TOOTSIE ROLL INDUSTRIES INC, 10-K, 1994-03-30

TOOTSIE ROLL INDUSTRIES INC
10-K, 1994-03-30
SUGAR & CONFECTIONERY PRODUCTS

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1993
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 other jurisdiction (IRS Employer Identification No.)
of Incorporation or organization)

7401 South Cicero Avenue, Chicago, Illinois 60629
(Address of principle executive offices)(ZIP Code)

Registrant's Telephone Number: (312) 838-3400
Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of each class on which registered
------------------------ ----------------------------
Common Stock - Par Value New York Stock Exchange
$.69-4/9 Per Share

Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock - Par Value $.69-4/9 Per Share
------------------------------------------------------------

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 X No
-------- --------

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
------

<PAGE>

As of March 11, 1994, 7,078,671 shares of Common Stock par value $.69-4/9
per share were outstanding and the aggregate market value of the Common Stock
(based upon the closing price of the stock on the New York Stock Exchange on
such date) held by non-affiliates was approximately $295,638,000. As of March
11, 1994, 3,451,695 shares of Class B Common Stock, par value $.69-4/9 per share
were outstanding. Class B Common Stock is not traded on any exchange, is
restricted as to transfer or other disposition, but is convertible into Common
Stock on a share-for-share basis. Upon such conversion, the resulting shares of
Common Stock are freely transferable and publicly traded. Assuming all
3,451,695 shares of outstanding Class B Common Stock were converted into Common
Stock, the aggregate market value of Common Stock held by non-affiliates on
March 11, 1994 (based upon the closing price of the stock on the New York Stock
Exchange on such date) would have been approximately $328,485,000.
Determination of stock ownership by non-affiliates was made solely for the
purpose of this requirement, and the Registrant is not bound by these
determinations for any other purpose.

DOCUMENTS INCORPORATED BY REFERENCE

1. Portions of the Company's Annual Report to Shareholders for the year ended
December 31, 1993 (the "1993 Report") are incorporated by reference in Parts I
and II of this report.

2. Portions of the Company's Definitive Proxy Statement which will be
distributed on or before April 30, 1994 in connection with the Company's 1994
Annual Meeting of Shareholders (the "1994 Proxy Statement") is incorporated by
reference in Part III of this report.

Cover Page 2 of 2 pages

<PAGE>

PART I

ITEM 1. BUSINESS.

Tootsie Roll Industries, Inc. and its consolidated subsidiaries
(the "Company") are engaged in the manufacture and sale of candy. This is the
only industry segment in which the Company operates and is its only line of
business. A majority of the Company's products are sold under the registered
trademarks "Tootsie," "Tootsie Roll," or "Tootsie Pop." The principal product
of the Company is the familiar "Tootsie Roll," a chocolate-flavored candy of a
chewy consistency, which is sold in several sizes and which is also used as a
center for other products in the line including "Tootsie Pops," a spherical
fruit or chocolate-flavored shell of hard candy with a center of "Tootsie Roll"
candy on a paper safety stick, and "Tootsie Pop Drops," a smaller sized version
of the "Tootsie Pop" without the stick. The Company and its predecessors have
manufactured the "Tootsie Roll" product to substantially the same formula and
sold it under the same name for over 90 years. The Company's products also
include "Tootsie Roll Flavor Rolls" and "Tootsie Frooties," multiflavored
candies of chewy consistency.

The Company also manufactures and sells molded candy drop
products under the registered trademark "Mason" and "Tootsie," including "Mason
Dots," and "Mason Crows."

The Company's wholly owned subsidiary, Cella's Confections Inc.,
produces a chocolate covered cherry under the registered trademark "Cella's."

In 1988, the Company acquired the Charms Company. This candy
manufacturer produces lollipops, including bubble gum-filled lollipops, and hard
candy. The majority of the Company's products are sold under the registered
trademarks "Charms," "Blow-Pop," "Blue Razz," and "Zip-A-Dee-Doo-Da-Pops."

On October 15, 1993, the Company acquired Cambridge Brands, Inc.
which was the former Chocolate/Caramel Division of Warner Lambert. Cambridge
Brands, Inc. produces various confectionery products under the registered
trademarks "Junior Mint," "Charleston Chew," "Sugar Babies," "Sugar Daddy," and
"Pom Poms."

The Company's products are marketed in a variety of packages
designed to be suitable for display and sale in different types of retail
outlets and vending machines and fund-raising religious and charitable
organizations. They are distributed through approximately 100 candy and grocery
brokers and by the Company itself to approximately 15,000 customers throughout
the

<PAGE>

United States. These customers include wholesale distributors of candy and
groceries, supermarkets, variety stores, chain grocers, drug chains, discount
chains, cooperative grocery associations, warehouse and membership club stores,
vending machine operators, and fund-raising religious and charitable
organizations.

The Company's principal markets are in the United States, Canada
and Mexico. The Company's Mexican plant supplies a very small percentage of
the products marketed in the United States and Canada.

The Company has advertised nationally for many years. Although
nearly all advertising media have been used at one time or another, at present
most of the Company's advertising expenditures are for the airing of network
and syndicated TV and cable and spot television on major markets throughout the
country.

The domestic candy business is highly competitive. The Company
competes primarily with other manufacturers of bar candy and candy of the type
sold in variety, grocery and convenience stores. Although accurate statistics
are not available, the Company believes it is among the ten largest domestic
manufacturers in this field. In the markets in which the Company competes, the
main forms of competition comprise brand recognition as well as a fair price for
our products at various retail price points.

Sale of candy products may be influenced to some extent by
discussions of and effect on dental health and weight.

The Company did not have a material backlog of firm orders at the
end of the calendar years 1993 or 1992.

All raw materials used by the Company are readily obtainable from
a number of suppliers at competitive prices. The average cost of most major raw
materials remained relatively stable in 1993 compared to 1992. It is not
possible to project future changes in the price of raw materials. The Company
has engaged in hedging transactions in sugar and corn and may do so in the
future if and when advisable. From time to time the Company changes the size
of certain of its products, which are usually sold at standard retail prices,
to reflect significant changes in raw material costs.

The Company does not hold any material patents, licenses,
franchises or concessions. The Company's major trademarks are registered in the
United States and in many other countries. Continued trademark protection is of
material importance to the Company's business as a whole.

The Company does not expend significant amounts on research or
development activities.

Compliance with Federal, State and local provisions which have
been enacted or adopted regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, has not
had a material effect on the capital expenditures, earnings or competitive
position of the Company nor does the Company anticipate any such material
effects from presently enacted or adopted regulations.

<PAGE>

The Company employs approximately 1,700 persons.

The Company has found that its sales normally maintain a
consistent level throughout the year except for a substantial upsurge in the
third quarter which reflects sales in anticipation of Halloween. In
anticipation of this high sales period, the Company generally begins its
Halloween inventory build up in the second quarter of each year. The Company
historically offers extended credit terms for sales made under Halloween sales
programs. Each year, after Halloween receivables have been paid, the Company
invests funds in various temporary cash investments.

For a summary of sales, net earnings and assets of the Company by
geographic area and additional information regarding the foreign subsidiaries of
the Company, see Note 11 of the Notes to Consolidated Financial Statements on
Page 15 of the Company's Annual Report to Shareholders for the year ended
December 31, 1993 (the "1993 Report") and on Page 4 of the 1993 Report under the
section entitled "International." Note 11 and the aforesaid section are
incorporated herein by reference. Portions of the 1993 Report are filed as an
exhibit to this report.

ITEM 2. PROPERTIES.

The Company owns its principal plant and offices which are
located in Chicago, Illinois in a building consisting of approximately 2,200,000
square feet. The Company utilizes approximately 1,800,000 square feet for
offices, manufacturing and warehousing facilities and leases, or has available
to lease to third parties, approximately 400,000 square feet.

In addition to owning the principal plant and warehousing
facilities mentioned above, the Company leases manufacturing and warehousing
facilities at a second location in Chicago which comprises 80,600 square feet.
The lease is renewable by the Company every five years through June, 2011. The
Company also periodically leases additional warehousing space at this second
location as needed on a month to month basis.

Cella's Confections, Inc., a subsidiary, owns a facility in New
York City, containing approximately 43,000 square feet. This facility consists
of manufacturing, warehousing and office space on three floors containing
approximately 33,200 square feet with a below surface level of approximately
9,800 square feet.

Charms Company, a subsidiary, owns a facility in Covington,
Tennessee, containing approximately 267,000 square feet of manufacturing,
warehousing and office space.

Cambridge Brands, Inc., a subsidiary, owns a facility in
Cambridge, Massachusetts, containing approximately 145,000 square feet. The
facility consists of manufacturing, warehousing and office space on five floors.

The Company also owns property and a plant with manufacturing,
warehousing and office space in Mexico City, Mexico, consisting of approximately
57,000 square feet plus parking lot and yard area comprising approximately
25,000 square feet.

<PAGE>

The Company owns the production machinery and equipment located
in the plants in Chicago, New York, Covington (Tennessee), Cambridge
(Massachusetts) and Mexico City, except for approximately $7 million of
equipment in Covington, Tennessee under an operating lease. The Company
considers that all of its facilities are well maintained, in good operating
condition and adequately insured.

ITEM 3. LEGAL PROCEEDINGS.

There are no material pending legal proceedings known to the
Company to which the Company or any of its subsidiaries is a party or of which
any of their property is the subject.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of the Company's shareholders
through the solicitation of proxies or otherwise during the fourth quarter of
1993.

ADDITIONAL
ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.

See the information on Executive Officers set forth in the table
in Part III, Item 10, Page 6 of this report, which is incorporated herein by
reference.

<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.

The Company's Common Shares are traded on the New York Stock
Exchange.The Company's Class B Common Shares are subject to restrictions on
transfer and no market exists for such shares. The Class B Common Shares are
convertible at the option of the holder into Common Shares on a share for
share basis. As of March 11, 1994, there were approximately 9,500 holders of
record of Common and Class B Common Shares. For information on the market
price of, and dividends paid with respect to, the Company's Common Shares, see
the section entitled "1993-1992 Quarterly Summary of Tootsie Roll Industries,
Inc. Stock Prices and Dividends" which appears on Page 16 of the 1993 Report.

This section is incorporated herein by reference and filed as an exhibit to
this report.

ITEM 6. SELECTED FINANCIAL DATA.

See the section entitled "Five Year Summary of Earnings and Financial
Highlights" which appears on Page 17 of the 1993 Report. This section is
incorporated herein by reference and filed as an exhibit to this report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

See the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on Pages 5-7 of the 1993 Report.
This section is incorporated herein by reference and filed as an exhibit of this
report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements, together with the report thereon of Price
Waterhouse dated February 17, 1994, appearing on Pages 8-15 of the 1993 Report
and the Quarterly Financial Data on Page 16 of the 1993 Report are incorporated
by reference in this report. With the exception of the aforementioned
information and the information incorporated in Items 1, 5, 6 and 7, the 1993
Report is not to be deemed filed as part of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.

See the information with respect to the Directors of the Company which
is set forth in the section entitled "Election of Directors" of the Company's
Definitive Proxy Statement to be used in connection with the Company's 1994
Annual Meeting of Shareholders (the "1994 Proxy Statement"). Except for the
last paragraph of this section relating to the compensation of Directors, this
section is incorporated herein by reference. The 1994 Proxy Statement will be
filed with the Securities and Exchange Commission on or before April 30, 1994.

The following table sets forth the information with respect to the
executive officers of the Company:

Name Position (1) Age
- ---- -------- ---
<S> <C> <C>

Melvin J. Gordon* Chairman of the Board
and Chief Executive Officer (2) 74

Ellen R. Gordon* President and Chief
Operating Officer (2) 62

G. Howard Ember Jr. Vice President/Finance 41

John W. Newlin Jr. Vice President/Manufacturing 57

Thomas E. Corr Vice President/Marketing and
Sales 45

James M. Hunt Vice President/Distribution 51

<FN>
*A member of the Board of Directors of the Company.

1) Mr. and Mrs. Gordon and Messrs. Newlin and
Corr have served in the positions set forth
in the table as their principal occupations
for more than the past five years. Mr. Ember
has served in his position for the past three years,
and in the seven years prior to that, has served
the Company in the position of Treasurer and
Assistant Vice President of Finance. Mr. Hunt has served in his position
for the past year and in the fifteen years prior to that, has served the
Company in the positions of Director of Distribution and Assistant Vice
President of Distribution. Mr. and Mrs. Gordon have also served as
President and Vice President, respectively, of HDI Investment Corp., a
family investment company.

2) Melvin J. Gordon and Ellen R. Gordon are
husband and wife.
</TABLE>

<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

See the information set forth in the section entitled "Executive
Compensation and Other Information" of the Company's 1994 Proxy Statement.
Except for the "Report on Executive Compensation" and "Performance Graph," this
section of the 1994 Proxy Statement is incorporated herein by reference. See
the last paragraph of the section entitled "Election of Directors" of the 1994
Proxy Statement, which paragraph is incorporated herein by reference. The 1994
Proxy Statement will be filed with the Securities and Exchange Commission on or
before April 30, 1994.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.

For information with respect to the beneficial ownership of the
Company's Common and Class B Common shares by the beneficial owners of more than
5% of said shares and by the management of the Company, see the sections
entitled "Ownership of Common Stock and Class B Common Stock by Certain
Beneficial Owners" and "Ownership of Common Stock and Class B Common Stock by
Management" of the 1994 Proxy Statement. These sections of the 1994 Proxy
Statement are incorporated herein by reference. The 1994 Proxy Statement will
be filed with the Securities and Exchange Commission on or before April 30,
1994.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Daniel G. Ross, a director of the Company, is a member of the law firm
of Becker, Ross, Stone, DeStefano & Klein, which has served as general counsel
to the Company for many years.

<PAGE>

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Financial Statements.

The following financial statements and schedules are filed as part of
this report:

(1) Financial Statements (filed herewith as part of Exhibit 13):

Report of Independent Accountants

Consolidated Statements of Earnings and
Retained Earnings for the three years
ended December 31, 1993

Consolidated Statements of Cash Flows
for the three years ended December 31,
1993

Consolidated Statements of Financial
Position at December 31, 1993 and 1992

Notes to Consolidated Financial
Statements

(2) Financial Statement Schedules:

Report of Independent Accountants on
Financial Statement Schedules

For the year ended December 31, 1993-

I - Marketable Securities - Other Investments

For the three years ended December 31, 1993-

V- Property, Plant and Equipment
VI- Accumulated Depreciation and Amortization of
Property, Plant and Equipment
VIII- Valuation and Qualifying Accounts
IX- Short-Term Borrowings
X- Supplementary Income Statement Information

All other schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.

(3) Exhibits required by Item 601 of Regulation S-K:

See Index to Exhibits which appears following
Financial Schedule X.

(b) Reports on Form 8-K

<PAGE>

The Company filed a Report on Form 8-K dated October 15, 1993 and a Report
on Form 8-K/A (Amendment No. 1) dated October 15, 1993, which described the
acquisiton by the Company of the chocolate/caramel division of Warner-Lambert
Company. The Report on Form 8-K/A filed the financial statements of the
acquired company and unaudited pro forma financial statements of the Company.

