UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

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

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

For the quarterly period ended ~~September~~June 30, ~~2017~~2023

☐

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

☐~~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~~Virginia		22-1318955
(State of Incorporation)		(I.R.S. Employer Identification No.)


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

773-838-3400

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, par value $0.694 per share	TR	New York Stock Exchange

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

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

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

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐◻

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date ~~(September~~(June 30, ~~2017)~~2023).


Class		Outstanding

Common Stock, ~~$.69 4/9~~$0.694 par value		~~38,046,216~~40,489,994
Class B Common Stock, ~~$.69 4/9~~$0.694 par value		~~24,917,501~~29,452,448

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

~~September~~JUNE 30, ~~2017~~2023

INDEX

~~INDEX~~


		Page No.

Part I —	Financial Information

Item 1.	Financial Statements꞉

	Condensed Consolidated Statements of Financial Position	3-4

	Condensed Consolidated Statements of Earnings and Retained Earnings	5


	Condensed Consolidated Statements of Comprehensive Earnings	6


	Condensed Consolidated Statements of Cash Flows	7


	Notes to Condensed Consolidated Financial Statements	~~8-14~~8-16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~14-18~~17-22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19 23

Item 4.	Controls and Procedures	19 23

Part II —	Other Information

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19 24

Item 6.	Exhibits	20 25

Signatures		20 25

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

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands) (Unaudited)



	June 30, 2023		December 31, 2022		June 30, 2022

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	26,047	$	53,270	$	46,628
Restricted cash		371		365		355
Investments		83,165		96,128		76,462
Accounts receivable trade, less allowances of $2,488, $2,335 and $2,153		49,802		58,556		44,706
Other receivables		7,174		4,299		4,305
Inventories:
Finished goods and work-in-process		92,370		43,595		63,863
Raw materials and supplies		47,557		40,671		37,225
Prepaid expenses		8,105		12,144		7,213
Total current assets		314,591		309,028		280,757

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,782		21,715		21,691
Buildings		142,613		142,462		130,152
Machinery and equipment		468,721		467,977		446,438
Construction in progress		13,370		4,325		26,828
Operating lease right-of-use assets		6,291		4,703		7,019
		652,777		641,182		632,128
Less - accumulated depreciation		438,456		429,139		419,998
Net property, plant and equipment		214,321		212,043		212,130

OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		252,459		247,528		258,075
Prepaid expenses and other assets		2,693		465		494
Deferred income taxes		1,664		1,454		1,397
Total other assets		505,077		497,708		508,227
Total assets	$	1,033,989	$	1,018,779	$	1,001,114

September 30, 2017

December 31, 2016

September 30, 2016

ASSETS

CURRENT ASSETS:

Cash & cash equivalents

$
49,512

$
119,145

$
94,239
Restricted cash

400

382

409
Investments

74,272

67,513

27,905
Trade accounts receivable, less allowances of $3,225, $1,884 & $3,274

95,341

42,964

81,718
Other receivables

6,405

3,299

1,552
Inventories:

Finished goods & work-in-process

41,273

34,631

36,173
Raw material & supplies

26,767

22,900

28,613
Prepaid expenses

2,489

7,146

5,077
Deferred income taxes

-

1,320

3,149
Total current assets

296,459

299,300

278,835

PROPERTY, PLANT & EQUIPMENT, at cost:

Land

22,222

22,081

22,155
Buildings

116,555

116,398

114,473
Machinery & equipment

369,753

369,802

355,059
Construction in progress

14,328

3,546

17,511

522,858

511,827

509,198
Less-accumulated depreciation

344,809

330,922

326,609
Net property, plant and equipment

178,049

180,905

182,589

OTHER ASSETS:

Goodwill

73,237

73,237

73,237
Trademarks

175,024

175,024

175,024
Investments

193,991

164,665

189,956
Split dollar officer life insurance

26,042

26,042

26,042
Prepaid expenses and other assets

34

602

1,526
Deferred income taxes

-

326

275
Total other assets

468,328

439,896

466,060
Total assets

$
942,836

$
920,101

$
927,484

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

Table of Contents

(in thousands except per share data) (Unaudited)

September 30, 2017

December 31, 2016

September 30, 2016

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$
14,037

$
10,320

$
13,366
Bank loans

404

336

164
Dividends payable

5,667

5,573

5,578
Accrued liabilities

50,552

46,300

52,354
Postretirement health care

513

513

448
Income taxes payable

7,636

-

3,955
Deferred income taxes

-

519

666
Total current liabilities

78,809

63,561

76,531

NONCURRENT LIABILITIES:

Deferred income taxes

44,316

46,060

49,276
Bank loans

-

230

283
Postretirement health care

11,941

11,615

11,283
Industrial development bonds

7,500

7,500

7,500
Liability for uncertain tax positions

4,811

5,185

4,939
Deferred compensation and other liabilities

80,936

74,412

72,119
Total noncurrent liabilities

149,504

145,002

145,400

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:

