Table of Contents 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 March 31, 2021 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 Inc ...

Part I [Business](index=3&type=section&id=ITEM%201.%20Business.) The company operates solely in the confectionery segment, with business defined by North American markets, brand competition, Halloween-driven seasonality, and high customer concentration - The company operates in a **single business segment**: the manufacture and sale of confectionery products, with key brands including TOOTSIE ROLL, TOOTSIE POPS, and JUNIOR MINTS[10](index=10&type=chunk) - Products are sold through approximately 30 brokers and directly to **2,000 customers**, including wholesale distributors, supermarkets, and mass merchandisers[11](index=11&type=chunk) - The business experiences **seasonality**, with sales increasing in the third quarter for Halloween, requiring inventory and workforce build-up in the second and third quarters[21](index=21&type=chunk) Customer Concentration (as % of Net Product Sales) | Customer | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Wal-Mart Stores, Inc | 23.5% | 24.2% | 24.1% | | Dollar Tree, Inc | 11.7% | 11.3% | 11.2% | | McLane Company, Inc | 22.1% | 17.7% | 17.4% | [Risk Factors](index=5&type=section&id=ITEM%201A.%20Risk%20Factors.) The company faces industry-wide risks from the Covid-19 pandemic and commodity prices, and specific risks from customer dependency and a critical status pension plan [Industry-Wide Risk Factors](index=5&type=section&id=Risk%20factors%20which%20we%20believe%20affect%20all%20competitors%20in%20our%20industry) Industry-wide risks include the Covid-19 pandemic's impact on demand, commodity price volatility, intense competition, and potential cybersecurity threats - The **Covid-19 pandemic** has negatively impacted business by reducing demand and altering consumer behavior, especially for seasonal sales like Halloween[27](index=27&type=chunk)[32](index=32&type=chunk) - The company is exposed to **price volatility** for principal ingredients, which are subject to market conditions and climate change, and may not be able to offset price increases[34](index=34&type=chunk) - The company faces risks from **intense competition**, pricing pressure from retail customers, and the need to adapt to changing consumer preferences[34](index=34&type=chunk)[36](index=36&type=chunk) [Company-Specific Risk Factors](index=8&type=section&id=Risk%20factors%20which%20we%20believe%20are%20principally%20specific%20to%20our%20Company) Specific risks include a multi-employer pension plan in 'critical and declining status,' reliance on a single manufacturing facility, and high customer concentration - The company participates in a multi-employer pension plan that is in **'critical and declining status'** and is expected to become insolvent, posing a significant potential withdrawal liability[39](index=39&type=chunk) - The **majority of products are manufactured in a single facility**, making the company vulnerable to disruptions that could lead to a loss of market share[39](index=39&type=chunk) - The company has **high customer concentration risk**, with its largest customers accounting for approximately **37.5% of 2020 net product sales**[46](index=46&type=chunk) - The company is a **controlled company**, as the Gordon family's share ownership represents a majority of the combined voting power[46](index=46&type=chunk) [Unresolved Staff Comments](index=9&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments.) The company reports no unresolved staff comments - None[44](index=44&type=chunk) [Properties](index=10&type=section&id=ITEM%202.%20Properties.) The company owns its principal 2.35 million sq ft facility in Chicago and other properties in North America and Spain, with most equipment being company-owned - The main facility is an owned **2,354,000 sq ft** building in Chicago, IL, with an additional 137,000 sq ft facility in Chicago being leased[47](index=47&type=chunk) Other Owned Principal Facilities | Location | Square Feet (approx) | | :--- | :--- | | Covington, Tennessee | 685,000 | | Cambridge, Massachusetts | 142,000 | | Delavan, Wisconsin | 162,000 | | Concord, Ontario, Canada | 280,500 | | Mexico City, Mexico | 90,000 | | Barcelona, Spain | 93,000 | [Legal Proceedings](index=10&type=section&id=ITEM%203.%20Legal%20Proceedings.) The company does not expect current legal proceedings to materially affect its financial condition, operations, or cash flows - In the opinion of the Company, active or threatened legal proceedings are **not expected to have a material effect** on the Company's financial condition, results of operations or cash flows[51](index=51&type=chunk) [Mine Safety Disclosures](index=10&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures.) The company reports no mine safety disclosures - None[53](index=53&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=11&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) The company's stock (NYSE: TR) underperformed key indices, while consistent cash and stock dividends were paid and share repurchases were made in Q4 2020 Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 1 to Oct 31 | 165,000 | $31.01 | | Nov 1 to Nov 30 | 111,062 | $30.80 | | Dec 1 to Dec 31 | — | — | | **Total** | **276,062** | **$30.92** | - The company paid a quarterly cash dividend of **$0.09 per share** throughout 2020 and 2019, supplemented by a **3% stock dividend** each year[58](index=58&type=chunk) - Over five years, a **$100 investment** in the Company's stock grew to **$114.84**, underperforming the S&P 500 ($203.04) and a peer index ($131.47)[61](index=61&type=chunk) [Selected Financial Data](index=13&type=section&id=ITEM%206.