No other reports on Form 8-K were filed during the quarter ended December
31, 1993.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, Tootsie Roll Industries, Inc., has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

TOOTSIE ROLL INDUSTRIES, INC.

By S/ MELVIN J. GORDON
-------------------------------
Melvin J. Gordon, Chairman
of the Board of Directors
and Chief Executive Officer

Date: March 28, 1994
-----------------------

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

S/MELVIN J. GORDON
- ------------------ Chairman of the Board
Melvin J. Gordon of Directors and Chief
Executive Office
(principal executive
officer) March 28, 1994

S/ELLEN R. GORDON
- ----------------- Director, President,
Ellen R. Gordon and Chief Operating
Officer March 28, 1994

S/DANIEL G. ROSS
- ----------------- Director March 28, 1994
Daniel G. Ross

- -------------------
Charles W. Seibert Director March 28, 1994

S/WILLIAM TOURETZ
- ----------------- Director & Secretary
William Touretz March 28, 1994

- --------------------
Lana Jane Lewis-Brent Director
March 28, 1994

G.HOWARD EMBER JR.
- -------------------- Vice President, Finance
G. Howard Ember Jr. (principal financial
officer and principal
accounting officer) March 28, 1994

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES

To the Directors and Shareholders of
Tootsie Roll Industries, Inc.

Our audit of the consolidated financial statements referred to in our
report dated February 17, 1994 appearing on Page 15 of the 1993 Annual Report to
Shareholders of Tootsie Roll Industries, Inc., (which report and consolidated
financial statements are incorporated by reference in this Annual Report on Form
10-K) also included an audit of the financial statement schedules listed in Item
14(a) of this Form 10-K. In our opinion, these financial statement schedules
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated Financial Statements Schedules
listed in Item 14(a) of this Form 10-K. In our opinion, these Financial
Statement Schedules present fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.

/s/ PRICE WATERHOUSE

PRICE WATERHOUSE
Chicago, Illinois
February 17, 1994

<PAGE>

FINANCIAL SCHEDULES

<PAGE>

TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
AT DECEMBER 31, 1993
<TABLE>
<CAPTION>

COL. A COL. B COL. C COL. D COL. E
------ ------ ------ ------ ------

Amount at which
Number each portfolio of
of shares equity security
or units- Market issues and each
principal value of other security
Name of issuer and amount each issue issue carried in
title of each of bonds Cost of at balance the balance
issue and notes each issue sheet date sheet
- ------------------ --------- ---------- ---------- -------------
<S> <C> <C> <C> <C>

Unit Investment Trusts of
Preferred Stocks
- -------------------------

Merrill Lynch
CIF Stock PUT Fund #1 34,337 $ 8,279,886 $ 9,750,232 $ 8,279,886
CIF Stock PUT Fund #2 6,331 1,996,546 2,004,267 1,996,546
CIF Stock PUT Fund #3 2,559 843,721 810,128 843,721
CIF Stock PUT Fund #6 1,001 129,429 132,982 129,429
---------- ---------- ---------
11,249,582 12,697,609 11,249,582
---------- ---------- ---------

Tax - Free Commercial Paper
- ---------------------------

Muniyield Quality IIB 2,000,000 1,994,972 2,000,000 1,994,972
Nuveen Income #2th 100 5,000,000 5,000,000 5,000,000
Nuveen Advtg Ser W 20 1,000,000 1,000,000 1,000,000
Nuveen NY Select Qlty Ser 9 450,522 450,000 450,522
Intercapital Qlty Ser TH 50 2,504,985 2,500,000 2,504,985
Intercapital Ser B 40 2,000,000 2,000,000 2,000,000
Blackrock Insured Ser 17 35 1,750,000 1,750,000 1,750,000
Blackrock Insured Ser T28 60 3,000,000 3,000,000 3,000,000
Utah HFA S/F Mtg Sen-A- 100,000 100,000 100,145 100,000
Van Kempen Merritt Mun Tru 40 2,002,111 2,002,111 2,002,111
---------- ---------- ----------
19,802,590 19,802,256 19,802,590
---------- ---------- ----------
</TABLE>
-1-
<PAGE>

SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
AT DECEMBER 31, 1993

COL. A COL. B COL. C COL. D COL. E

Municipal Bonds
- ---------------

Jacksonville FL Elec 200,000 200,000 201,280 200,000
Jacksonville FL Elec 300,000 316,573 321,300 316,573
Jacksonville FL Ex 1,000,000 1,064,940 1,074,900 1,064,940
Marion County FL Sch 500,000 500,000 501,450 500,000
Intermountain Power 280,000 281,535 284,004 281,535
Detroit MI Water 500,000 500,711 503,950 500,711
Detroit MI Distr St 400,000 400,542 401,640 400,542
Honolulu Hawaii City 260,000 264,466 267,410 264,466
Arizona St Power Authority 200,000 201,818 203,600 201,818
California Housing 200,000 201,353 202,560 201,353
Nassau County 315,000 315,270 318,276 315,270
Brunswick OH 200,000 204,004 204,600 204,004
Fort Myers FL 250,000 252,708 253,875 252,708
Riverside County CA 500,000 515,129 516,150 515,129
New Jersey State 370,000 371,457 376,105 371,457
Maryland State County 1,080,000 1,080,000 1,091,772 1,080,000
Warren County NJ 290,000 290,000 291,537 290,000
Cambria County 665,000 665,000 669,256 665,000
Harris County Tx 350,000 359,287 361,550 359,287
MA Municipal Whsl Elec 200,000 200,092 201,040 200,092
MA St Rfdg Ser C 2,000,000 2,000,909 2,006,200 2,000,909
MA State Health & Ed 500,000 520,469 531,500 520,469
Suffolk County NY 500,000 513,740 514,900 513,740
Municipal Custodial 378 364,909 365,110 364,909
NJ State Highway Auth 1,000,000 1,049,337 1,063,370 1,049,337
Westmoreland Cnty PA 1,120,000 1,160,858 1,177,187 1,160,858
Kansas City KS 500,000 519,432 523,160 519,432
---------- ---------- ----------
14,314,539 14,427,682 14,314,539
---------- ---------- ----------

</TABLE>

-2-
<PAGE>

SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
AT DECEMBER 31, 1993

COL. A COL. B COL. C COL. D COL. E

MIT-PUT Ser 05 10,430 4,312,443 4,962,906 4,312,443
MIT-PUT Ser 01 3,411 721,984 637,277 721,984
MIT-PUT Ser 10 2,077,989 1,553,204 1,537,712 1,553,204
MIT-PUT Ser 13 3,094 411,935 378,550 411,935
MIT-PUT Ser 04 725 50,127 38,359 50,127
US Leasing Intl Tax Ex 2,000,000 89,538 78,400 89,538
---------- ---------- ----------
7,139,231 7,633,204 7,139,231
---------- ---------- ----------

Other

Private Export Funding Corp.
Secured Note - Ser Y 1,711,137 1,711,137 1,711,137
---------- ---------- ----------

$54,217,079
----------
</TABLE>

-3-

<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
<TABLE>
<CAPTION>

Balance at Retirements Balance at
beginning Additions and end of
Classification of year at cost Reclassifications year
- --------------- ---------- --------- ----------------- ----------
<S> <C> <C> <C> <C>

1993:
Land $ 230,667 $ 4,000,000 (3) $ $ 4,230,667
Buildings 4,861,047 15,654,891 (4) 4,831,261 (6) 25,347,199
Machinery and
equipment 75,090,978 32,837,252 (5) (242,869) 107,685,361
Leasehold
improvements 4,840,902 (4,831,261)(6) 9,641
----------- ---------- ---------- -----------
$85,023,594 $52,492,143 $ (242,869) $137,272,868
----------- ---------- ---------- -----------

1992:
Land $ 230,667 $ $ $ 230,667
Buildings 4,861,047 4,861,047
Machinery and
equipment 64,472,325 10,956,217 (2) (337,564) 75,090,978 (2)
Leasehold
improvements 4,840,902 4,840,902
----------- ---------- ---------- -----------

$74,404,941 $10,956,217 $ (337,564) $ 85,023,594
----------- ---------- ---------- -----------

1991:
Land $ 230,667 $ $ $ 230,667
Buildings 4,087,964 773,083 (1) 4,861,047
Machinery and
equipment 58,815,077 5,840,866 (1) (183,618) 64,472,325
Leasehold
improvements 4,840,902 4,840,902
----------- ---------- ---------- -----------

$67,974,610 $ 6,613,949 $ (183,618) $ 74,404,941
----------- ---------- ---------- -----------
<FN>

(1) Additions include $741,000 for buildings and $1,888,000 for machinery and
equipment related to the step-up adjustment to assets acquired in connection
with the 1988 acquisition of Charms Company recorded in the adoption of SFAS
109.

(2) Balance reduced by $1,554,468 leased equipment transferred to prepaid
expenses.

(3) Additions include $2,500,000 from Cambridge Brands which was acquired in
October, 1993 and $1,500,000 from Tootsie Roll building purchased in August,
1993.

(4) Additions include $5,000,000 from Cambridge Brands which was acquired in
October, 1993 and $4,619,278 from Tootsie Roll building purchased in August,
1993.

(5) Additions include $17,000,000 from Cambridge Brands which was acquired in
October, 1993 and $13,880,722 from Tootsie Roll building purchased in August,
1993.

(6) Reclassification resulting from Tootsie Roll building purchase in August,
1993.
</TABLE>

<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE VI - ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

Additions
Balance at charged to Retirements Balance at
beginning costs and and end of
Classification of year expenses Reclassifications year
- -------------- ---------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>

1993:
Buildings $ 775,536 $ 378,509 $ 3,440,388 (2) $ 4,594,433
Machinery and
equipment 40,674,816 5,507,115 (208,800) 45,973,131
Leasehold
improvements 3,316,037 130,466 (3,440,388)(2) 6,115
---------- ---------- ------------ -----------

$44,766,389 $ 6,016,090 $ (208,800) $ 50,573,679
---------- ---------- ------------ -----------

1992:
Buildings $ 611,312 $ 164,224 $ $ 775,536
Machinery and
equipment 36,589,841 4,394,383 (309,408) 40,674,816
Leasehold
improvements 3,185,087 130,950 3,316,037
---------- ---------- ------------ -----------

$40,386,240 $ 4,689,557 $ (309,408) $ 44,766,389
---------- ---------- ------------ -----------

1991:
Buildings $ 426,549 $ 184,763 (1) $ $ 611,312
Machinery and
equipment 32,394,954 4,377,614 (1) (182,727) 36,589,841
Leasehold
improvements 3,054,247 130,840 3,185,087
---------- ---------- ------------ -----------

$35,875,750 $ 4,693,217 $ (182,727) $ 40,386,240
---------- ---------- ------------ -----------
<FN>

(1) Additions included $47,343 for buildings and $430,000 for machinery and
equipment related to the step-up adjustment to assets acquired in connection
with the 1988 acquisition of Charms
Company recorded in the adoption of SFAS 109.

(2) Reclassification resulting from Tootsie Roll building purchase in August,
1993.
</TABLE>

<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
DECEMBER 31, 1993, 1992 AND 1991

Additions
Balance at charged to Balance at
beginning costs and end of
Classification of year expenses Deductions year
-------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>

1993:
Reserve for bad
debts $ 1,110,000 $ 894,790 $ 169,790 (1) $ 1,835,000
Reserve for cash
discounts 109,000 4,962,551 4,831,551 (2) 240,000
---------- ---------- ---------- ----------
$ 1,219,000 $ 5,857,341 $ 5,001,341 $ 2,075,000
---------- ---------- ---------- ----------
1992:
Reserve for bad
debts $ 981,000 $ 939,448 $ 810,448 (1) $ 1,110,000
Reserve for cash
discounts 118,000 4,557,058 4,566,058 (2) 109,000
---------- ---------- ---------- ----------

$ 1,099,000 $ 5,496,506 $ 5,376,506 $ 1,219,000
---------- ---------- ---------- ----------
1991:
Reserve for bad
debts $ 576,000 $ 739,211 $ 334,211 (1) $ 981,000
Reserve for cash
discounts 172,000 3,497,649 3,551,649 (2) 118,000
---------- ---------- ---------- ----------

$ 748,000 $ 4,236,860 $ 3,885,860 $ 1,099,000
---------- ---------- ---------- ----------
<FN>

(1) Accounts receivable written off net of recoveries.

(2) Allowances to customers.
</TABLE>

<PAGE>

TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 and 1991

Maximum Average
Category of Weighted amount amount
aggregate Balance average outstanding outstanding
short-term at end of interest during the during the
borrowings period rate* year year
---------- --------- -------- ------------ -----------
<S> <C> <C> <C> <C>

1993:
Notes payable
to banks $22,600,673 3.2% $67,600,673 $12,490,782

1992:
Notes payable
to banks $ 252,569 7.7% $ 2,000,000 $ 306,192

1991:
Notes payable
to banks $ -- 5.8% $ 1,493,294 $ 998,019

<FN>

* Total interest expense as a percentage of average notes payable, calculated
using sum of month-end balances divided by 12.
</TABLE>

<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARY COMPANIES

SCHEDULE X - SUPPLEMENTARY INCOME
STATEMENT INFORMATION FOR THE YEARS ENDED
DECEMBER 31, 1993, 1992 AND 1991

Charged to
Item costs and expenses
---- ------------------
<S> <C>

1993:
Repairs and maintenance $ 4,914,712
Depreciation and amortization 8,814,188
Advertising 4,902,292

1992:
Repairs and maintenance $ 5,174,373
Depreciation and amortization 6,070,891
Advertising 4,876,510

1991:
Repairs and maintenance $ 4,048,986
Depreciation and amortization 5,202,442
Advertising 4,069,583
</TABLE>

<PAGE>
INDEX TO EXHIBITS

2.1 Asset Sale Agreement dated September 29, 1993 between
Warner-Lambert Company and the Company, including a
list of omitted exhibits and schedules. Incorporated
by reference to Exhibit 2 to the Company's Report on
Form 8-K dated October 15, 1993; Commission File No.
1-1361.

The Company hereby agrees to provide the Commission, upon
request, copies of any omitted exhibits or schedules required by Item
601(b)(2) of Regulation S-K.

3.1 Articles of Incorporation. Incorporated by reference
to Exhibit 2.1 to Company's Registration Statement on
Form 8-A dated February 29, 1988.

3.1.1 Articles of Amendment of the Articles of Incorporation
dated May 2, 1988. Incorporated by reference to
Exhibit 3.1.1 of the Company's Annual Report on Form
10-K for the year ended December 31, 1988; Commission
File No. 1-1361.

3.1.2 Articles of Amendment of the Articles of Incorporation
dated May 7, 1990. Incorporated by reference to
Exhibit 3.1.2 of the Company's Annual Report on Form
10-K for the year ended December 31, 1990; Commission
File No. 1-1361.

3.2 By-Laws. Incorporated by reference to Exhibit 2.2 to
Company's Registration Statement of Form 8-A dated
February 29, 1988.

3.3 Specimen Class B Common Stock Certificate.
Incorporated by reference to Exhibit 1.1 to Company's
Registration Statement on Form 8-A dated February 29,
1988.

