 /S/ G. HOWARD EMBER, JR.
G. Howard Ember, Jr.
V.P./Finance and
Chief Financial Officer