%20Selected%20Financial%20Data.) The five-year summary shows a drop in 2020 net sales to $467.4 million and net earnings to $59.0 million, while maintaining consistent dividend payouts Five Year Summary of Earnings and Financial Highlights (in thousands, except per share data) | | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net product sales | $467,427 | $523,616 | $515,251 | $515,674 | $517,373 | | Net earnings attributable to Tootsie Roll Industries, Inc | $58,995 | $64,920 | $56,893 | $80,864 | $67,510 | | Net earnings per share | $0.89 | $0.96 | $0.84 | $1.17 | $0.97 | | Cash dividends declared per share | $0.36 | $0.36 | $0.36 | $0.36 | $0.36 | | Total assets | $984,558 | $977,864 | $947,361 | $930,946 | $920,101 | - Net earnings in 2017 included a favorable one-time adjustment of **$20.3 million** ($0.29 per share) due to the U.S. Tax Cuts and Jobs Act[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=14&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) The company maintains a strong financial position despite a 10.7% sales decline in 2020 due to the COVID-19 pandemic, which impacted gross margins and net earnings [Financial Condition](index=14&type=section&id=FINANCIAL%20CONDITION) The company maintains a strong financial position with $429.0 million in cash and investments, and a slight increase in shareholders' equity to $763.3 million Key Financial Position Indicators (in thousands) | Indicator | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash, Cash Equivalents & Investments | $428,951 | $392,435 | | Net Working Capital | $250,851 | $273,786 | | Shareholders' Equity | $763,327 | $759,854 | - The company has a straightforward financial structure with **no special financing arrangements** or off-balance sheet entities[71](index=71&type=chunk) [Results of Operations: 2020 vs. 2019](index=14&type=section&id=RESULTS%20OF%20OPERATIONS%202020%20vs.%202019) In 2020, net sales fell 10.7% to $467.4 million and net earnings fell 9.1% to $59.0 million, primarily due to the COVID-19 pandemic's impact on consumer behavior 2020 vs. 2019 Performance (in thousands) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Net Product Sales | $467,427 | $523,616 | (10.7)% | | Product Gross Margin | $167,717 | $194,514 | (13.8)% | | Earnings from Operations | $58,244 | $69,214 | (15.8)% | | Net Earnings | $58,995 | $64,920 | (9.1)% | | EPS | $0.89 | $0.96 | (7.3)% | - The sales decline was attributed to the **Covid-19 pandemic**, which disrupted lifestyles, shopping habits, and curtailed group events[72](index=72&type=chunk) - The effective income tax rate **decreased to 22.7%** in 2020 from 24.1% in 2019, reflecting more favorable foreign tax rates[87](index=87&type=chunk) [Results of Operations: 2019 vs. 2018](index=19&type=section&id=RESULTS%20OF%20OPERATIONS%202019%20vs.%202018) In 2019, net sales grew 1.6% to $523.6 million, and net earnings increased 14% to $64.9 million, driven by successful marketing and improved price realization 2019 vs. 2018 Performance (in thousands) | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | Net Product Sales | $523,616 | $515,251 | 1.6% | | Adjusted Earnings from Operations | $80,506 | $69,379 | 16.0% | | Net Earnings | $64,920 | $56,893 | 14.1% | | EPS | $0.96 | $0.84 | 14.3% | - **Gross margin in 2019 benefited** from increased sales, higher price realization, and plant efficiencies from capital investments[105](index=105&type=chunk) - The **effective tax rate increased** from 22.4% in 2018 to 24.1% in 2019, primarily due to higher state income taxes[111](index=111&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Operating cash flow decreased to $74.7 million in 2020, while investing activities provided cash, and financing activities used $55.8 million for dividends and buybacks Cash Flow Summary (in thousands) | Cash Flow Activity | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $74,710 | $100,221 | $100,929 | | Net cash from (used in) investing activities | $9,501 | $(15,009) | $(44,510) | | Net cash used in financing activities | $(55,846) | $(57,187) | $(42,353) | - Capital expenditures were **$18.0 million** in 2020, with a commitment of approximately **$25.0 million** for a future plant rehabilitation project[115](index=115&type=chunk) - The company purchased and retired **$32.1 million** of its common stock and paid **$23.8 million** in cash dividends during 2020[117](index=117&type=chunk) [Critical Accounting Policies and Estimates](index=21&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Management identifies critical accounting policies requiring significant judgment, including revenue recognition, intangible asset valuation, and income tax estimates - **Intangible assets**, primarily goodwill and trademarks, are tested for impairment annually, with **no impairments recorded** in 2020, 2019, or 2018[122](index=122&type=chunk)[81](index=81&type=chunk) - For certain trademarks, a **100 basis