10.5* Consultation Agreement between the Company and William
Touretz dated December 21, 1979. Incorporated by
reference to Exhibit 10.5 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1992; Commission File No. 1-1361.

<PAGE>

INDEX TO EXHIBITS (CONTINUED)

10.5.1* Modification Agreement between the Company and William
Touretz dated as of December 5, 1984. Incorporated by
reference to Exhibit 10.5.1 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1984; Commission File No. 1-1361.

10.5.2* Modification Agreement between the Company and William
Touretz dated as of December 13, 1985. Incorporated by
reference to Exhibit 10.5.2 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1985; Commission File No. 1-1361.

10.5.3* Modification Agreement between the Company and William
Touretz dated as of December 17, 1986. Incorporated by
reference to Exhibit 10.5.3 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1986; Commission File No. 1-1361.

10.8.1* Excess Benefit Plan. Incorporated by reference to
Exhibit 10.8.1 of the Company's Annual Report on Form
10-K for the year ended December 31, 1990; Commission
File No. 1-1361.

10.8.2* Career Achievement Plan of the Company.

10.17* Family Security Agreement between the Company and G.
Howard Ember dated March 5, 1992. Incorporated by
reference to Exhibit 10.17 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1991; Commission File No. 1-1361.

<PAGE>

INDEX TO EXHIBITS (CONTINUED)

10.12* Split Dollar Agreements (Special Trust and Daughters
Revocable Trust) between the Company and trustee of
Trust dated July 10, 1993.

10.18* Family Security Agreement between the Company and John
W. Newlin dated October 30, 1986. Incorporated by
reference to Exhibit 10.18 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1986; Commission File No. 1-1361.

10.19* Family Security Agreement between the Company and
Thomas E. Corr dated November 18, 1986. Incorporated
by reference to Exhibit 10.19 of the Company's Annual
Report on Form 10-K for the year ended December 31,
1986; Commission File No. 1-1361.

10.20* Family Security Agreement between the Company and
James M. Hunt dated August 26, 1993.

13 The following items incorporated by reference herein
from the Company's 1993 Annual Report to Shareholders
for the year ended December 31, 1993 (the "1993
Report"), are filed as Exhibits to this report:

(i) Information under the section entitled
"International" set forth on Page 4 of the 1993
Report;

(ii) Information under the section entitled
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" set forth on
Pages 5-7 of the 1993 Report;

(iii) Consolidated Statements of Earnings and
Retained Earnings for the three years ended
December 31, 1993 set forth on Page 8 of the
1993 Report;

<PAGE>

INDEX TO EXHIBITS (CONTINUED)

(iv) Consolidated Statements of Financial Position at
December 31, 1993 and 1992 set forth on Pages 9-10
of the 1993 Report;

(v) Consolidated Statements of Cash Flow for the three
years ended December 31, 1993 set forth on Page 11
of the 1993 Report;

(vi) Notes to Consolidated Financial Statements set
forth on Pages 12-15 of the 1993 Report;

(vii) Report of Independent Accountants set forth
on Page 15 of the 1993 Report;

(viii) Quarterly Financial Data set forth on Page 16
of the 1993 Report;

(ix) Information under the section entitled "1993-1992
Quarterly Summary of Tootsie Roll Industries, Inc.
Stock Prices and Dividends" set forth on Page 16
of the 1993 Report; and

(x) Information under the section entitled "Five Year
Summary of Earnings and Financial Highlights" set
forth on Page 17 of the 1993 Report.

21 List of Subsidiaries of the Company.

- ------------------

* Executive compensation plan or arrangement.

<PAGE>

EXHIBIT 13

INTERNATIONAL

Strong sales growth was realized in our Mexican subsidiary primarily due to
another successful Christmas season. Profits also increased substantially,
although they declined as a percentage of sales due to margin pressure. New
sales and marketing programs are being implemented in order to retain and grow
our sales base in this emerging market.

Canadian sales increased as did export sales outside of North America. Our sales
division in the Far East developed new packaging and product formulations to
appeal to local taste preferences. These new items, along with certain of our
existing products, have been introduced in various test markets in the Pacific
Rim. We are encouraged by the acceptance of our products in these markets to
date.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND THE RESULTS OF OPERATIONS
(in thousands except per share,
percentage and ratio figures)

NET SALES
Per Share
<S> <C>
89... $17.02
90... $18.45
91... $19.73
92... $23.30
93... $24.64

</TABLE>

NET EARNINGS
Per Share
<S> <C>
89... $1.92
90... $2.14
91... $2.42
92... $3.04
93... $3.36

</TABLE>

FINANCIAL REVIEW

This financial review discusses the company's financial condition, results of
operations, liquidity and capital resources. This discussion should be read in
conjunction with the Consolidated Financial Statements and related footnotes
beginning on pages 8 and 12, respectively.

FINANCIAL CONDITION

Our financial condition remained strong in 1993, bolstered by another year of
record profits. Net earnings rose from $32,032 in 1992 to $35,442 in 1993.
Shareholders' equity increased by 16.9% from $181,704 in 1992 to $212,343 in
1993, due principally to the addition of these earnings, less cash dividends of
$3,769. Cash dividends have been paid by the company for fifty-one consecutive
years. Shareholders also received a 3% stock dividend in 1993, the twenty-ninth
consecutive year one has been distributed.

Capital expenditures were a record $27,992, primarily reflecting the purchase of
our Chicago facility which had previously been leased, completion of the
Covington plant expansion commenced in 1992, and several other projects. In
October we acquired the Junior Mints, Charleston Chew, Sugar Daddy and Sugar
Babies brands, along with the facility in which they are produced. This
acquisition was the largest in the history of the company.

These significant investments were financed by a combination of cash and debt
which is reflected in the following ratios: current ratio declined from 5.9:1 to
2.2:1; quick ratio declined from 4.5:1 to 1.5:1; current liabilities to net
worth increased from 12.4% to 24.0% and debt to equity increased from 4.3% to
23.6%. Despite the increased leverage incurred in 1993, the company retains a
conservative financial position and sufficient capital for other corporate
purposes.

RESULTS OF OPERATIONS

1993 vs. 1992

Net sales increased in 1993 to $259,593, a record level for the seventeenth
consecutive year and 6% over 1992 sales of $245,424. Sales remained at the
highest level in the third quarter, due to successful Halloween and Back to
School promotions.

Other factors contributing to sales growth during the year were the continued
success of our traditional product lines, favorable results with seasonal lines
and the line extensions, as well as growth in our Mexican and Canadian
subsidiaries.

Comparing the quarterly sales in 1993 to those of 1992, increases were seen in
each of the first three quarters, while the fourth quarter declined by 3%.
Excluding the brands acquired in October the decrease would have been 10%. This
decrease is largely due to general softness in the candy industry, the timing of
some large customer Halloween shipments between the third and fourth quarters
relative to the prior year and the effects of consolidation in the warehouse
club class of trade.

Cost of goods sold, as a percentage of sales, was consistent with 1992 at 51.6%
versus 51.8%. Raw material prices remained stable throughout the year and
productivity improvements continued to

<PAGE>

SHAREHOLDERS' EQUITY
Per Share
<S> <C>
89... $10.40
90... $12.33
91... $14.50
92... $17.25
93... $20.16

</TABLE>

NET EARNINGS
As a % of Sales
<S> <C>
89... 11.3
90... 11.6
91... 12.3
92... 13.1
93... 13.7

</TABLE>

mitigate modest changes in the cost of other factors of production. Gross
margin grew by 6% to $125,615 because of increased sales and as a percentage of
sales it remained constant at 48.4% versus 48.2% in 1992.

Operating expenses, comprised of marketing, selling, physical distribution,
general and administrative expenses and goodwill amortization, declined
slightly as a percentage of sales to 27.8% from 28.7% in the prior year. This
favorable result demonstrates the effect of management's "hands-on" involvement
in the operation of the business and the implementation of effective expense
control programs to keep costs in check.

The effective tax rate was comparable to the 1992 rate at 38.6% versus 38.3% and
other income, consisting primarily of interest and dividend income, remained
essentially even with the prior year as the decrease in our short term
investment portfolio, to partially finance the acquisition, did not occur until
later in the year.

Consolidated earnings rose 10.6% to $35,442, a record high for the twelfth
consecutive year.

1992 vs. 1991

1992 represented the sixteenth year of record sales achievement. Sales of
$245,424 were up 18.1% over 1991 sales of $207,875. Double digit gains were
realized in each quarter.

The third quarter back to school and pre-Halloween sales periods, historically
our largest, again surpassed levels attained in previous years. However, the
largest sales increase on both a percentage and absolute basis was seen in the
fourth quarter, as tight inventory management at the retail level caused
seasonal orders to be carried over into October and due to the fact that
our Mexican subsidiary experienced a strong Christmas season.

Sales increases stemmed from merchandising efforts directed toward the fastest
growing classes of trade, continued strength in our Child's Play assortment
and successful line extensions such as Blue Razz Berry Blow Pops and seasonal
packs.

Cost of goods sold, as a percentage of sales, was in line with the prior year at
51.8% versus 51.6% in 1991. Both direct and indirect costs were comparable to
the prior year as a percent of sales. Continued weakness in the cosmetic economy
and the absence of significant increases in the cost of any major raw materials
or packaging components contributed to this stability. Correspondingly, gross
margin, as a percentage of sales, remained essentially even at 48.2% in 1992
compared with 48.4% in 1991.

Operating expenses, as a percentage of sales, remained comparable with the prior
year and 28.7% of sales. Tight control of operating expenses is an ongoing
program within the company.

The effective tax rate of 38.3% declined slightly from the 1991 level of 32.9%
due to lower foreign taxes offset by foreign tax credits and increased tax free
investment income. Other income rose by $1,050 due to increased interest and
dividend income.

In 1991, the company adopted two new Statements of Financial Accounting
Standards (SFAS) issued by the Financial Accounting Standards Board. SFAS No.
109, "Accounting for Income Taxes" principally requires companies to adopt the
liability

<PAGE>

method of computing deferred taxes, thereby recomputing existing tax
liabilities at current rates. This change had a favorable impact of $869.

Also in 1991, the Company adopted SFAS No. 106, "Employers" Accounting for
Postretirement Benefits other than Pensions whereby the accrual method is
utilized to record the anticipated expenses of each retiree's benefits ratably
over his/her working career. This method accelerates the recognition of expense
versus the ""pay as you go'' method which deferred such recognition until the
expenses were actually paid. This change had an unfavorable impact of $1,907,
net of future tax benefits.

Consolidated net earnings after the cumulative effect of these accounting
changes rose 25.6% to a new company record of $32,032 or $3.04 per share in 1992
from the previous record of $25,495 or $2.42 per share for 1991. Prior to the
cumulative effect of accounting changes the increase was 20.7%.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities decreased $2,108 to $33,363 in 1993 from
$35,471 in 1992 and $36,826 in 1991. Higher profits and depreciation and
amortization and accrued liabilities in 1993 were offset by increased accounts
receivable, inventories and prepaids.

Cash flows from investing activities in 1993 reflect the acquisition of
Cambridge Brands along with net investment sales which were used toward its
financing. Increased capital expenditures were principally due to the purchase
of our Chicago plant and the Charms expansion.

Cash flows from financing activities include $92,000 of interest bearing debt
incurred during 1993, $50,000 of which was paid off prior to year end. The net
inflow of funds was utilized in the purchase of Cambridge Brands and our Chicago
plant and enabled us to maintain a solid financial position with cash and
marketable securities of $56,203.

Cash dividends were declared and paid in 1993 for the fifty-first consecutive
year. Dividends were increased by 28% to $.36 per share during 1993.

Our successful operating results and financial conservatism are expressed in the
following financial statements.

NET SALES
Millions of dollars
<S> <C>
89... $179
90... $194
91... $206
92... $245
93... $250

</TABLE>

NET EARNINGS
Millions of dollars
<S> <C>
89... $20.2
90... $22.6
91... $25.5
92... $32.0
93... $35.4

</TABLE>

GROSS MARGIN
Millions of dollars
<S> <C>
89... $85
90... $91
91... $101
92... $118
93... $126

</TABLE>

SHAREHOLDERS'
EQUITY
Millions of dollars
<S> <C>
89 $110
90 $130
91 $153
92 $182
93 $212

</TABLE>

TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS
AND RETAINED EARNINGS
(in thousands except per share data)

For the year ended December 31,
------------------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . $259,593 $245,424 $207,875
Cost of goods sold. . . . . . . . . . . . . . . . . . . . 133,978 127,123 107,280
--------- --------- ---------
Gross margin. . . . . . . . . . . . . . . . . . . . . . 125,615 118,301 100,595
--------- --------- ---------
Operating expenses:
Marketing, selling and advertising. . . . . . . . . . . 40,096 38,958 32,392
Distribution and warehousing . . . . . . . . . . . . . 17,655 16,959 14,867
General and administrative. . . . . . . . . . . . . . . 12,837 13,186 10,837
Amortization of the excess of cost
over acquired net tangible assets . . . . . . . . . . 1,510 1,265 1,264
--------- --------- ---------
72,098 70,368 59,360
--------- --------- ---------
Earnings from operations. . . . . . . . . . . . . . . . . 53,517 47,933 41,235
Other income, net (Note 8). . . . . . . . . . . . . . . . 4,193 3,989 2,939
--------- --------- ---------
Earnings before income taxes. . . . . . . . . . . . . . . 57,710 51,922 44,174
Provision for income taxes (Notes 1 and 4). . . . . . . . 22,268 19,890 17,641
--------- --------- ---------
Earnings before cumulative effect
of accounting changes. . . . . . . . . . . . . . . . . . 35,442 32,032 26,533
Cumulative effects of accounting
changes - income (expense):
Income taxes (Note 1). . . . . . . . . . . . . . . - - 869
Postretirement health care and life
insurance benefits, less income
tax effect (Notes 1 and 7). . . . . . . . . . . . - - (1,907)
--------- --------- ---------
Net earnings. . . . . . . . . . . . . . . . . . . . . . . 35,442 32,032 25,495

Retained earnings at beginning of year. . . . . . . . . . 90,285 83,507 74,173
--------- --------- ---------
125,727 115,539 99,668
--------- --------- ---------
Deduct (Note 5):
Cash dividends ($.36, $.28 and $.24 per share). . . . . 3,769 2,947 2,492
Stock dividends . . . . . . . . . . . . . . . . . . . . 25,311 22,307 13,669
--------- --------- ---------
29,080 25,254 16,161
--------- --------- ---------
Retained earnings at end of year. . . . . . . . . . . . . $ 96,647 $ 90,285 $ 83,507
--------- --------- ---------
--------- --------- ---------
Earnings per common share:
Earnings before cumulative effect of
accounting changes. . . . . . . . . . . . . . . . $3.36 $3.04 $2.52
Cumulative effect of accounting changes. . . . . . - - (.10)
--------- --------- ---------
Net earnings per common share . . . . . . . . . . . . . . $3.36 $3.04 $2.42
--------- --------- ---------
--------- --------- ---------
Average common and class B common shares
outstanding (Note 5) . . . . . . . . . . . . . . . . . . 10,534 10,534 10,534
--------- --------- ---------
--------- --------- ---------

<FN>

* Based on average shares outstanding adjusted for stock dividends.