Common stock, $.69-4/9 par value- 120,000 shares authorized; 38,046, 37,701 & 37,775, respectively, issued

26,421

26,181

26,232
Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 24,918, 24,221 & 24,226, respectively, issued

17,304

16,820

16,824
Capital in excess of par value

660,779

646,768

649,514
Retained earnings

30,890

43,833

31,557
Accumulated other comprehensive loss

(18,921)

(20,246)

(16,805)
Treasury stock (at cost)- 85, 83 & 83 shares, respectively

(1,992)

(1,992)

(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity

714,481

711,364

705,330
Noncontrolling interests

42

174

223
Total equity

714,523

711,538

705,553
Total liabilities and shareholders’ equity

$
942,836

$
920,101

$
927,484

June 30, 2023

December 31, 2022

June 30, 2022

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$
22,156

$
25,246

$
21,618
Bank loans

1,051

1,051

1,020
Dividends payable

6,303

6,154

6,210
Accrued liabilities

59,655

54,444

52,010
Postretirement health care benefits

658

658

616
Operating lease liabilities

1,172

791

1,000
Income taxes payable

-

1,790

-
Total current liabilities

90,995

90,134

82,474

NONCURRENT LIABILITIES:

Deferred income taxes

45,662

45,005

43,051
Postretirement health care benefits

9,304

9,303

12,601
Industrial development bonds

7,500

7,500

7,500
Liability for uncertain tax positions

3,913

3,747

3,584
Operating lease liabilities

5,182

3,952

6,019
Deferred compensation and other liabilities

86,359

76,256

76,870
Total noncurrent liabilities

157,920

145,763

149,625

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:

Common stock, $0.694 par value - 120,000 shares authorized; 40,490, 39,721 and 40,379, respectively, issued

28,118

27,584

28,041
Class B common stock, $0.694 par value - 40,000 shares authorized; 29,452, 28,607 and 28,623, respectively, issued

20,453

19,866

19,877
Capital in excess of par value

753,839

719,606

746,026
Retained earnings

11,656

48,276

8,692
Accumulated other comprehensive loss

(26,698)

(30,169)

(31,368)
Treasury stock (at cost) - 102, 99 and 99 shares, respectively

(1,992)

(1,992)

(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity

785,376

783,171

769,276
Noncontrolling interests

(302)

(289)

(261)
Total equity

785,074

782,882

769,015
Total liabilities and shareholders’ equity

$
1,033,989

$
1,018,779

$
1,001,114

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

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

EARNINGS AND RETAINED EARNINGS

(in thousands except per share amounts) (Unaudited)



	Quarter Ended				Year to Date Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Net product sales	$	158,837	$	142,081	$	319,548	$	281,372
Rental and royalty revenue		1,308		1,359		2,689		2,705
Total revenue		160,145		143,440		322,237		284,077
Product cost of goods sold		107,075		95,402		218,481		187,752
Rental and royalty cost		460		386		851		765
Total costs		107,535		95,788		219,332		188,517
Product gross margin		51,762		46,679		101,067		93,620
Rental and royalty gross margin		848		973		1,838		1,940
Total gross margin		52,610		47,652		102,905		95,560
Selling, marketing and administrative expenses		37,857		20,674		75,356		47,747
Earnings from operations		14,753		26,978		27,549		47,813
Other income (loss), net		4,804		(11,137)		9,584		(16,153)
Earnings before income taxes		19,557		15,841		37,133		31,660
Provision for income taxes		4,837		3,860		9,019		7,660
Net earnings		14,720		11,981		28,114		24,000
Less: net loss attributable to noncontrolling interests		(6)		(8)		(13)		(16)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	14,726	$	11,989	$	28,127	$	24,016

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.21	$	0.17	$	0.40	$	0.34
Dividends per share *	$	0.09	$	0.09	$	0.18	$	0.18

Average number of shares outstanding		70,089		70,985		70,156		71,029

Retained earnings at beginning of period	$	3,223	$	2,904	$	48,276	$	39,545
Net earnings attributable to Tootsie Roll Industries, Inc.		14,726		11,989		28,127		24,016
Cash dividends		(6,293)		(6,201)		(12,430)		(12,235)
Stock dividends		-		-		(52,317)		(42,634)
Retained earnings at end of period	$	11,656	$	8,692	$	11,656	$	8,692

Quarter Ended

Year to Date Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Net product sales

$
182,173

$
185,473

$
390,495

$
393,094
Rental and royalty revenue

842

884

2,771

2,827
Total revenue

183,015

186,357

393,266

395,921

Product cost of goods sold

114,848

114,748

245,523

245,581
Rental and royalty cost

240

235

757

782
Total costs

115,088

114,983

246,280

246,363

Product gross margin

67,325

70,725

144,972

147,513
Rental and royalty gross margin

602

649

2,014

2,045
Total gross margin

67,927

71,374

146,986

149,558
Selling, marketing and administrative expenses

33,095

32,101

86,122

81,772
Earnings from operations

34,832

39,273

60,864

67,786
Other income (loss), net

4,121

1,943

8,565

4,147
Earnings before income taxes

38,953

41,216

69,429

71,933
Provision for income taxes

12,066

12,619

20,681

22,406
Net earnings

26,887

28,597

48,748

49,527
Less: Net earnings (loss) attributable to noncontrolling interests

(46)

(40)

(131)

(142)
Net earnings attributable to Tootsie Roll Industries, Inc.