point increase in the discount rate** would reduce fair value by 18%, but would not result in impairment as of year-end 2020[196](index=196&type=chunk)[83](index=83&type=chunk) - The company records **valuation allowances for deferred tax assets** when realization is not 'more-likely-than-not,' particularly for its Spanish subsidiary[129](index=129&type=chunk)[88](index=88&type=chunk) [Market Risks](index=23&type=section&id=MARKET%20RISKS) The company is exposed to commodity price, interest rate, equity price, and foreign currency risks, which are managed through hedging and other financial instruments - The company faces **commodity price risk** for ingredients like sugar and cocoa, using futures contracts and supply agreements to mitigate this risk[137](index=137&type=chunk)[140](index=140&type=chunk) - **Interest rate risk is managed** by investing in marketable securities with short maturities and variable rate demand notes[142](index=142&type=chunk)[143](index=143&type=chunk) Open Contractual Commitments as of December 31, 2020 (in thousands) | Commitment Type | Total | Less than 1 Year | 1 to 3 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | | Commodity hedges | $4,010 | $4,010 | $— | $— | | Foreign currency hedges | $6,391 | $3,195 | $3,196 | $— | | Purchase obligations | $5,958 | $5,958 | $— | $— | | Interest bearing debt | $7,500 | $— | $— | $7,500 | | Operating leases | $869 | $684 | $185 | $— | | **Total** | **$24,728** | **$13,847** | **$3,381** | **$7,500** | [Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section incorporates by reference the information provided under the 'Market Risks' caption in the preceding MD&A section - The information required by this item is included under the caption "Market Risk" in Item 7[153](index=153&type=chunk) [Financial Statements and Supplementary Data](index=26&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data.) This section presents management's report on effective internal controls, the independent auditor's unqualified opinion, and the consolidated financial statements [Management's Report on Internal Control Over Financial Reporting](index=26&type=section&id=Management's%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) Management concluded that its internal control over financial reporting was effective as of December 31, 2020, based on the COSO framework - Management concluded that the Company's **internal control over financial reporting was effective** as of December 31, 2020[154](index=154&type=chunk) [Report of Independent Registered Public Accounting Firm](index=27&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion on the financial statements and internal controls, identifying the Trademark Impairment Assessment as a critical audit matter - The auditor, Grant Thornton LLP, expressed an **unqualified opinion** on the financial statements and the effectiveness of internal control over financial reporting[158](index=158&type=chunk) - The **Trademark Impairment Assessment was identified as a critical audit matter** due to significant management judgment in forecasting revenues, margins, and discount rates[166](index=166&type=chunk)[167](index=167&type=chunk) [Consolidated Financial Statements](index=30&type=section&id=Consolidated%20Financial%20Statements) The financial statements detail a decline in 2020 sales and earnings, a strong balance sheet with $984.6 million in assets, and reduced operating cash flow Consolidated Earnings Summary (in thousands) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net product sales | $467,427 | $523,616 | $515,251 | | Earnings from operations | $58,244 | $69,214 | $70,482 | | Net earnings attributable to Tootsie Roll Industries, Inc | $58,995 | $64,920 | $56,893 | Consolidated Financial Position Summary (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total current assets | $320,872 | $353,330 | | Net property, plant and equipment | $187,328 | $188,455 | | Total assets | $984,558 | $977,864 | | Total current liabilities | $70,021 | $79,544 | | Total Tootsie Roll Industries, Inc shareholders' equity | $763,327 | $759,854 | Consolidated Cash Flow Summary (in thousands) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $74,710 | $100,221 | $100,929 | | Net cash provided by (used in) investing activities | $9,501 | $(15,009) | $(44,510) | | Net cash used in financing activities | $(55,846) | $(57,187) | $(42,353) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=51&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[267](index=267&type=chunk) [Controls and Procedures](index=51&type=section&id=ITEM%209A.%20Controls%20and%20Procedures.) The CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the fourth quarter of 2020 - The Company's Chief Executive Officer and Chief Financial Officer concluded that **disclosure controls and procedures are effective**[268](index=268&type=chunk) - There were **no changes in the Company's internal control** over financial reporting during the fourth quarter of 2020 that have materially affected, or are reasonably likely to materially affect, internal controls[271](index=271&type=chunk) [Other Information](index=51&type=section&id=ITEM%209B.