</TABLE>

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

TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)

December 31,
ASSETS 1993 1992
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Notes 1 and 10). . . . . . . . . . . . . . $ 1,986 $ 995
Investments (Notes 1 and 10). . . . . . . . . . . . . . . . . . . . . 54,217 87,947
Accounts receivable, less allowances of $2,075 and $1,219 . . . . . . 20,656 12,889
Inventories (Note 1):
Finished goods and work in process. . . . . . . . . . . . . . . . . 17,186 14,823
Raw materials and supplies. . . . . . . . . . . . . . . . . . . . . 12,108 10,022
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,667 4,544
Deferred income taxes (Notes 1 and 4) . . . . . . . . . . . . . . . . 2,094 1,992
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . 111,914 133,212
---------- ----------

PROPERTY, PLANT AND EQUIPMENT, at cost (Note 1):
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,231 231
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,347 4,861
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . 107,685 75,091
Leasehold improvements. . . . . . . . . . . . . . . . . . . . . . . . 10 4,841
---------- ----------
137,273 85,024
Less - Accumulated depreciation and
amortization. . . . . . . . . . . . . . . . . . . . . . . . . 50,574 44,767
---------- ----------
86,699 40,257
---------- ----------

OTHER ASSETS:
Excess of cost over acquired net tangible assets, net of accumulated
amortization of $7,260 and $5,750 (Notes 1 and 2) . . . . . . . . . 101,375 45,195
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,952 5,806
---------- ----------
105,327 51,001
---------- ----------
$303,940 $224,470
---------- ----------
---------- ----------

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

</TABLE>

(in thousands except per share data)

LIABILITIES AND SHAREHOLDERS' EQUITY December 31,
1993 1992
---------- ----------
<S> <C> <C>

CURRENT LIABILITIES:

Notes payable to banks (Notes 2, 6 and 10) . . . . . . . . . . . . . $ 22,601 $ 253
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 6,259 4,674
Dividends payable. . . . . . . . . . . . . . . . . . . . . . . . . . 1,026 791
Accrued liabilities (Note 3) . . . . . . . . . . . . . . . . . . . . 17,919 13,661
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . 3,057 3,119
---------- ----------
Total current liabilities 50,862 22,498
---------- ----------

NONCURRENT LIABILITIES:
Deferred income taxes (Notes 1 and 4). . . . . . . . . . . . . . . . 6,364 5,986
Postretirement health care and life insurance
benefits (Notes 1 and 7) . . . . . . . . . . . . . . . . . . . . . . 4,498 3,976
Industrial Development Bonds (Notes 6 and 10). . . . . . . . . . . . 7,500 7,500
Term notes payable (Note 6 and 10) . . . . . . . . . . . . . . . . . 20,000 -
Other long-term liabilities. . . . . . . . . . . . . . . . . . . . . 2,373 2,806
---------- ----------
Total noncurrent liabilities 40,735 20,268
---------- ----------

SHAREHOLDERS' EQUITY (Notes 1 and 5):
Common stock, $.69-4/9 par value -
25,000 shares authorized -
7,069 and 6,834, respectively, issued . . . . . . . . . . . . . . 4,909 4,746
Class B common stock, $.69-4/9 par value -
10,000 shares authorized -
3,465 and 3,395, respectively, issued . . . . . . . . . . . . . . 2,406 2,357
Capital in excess of par value . . . . . . . . . . . . . . . . . . . 111,108 86,162
Retained earnings, per accompanying statement. . . . . . . . . . . . 96,647 90,285
Foreign currency translation adjustment account (Note 1) . . . . . . (2,727) (1,846)
---------- ----------
212,343 181,704
---------- ----------

COMMITMENTS (Note 9). . . . . . . . . . . . . . . . . . . . . . . . . . - -
---------- ----------
$303,940 $224,470
---------- ----------
---------- ----------
</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE>
<TABLE>
<CAPTION>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

For the year ended December 31,
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings. . . . . . . . . . . . . . . . . . . . . . $35,442 $32,032 $25,495
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization. . . . . . . . . . 8,814 6,071 5,202
Translation loss . . . . . . . . . . . . . . . . - 124 171
Changes in operating assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . (7,941) 113 3,152
Inventories. . . . . . . . . . . . . . . . . . (2,727) (3,443) 1,457
Prepaid expenses and other assets. . . . . . . (2,827) (724) 125
Accounts payable and accrued liabilities . . . 3,179 2,964 (1,664)
Income taxes payable and deferred. . . . . . . 214 (3,536) (1,697)
Postretirement health care and life
insurance benefits . . . . . . . . . . . . . . 522 450 3,526
Other long-term liabilities . . . . . . . . . . (432) 1,420 59
Other . . . . . . . . . . . . . . . . . . . . . (881) - -
--------- --------- ---------
Net cash provided by operating activities . . . . . . . 33,363 35,471 35,826
--------- --------- ---------
Cash flows from investing activities:
Acquisition of Cambridge Brands . . . . . . . . . . . . (81,317) - -
Capital expenditures. . . . . . . . . . . . . . . . . . (27,992) (10,956) (3,984)
Investment purchases. . . . . . . . . . . . . . . . . . (22,854) (86,357) (68,399)
Investment sales. . . . . . . . . . . . . . . . . . . . 61,096 52,752 41,017
--------- --------- ---------
Net cash used in investing activities . . . . . . . . . (71,067) (44,562) (31,366)

--------- --------- ---------
Cash flows from financing activities:
Issuances of industrial development bonds and
notes payable . . . . . . . . . . . . . . . . . . 92,000 7,500 -
Repayments of notes payable . . . . . . . . . . . . . . (50,000) - -
Dividends paid in cash. . . . . . . . . . . . . . . . . (3,687) (2,965) (2,489)
Other, net. . . . . . . . . . . . . . . . . . . . . . . 382 152 (797)
--------- --------- ---------
Net cash provided by (used in) financing activities . . 38,695 4,687 (3,286
--------- --------- ---------
Increase (decrease) in cash and cash equivalents. . . . . 991 (4,403) 1,174
Cash and cash equivalents at beginning of year. . . . . . 995 5,398 4,224
--------- --------- ---------
Cash and cash equivalents at end of year. . . . . . . . . $ 1,986 $ 995 $ 5,398
--------- --------- ---------
--------- --------- ---------
Supplemental cash flow information:
Income taxes paid . . . . . . . . . . . . . . . . . . . $22,111 $23,733 $16,887
--------- --------- ---------
--------- --------- ---------

Interest paid . . . . . . . . . . . . . . . . . . . . . $ 653 $ 116 $ 88
--------- --------- ---------
--------- --------- ---------

</TABLE>

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

<PAGE>
TOOTSIE ROLL INDUSTRIES, INC.
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands except per share data)

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF CONSOLIDATION:

The consolidated financial statements include the accounts of Tootsie Roll
Industries, Inc. and its wholly-owned subsidiaries (the company), all of
which are engaged in the manufacture and sale of candy products. All
significant intercompany transactions have been eliminated.

CASH AND CASH EQUIVALENTS:

The company considers temporary cash investments with a maturity of three
months or less to be cash equivalents.

INVESTMENTS:

Investments are carried at cost which approximates market and consist of
various marketable securities that have maturities of less than one year.

INVENTORIES:

Inventories are stated at cost, not in excess of market. The cost of
domestic inventories ($26,500 and $21,546 at December 31, 1993 and 1992,
respectively) has been determined by the last-in, first-out (LIFO) method.
The excess of current cost over LIFO cost of inventories approximates $4,316
and $4,301 at December 31, 1993 and 1992, respectively. The cost of foreign
inventories ($2,794 and $3,299 at December 31, 1993 and 1992, respectively)
has been determined by the first-in, first-out (FIFO) method.

The company executes futures contracts to hedge price risk related to
certain future purchases of product ingredients. Changes in market value of
such futures contracts are included in the measurement of the cost of these
ingredients.

PROPERTY, PLANT AND EQUIPMENT:

Depreciation is computed for financial reporting purposes by use of both
the straight-line and accelerated methods, whereas for income tax purposes
the company uses accelerated methods on all properties. Amortization is
computed for financial reporting and income tax purposes by use of the
straight-line method.

POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS:

Effective January 1, 1991, the company changed its method of accounting
for postretirement health care and life insurance benefits to the accrual
method, as a result of adopting Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for Postretirement Benefits other than
Pensions." The cumulative effect of this accounting change was to decrease
net earnings by $1,907 (net of income taxes of $1,144) or $.18 per share as
of January 1, 1991. The effect of this change on 1991 operations is a
decrease in net earnings before the cumulative effect of accounting changes
of approximately $250 or $.02 per share.

INCOME TAXES:

Effective January 1, 1991, the company changed its method of accounting
for income taxes, as a result of adopting SFAS No. 109, "Accounting for
Income Taxes." This statement requires, among other things, a change from
the deferral to the liability method of computing deferred income taxes. The
cumulative effect of this change on 1991 net earnings, excluding the
cumulative effect upon adoption, was not material. The company elected not
to restate prior years.

EXCESS OF COST OVER ACQUIRED NET TANGIBLE ASSETS:

The excess of cost over the acquired net tangible assets of operating
companies is amortized on a straight-line basis over a 40 year period.

FOREIGN CURRENCY TRANSLATION:

During 1992 and 1991 management classified Mexico as a hyper-inflationary
economy, as defined by SFAS No. 52, "Foreign Currency Translation". Under
this classification, the dollar is used as the functional currency, and
translation gains and losses are included in the determination of earnings.
Translation losses of $124 and $171 related to the company's Mexican
operations were charged to expense in 1992 and 1991, respectively.

Effective January 1, 1993 management determined that the Mexican economy
is no longer hyper-inflationary. Accordingly, the local currency is used as
the functional currency and the net effect of translating the Mexican
operation's financial statements is reported in a separate component of
shareholders' equity.

RECLASSIFICATIONS:

Certain prior year balances and amounts have been reclassified in order to
conform to the current year presentation. Such reclassifications had no
effect on net income or retained earnings as previously reported.

NOTE 2 - ACQUISITION:

On October 15, 1993, the company purchased certain tangible and intangible
assets of a candy manufacturer (Cambridge Brands) for approximately $81,300.
Funds for the acquisition were provided from $9,300 of the company's own
funds and $72,000 in bank borrowings (Note 6). The acquisition has been
accounted for as a purchase and the net assets and the results of operations
and cash flows of Cambridge Brands have been included in the company's
consolidated financial statements from October 15, 1993.

The following unaudited pro forma information shows the results of the
company's operations as though the purchase of Cambridge Brands had been
consummated as of the beginning of each year:

<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Net sales $306,584 $303,576
Net earnings 36,592 32,763
Net earnings per common share 3.47 3.11

</TABLE>

The pro forma results of operations are not necessarily indicative of the
actual results of operations that would have occurred had the purchase actually
been made at the beginning of periods presented or of future operations.

NOTE 3 - ACCRUED LIABILITIES:

Accrued liabilities are comprised of the following:

December 31,
------------------------

1993 1992
-------- --------
<S> <C> <C>
Compensation and employee benefits . $ 5,989 $ 5,134
Commissions. . . . . . . . . . . . . 856 850
Advertising and promotions . . . . . 4,413 2,353
Workmen's compensation . . . . . . . 973 1,067
Other . . . . . . . . . . . . . . . 5,688 4,257
-------- --------
$17,919 $13,661
-------- --------
-------- --------

</TABLE>

NOTE 4 - INCOME TAXES:

The domestic and foreign components of pretax income are as follows:

1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Domestic . . . . . . . . . . . . . . . $56,159 $48,450 $40,423
Foreign . . . . . . . . . . . . . . . 1,551 3,472 3,751
------- ------- -------
$57,710 $51,922 $44,174
------- ------- -------
------- ------- -------
</TABLE>

<PAGE>

The provision for income taxes is comprised of the following:

1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Current:
Federal. . . . . . . . . . . . . . . $19,052 $17,820 $14,230
Foreign . . . . . . . . . . . . . . 534 1,073 1,343
State. . . . . . . . . . . . . . . . 2,406 2,469 2,312
------- ------- -------
21,992 21,362 17,885
------- ------- -------
Deferred:
Federal . . . . . . . . . . . . . . 514 (1,318) (586)
Foreign . . . . . . . . . . . . . . (281) (25) 411
State . . . . . . . . . . . . . . . 43 (129) (69)
------- ------- -------
276 (1,472) (244)
------- ------- -------
$22,268 $19,890 $17,641
------- ------- -------
------- ------- -------
</TABLE>

Deferred income taxes are comprised of the following:

December 31,
------------------
1993 1992
------- -------
<S> <C> <C>
Workers' compensation. . . . . . . . . $ 331 $ 364
Reserve for returns. . . . . . . . . . 445 295
Reserve for uncollectible
accounts. . . . . . . . . . . . . . . 230 257
Other accrued expenses . . . . . . . . 1,705 1,099
VEBA funding . . . . . . . . . . . . . (526) (433)
Other, net . . . . . . . . . . . . . . (91) 410
------- -------
Net current deferred income
tax asset . . . . . . . . . . . . . . $2,094 $1,992
------- -------
------- -------

</TABLE>

December 31,
------------------
1993 1992
------- -------
<S> <C> <C>
Depreciation . . . . . . . . . . . . . $6,878 $7,298
Post employment benefits . . . . . . . (1,536) (1,353)
Deductible goodwill. . . . . . . . . . 1,342 -
Deferred compensation. . . . . . . . . (473) (699)
DISC commissions . . . . . . . . . . . 724 768
Other, net . . . . . . . . . . . . . . (571) (28)
------- -------
Net long-term deferred income
tax liability . . . . . . . . . . . . $6,364 $5,986
------- -------
------- -------

</TABLE>

The effective income tax rate differs from the statutory rate as follows:

1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
U.S. statutory rate. . . . . . . . . . 35.0% 34.0% 34.0%
State income taxes, net . . . . . . . 2.8 3.0 3.4
Amortization of excess of
cost over acquired net
tangible assets . . . . . . . . . . . 0.7 0.8 1.0
Other, net . . . . . . . . . . . . . . 0.1 0.5 1.5
------- ------- -------
Effective income tax rate. . . . . . . 38.6% 38.3% 39.9%
------- ------- -------
------- ------- -------
</TABLE>

The company has not provided for U.S. federal or foreign withholding taxes on
$6,015 of foreign subsidiaries' undistributed earnings as of December 31, 1993
because such earnings are considered to be permanently reinvested. When excess
cash has accumulated in the company's foreign subsidiaries and it is
advantageous for tax or foreign exchange reasons, subsidiary earnings may be
remitted, and income taxes are provided on such amounts. It is not practicable
to determine the amount of income taxes that would be payable upon remittance of
the undistributed earnings.