$
26,933

$
28,637

$
48,879

$
49,669

Net earnings attributable to Tootsie Roll Industries, Inc. per share

$
0.43

$
0.45

$
0.77

$
0.77
Dividends per share *

$
0.09

$
0.09

$
0.27

$
0.27

Average number of shares outstanding

62,986

64,021

63,286

64,205

Retained earnings at beginning of period

$
9,615

$
8,491

$
43,833

$
52,349
Net earnings attributable to Tootsie Roll Industries, Inc.

26,933

28,637

48,879

49,669
Cash dividends

(5,658)

(5,571)

(16,898)

(16,645)
Stock dividends

-

-

(44,924)

(53,816)
Retained earnings at end of period

$
30,890

$
31,557

$
30,890

$
31,557

*Does not include 3% stock dividend to shareholders of record on 3/~~7/17~~6/23 and 3/~~8/16.~~7/22.

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

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS

(in thousands except per share amounts) (Unaudited)



	Quarter Ended				Year to Date Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Net earnings	$	14,720	$	11,981	$	28,114	$	24,000

Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		1,142		(106)		2,438		463

Pension and postretirement reclassification adjustments:
Unrealized gains (losses) for the period on postretirement and pension benefits		-		-		-		-
Less: reclassification adjustment for (gains) losses to net earnings		(189)		(206)		(379)		(413)
Unrealized gains (losses) on postretirement and pension benefits		(189)		(206)		(379)		(413)

Investments:
Unrealized gains (losses) for the period on investments		(325)		(2,440)		2,169		(8,287)
Less: reclassification adjustment for (gains) losses to net earnings		-		(5)		(1)		(10)
Unrealized gains (losses) on investments		(325)		(2,445)		2,168		(8,297)

Derivatives:
Unrealized gains (losses) for the period on derivatives		(565)		(229)		(470)		(8)
Less: reclassification adjustment for (gains) losses to net earnings		48		(148)		43		(277)
Unrealized gains (losses) on derivatives		(517)		(377)		(427)		(285)

Total other comprehensive income (loss), before tax		111		(3,134)		3,800		(8,532)
Income tax benefit (expense) related to items of other comprehensive income		250		733		(329)		2,177
Total comprehensive earnings		15,081		9,580		31,585		17,645
Comprehensive earnings (loss) attributable to noncontrolling interests		(6)		(8)		(13)		(16)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$	15,087	$	9,588	$	31,598	$	17,661

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

Quarter Ended

Year to Date Ended

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Net earnings

$
26,887

$
28,597

$
48,748

$
49,527

Other comprehensive income (loss), before tax:

Foreign currency translation adjustments

(216)

(906)

2,875

(2,337)

Pension and postretirement reclassification adjustments:

Unrealized gains (losses) for the period on postretirement and pension benefits

4

-

95

-
Less: reclassification adjustment for (gains) losses to net earnings

(366)

(411)

(1,097)

(1,232)
Unrealized gains (losses) on postretirement and pension benefits

(362)

(411)

(1,002)

(1,232)

Investments:

Unrealized gains (losses) for the period on investments

121

(289)

500

710
Less: reclassification adjustment for (gains) losses to net earnings

-

-

-

4
Unrealized gains (losses) on investments

121

(289)

500

714

Derivatives:

Unrealized gains (losses) for the period on derivatives

19

1,288

(1,735)

4,411
Less: reclassification adjustment for (gains) losses to net earnings

28

(337)

(109)

646
Unrealized gains (losses) on derivatives

47

951

(1,844)

5,057

Total other comprehensive income (loss), before tax

(410)

(655)

529

2,202
Income tax benefit (expense) related to items of other comprehensive income

70

(91)

796

(1,643)
Total comprehensive earnings

26,547

27,851

50,073

50,086
Comprehensive earnings (loss) attributable to noncontrolling interests

(46)

(40)

(131)

(142)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.