%20Other%20Information.) The company reports no other information - None[269](index=269&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=52&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) This section provides information on executive officers and incorporates details on directors and governance by reference from the 2021 Proxy Statement Executive Officers | Name | Position | Age | | :--- | :--- | :--- | | Ellen R Gordon | Chairman of the Board and Chief Executive Officer | 89 | | G Howard Ember Jr | Vice President/Finance | 68 | | Stephen P Green | Vice President/Manufacturing | 62 | | Kenneth D Naylor | Vice President/Marketing and Sales | 61 | | Barry P Bowen | Treasurer | 65 | - Information regarding Directors and Section 16(a) compliance is **incorporated by reference** from the 2021 Proxy Statement[273](index=273&type=chunk) [Executive Compensation](index=52&type=section&id=ITEM%2011.%20Executive%20Compensation.) Information regarding executive and director compensation is incorporated by reference from the company's 2021 Proxy Statement - Information is **incorporated by reference** from the Company's 2021 Proxy Statement[276](index=276&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=52&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Details on security ownership are incorporated by reference from the 2021 Proxy Statement, and the company has no equity compensation plans - Information regarding security ownership is **incorporated by reference** from the Company's 2021 Proxy Statement[277](index=277&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information on related transactions is incorporated by reference, and the board has determined that its three non-management directors are independent - The board of directors has determined that **non-management directors Mr Seibert, Ms Wardynski, and Ms Lewis-Brent are independent**[280](index=280&type=chunk) [Principal Accounting Fees and Services](index=53&type=section&id=ITEM%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Information regarding fees paid to the independent auditor is incorporated by reference from the company's 2021 Proxy Statement - Information is **incorporated by reference** from the Company's 2021 Proxy Statement[280](index=280&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=53&type=section&id=ITEM%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists the financial statements and schedules filed with the Form 10-K, including Schedule II - Valuation and Qualifying Accounts and Reserves - The financial statements from Item 8 are listed as part of this item[281](index=281&type=chunk) - **Financial Statement Schedule II** - Valuation and Qualifying Accounts and Reserves is included with the Form 10-K[282](index=282&type=chunk) [Form 10-K Summary](index=53&type=section&id=ITEM%2016.%20Form%2010-K%20Summary.) The company provides no Form 10-K summary - None[284](index=284&type=chunk)

Table of Contents 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, 2020 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 ...

Table of Contents 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 June 30, 2020 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 Inco ...

Table of Contents 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 March 31, 2020 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 Inc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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) (State or other jurisdiction of (IRS E ...

Table of Contents 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, 2019 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 ...

Part I [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Tootsie Roll Industries' unaudited condensed consolidated financial statements and related notes [Condensed Consolidated Statements of Financial Position](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Financial%20Position) Total assets increased to **$948.5 million** as of June 30, 2019, with equity rising to **$742.6 million** Condensed Consolidated Statements of Financial Position (in thousands) | Account | June 30, 2019 | December 31, 2018 | June 30, 2018 | | :--- | :--- | :--- | :--- | | **Total current assets** | $281,089 | $304,046 | $260,165 | | **Total assets** | **$948,524** | **$947,361** | **$923,715** | | **Total current liabilities** | $60,287 | $61,391 | $61,314 | | **Total liabilities** | $205,899 | $196,864 | $197,684 | | **Total equity** | **$742,625** | **$750,497** | **$726,031** | [Condensed Consolidated Statements of Earnings and Retained Earnings](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings%20and%20Retained%20Earnings) Net product sales remained flat, while net earnings increased **10.2%** to **$11.6 million** (Q2) and **$20.5 million** (H1) Key Earnings Data (in thousands, except per share amounts) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Net product sales | $106,021 | $105,623 | $207,040 | $206,482 | | Earnings from operations | $12,515 | $10,368 | $18,273 | $20,210 | | Net earnings attributable to Tootsie Roll | $11,556 | $10,489 | $20,511 | $18,614 | | Net earnings per share | $0.18 | $0.16 | $0.31 | $0.28 | [Condensed Consolidated Statements of Comprehensive Earnings](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Earnings) Total comprehensive earnings significantly increased to **$12.5 million** (Q2) and **$23.2 million** (YTD) due to investment gains Comprehensive Earnings (in