NOTE 5 - SHARE CAPITAL AND CAPITAL IN EXCESS OF PAR VALUE:

Common Stock Class B Common Stock Capital in
------------------ --------------------- excess of
Shares Amount Shares Amount par value
--------- -------- -------- -------- ---------
(000's) (000's)

<S> <C> <C> <C> <C> <C>
Balance at January 1, 1991 . . . . 6,287 $4,366 3,358 $2,332 $ 50,820

Issuance of 3% stock dividend. . . 189 132 98 68 13,380
Conversion of Class B common
shares to common shares . . . . . 78 54 (78) (54) -
-------- -------- -------- -------- --------
Balance at December 31, 1991 . . . 6,554 4,552 3,378 2,346 64,200
Issuance of 3% stock dividend. . . 197 136 100 69 21,962
Conversion of Class B common
shares to common shares . . . . . 83 58 (83) (58) -
-------- -------- -------- -------- --------
Balance at December 31, 1992 6,834 4,746 3,395 2,357 86,162
Issuance of 3% stock dividend. . . 204 142 101 70 24,946
Conversion of Class B common
shares to common shares . . . . . 31 21 (31) (21) -
-------- -------- -------- -------- --------
Balance at December 31, 1993 . . . 7,069 $4,909 3,465 $2,406 $111,108
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>

The Class B Common Stock has essentially the same rights as Common Stock,
except that each share of Class B Common Stock has ten votes per share
(compared to one vote per share of Common Stock), is not traded on any
exchange, is restricted as to transfer and is convertible on a share-for-
share basis, at any time and at no cost to the holders, into shares of Common
Stock which are traded on the New York Stock Exchange.
Average shares outstanding and all per share amounts included in the
financial statements and notes thereto have been adjusted retroactively to
reflect the three percent stock dividend distributed in 1993.

NOTE 6 - NOTES PAYABLE AND INDUSTRIAL DEVELOPMENT BONDS:

In October 1993, the company executed notes payable with three banks in the
aggregate amount of $72,000 to provide funds for the acquisition of Cambridge
Brands (Note 2). As of December 31, 1993 $22,000 was outstanding at fixed
(3.64%) and variable interest rates based upon the London Interbank Offered
Rates (LIBOR) plus 13 basis points with a composite interest rate of 3.62%.
The outstanding principal balance is due in 1994.

Additionally, the company entered into two 3-year term notes aggregating
$20,000 the proceeds of which were used to purchase the company's Chicago
manufacturing facility and headquarters. These term notes bear interest
payable monthly at 3.55% and mature entirely in 1996.
At December 31, 1993, the company had outstanding a three year interest rate
swap agreement with a notional amount of $20,000. Under the agreement, the
company exchanged a fixed rate of 4.24% for a variable rate adjusted monthly
based upon LIBOR (3.33% at December 31, 1993). The company anticipates the
counterparty to the swap agreement (a large financial institution) will fully
perform on its obligations.
During 1992, the company entered into an industrial development bond
agreement with the City of Covington, Tennessee. The bond proceeds of $7.5
million are being used to finance the expansion of the Company's existing
facilities. Interest is payable at various times during the year based upon
the interest calculation option (fixed, variable or floating) selected by the
company. As of December 31, 1993 and 1992, interest was calculated under the
floating option

<PAGE>

(3.4% and 2.9%, respectively) which requires monthly payments of interest.
Principal on the bonds is due in its entirety in the year 2027.
At December 31, 1993 and 1992, unexpended bond proceeds of $1,061 and $5,573
were restricted for use on the capital expenditure projects discussed above.
These funds, which are included as other assets in the accompanying
consolidated balance sheet, are invested in short-term securities until
expended.
In connection with the issuance of the bonds, the company entered into a
letter of credit agreement with a bank for the amount of principal
outstanding plus 48 days accrued interest. The letter of credit, which
expires in March 1996, carries an annual fee of 32 1/2 basis points on the
outstanding principal amount of the bonds.

NOTE 7 - EMPLOYEE BENEFIT PLANS:

PENSION PLANS:

The company sponsors defined contribution pension plans covering certain
nonunion employees with over one year of credited service. The company's
policy is to fund pension costs accrued based on compensation levels. Total
pension expense for 1993, 1992 and 1991 approximated $1,202, $1,075 and $867,
respectively. The company also maintains certain profit sharing and savings-
investment plans. Company contributions in 1993, 1992 and 1991 to these
plans were $321, $291, and $263, respectively.
The company also contributes to multi-employer defined benefit pension
plans for its union employees. Such contributions aggregated $407, $474 and
$510 in 1993, 1992 and 1991, respectively. The relative position of each
employer associated with the multi-employer plans with respect to the
actuarial present value of benefits and net plan assets is not determinable
by the company.

POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFIT PLANS:

The company provides certain postretirement health care and life insurance
benefits for corporate office and management employees. As discussed in Note
1, the company adopted the accrual method of accounting for these benefits
effective January 1, 1991. Employees become eligible for these benefits if
they meet minimum age and service requirements and if they agree to
contribute a portion of the cost. The company has the right to modify and
terminate these benefits and increase future participant contributions. The
Company does not fund postretirement health care and life insurance benefits
in advance of payments for benefit claims.

The accrual for the accumulated postretirement benefit obligation at December
31, 1993 and 1992 consists of the following:

December 31,
----------------
1993 1992
------ ------
<S> <C> <C>
Retirees. . . . . . . . . . . . . . $1,285 $1,354
Active employees. . . . . . . . . . 3,213 2,622
------ ------
$4,498 $3,976
------ ------

</TABLE>

Net periodic postretirement benefit cost for 1993, 1992 and 1991 included
the following components:

1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Service cost - benefits attributed
to service during the period. . . . $241 $246 $220
Interest cost on the accumulated
postretirement benefit obligation . 259 288 255
------ ------ ------
Net periodic postretirement benefit
cost. . . . . . . . . . . . . . . $500 $534 $475
------ ------ ------
------ ------ ------

</TABLE>

For measurement purposes, a 14.5% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1994; the rate was assumed
to decrease gradually to 6.5% for 2002 and remain at that level thereafter. The
health care cost trend rate assumption has a significant effect on the amounts
reported. To illustrate, increasing the assumed health care cost trend rates by
1 percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1993 by approximately $233 and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by approximately $121. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.0% and 8.5% at December 31, 1993 and
1992, respectively.

NOTE 8 - OTHER INCOME, NET:

Other income (expense) is comprised of the following:

1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Interest income. . . . . . . . . . . $1,975 $2,376 $1,380
Interest expense . . . . . . . . . . (642) (440) (196)
Dividend income. . . . . . . . . . . 1,992 1,624 1,510
Foreign exchange losses. . . . . . . (4) (155) (178)
Royalty income . . . . . . . . . . . 634 289 299
Miscellaneous, net . . . . . . . . . 238 295 124
------ ------ ------
$4,193 $3,989 $2,939
------ ------ ------
------ ------ ------

</TABLE>

NOTE 9 - COMMITMENTS:

Future minimum rental commitments under non-cancelable operating leases are as
follows:

Amount
-------
<S> <C>
1994. . . . . . . . . . $2,213
1995. . . . . . . . . . 1,996
1996. . . . . . . . . . 153

</TABLE>

During 1993, the Company entered into operating leases for certain
manufacturing equipment. These leases expire in 1998 but provide the Company
with the option to terminate the lease in 1996 and to purchase the equipment at
its fair market value.

Rental expense aggregated $1,015, $1,243, and $1,172 in 1993, 1992 and 1991,
respectively.

NOTE 10 - DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS:

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

CASH AND CASH EQUIVALENTS

The carrying amount approximates fair value because of the short maturity of
those instruments.

INVESTMENTS

The fair values of investments are estimated based on quoted market prices.

NOTES PAYABLE AND INDUSTRIAL DEVELOPMENT BONDS

The fair values of the company's notes payable and industrial development
bonds are estimated based on the quoted market prices for the same or similar
issues.

FAIR VALUE

The estimated fair values of the company's financial instruments are as
follows:

1993 1992
-------------- ----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------- ----- -------- -----
<S> <C> <C> <C> <C>
Cash and cash equivalents. . . $ 1,986 $ 1,986 $ 995 $ 995
Investments. . . . . . . . . . 54,217 56,327 87,947 89,347
Notes payable and
industrial development
bonds. . . . . . . . . . . . 50,101 50,101 7,500 7,500

</TABLE>

14
<PAGE>
<TABLE>
<CAPTION>

NOTE 11 - GEOGRAPHIC AREA AND SALES INFORMATION:

Summary of sales, net earnings and assets by geographic area

1993 1992 1991
----------------------------- ----------------------------- --------------------------
Mexico Mexico Mexico
United and Consoli- United and Consoli- United and Consoli-
States Canada dated States Canada dated States Canada dated
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales to unaffiliated
customers. . . . . . . . . . . . . $234,460 $25,133 $259,593 $225,001 $20,423 $245,424 $188,625 $19,250 $207,875
-------- -------- --------
-------- -------- --------

Sales between geographic areas . . . 2,186 3,219 806 1,649 795 1,546
-------- -------- -------- -------- -------- --------
$236,646 $28,352 $225,807 $22,072 $189,420 $20,796
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------

Net earnings . . . . . . . . . . . . $ 34,144 $ 1,298 $ 35,442 $ 29,478 $ 2,554 $ 32,032 $ 23,722 $ 1,773 $ 25,495

Total assets . . . . . . . . . . . . 288,506 15,434 303,940 211,099 13,371 224,470 171,349 13,078 184,427

Net assets . . . . . . . . . . . . . 199,862 12,481 212,343 171,838 9,866 181,704 145,473 7,286 152,759

</TABLE>

Total assets are those assets associated with or used directly in the respective
geographic area, excluding intercompany advances and investments.

MAJOR CUSTOMER

Revenues from a major customer aggregated approximately 13.6% and 12.5% of
total net sales during the year ended December 31, 1993 and 1992.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Shareholders of
Tootsie Roll Industries, Inc.

In our opinion, the accompanying consolidated statements of financial
position and the related consolidated statements of earnings and retained
earnings and of cash flows present fairly, in all material respects, the
financial position of Tootsie Roll Industries, Inc. and its subsidiaries at
December 31, 1993 and 1992, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1993,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

As discussed in Note 1, the Company changed its method of accounting for
income taxes and postretirement health care and life insurance benefits in
1991.

Price Waterhouse

Chicago, Illinois
February 17, 1994

<PAGE>

QUARTERLY FINANCIAL DATA
Tootsie Roll Industries, Inc. and Subsidiaries

(Thousands of dollars except per share data)
1993 First Second Third Fourth Total
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . $50,017 $53,923 $93,239 $62,414 $259,593
Gross margin . . . . . . . . . . . . . . . . . . . . 25,281 27,232 45,318 27,784 125,615
Net earnings . . . . . . . . . . . . . . . . . . . . 6,696 7,345 14,380 7,021 35,442
Net earnings per share . . . . . . . . . . . . . . . .64 .69 1.37 .66 3.36

1992
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales. . . . . . . . . . . . . . . . . . . . . . $42,798 $51,494 $86,856 $64,276 $245,424
Gross margin . . . . . . . . . . . . . . . . . . . . 21,691 26,104 41,979 28,527 118,301
Net earnings . . . . . . . . . . . . . . . . . . . . 5,563 6,733 13,076 6,660 32,032
Net earnings per share . . . . . . . . . . . . . . . .53 .64 1.24 .63 3.04

1991
- ------------------------------------------------------------------------------------------------------------------------------------
Net sales. . . . . . . . . . . . . . . . . . . . . . $38,405 $43,786 $77,289 $48,395 $207,875
Gross margin . . . . . . . . . . . . . . . . . . . . 19,934 22,346 37,207 21,088 100,585
Earnings before cumulative
effect of accounting changes . . . . . . . . . . . 4,823 5,265 11,335 5,093 26,533
Cumulative effect of accounting changes. . . . . . . (1,038) -- -- -- (1,038)
Net earnings . . . . . . . . . . . . . . . . . . . . 3,785 5,285 11,335 5,090 25,495
Net earnings per share
Before cumulative effect of accounting changes . . .46 .50 1.08 .48 2.52
Cumulative effect of accounting changes. . . . . . (.10) -- -- -- (.10)
Net earnings . . . . . . . . . . . . . . . . . . . .36 .50 1.08 .48 2.42

<FN>

Net earnings per share is based upon average outstanding shares
as adjusted for 3% stock dividends issued during the second
quarter of each year.

</TABLE>

1993-1992 QUARTERLY SUMMARY OF TOOTSIE ROLL INDUSTRIES INC. STOCK

STOCK PRICES*
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1st Qtr. . . . . . . . . 83-3/8 74 81-1/8 70-1/2
2nd Qtr. . . . . . . . . 82-1/2 71-1/8 76-3/4 60
3rd Qtr. . . . . . . . . 74-1/4 85 82-1/8 61
4th Qtr. . . . . . . . . 79-1/4 69-1/4 83-1/2 78

<FN>

*NYSE Closing Quotations.
</TABLE>

Estimated Number of shareholders at 12/31/93..... 9,500

DIVIDENDS*
- --------------------------------------------------------------------------------------
<S> <C> <C>
1st Qtr. . . . . . . . . $.0728 $.0613
2nd Qtr. . . . . . . . . $.0950 $.0728
3rd Qtr. . . . . . . . . $.0950 $.0728
4th Qtr. . . . . . . . . $.0950 $.0728

<FN>

NOTE: In addition to the above Cash Dividends, a 3% Stock
Dividend was issued on 4/22/93 and 4/24/92.

*Cash Dividends are restated to reflect 3% Stock Dividends.

</TABLE>

<PAGE>

FIVE YEAR SUMMARY OF EARNINGS AND FINANCIAL HIGHLIGHTS
Tootsie Roll Industries, Inc. and Subsidiaries

(See Management's Comments starting on page 5) 1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Sales and Earnings Data
Net Sales . . . . . . . . . . . . . . . . . . . $259,593 $245,424 $207,875 $194,299 $179,294
Gross Margin. . . . . . . . . . . . . . . . . . 125,615 118,301 100,595 91,094 85,295
Interest Expense. . . . . . . . . . . . . . . . 642 440 196 527 1,184
Provision for Income Taxes. . . . . . . . . . . 22,268 19,890 17,641 14,563 12,994
Earnings before cumulative
effect of accounting changes. . . . . . . . . 35,442 32,032 26,533 22,556 20,212
Cumulative effect of accounting changes (1) . . - - (1,038) - -
Net Earnings. . . . . . . . . . . . . . . . . . 35,442 32,032 25,495 22,556 20,212
% of Sales. . . . . . . . . . . . . . . . . . . 13.7% 13.1% 12.3% 11.6% 11.3%
% of Shareholders' Equity . . . . . . . . . . . 16.7% 17.6% 16.7% 17.4% 18.4%

Per Common Share Data (2)
Net Sales . . . . . . . . . . . . . . . . . . . $24.64 $23.30 $19.73 $18.45 $17.02
Earnings before cumulative
effect of accounting changes . . . . . . . . . 3.36 3.04 2.52 2.14 1.92
Cumulative effect of accounting changes (1) . . -- -- (.10) -- --
Net Earnings. . . . . . . . . . . . . . . . . . 3.36 3.04 2.42 2.14 1.92
Shareholders' Equity. . . . . . . . . . . . . . 20.16 17.25 14.50 12.13 10.40
Cash Dividends. . . . . . . . . . . . . . . . . .36 .28 .24 .21 .20
Stock Dividends . . . . . . . . . . . . . . . . 3% 3% 3% 3% 3%

Additional Financial Data
Working Capital. . . . . . . . . . . . . . . . . $61,052 $110,714 $80,569 $55,318 $33,486
Current Ratio. . . . . . . . . . . . . . . . . . 2.2 5.9 4.8 3.5 2.6
Net Cash Provided by
Operating Activities (3). . . . . . . . . . . . 33,363 36,471 36,826 26,685 16,189
Property, Plant and
Equipment Additions . . . . . . . . . . . . . . 27,992 10,956 3,985 5,155 3,114
Net Property, Plant and
Equipment. . . . . . . . . . . . . . . . . . . 86,699 40,257 34,019 32,099 30,907
Total Assets . . . . . . . . . . . . . . . . . . 303,940 224,470 184,427 159,702 136,342
Shareholders' Equity . . . . . . . . . . . . . . 212,343 181,704 152,759 129,645 109,562
Average Shares Outstanding (2) . . . . . . . . . 10,534 10,534 10,534 10,534 10,534

<FN>

(1) Reflects adoption of new accounting standards for income taxes and
postretirement health care and life insurance benefits (see Notes 1 and 7 to
financial statements).