$
26,593

$
27,891

$
50,204

$
50,228

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)



	Year to Date Ended
	June 30, 2023		June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	28,114	$	24,000
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		9,205		8,451
Deferred income taxes		313		(233)
Amortization of marketable security premiums		2,325		2,792
Changes in operating assets and liabilities:
Accounts receivable		9,601		10,165
Other receivables		(3,338)		(745)
Inventories		(54,304)		(45,483)
Prepaid expenses and other assets		3,233		2,206
Accounts payable and accrued liabilities		353		3,214
Income taxes payable		(769)		(3,813)
Postretirement health care benefits		(378)		(431)
Deferred compensation and other liabilities		503		494
Net cash (used in) provided by operating activities		(5,142)		617
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(10,723)		(10,194)
Purchases of trading securities		(1,358)		(1,112)
Sales of trading securities		528		205
Purchase of available for sale securities		(48,522)		(57,731)
Sale and maturity of available for sale securities		66,507		25,993
Net cash provided by (used in) investing activities		6,432		(42,839)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(16,548)		(5,023)
Dividends paid in cash		(12,531)		(12,237)
Proceeds from bank loans		1,997		2,182
Repayment of bank loans		(2,013)		(2,018)
Net cash used in financing activities		(29,095)		(17,096)
Effect of exchange rate changes on cash		588		75
Decrease in cash and cash equivalents		(27,217)		(59,243)
Cash, cash equivalents and restricted cash at beginning of year		53,635		106,226
Cash, cash equivalents and restricted cash at end of quarter	$	26,418	$	46,983
Supplemental cash flow information:
Income taxes paid/(received), net	$	9,521	$	11,415
Interest paid	$	120	$	13
Stock dividend issued	$	86,433	$	70,242

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

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(in thousands) (Unaudited)~~

Year to Date Ended

September 30, 2017

September 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings

$
48,748

$
49,527
Adjustments to reconcile net earnings to net cash used in operating activities:

Depreciation and amortization

14,364

14,651
Deferred income taxes

153

23
Amortization of marketable security premiums

1,840

2,221
Changes in operating assets and liabilities:

Accounts receivable

(51,270)

(31,367)
Other receivables

(4,265)

2,622
Inventories

(10,018)

(2,826)
Prepaid expenses and other assets

3,313

3,678
Accounts payable and accrued liabilities

8,249

6,906
Income taxes payable

8,706

3
Postretirement health care benefits

(677)

(902)
Deferred compensation and other liabilities

(723)

2,496
Net cash from operating activities

18,420

47,032
CASH FLOWS FROM INVESTING ACTIVITIES:

Restricted cash

(17)

-
Capital expenditures

(11,699)

(13,067)
Purchases of trading securities

(3,387)

(3,064)
Sales of trading securities

3,544

645
Purchase of available for sale securities

(51,935)

(45,298)
Sale and maturity of available for sale securities

21,328

26,517
Net cash used in investing activities

(42,166)

(34,267)
CASH FLOWS FROM FINANCING ACTIVITIES:

Shares purchased and retired

(30,027)

(26,293)
Dividends paid in cash

(16,965)

(16,694)
Proceeds from bank loans

1,182

2,156
Repayment of bank loans

(1,345)

(2,339)
Net cash used in financing activities

(47,155)

(43,170)
Effect of exchange rate changes on cash

1,268

(1,501)
Decrease in cash and cash equivalents

(69,633)

(31,906)
Cash and cash equivalents at beginning of year

119,145

126,145
Cash and cash equivalents at end of quarter

$
49,512

$
94,239
Supplemental cash flow information:

Income taxes paid, net

$
12,360

$
22,622
Interest paid

$
49

$
19
Stock dividend issued

$
69,739

$
61,671

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

~~Table of Contents~~

~~TOOTSIE ROLL INDUSTRIES, INC.~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~JUNE 30, ~~2017~~2023

(in thousands except per share amounts) (Unaudited)

Note 1 — Significant Accounting Policies

General Information

~~Foregoing~~The foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the ~~Company) and in~~“Company”). In the opinion of ~~management~~Management, all adjustments, which are of a normal recurring nature, and necessary for a fair statement of the results for the interim period have been reflected. Certain amounts previously reported have been reclassified to conform to the current year presentation. The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting and with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Form 10-K for the year ended December 31, ~~2016~~2022 (the ~~“2016~~“2022 Form 10-K”).

Results of operations for the period ended ~~September~~June 30, ~~2017~~2023 are not necessarily indicative of results to be expected for the year to end December 31, ~~2017~~2023 because of the seasonal nature of the Company’s operations. Historically, the third quarter has been the Company’s largest net product sales quarter due to pre-Halloween net product sales.

~~Accounting Pronouncements~~Revenue Recognition

~~In May 2014,~~The Company’s revenues, primarily net product sales resulting from the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfersale of ~~promised~~ goods, ~~or services to customers in an amount that reflects~~reflect the consideration to which the ~~entity~~Company expects to be entitled generally based on customer purchase orders. The Company records revenue based on a five-step model in ~~exchange~~accordance with Accounting Standards Codification ("ASC") Topic 606. Adjustments for ~~those goods or services. This ASU also requires disclosures sufficient~~estimated customer cash discounts upon payment, discounts for price adjustments, product returns, allowances, and certain advertising and promotional costs, including consumer coupons, are variable consideration and are recorded as a reduction of net product sales revenue in the same period the related net product sales are recorded. Such estimates are calculated using historical averages adjusted for any expected changes due to ~~enable users to understand the nature, amount, timing,~~current business conditions and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standardexperience. A net product sale is ~~effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. Although~~recorded when the Company ~~is continuing its evaluation of~~delivers the ~~new guidance, based upon the current status of the evaluation, the impact of adoption is not expected to be material~~product to the ~~consolidated financial statements. The Company will use~~customer or, in certain instances, when the ~~modified retrospective method~~customer picks up the goods at the Company’s distribution center and thereby obtains control of ~~adoption in the first quarter of 2018.~~