thousands) | Metric | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | | :--- | :--- | :--- | :--- | :--- | | Net earnings | $11,544 | $10,470 | $20,455 | $18,571 | | Total other comprehensive income (loss), before tax | $1,229 | $(1,864) | $3,352 | $(3,018) | | Total comprehensive earnings attributable to Tootsie Roll | $12,537 | $8,671 | $23,196 | $16,311 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased, while investing and financing activities led to a **$53.0 million** net decrease in cash Cash Flow Summary - Year to Date Ended June 30 (in thousands) | Activity | 2019 | 2018 | | :--- | :--- | :--- | | Net cash from operating activities | $11,021 | $6,395 | | Net cash used in investing activities | $(33,662) | $(37,092) | | Net cash used in financing activities | $(30,568) | $(27,229) | | **Decrease in cash and cash equivalents** | **$(53,045)** | **$(57,990)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, tax rates, derivative use, and a multi-employer pension plan's critical status - The company adopted a new lease accounting standard (ASU 2016-02) in 2019, recognizing **$1.48 million** in right-of-use assets and lease liabilities[23](index=23&type=chunk) - The consolidated effective income tax rate increased to **25.2%** in the first half of 2019 from **22.9%** in the first half of 2018, mainly due to higher state and foreign income tax expenses[27](index=27&type=chunk) - The company participates in a multi-employer pension plan that is in 'critical and declining status' and is projected to be insolvent in **2030**. The estimated withdrawal liability was **$81.6 million** if the company had withdrawn during 2018[38](index=38&type=chunk)[39](index=39&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses flat sales, increased operating earnings, strong liquidity, and risks from a critical pension plan - First half 2019 net product sales increased **0.3%** to **$207.0 million**, driven by an **0.8%** increase in domestic sales and higher price realization, partially offset by lower foreign sales[51](index=51&type=chunk) - Adjusted operating earnings for the first half of 2019 increased **13.0%** to **$25.1 million**, reflecting improved gross margins from higher pricing and plant efficiencies[58](index=58&type=chunk) - The company's multi-employer pension plan remains in 'critical and declining status' with projected insolvency in **2030**. The estimated withdrawal liability was **$81.6 million** for 2018, and management believes this liability could increase in future years[67](index=67&type=chunk)[69](index=69&type=chunk) - Net cash from operating activities increased to **$11.0 million** in H1 2019 from **$6.4 million** in H1 2018, due to higher net earnings and favorable working capital changes[74](index=74&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from commodity prices, packaging, fuel, and foreign exchange rates, with no material changes - Key market risks include price fluctuations for raw materials (sugar, cocoa, oils), packaging, and fuel[85](index=85&type=chunk) - The company is exposed to foreign exchange rate fluctuations, particularly with the Canadian dollar, Mexican peso, and Spanish euro[85](index=85&type=chunk) - No material changes in market risks were reported compared to the Form 10-K for the year ended December 31, 2018[86](index=86&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal controls - Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of **June 30, 2019**[87](index=87&type=chunk) - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[88](index=88&type=chunk) Part II — Other Information [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Current legal proceedings are not expected to materially affect the company's financial condition or operations - Information on legal proceedings is referenced in Note 12 of the financial statements, which states that current proceedings are not expected to have a material impact[91](index=91&type=chunk)[49](index=49&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company purchased **225,355** shares of common stock at an average of **$38.42** per share in Q2 2019 Common Stock Purchases - Q2 2019 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Apr 1 to Apr 30 | 75,714 | $37.81 | | May 1 to May 31 | 68,955 | $39.43 | | Jun 1 to Jun 30 | 80,686 | $38.12 | | **Total** | **225,355** | **$38.42** | [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed, including XBRL data and CEO/CFO certifications - Exhibits filed include CEO and CFO certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act[96](index=96&type=chunk) - The filing includes various XBRL documents for interactive data[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Signatures](index=34&type=section&id=Signatures) The report was duly signed by the Chairman and CEO, and Vice President Finance and CFO on August 8, 2019 - The report was duly signed on **August 8, 2019**, by Ellen R. Gordon, Chairman and Chief Executive Officer, and G. Howard Ember, Jr., Vice President Finance and Chief Financial Officer[99](index=99&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 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 Washington, D.C. 20549 (State of Inc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 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 incorporation or o ...