(2) Adjusted for stock dividends.

(3) 1989 has been restated in accordance with SFAS No. 35 "Statement of Cash
Flows."

</TABLE>

<PAGE>

SUBSIDIARIES

Arrendadora Gorvac S.A. de C.V
C.G.C. Corporation
Cambridge Brands, Inc.
Cambridge Mfg., Inc.
Cambridge Services, Inc.
Cella's Confections, Inc.
Charms Company
Charms Marketing Company
Henry Eisen Advertising Agency, Inc.
J.T. Company, Inc.
Tootsie Roll of Canada, Ltd.
The Tootsie Roll Company, Inc.
Tootsie Roll Management, Inc.
Tootsie Ross Mfg., Inc.
Tootsie Rolls--Latin America, Inc.
Tootsie Roll Worldwide Ltd.
The Sweets Mix Company, Inc.
TRI de Latino America
TRI International Co.
TRI-Mass., Inc.
TRI Sales Co.
Tutsi S.A. de C.V.
World Trade & Marketing Ltd.

<PAGE>
FAMILY SECURITY AGREEMENT

THIS AGREEMENT made and entered into on this 26 day of August, 1993 by and
between TOOTSIE ROLL INDUSTRIES, INC. (hereinafter called "Company"), and James
M. Hunt (hereinafter called "Employee").

W I T N E S S E T H :
WHEREAS, the Employee has rendered valuable services to the Company for 15
years;
WHEREAS, the Company desires to have the benefit of the Employee's
continued loyalty, service and counsel and also to assist the Employee in
providing for the contingency of his death;
WHEREAS, the Company wishes to offer an inducement to the Employee to
continue his relationship with the Company; and
WHEREAS, the Company is willing to pay a death benefit to a designated
beneficiary of the Employee as provided herein.
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of all of which are hereby
acknowledged, it is mutually agreed by the parties as follows:

I.
BENEFITS
1.01 If the Employee dies while in the employ of the Company, the
Company shall pay to the Employee's designated beneficiary a total death benefit
of $600,000 payable within (90)

<PAGE>

days after the death of the Employee.
1.02 Notwithstanding anything in this Agreement to the contrary,
nothing herein shall require the Company to purchase any insurance to secure its
obligation under this Agreement. If the Company should purchase such insurance,
it shall not be required to exercise any option, election or right under such
insurance contract; or if the Company wishes to exercise any option, election or
right under such insurance, it shall not be required to so exercise any such
option, election or right in any particular manner. Employee hereby agrees and
confirms that the Company has an insurance interest in the Employee and he
agrees to execute such documents and to take such action as may be reasonably
required to enable the Company to purchase and maintain life insurance policies
on the life of the Employee.
II.
BENEFICIARY
2.01 Beneficiary shall mean a beneficiary or beneficiaries designated
by the Employee in writing duly signed by the Employee and delivered to the
Company. No other manner of designating a beneficiary shall be recognized by
Company. The Employee reserves the right to change such beneficiary
designations from time to time. If more than one designated beneficiary
survives the Employee, payment shall be made as provided in the last dated
beneficiary designation received by the Company. Unless clearly stated to the
contrary in the beneficiary designation, the primary beneficiary shall receive
100% of the benefits. Nothing

<PAGE>

herein shall prevent Employee from designating secondary beneficiaries. Should
no beneficiary be designated, or should all designated beneficiaries predecease
the Employee, the benefits payable hereunder shall be paid to the Employee's
estate.
III.
SERVICES SUBJECT TO MUTUAL AGREEMENT
3.01 Employee will continue to furnish services to the Company on the
basis of an independent understanding or a contractual agreement. Any changes
in the Employee's compensation shall not be deemed a violation or waiver of any
of the provisions of this Agreement. Nothing contained in this Agreement shall
be deemed to constitute a contract for services between the Employee and the
Company, and nothing contained herein shall be deemed to give the Employee any
right to continue furnishing services to the Company, or the Company the right
to so demand such services.
IV.
PROHIBITION AGAINST FUNDING
4.01 Should the Company elect to acquire an insurance contract as
described in Article II hereof in connection with the liabilities assumed by it
hereunder, it is expressly understood and agreed that the Employee shall not
have any right with respect to, or claim against, such contract. Such contract
shall be and remain a general, unpledged, unrestricted asset of Company subject
to the claims of it creditors. Such contract shall not be held under any trust
for the benefit of the Employee. In the event such purchase is made by the
Company, the Employee shall have no right of

<PAGE>

ownership or any other right or benefit with respect to such contract. The
beneficiary or beneficiaries under this Agreement shall be required to look
solely to the provisions of this Agreement and the Company itself for
enforcement of any and all benefits under this Agreement. Company shall be the
owner and beneficiary of any insurance contract acquired by it in connection
with this Agreement.
V.
MISCELLANEOUS
5.01 This Agreement shall be binding upon and inure to the benefit of
the parties hereto, their respective heirs, legal representatives, successors
and assigns.
5.02 There shall be no change or modification of this Agreement unless
reduced to writing and signed by the parties hereto.
5.03 This is the entire understanding of the parties regarding the
subject matter of this Agreement and all other understandings regarding such
subject matter, oral or written, prior or contemporaneous, are merged herein.
VI.
CHOICE OF LAW
6.01 This Agreement shall be construed under the laws of the State of
Illinois governing contracts wholly executed and performed therein.
IN WITNESS WHEREOF, the Company and the Employee have caused this Agreement
to be duly executed, effective as of the day and

<PAGE>

year first above written.

ATTEST: TOOTSIE ROLL INDUSTRIES, INC.

By: M. Buddemeier By: Ellen R. Gordon
Title: Director-Human Resources Title: President

EMPLOYEE

James M. Hunt

<PAGE>

TOOTSIE ROLL INDUSTRIES, INC.
CAREER ACHIEVEMENT PLAN

1. PURPOSE. The purpose of the Career Achievement Plan (the "Plan")
of Tootsie Roll Industries, Inc. (the "Company") is to promote the financial
interests and growth of the Company by increasing motivation on the part of
its senior officers and key employees by creating an incentive for them to
remain in the long term employ of the Company and to work to the best of
their abilities for the achievement of the Company's strategic growth
objectives.

2. PARTICIPATION. Participation in the Plan will be limited to those
senior officers and other key employees of the Company as the Board of
Directors (the "Board") in its sole discretion shall designate from time to
time to be eligible to receive Career Achievement Awards hereunder.

3. CAREER ACHIEVEMENT AWARDS. As of the date determined by the Board
for any calendar year during the term of the Plan, the Board may, but shall
not be required to, grant an award to any or all of the participants of the
Plan. Each such award (a "Career Achievement Award") shall be for a fixed
dollar amount, and shall be calculated based on such formulas or other
criteria as may be established by the Board in its sole discretion, PROVIDED,
HOWEVER, that the Board shall be prohibited from adopting formulas or other
criteria which would cause Career Achievement Awards to be subject to Section
16 of the Securities Exchange Act of 1934 or the rules promulgated
thereunder. Each Career Achievement Award shall be communicated in a written
notice to the affected participant as soon as practicable

-1-
<PAGE>

after the amount has been determined by the Board. Such written notice shall
state the amount of the award, and shall set forth the non-competition
provisions of Section 7 hereof and any other terms or conditions that may be
established by the Board consistent with the provisions of this Plan. Except
as otherwise provided in Section 5 hereof, once an award has been
communicated to a participant pursuant to this Section 3, such award may not
be canceled, reduced or diminished in any manner without the written consent
of the participant.

4. CAREER ACHIEVEMENT ACCOUNT.

(a) ESTABLISHMENT OF ACCOUNTS. There shall be established on the
books of the Company a Career Achievement Account in the name of each
participant in the Plan. Career Achievement Awards made under the Plan shall
be credited to a participant's Career Achievement Account as of the January
1st specified in the written notice of the award delivered to the
participant.

(b) CAREER ACHIEVEMENT ACCOUNT EARNINGS.
(1) PRIOR TO TERMINATION OF EMPLOYMENT. Each participant's
Career Achievement Account shall consist of the aggregate amount of all
Career Achievement Awards and any "interest" previously credited to the
participant's account with respect to such Career Achievement Awards under
this Section 4(b)(1). Such account balance shall be credited with "interest"
as of the last day of each calendar quarter in which the participant remains
an employee of the Company at a rate equal to one-fourth of the published
yield of Moody's Seasoned Bond Index as of the last day of such quarter.
Notwithstanding the preceding sentence, if the date

-2-
<PAGE>

of termination of a participant's employment is other than the last day of a
calendar quarter, no "interest" shall be credited to the participant's
account under this Section 4(b)(1) for the calendar quarter in which such
termination occurs.

(2) AFTER TERMINATION OF EMPLOYMENT. From and after the date on
which a participant's employment with the Company terminates until payment is
made hereunder, the "vested" portion of the participant's Career Achievement
Account (as determined under Section 5(a)) shall be credited with "interest"
as of the last day of each calendar quarter beginning with the calendar
quarter in which such termination occurs and ending with the calendar quarter
in which the participant's Career Achievement Account is distributed. For
purposes of this Section 4(b)(2), the rate of "interest" shall equal one-
fourth of the annual yield on five-year United States Treasury Notes as of
the last day of each relevant calendar quarter. If the participant's Career
Achievement Account is distributed on a date other than the last day of a
calendar quarter, the rate of interest set forth in the preceding sentence
for such quarter shall be multiplied by a fraction, the numerator of which is
the number of days from the beginning of the calendar quarter to the date of
distribution and the denominator of which is the total number of days in such
calendar quarter.

5. PAYMENT OF CAREER ACHIEVEMENT ACCOUNT UPON TERMINATION OF
EMPLOYMENT. A participant's Career Achievement Account shall be paid to the
participant, shall be paid to the participant's designated beneficiary in the
event of the participant's death, or shall be forfeited, depending upon the
time and

-3-

<PAGE>

circumstances of the participant's termination of employment, as provided
below:

(a) TERMINATION OF EMPLOYMENT OTHER THAN FOR DEATH OR DISABILITY.
Subject to Sections 5(c), 5(d) and 5(e) hereof, if a participant's employment
with the Company terminates other than as a result of the participant's death
or permanent disability, the participant shall be entitled to receive, on the
"date of distribution", a lump sum payment equal to (x) the "vested" portion
of the participant's Career Achievement Account as of the date of termination
of employment (as such "vested" portion is determined below) and (y) amounts
credited to the participant's account under Section 4(b)(2) following such
date of termination of employment. For purposes of this Section 5(a), the
"date of distribution" means the later of (i) the second anniversary of the
date of the participant's termination of employment or (ii) sixty (60) days
after the earlier of the participant's 65th birthday or his or her death.
The portion of a participant's Career Achievement Account which has not
"vested" as of the date of the participant's termination of employment shall
be forfeited, and the participant shall not be entitled to any payment of
such forfeited amount or any interest thereon.

The "vested" portion of a participant's Career Achievement Account
as of the date of termination shall equal the aggregate of the "vested"
portions of each Career Achievement Award previously granted to the
participant. The "vested" portion of each Career Achievement Award shall be
separately determined and shall equal the product of the Career Achievement
Award (plus any "interest" previously credited to the participant's account
with respect to such Career Achievement Award

-4-

<PAGE>

under Section 4(b)(1) hereof) multiplied by the Vested Percentage of such
award. The Vested Percentage of a Career Achievement Award shall be
determined according to the number of the participant's consecutive full
calendar years of employment with the Company beginning with the calendar
year in which such award was credited to the participant's Career Achievement
Account and ending with the calendar year immediately prior to the year in
which termination occurs, pursuant to the following table:

Years of Continuous Vested
Employment Percentage
------------------- ----------

For purposes of this Section 5(a), if a participant first becomes an employee
of the Company during the calendar year in which a Career Achievement Award
is credited to such participant's account, such year shall count as a full
calendar year of employment.

(b) TERMINATION OF EMPLOYMENT BY REASON OF DEATH OR
DISABILITY. Subject to Section 5(e) hereof, if a participant's employment
with the Company terminates by reason of the participant's death or permanent
disability, the Company shall pay to the participant or the beneficiary
designated by the participant pursuant to Section

-5-

<PAGE>

9(a) hereof, as the case may be, a lump sum amount equal to the full balance
of the participant's Career Achievement Account as of the date of
termination, and any amounts credited to the participant's account under
Section 4(b)(2) following such termination of employment. Such payment shall
be made not later than sixty (60) days after the participant's termination of
employment. For purposes of this Plan, a participant shall be deemed to be
permanently disabled if such participant is unable to perform his or her
stated duties with the Company by reason of illness, accident or other
incapacity and is not engaged in any occupation or employment for wage or
profit for which he or she is reasonably qualified by education, training, or
experience, provided however, that in the event the Company maintains a long-
term disability plan in which the participant is entitled to receive
benefits, the participant shall be deemed to be permanently disabled when he
or she suffers a physical illness, injury or other impairment in respect to
which the participant is entitled to receive benefits under such long-term
disability plan.

(c) TERMINATION OF EMPLOYMENT FOR CAUSE. Notwithstanding any
provision of this Plan to the contrary, if the Board, in its sole discretion,
shall determine that the participant's employment with the Company was
terminated for "cause" (as defined below), the participant's Career Achieve-
ment Account shall be forfeited in its entirety, and the participant shall
not be entitled to any payments under this Plan. For purposes of this Plan,
"cause" shall mean any act or conduct by a participant that consists of or
constitutes fraud, theft, dishonesty, alcohol or drug use on the job, willful
injury to or destruction of the Company's property or property of any person
dealing with the Company, any act or conduct injurious to the goodwill of the

-6-

<PAGE>

Company or its relations with its customers or any other person dealing with
the Company or derogatory of any of the Company's methods or products, any
violation of the duty imposed upon employees by contract or by law in their
relationship with the Company, or engages in any activities in violation of
Section 7 hereof.

(d) FORFEITURE OF CAREER ACHIEVEMENT ACCOUNT. Notwithstanding any
provision of this Plan to the contrary, a participant will forfeit all rights
to any amounts previously credited to his or her Career Achievement Account
if, after the termination of the participant's employment, the participant
engages in any activities in violation of Section 7 hereof.