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

~~In February 2016, the FASB issued ASU 2016-02 which amends existing guidance to require lessees to recognize assets and liabilities~~due from our customers are classified as accounts receivable trade on the balance sheet ~~for the rights~~ and ~~obligations created by long-term leases~~require payment on a short-term basis. Accounts receivable trade are unsecured. Shipping and handling costs of $15,432 and $14,156 in second quarter 2023 and 2022, respectively, and $31,665 and $30,694 in first half 2023 and 2022, respectively, are included in selling, marketing and administrative expenses. Royalty income from sales-based licensing arrangements, pursuant to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. This guidance will be effective for the Company on January 1, 2019. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

~~In April 2016, the FASB issued ASU 2016-10,~~ which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized ~~over time or at a point in time. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period.~~ as the third-party licensee sales occur, and rental income are not considered revenue from contracts from customers and are presented separately from net product revenue as rental and royalty revenue.

Leases

The Company ~~does~~identifies leases by evaluating its contracts to determine if the contract conveys the right to use an identified asset for a stated period of time in exchange for consideration. The Company considers whether it can control the underlying asset and have the right to obtain substantially all of the economic benefits or outputs from the asset. Leases with terms greater than 12 months are classified as either operating or finance leases at the commencement date. For these leases, we record the present value of the minimum lease payments over the lease term as a lease liability with an offsetting right-of-use asset that is then presented net of any deferred rent or lease incentives. The discount rate used to calculate the present value of the minimum lease payments is our incremental borrowing rate, as the rate implicit in the lease is generally not known or determinable. The lease term includes any noncancelable period for which the Company has the right to use the asset as well as any future periods to which the Company has the right and intent to extend the lease under the terms of the lease agreement. Currently, all capitalized leases are classified as operating leases and the Company records rental expense on a straight-line basis over the term of the lease.

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~~have any significant licenses of intellectual property and is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.~~

In August 2016, the FASB issued ASU 2016-15, which includes amendments addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendments to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

~~In March 2017, the FASB issued ASU 2017-07, which requires employers~~ ~~who offer defined benefit and postretirement benefit plans~~ to report the service cost component in the same line item as other compensation costs arising from services rendered by employees during the reporting period. The other components of net benefit costs will be presented in the income statement separately from the service cost and outside of a subtotal of income from operations. In addition, only the service cost component may be eligible for capitalization where applicable. This guidance is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, guidance that amends hedge accounting. Under the new guidance, more hedging strategies will be eligible for hedge accounting and the application of hedge accounting is simplified. The new guidance amends presentation and disclosure requirements, and how effectiveness is assessed. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact that the new guidance will have on its consolidated financial statements.

Recently Adopted Accounting Pronouncements

~~In November 2015,~~As of the ~~FASB issued ASU 2015-17 which simplifies~~date of this report, there are no recent accounting pronouncements that have been adopted in the ~~presentation of deferred income taxes by requiring~~period nor any that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. This guidance was adopted on January 1, 2017 on a prospective basis. Prior period balances have not yet been ~~adjusted.~~adopted that Management believes would have a material impact on the Company’s consolidated financial statements.

Note 2 — Average Shares Outstanding

The average number of shares outstanding for ~~nine~~six months ~~2017~~2023 reflects aggregate stock purchases of ~~809~~429 shares for ~~$30,027~~$16,548, excluding excise taxes, and a 3% stock dividend of ~~1,850~~2,040 shares distributed on April ~~17, 2017.~~7, 2023. The average number of shares outstanding for ~~nine~~six months ~~2016~~2022 reflects aggregate stock purchases of ~~740~~145 shares for ~~$26,293~~$5,023 and a 3% stock dividend of ~~1,819~~2,006 shares distributed on April 8, ~~2016.~~2022.

Note 3 — Income Taxes

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years ~~2014~~2019 through ~~2016. With few exceptions, the Company is no longer subject to examination by tax authorities for the year 2013 and prior.~~2021. The Company’s consolidated effective income tax ~~rates were 31.0%~~rate was 24.7% and ~~30.6%~~24.4% in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~29.8%~~24.3% and ~~31.1%~~24.2% in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively. ~~The lower effective tax rate for nine months 2017 compared to nine months 2016 principally reflects certain benefits resulting from filing amended federal~~

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NOTE 4—Share Capital and ~~state income tax returns, including a state income tax carry forward.~~Capital In Excess of Par Value:


										Capital in
				Class B						Excess
	Common Stock			Common Stock			Treasury Stock			of Par
	Shares	Amount		Shares	Amount		Shares	Amount		Value
	(000’s)			(000’s)			(000’s)
Balance at March 31, 2023	40,871	$	28,383	29,463	$	20,460	102	$	(1,992)	$	768,676
Issuance of 3% stock dividend	-		-	-		-	-		-		-
Conversion of Class B common shares to common shares	11		7	(11)		(7)	-		-		-
Purchase and retirement of common shares and other	(392)		(272)	-		-	-		-		(14,837)
Balance at June 30, 2023	40,490	$	28,118	29,452	$	20,453	102	$	(1,992)	$	753,839

Balance at March 31, 2022	40,487	$	28,116	28,626	$	19,879	99	$	(1,992)	$	749,819
Issuance of 3% stock dividend	-		-	-		-	-		-		-
Conversion of Class B common shares to common shares	4		3	(4)		(3)	-		-		-
Purchase and retirement of common shares and other	(112)		(78)	1		1	-		-		(3,793)
Balance at June 30, 2022	40,379	$	28,041	28,623	$	19,877	99	$	(1,992)	$	746,026

Balance at December 31, 2022	39,721	$	27,584	28,607	$	19,866	99	$	(1,992)	$	719,606
Issuance of 3% stock dividend	1,185		823	858		596	3		-		50,648
Conversion of Class B common shares to common shares	13		9	(13)		(9)	-		-		-
Purchase and retirement of common shares and other	(429)		(298)	-		-	-		-		(16,415)
Balance at June 30, 2023	40,490	$	28,118	29,452	$	20,453	102	$	(1,992)	$	753,839

Balance at December 31, 2021	39,344	$	27,322	27,793	$	19,300	96	$	(1,992)	$	709,880
Issuance of 3% stock dividend	1,176		817	833		579	3		-		41,068
Conversion of Class B common shares to common shares	4		3	(4)		(3)	-		-		-
Purchase and retirement of common shares and other	(145)		(101)	1		1	-		-		(4,922)
Balance at June 30, 2022	40,379	$	28,041	28,623	$	19,877	99	$	(1,992)	$	746,026

Note 45 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received on the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings,

~~Table of Contents~~

or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include ~~management’s~~Management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of ~~September~~June 30, ~~2017,~~2023, December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016,~~2022, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities. The Company’s available for sale securities principally consist of corporate ~~and municipal~~ bonds ~~that are publicly traded and~~but also include variable rate demand ~~notes with interest rates that generally reset weekly and the security can be “put” back and sold weekly. Trading securities principally consist~~

Table of ~~equity mutual funds that are publicly traded.~~Contents

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of September 30, 2017, December 31, 2016 and September 30, 2016 and indicate the fair value hierarchy of the valuation techniques utilized bynotes. While the Company generally holds its available for sale investments to ~~determine~~maturity, the Company would sell prior to maturity if it was considered beneficial to do so for tax-planning strategies or if the Company required the funds to finance a significant reinvestment in the Company, including an acquisition. As such, ~~fair value:~~the Company does not classify any investments as held to maturity which is restrictive under GAAP because the use of amortized cost must be justified for each security.

Estimated Fair Value September 30, 2017

Total

Input Levels Used

Fair Value

Level 1

Level 2

Level 3
Cash and cash equivalents

$
49,512

$
49,512

$
-

$
-
Available for sale securities

193,169

2,402

190,767

-
Foreign currency forward contracts

147

-

147

-
Commodity futures contracts

(364)

(364)

-

-
Trading securities

75,094

75,094

-

-
Total assets measured at fair value

$
317,558

$
126,644

$
190,914

$
-

Estimated Fair Value December 31, 2016

Total

Input Levels Used

Fair Value

Level 1

Level 2

Level 3
Cash and cash equivalents

$
119,145

$
119,145

$
-

$
-
Available for sale securities

164,183

2,419

161,764

-
Foreign currency forward contracts

(119)

-

(119)

-
Commodity futures contracts, net

1,746

1,746

-

-
Trading securities

67,995

67,995

-

-
Total assets measured at fair value

$
352,950

$
191,305

$
161,645

$
-

Estimated Fair Value September 30, 2016

Total

Input Levels Used

Fair Value

Level 1

Level 2

Level 3
Cash and cash equivalents

$
94,239

$
94,239

$
-

$
-
Available for sale securities

151,776

2,429

149,347

-
Foreign currency forward contracts

(532)

-

(532)

-
Commodity futures contracts

3,234

3,234

-

-
Trading securities

66,085

66,085

-

-
Total assets measured at fair value

$
314,802

$
165,987

$
148,815

$
-

The fair value of the Company’s industrial revenue development bonds at ~~September~~June 30, ~~2017,~~2023, December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016~~2022 were valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. Interest rates on these bonds are reset weekly based on current market conditions.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of June 30, 2023, December 31, 2022 and June 30, 2022 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:



	Estimated Fair Value June 30, 2023
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	26,047	$	26,047	$	-	$	-
Available for sale securities		254,305		4,510		249,795		-
Foreign currency derivatives		108		-		108		-
Commodity derivatives		(806)		(806)		-		-
Trading securities		81,319		65,065		16,254		-
Total assets measured at fair value	$	360,973	$	94,816	$	266,157	$	-


	Estimated Fair Value December 31, 2022
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	53,270	$	53,270	$	-	$	-
Available for sale securities		272,448		1,889		270,559		-
Foreign currency derivatives		(282)		-		(282)		-
Commodity derivatives		10		10		-		-
Trading securities		71,208		56,049		15,159		-
Total assets measured at fair value	$	396,654	$	111,218	$	285,436	$	-


	Estimated Fair Value June 30, 2022
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	46,628	$	46,628	$	-	$	-
Available for sale securities		262,057		748		261,309		-
Foreign currency derivatives		165		-		165		-
Commodity derivatives		100		100		-		-
Trading securities		72,480		56,964		15,516		-
Total assets measured at fair value	$	381,430	$	104,440	$	276,990	$	-

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Note 56 — Derivative Instruments and Hedging Activities

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

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses hedge accounting for its foreign currency and commodity derivative instruments as discussed above. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially all amounts reported in accumulated other comprehensive loss for commodity derivatives are expected to be reclassified to cost of goods sold. Approximately ~~43%~~$(186), $(563) and $(57) of this accumulated comprehensive ~~net~~ gain (loss) is expected to be reclassified to ~~net~~ earnings in ~~the next 12 months. Substantially all amounts~~2023, 2024 and 2025, respectively. Approximately $(15) and $123 reported in accumulated other comprehensive ~~loss~~gain (loss) for foreign currency derivatives are expected to be reclassified to other income, net in ~~the next 12 months.~~2023 and 2024, respectively.

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at ~~September~~June 30, ~~2017,~~2023, December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016:~~2022:



	September 30, 2017
	Notional
	Amounts		Assets		Liabilities



							June 30, 2023
							Notional
							Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	2,059	$	147	$	-
Commodity futures contracts		13,616		56		(420)
Foreign currency derivatives							$	12,021	$	154	$	(46)
Commodity derivatives								16,496		75		(881)
Total derivatives			$	203	$	(420)			$	229	$	(927)

	December 31, 2016
	Notional
	Amounts		Assets		Liabilities


							December 31, 2022
							Notional
							Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	2,357	$	-	$	(119)
Commodity futures contracts		10,811		1,932		(186)
Foreign currency derivatives							$	7,264	$	-	$	(282)
Commodity derivatives								189		10		-
Total derivatives			$	1,932	$	(305)			$	10	$	(282)

	September 30, 2016
	Notional
	Amounts		Assets		Liabilities


							June 30, 2022
							Notional
							Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	5,684	$	-	$	(532)
Commodity futures contracts		11,047		3,256		(22)
Foreign currency derivatives							$	8,503	$	186	$	(21)
Commodity derivatives								2,185		111		(11)
Total derivatives			$	3,256	$	(554)			$	297	$	(32)

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The effects of derivative instruments on the Company’s Condensed Consolidated Statements of Earnings and Retained Earnings and the Condensed Consolidated Statements of Comprehensive Earnings for periods ended ~~September~~June 30, ~~2017~~2023 and ~~September~~June 30, ~~2016~~2022 are as follows:

For Quarter Ended September 30, 2017





Gain (Loss)

Gain (Loss)

on Amount Excluded

Gain (Loss)

Reclassified from

from Effectiveness

Recognized

Accumulated OCI

Testing Recognized

in OCI

into Earnings

in Earnings

Foreign currency forward contracts

$
118

$
55

$
-
Commodity futures contracts

(99)

(83)

-
Total

$
19

$
(28)

$
-

For Quarter Ended September 30, 2016





Gain (Loss)

Gain (Loss)

on Amount Excluded

Gain (Loss)

Reclassified from

from Effectiveness

Recognized

Accumulated OCI

Testing Recognized

in OCI

into Earnings

in Earnings

Foreign currency forward contracts

$
(77)

$
(456)

$
-
Commodity futures contracts

1,365

793

-
Total

$
1,288

$
337

$
-

For Year to Date Ended September 30, 2017





Gain (Loss)

Gain (Loss)

on Amount Excluded

Gain (Loss)

Reclassified from

from Effectiveness

Recognized

Accumulated OCI

Testing Recognized

in OCI

into Earnings

in Earnings

Foreign currency forward contracts

$
266

$
1

$
-
Commodity futures contracts

(2,001)

108

-
Total

$
(1,735)

$
109

$
-

For Year to Date Ended September 30, 2016





Gain (Loss)

Gain (Loss)

on Amount Excluded

Gain (Loss)

Reclassified from

from Effectiveness

Recognized

Accumulated OCI

Testing Recognized

in OCI

into Earnings

in Earnings

Foreign currency forward contracts

$
613

$
(1,482)