(e) FURTHER DEFERRAL. To the extent determined by the Board in its
sole discretion, the Board shall have the authority to delay any payments
otherwise due under this Plan to the extent necessary to avoid a limitation
on the deductibility of compensation paid to a participant pursuant to
Section 162(m) of the Internal Revenue Code of 1986, or any successor
provision. To the extent any payments under this Plan are deferred under
this Section 5(e), such amounts shall continue to accrue "interest" pursuant
to Section 4(b)(2) hereof, and shall be paid at such time or from time to
time to the extent such payments would not cause or increase a limitation on
deductibility under such Section 162(m).

6. IMMEDIATE DISTRIBUTION OF CAREER ACHIEVEMENT ACCOUNTS UPON CHANGE
OF CONTROL OF THE COMPANY. Notwithstanding any provision of this Plan to
the

-7-

<PAGE>

contrary, the Company shall pay the entire balance of a participant's Career
Achievement Account to such participant within three business days after the
occurrence of a "change of control" of the Company. A "change of control" of
the Company shall occur when: (1) any person, including a "group," as
described in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, acquires after the effective date of this Plan the beneficial
ownership of, and the right to vote, shares having the right to cast at least
twenty percent (20%) of the votes permitted to be cast in any election of
members to the Board of Directors of the Company; or (2) as the result of any
tender or exchange offer, substantial purchase of the Company's equity
securities, merger, consolidation, sale of assets or contested election, or
any combination of the foregoing transactions, the persons who were directors
of the Company immediately prior to such transaction or transactions do not
constitute a majority of the Board (or of the board of directors of any
successor to or assignee of the Company) immediately after the next meeting
of stockholders of the Company (or any successor or assignee) following such
transaction; except that no event described in clause (1) or (2) above shall
constitute a "change of control" if immediately after such event Melvin J.
Gordon, Ellen R. Gordon, their descendants (and spouses of such descendants)
and any trusts or estates in which such persons have an interest own,
directly or indirectly, shares having the right to cast at least fifty
percent (50%) of the votes permitted to be cast in any election of members of
the Board of Directors of the Company.

7. NONCOMPETITION. In connection with the receipt of a Career
Achievement Award hereunder, each participant will be required to enter into
an

-8-

<PAGE>

agreement with the Company which provides that during the term of employment,
and for a period ending on the second anniversary of the effective date of
the participant's termination of employment by the Company, the participant
will not:

(1) directly or indirectly engage in, own, manage, operate,
participate in, render advice to or have any interest in any person,
firm, corporation, or business (whether as an owner, partner, employee,
officer, director, agent, security holder, creditor, consultant, or
otherwise) that engages in any activity which is the same as, similar
to, or competitive with any activity then, or within the prior twelve
(12) months, engaged in by the Company or any affiliate of the Company;
or

(2) directly or indirectly solicit for employment or employ or
become employed by any person then, or within the prior twelve (12)
months, employed by the Company or any affiliate of the Company, or
request, influence or advise any person who is or shall be employed by
or is in the service of the Company or any affiliate of the Company to
leave such employment or service of the Company or any affiliate of the
Company; or

(3) directly or indirectly influence or advise any competitor of
or anyone intending to compete with the Company or any affiliate of the
Company to employ or otherwise engage the services of any person who is
or shall be employed by or is in the service of the Company or any
affiliate of the Company; or

-9-

<PAGE>

(4) directly or indirectly solicit or accept any business which is
the same as, similar to or competitive with that of the Company or any
affiliate of the Company from customers of the Company or any affiliate
of the Company or request, induce or advise customers of the Company or
any affiliate of the Company to withdraw, curtail or cancel their
business with the Company or any affiliate of the Company.

For purposes of this Plan, the term "affiliate" means any entity engaged in
the same or similar business as the Company or a related business, which is
controlled by or under common control with the Company.

8. ADMINISTRATION OF THE PLAN. The Plan shall be administered and
interpreted by the Board. The Board shall, subject to the terms of the Plan,
make or refrain from making Career Achievement Awards, determine the amount
of Career Achievement Awards, establish rules and regulations for the
administration of the Plan, impose conditions with respect to competitive
employment or other activities with respect to any such award, and establish
the written form to be used to evidence such awards pursuant to Section 3
hereof. The Board shall have full authority to construe and interpret the
terms and provisions of the Plan, to adopt, alter and repeal such
administrative rules, guidelines and practices governing this Plan and to
perform all acts, including the delegation of its administrative
responsibilities as it shall, from time to time, deem advisable, and to
otherwise supervise the administration of this Plan. All such rules,
regulations and interpretations relating to the Plan which are

-10-

<PAGE>

adopted by the Board shall be conclusive and binding on all parties. The
Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any award granted hereunder, in the manner
and to the extent it shall deem necessary to carry the Plan into effect.

9. MISCELLANEOUS.
(a) DESIGNATION OF BENEFICIARY. In the event of the death of a
participant, the amount payable under Section 5 hereof shall, unless the
participant shall designate to the contrary as provided below, thereafter be
made to such person or persons who, as of the date payment is to be made
under this Plan, would receive distribution of the participant's account
balance under the terms of the Tootsie Roll Employee's Pension Plan.
Notwithstanding the preceding sentence, a participant may specifically
designate the person or persons (who may be designated successively or
contingently) to receive payments under this Plan following the participant's
death by filing a written beneficiary designation with the Company during the
participant's lifetime. Such beneficiary designation shall be in such form
as may be prescribed by the Company and may be amended from time to time or
may be revoked by the participant pursuant to written instruments filed with
the Company during his or her lifetime. Beneficiaries designated by a
participant may be any natural or legal person or persons, including a
fiduciary, such as a trustee of a trust or the legal representative of an
estate. Unless otherwise provided by the beneficiary designation filed by a
participant, if all of the persons so designated die before a participant on
the occurrence of a contingency not contemplated in such beneficiary
designation, then the amount payable under this Plan shall be paid to the
person or persons

-11-

<PAGE>

determined in accordance with the first sentence of this Section 9(a).

(b) ASSETS. No assets shall be segregated or earmarked in respect
of any Career Achievement Award or Career Achievement Account and no
participant shall have any right to assign, transfer, pledge or hypothecate
his or her interest, or any portion thereof, in his or her Career Achievement
Account. The Plan and the crediting of Career Achievement Accounts hereunder
shall not constitute a trust and shall be structured solely for the purpose
of recording an unsecured contractual obligation. All amounts payable
pursuant to the terms of this Plan shall be paid from the general assets of
the Company.

(c) REPORTS. Until a participant's entire Career Achievement
Account shall have been paid in full or forfeited, the Company will furnish
to the participant a report, at least annually, setting forth transactions in
such account and the status of such account with respect to the vested and
unvested portions thereof and the "interest" credited thereon.

(d) ACCELERATION OF VESTING AND PAYMENT. Notwithstanding any
other provision of this Plan to the contrary, the Board, in its sole
discretion, is empowered to accelerate the vesting and to accelerate the
payment of all or a portion of a participant's Career Achievement Account for
any reason the Board may determine to be appropriate. Neither the Company
nor the Board shall have any obligation to make any such acceleration for any
reason whatsoever.

-12-

<PAGE>

(e) LIABILITY. No member of the Board shall be liable for any act
or action hereunder, whether of omission or commission, by any other member
or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or, except in circumstances
involving such member's bad faith, gross negligence or fraud, for anything
done or omitted to be done by such member. The Company will fully indemnify
and hold each member of the Board harmless from any liability hereunder,
except in circumstances involving such member's bad faith, gross negligence
or fraud. The Company or the Board may consult with legal counsel, who may
be counsel for the Company, with respect to its obligations or duties
hereunder, or with respect to any action or proceeding or any question of
law, and shall not be liable with respect to any action taken or omitted by
it in good faith pursuant to the advice of such counsel.

(f) AMENDMENT OR TERMINATION. Notwithstanding any other provision
of this Plan, the Board may at any time, and from time to time, amend, in
whole or in part, any or all of the provisions of the Plan, or suspend or
terminate it entirely, retroactively or otherwise; provided, however that any
such amendment, suspension or termination may not, without the participant's
consent, adversely affect any Career Achievement Awards previously credited
to the participant's account prior to the effective date of such amendment,
suspension or termination. Notwithstanding the foregoing, upon any
termination of this Plan, the Board may in its sole discretion accelerate the
vesting and payment of the entire balance of all Career Achievement Accounts
as of the date of termination of this Plan. The Plan shall remain in effect
until terminated pursuant to this Section 9(f).

-13-

<PAGE>

(g) EXPENSES. The Company will bear all expenses incurred by it
in administering this Plan.

(h) WITHHOLDING. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan or to otherwise require prior to
the payment of any amount hereunder, payment by the participant of any
Federal, state or local taxes required by law to be withheld.

(i) NO OBLIGATION. The Board's designation of an individual as a
participant in any year shall not require the Board to designate such person
to receive a Career Achievement Award in any other year. Neither this Plan
nor any Career Achievement Awards made hereunder shall create any obligation
on the Company to continue any other existing award plans or policies or to
establish or continue any other programs, plans or policies of any kind.
Neither this Plan nor any Career Achievement Award made pursuant to this Plan
shall give any participant or other employee any right with respect to
continuance of employment by the Company or any of its affiliates or of any
specific aggregate amount of compensation, nor shall there be a limitation in
any way on the right of the Company or any of its affiliates by which an
employee is employed to terminate such employee at any time for any reason
whatsoever, nor shall this Plan nor any Career Achievement Award made
hereunder create a contract of employment.

(j) NO ASSIGNMENT; RESOLUTION OF DISPUTES. Except as otherwise
permitted under Section 9(a), no right or interest in any Career Achievement

-14-

<PAGE>

Account under this Plan shall be assignable or transferable, and no right or
interest of any participant in any Career Achievement Account hereunder shall
be subject to any lien, obligation or liability of such participant. In the
event any conflicting demands are made upon the Company with respect to any
payments due as a result of this Plan, provided that the Company shall not
have received prior written notice that said conflicting demands have been
finally settled by court adjudication, arbitration, joint order or otherwise,
the Company may pay to the participant any and all amounts due hereunder and
thereupon the Company shall stand fully relieved and discharged of any
further duties or liabilities under this Plan.

(k) GOVERNING LAW. This Plan and all actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
State of Illinois (regardless of the law that might otherwise govern under
applicable Illinois principles of conflict of laws).

-15-

<PAGE>

SPLIT DOLLAR AGREEMENT (SPECIAL TRUST)

AGREEMENT, made and entered into by and between Tootsie Roll
Industries, Inc., a Virginia corporation (the "Corporation"), and Wendy J.
Gordon, not individually, but as trustee of the Gordon Family 1993 Special
Trust (the "Owner").

WHEREAS, Melvin J. Gordon and Ellen R. Gordon (individually, an
"Employee," and collectively, the "Employees") are presently employed by the
Corporation in which capacity their services have contributed to the
successful operation of the Corporation, and the Corporation and its board of
directors believe it is in the best interest of the Corporation to retain the
services of the Employees; and

WHEREAS, the Corporation is desirous of assisting the Owner in
paying for life insurance on the joint lives of the Employees; and

WHEREAS, the Corporation has determined that this assistance can
best be provided under a "split dollar" arrangement for the insurance
policies (the "policies") owned by the Owner listed on the attached
Schedule A on the joint lives of the Employees; and

WHEREAS, the Corporation and the Owner agree to make the policies
subject to this split dollar agreement; and

WHEREAS, the Owner agrees to assign each policy to the Corporation
as collateral for the premium payments to be made by the Corporation under
this agreement by an instrument of collateral assignment (the "assignment")
and to record such assignment with the respective issuing insurance company.

NOW, THEREFORE, in consideration of the premises, and the services
to be rendered to the Corporation by the Employees, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the
Corporation and the Owner hereby mutually covenant and agree as follows:

ARTICLE I

PAYMENT OF PREMIUMS AND ECONOMIC BENEFIT

1.1. As long as this agreement is in force, the Owner and the
Corporation agree to pay the amounts and in the manner set forth below.

1.2. The Owner shall pay each year to the Corporation an amount equal to
the economic benefit that would be taxable as gross income for federal income
tax purposes to one or both of the Employees but for the payment by the Owner
of such amount. The Owner shall have the option, exercisable upon 30 days'
written notice delivered to the Corporation, to pay a greater amount to the
Corporation.

-1-

<PAGE>

1.3. For purposes of Section 1.2 above, the economic benefit that would
be taxable to one or both of the Employees shall be computed in accordance
with Revenue Rulings 64-328, 1964-2 C.B. 11, and 66-110, 1966-1 C.B 12, and
the Corporation shall be responsible for computing such amount. The
Corporation will advise the Owner of the amount payable by the Owner pursuant
to Section 1.2, and the Owner shall pay that amount directly to the
Corporation.

1.4. In order to facilitate the payment of premiums on the policies, the
Owner and the Corporation agree that the Corporation will forward to the
respective company issuing each policy the entire premiums due on that
policy, if any.

ARTICLE II

POLICY OWNERSHIP

2.1. The Owner shall be the sole owner and beneficiary of the policy.
The Corporation's payment of premiums hereunder shall constitute a liability
of the Owner subject to repayment as provided herein. The Owner agrees to
assign each policy to the Corporation as collateral for such liabilities and
the Corporation shall have those rights granted to it under the assignments
and this agreement. As between the Owner and the Corporation, this agreement
shall take precedence over any provisions of the assignments in case of a
conflict between the terms of this agreement and the assignments.

ARTICLE III

DEATH OF EMPLOYEES

3.1. On the death of the last to die of the Employees while this
agreement is in force, the Owner will pay to the Corporation an amount equal
to the total premiums paid by the Corporation from the date of this agreement
to the date of death of the last to die of the Employees, reduced by the
total payments made to the Corporation by the Owner pursuant to Section 1.2
above.

ARTICLE IV

TERMINATION OF AGREEMENT

4.1. As to each policy, this agreement shall automatically terminate
upon the happening of any of the following events:

(a) At the option of the Corporation, if both the Employees
terminate employment for any reason other than the death of both
Employees. An Employee shall be deemed to be employed by the
Corporation during any period of temporary or permanent disability.

-2-

<PAGE>

(b) At the surrender, lapse or termination of the policy.

(d) Upon failure of the Owner to make a payment required by
Section 1.2 above.

(e) Upon agreement of the parties.

4.2. In the event of a termination under Section 4.1 above, the
Corporation shall be entitled to receive from the Owner within 120 days after
such termination an amount equal to the amount the Corporation would have
been entitled to receive at the death of the last to die of the Employees
under Section 3.1 determined as if such death occurred on the date of such
termination (the "termination amount").

4.3. If full payment of the termination amount is not received by the
Corporation pursuant to Section 4.2 above within the 120-day period, the
remaining amount owed by the Owner to the Corporation shall be deemed to be
in default (the "default amount"). Thereafter, the Owner, at the Owner's
option, immediately shall:

(a) Pay the default amount to the Corporation; or

(b) Transfer complete ownership of the policy to the
Corporation.

ARTICLE V

OTHER PROVISIONS

5.1. The Corporation agrees that it will not merge or consolidate with
another corporation or organization, or permit its business activities to be
taken over by any other organization unless and until the succeeding or
continuing corporation or other organization shall expressly assume the
rights and obligations of the Corporation herein set forth.

5.2. This agreement will be governed by and construed in accordance with
the laws of Illinois, where it is made and to be performed. It sets forth
the entire agreement between the parties concerning the subject matter
thereof, and any amendment or discharge will be made only in writing. This
agreement will bind and benefit the parties and their legal representatives
and successors.

5.3. This agreement shall not be deemed to constitute a contract of
employment between the Corporation and either of the Employees, nor shall any
provision restrict the right of the Corporation to discharge either of the
Employees, or restrict the right of either of the Employees to terminate
employment.

-3-

<PAGE>

5.4. For the purposes of the Employee Retirement Income Security Act of
1974 (ERISA), the Corporation will be the "Named Fiduciary" and Plan Adminis-
trator of the split dollar life insurance plan (the "Plan") for which this
agreement is hereby designated the written plan instrument.

5.5. The Corporation's board of directors may authorize a person or
group of persons to fulfill the responsibilities of the Corporation as Plan
Administrator. The Named Fiduciary or the Plan Administrator may employ
others to render advice with regard to its responsibilities under the Plan.
The Named Fiduciary may also allocate fiduciary responsibilities to others
and may exercise any other powers necessary for the discharge of its duties
to the extent not in conflict with ERISA.

5.6. The following Claims Procedure shall control the determination of
benefit payments under the Plan:

(a) Filing of Claim for Benefits

Any person or entity ("Claimant") entitled to benefits under the
Plan or under a policy will file a claim request with the Plan
Administrator with respect to benefits under the Plan and with the
"Insurer" (defined below) with respect to benefits under the
policy. The Plan Administrator will, upon written request of a
Claimant, make available copies of any claim forms or instructions
provided by the Insurer or advise the Claimant where copies of such
forms or instructions may be obtained.

(b) Denial of Claim

A claim for Benefits under the Plan will be denied if the
Corporation determines that the Claimant is not entitled to receive
benefits under the Plan. Notice of a denial shall be furnished to
the Claimant within a reasonable period of time after receipt of
the Claim for Benefit by the Plan Administrator. In the case of
benefits which are provided under the policy, the initial decision
on the claims will be made by the Insurer.

The Plan Administrator shall provide to every Claimant who is
denied a Claim for Benefits written notice setting forth, in a
manner calculated to be understood by the Claimant, the following:

(i) The specific reason or reasons for the denial;

(ii) Specific reference to pertinent Plan provisions on
which the denial is based:

(iii) A description of any additional material or
information necessary for the Claimant to perfect the claim,
and

-4-

<PAGE>

an explanation of why such material or information is necessary;
and

(iv) An explanation of the Plan's Claim Review Procedure
as set forth below.

(d) Review Procedure

The purpose of the Review Procedure is to provide a method by which
a Claimant may have a reasonable opportunity to appeal a denial of
a Claim to the Named Fiduciary for a full and fair review. To
accomplish that purpose, the Claimant or his duly authorized
representative:

(i) May require a review upon written application to the
Named Fiduciary;

(ii) May review pertinent Plan documents; and

(iii) May submit issues and comments in writing.

A Claimant (or his duly authorized representative) shall request a
review by filing a written application for review with the Named
Fiduciary at any time within 60 days after receipt by the Claimant
of written notice of the denial of his claim.

(e) Decision on Review

A decision on review of a denied claim shall be made in the
following manner:

(i) The decision on review shall be made by the Named
Fiduciary, who may in his discretion hold a hearing on the
denied claim. Such decision shall be made promptly, and not
later than 60 days after receipt of the request for review,
unless special circumstances (such as the need to hold a
hearing) require an extension of time for processing, in which
case a decision shall be rendered as soon as possible, but not
later than 120 days after receipt of the request for review.

(ii) The decision on review shall be in writing and shall
include specific reasons for the decision, written in a manner
calculated to be understood by the Claimant, and specific
references to the pertinent Plan provisions upon which the
decision is based.

5.7. This agreement may be amended or modified in whole or in part by
the Owner and the Corporation in writing at any time.

-5-

<PAGE>

5.8. Notwithstanding the provisions of this agreement, each life
insurance company (the "Insurer") which has issued a policy which is subject
to the provisions of this agreement is hereby authorized to act in accordance
with the terms of such policy as if this agreement did not exist, and the
payment or other performance of the contractual obligations by the Insurer,
in accordance with the terms of such policy, shall completely discharge the
Insurer from all claims, suits and demands of all persons whatsoever.

IN WITNESS WHEREOF, the parties hereto have signed this agreement
as of July 10, 1993.

____________________________________
Wendy J. Gordon
not individually, but as trustee

TOOTSIE ROLL INDUSTRIES, INC.

By _________________________________
As its___________________________

-6-

<PAGE>

SCHEDULE A (SPECIAL TRUST)
--------------------------

Name Policy No.
---- ----------

<S> <C>
Guardian 3733408

John Hancock 80042963

Mass Mutual 8858899

New York Life 44956816

Principal Mutual 6450780

Security Life 1526881

Sun Life 9293268Z

</TABLE>

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 8858899 issued by Massachusetts Mutual Life Insurance
Company on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

3. The insurer hereby is authorized to recognize the Assignee's claim
to rights hereunder without investigating the reason for any action taken by
the Assignee, or the giving of any notice, or the application to be made by
the Assignee of any amounts to be paid to the Assignee. The sole signature
of the Assignee shall be sufficient for the exercise of its rights under the
policy and the sole receipt of the Assignee for any sums received shall be a
full discharge and release therefor to the insurer.

Dated: July 10, 1993.

________________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By _____________________________________________
Its _______________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY

By__________________________________
Its____________________________

-2-

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 80042963 issued by John Hancock Mutual Life Insurance
Company on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

________________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By________________________________________________
Its __________________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY

By ___________________________________
Its ______________________________

-2-

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 6450780 issued by Principal Mutual Life Insurance
Company on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By _____________________________________________
Its ________________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY

By ________________________________________
Its ___________________________________

-2-

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 1526881 issued by Security Life of Denver Insurance
Company on the life of Ellen R. Gordon, subject to all the terms and con-
ditions of the policy and to all superior liens, if any, which the insurer
may have against the policy. The Assignor by this instrument agrees and the
Assignee by the acceptance of this assignment agrees to the conditions and
provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the insured, the net
proceeds of the policy up to the amount of the Assignee's Interest in
the policy.

Dated: July 10, 1993.

______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ____________________________________________
Its _______________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

SECURITY LIFE OF DENVER INSURANCE
COMPANY

By _____________________________________________
Its ________________________________________

-2-

<PAGE>
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 44956816 issued by New York Life Insurance Company on
the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject to all the
terms and conditions of the policy and to all superior liens, if any, which
the insurer may have against the policy. The Assignor by this instrument
agrees and the Assignee by the acceptance of this assignment agrees to the
conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_________________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ______________________________________________
Its _________________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

NEW YORK LIFE INSURANCE COMPANY

By ______________________________________________
Its _________________________________________

-2-

<PAGE>
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 3733408 issued by Guardian Life Insurance Company of
America on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By _______________________________________________
Its __________________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

GUARDIAN LIFE INSURANCE COMPANY OF
AMERICA

By _____________________________________________
Its ________________________________________

-2-

<PAGE>
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Family 1993 Special Trust (the "Assignor"), hereby assigns, transfers and
sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 9293268Z issued by Sun Life Assurance Company of
Canada on the life of Ellen R. Gordon, subject to all the terms and con-
ditions of the policy and to all superior liens, if any, which the insurer
may have against the policy. The Assignor by this instrument agrees and the
Assignee by the acceptance of this assignment agrees to the conditions and
provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the insured, the net
proceeds of the policy up to the amount of the Assignee's Interest in
the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ____________________________________________
Its _______________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

SUN LIFE ASSURANCE COMPANY OF CANADA

By ____________________________________________
Its _______________________________________

-2-

<PAGE>
SPLIT DOLLAR AGREEMENT (DAUGHTERS REVOCABLE TRUST)

WHEREAS, the Corporation is desirous of assisting the Owner in
paying for life insurance on the joint lives of the Employees; and

WHEREAS, the Corporation and the Owner agree to make the policies
subject to this split dollar agreement; and

ARTICLE I

PAYMENT OF PREMIUMS AND ECONOMIC BENEFIT

1.1. As long as this agreement is in force, the Owner and the
Corporation agree to pay the amounts and in the manner set forth below.

-1-

<PAGE>

delivered to the Corporation, to pay a greater amount to the Corporation.

ARTICLE II

POLICY OWNERSHIP

ARTICLE III

DEATH OF EMPLOYEES

ARTICLE IV

TERMINATION OF AGREEMENT

4.1. As to each policy, this agreement shall automatically terminate
upon the happening of any of the following events:

(a) At the option of the Corporation, if both the Employees
terminate employment for any reason other than the death of both

-2-

<PAGE>

Employees. An Employee shall be deemed to be employed by the
Corporation during any period of temporary or permanent disability.

(b) At the surrender, lapse or termination of the policy.

(d) Upon failure of the Owner to make a payment required by
Section 1.2 above.

(e) Upon agreement of the parties.

(a) Pay the default amount to the Corporation; or

(b) Transfer complete ownership of the policy to the
Corporation.

ARTICLE V

OTHER PROVISIONS

-3-

<PAGE>

or restrict the right of either of the Employees to terminate employment.

5.4. For the purposes of the Employee Retirement Income Security Act of
1974 (ERISA), the Corporation will be the "Named Fiduciary" and Plan
Administrator of the split dollar life insurance plan (the "Plan") for which
this agreement is hereby designated the written plan instrument.

5.6. The following Claims Procedure shall control the determination of
benefit payments under the Plan:

(a) Filing of Claim for Benefits

(b) Denial of Claim

The Plan Administrator shall provide to every Claimant who is
denied a Claim for Benefits written notice setting forth, in a
manner calculated to be understood by the Claimant, the following:

(i) The specific reason or reasons for the denial;

(ii) Specific reference to pertinent Plan provisions on
which the denial is based:

-4-

<PAGE>

(iii) A description of any additional material or
information necessary for the Claimant to perfect the claim,
and an explanation of why such material or information is
necessary; and

(iv) An explanation of the Plan's Claim Review Procedure
as set forth below.

(d) Review Procedure

(i) May require a review upon written application to the
Named Fiduciary;

(ii) May review pertinent Plan documents; and

(iii) May submit issues and comments in writing.

(e) Decision on Review

A decision on review of a denied claim shall be made in the
following manner:

5.7. This agreement may be amended or modified in whole or in part by
the

-5-

<PAGE>

Owner and the Corporation in writing at any time.

IN WITNESS WHEREOF, the parties hereto have signed this agreement
as of July 10, 1993.

________________________________________________
Wendy J. Gordon
not individually, but as trustee

TOOTSIE ROLL INDUSTRIES, INC.

By _____________________________________________
As its ______________________________________

-6-

<PAGE>

<TABLE>
<CAPTION>
SCHEDULE A (DAUGHTERS REVOCABLE TRUST)
--------------------------------------

Name Policy No.
---- ----------

<S> <C>
Metropolitan 930750242A

Northwestern Mutual 12606422

Principal Mutual 6450724

Prudential 79728873

</TABLE>

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Daughters 1993 Revocable Trust (the "Assignor"), hereby assigns, transfers
and sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 6450724 issued by Principal Mutual Life Insurance
Company on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ____________________________________________
Its _______________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY

By ____________________________________________
Its _______________________________________

-2-

<PAGE>
COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Daughters 1993 Revocable Trust (the "Assignor"), hereby assigns, transfers
and sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 12606422 issued by Northwestern Mutual Life Insurance
Company on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ____________________________________________
Its _______________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

NORTHWESTERN MUTUAL LIFE INSURANCE
COMPANY

By ____________________________________________
Its ________________________________________

-2-

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Daughters 1993 Revocable Trust (the "Assignor"), hereby assigns, transfers
and sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 930750242A issued by Metropolitan Life Insurance
Company on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ____________________________________________
Its ________________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

METROPOLITAN LIFE INSURANCE COMPANY

By ____________________________________________
Its ________________________________________

-2-

<PAGE>

COLLATERAL ASSIGNMENT (SPLIT DOLLAR)

1. Wendy J. Gordon, not individually but as trustee of the Gordon
Daughters 1993 Revocable Trust (the "Assignor"), hereby assigns, transfers
and sets over to Tootsie Roll Industries, Inc., a Virginia corporation (the
"Assignee"), to the extent of the amounts defined in and owing from time to
time from Assignor to Assignee under that certain Split Dollar Agreement
dated July 10, 1993, between Assignor and Assignee (the "Assignee's
Interest"), Policy No. 79728873 issued by Prudential Insurance Company of
America on the joint lives of Melvin J. Gordon and Ellen R. Gordon, subject
to all the terms and conditions of the policy and to all superior liens, if
any, which the insurer may have against the policy. The Assignor by this
instrument agrees and the Assignee by the acceptance of this assignment
agrees to the conditions and provisions herein set forth.

2. It is expressly agreed that only the following specific rights are
included in this assignment and may be exercised solely by the Assignee:

(a) The right to obtain, upon surrender of the policy by the
Assignor, an amount of the cash surrender proceeds up to the amount of
the Assignee's Interest in the policy.

(b) The right to collect, upon the death of the last to die of the
insureds, the net proceeds of the policy up to the amount of the
Assignee's Interest in the policy.

Dated: July 10, 1993.

_______________________________________________
Wendy J. Gordon, not individually, but as trustee
Assignor

TOOTSIE ROLL INDUSTRIES, INC.
Assignee

By ____________________________________________
Its ________________________________________

-1-

<PAGE>

Accepted an executed counterpart of this Collateral Assignment as of the
date last above written.

PRUDENTIAL INSURANCE COMPANY OF
AMERICA

By ____________________________________________
Its ________________________________________

-2-

<PAGE>

SUBSIDIARIES OF TOOTSIE ROLL INDUSTRIES, INC.
AND STATE OF INCORPORATION

Arrendadora Gorvac S.A. De C.V. Mexico City, Mexico

C.G.C. Corporation Delaware

Cambridge Brands, Inc. Delaware

Cambridge Mfg., Inc. Delaware

Cambridge Services, Inc. Delaware

Cella's Confections, Inc. Virginia

Charms Company Delaware

Charms Marketing Company Illinois

Henry Eisen Advertising Agency, Inc. New Jersey

J.T. Company, Inc. Delaware

Tootsie Roll of Canada, Ltd. Canada

The Tootsie Roll Company, Inc. Illinois

Tootsie Roll Management, Inc. Illinois

Tootsie Roll Mfg., Inc. Illinois

Tootsie Rolls-Latin America, Inc. Delaware

Tootsie Roll Worldwide, Ltd. Illinois

The Sweets Mix Company, Inc. Ilinois

TRI de Latino America Mexico

TRI International Co. Illinois

TRI-MASS, Inc. Massachusetts

TRI Sales Co. Delaware

Tutsi S.A. de C.V. Mexico City, Mexico

World Trade & Marketing Ltd. Grand Cayman, BWI