$
-
Commodity futures contracts

3,798

836

-
Total

$
4,411

$
(646)

$
-



	For Quarter Ended June 30, 2023
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	292	$	(48)	$	-
Commodity derivatives		(857)		-		-
Total	$	(565)	$	(48)	$	-

	For Quarter Ended June 30, 2022
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	(149)	$	86	$	-
Commodity derivatives		(80)		62		-
Total	$	(229)	$	148	$	-

	For Year to Date Ended June 30, 2023
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	253	$	(136)	$	-
Commodity derivatives		(723)		93		-
Total	$	(470)	$	(43)	$	-

	For Year to Date Ended June 30, 2022
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency derivatives	$	(73)	$	188	$	-
Commodity derivatives		65		89		-
Total	$	(8)	$	277	$	-

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Note 67 — Pension Plans

~~During 2017 and 2016,~~Beginning in 2012, the Company received ~~updated~~periodic notices ~~that~~from the Bakery and Confectionery Union and Industry International Pension ~~Plan~~Fund (Plan), a multi-employer defined benefit pension plan for certain Company union employees, isthat the Plan’s actuary certified the Plan to be in “critical ~~and declining~~ status”, as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC); and that a plan of rehabilitation was adopted by the trustees of the Plan in 2012. The Plan was reclassified to “critical and declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015. A designation of “critical and declining status” implies that the Plan is ~~projected~~expected to become insolvent in ~~2030.~~ the next 20 years. In 2016, the Company received new notices that the Plan’s trustees adopted an updated Rehabilitation Plan effective January 1, 2016, and all annual notices through 2023 have continued to classify the Plan in the “critical and declining status” category.

The Company has been advised that its withdrawal liability would have been ~~$72,700~~$104,300, $99,300 and $99,800 if it had withdrawn from the Plan during ~~2016.~~2021, 2020 and 2019, respectively. The Plan has not yet provided an actuarial estimate of a withdrawal liability calculated as if the Company were to have withdrawn from the Plan during 2022. Should the Company actually withdraw from the Plan at a future date, aits withdrawal liability ~~which~~payable under the Plan could be higher than the above discussed ~~amount, could be payable~~amounts.

The Company’s pension expense for this Plan for first half 2023 and 2022 was $1,951 and $1,822, respectively. The aforementioned expense includes surcharges of $688 and $642 for first half 2023 and 2022, respectively, as required under the amended plan of rehabilitation. The Company’s twelve months pension expense for this Plan for 2022 and 2021 was $3,510 and $3,156, respectively, which includes surcharges of $1,237 and $1,112, respectively. From 2012 through 2020, the Company’s employer contributions were subject to annual 5% compounded surcharge increases. Beginning in 2021, the Plan ceased additional surcharges, but the prior surcharges remain in effect indefinitely.

During first quarter 2023, the Plan submitted an initial application to the ~~Plan.~~

~~Table~~PBGC for Special Financial Assistance under the American Rescue Plan Act of ~~Contents~~

2021. The Plan withdrew the application in the second quarter of 2023 and intends to resubmit after resolving certain aspects identified through discussions with the PBGC. If the application is approved, the Special Financial Assistance funds the plan would receive are expected to have a material effect on the Plan’s assets. The Company’s actuary believes that it still remains unclear if the Plan can remain solvent through the targeted date of 2051 and that the regulations under the aforementioned PBGC financial assistance could result in a higher withdrawal liability even with PBGC financial assistance. The Company is currently unable to determine the ultimate outcome of the above discussed ~~matter~~multi-employer union pension matters and therefore is unable to determine the effects on its consolidated financial statements, but the ultimate outcome orcould have a material adverse effect on the effects of any modifications to the current rehabilitation plan and new “hybrid plan” option discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations (Item 2) could be material to itsCompany’s consolidated results of operations or cash flows in one or more future periods. ~~See also the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis~~

Table of ~~Financial Condition and Results of Operations incorporated into the Company’s 2016 Form 10-K.~~Contents

Note 78 — Accumulated Other Comprehensive Earnings (Loss)

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



											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at March 31, 2023	$	(22,499)	$	(6,919)	$	(178)	$	39	$	2,498	$	(27,059)
Other comprehensive earnings (loss) before reclassifications		1,142		(247)		221		(648)		-		468
Reclassifications from accumulated other comprehensive loss		-		-		36		-		(143)		(107)
Other comprehensive earnings (loss) net of tax		1,142		(247)		257		(648)		(143)		361
Balance at June 30, 2023	$	(21,357)	$	(7,166)	$	79	$	(609)	$	2,355	$	(26,698)

Balance at March 31, 2022	$	(24,313)	$	(5,722)	$	302	$	184	$	582	$	(28,967)
Other comprehensive earnings (loss) before reclassifications		(106)		(1,849)		(113)		(61)		-		(2,129)
Reclassifications from accumulated other comprehensive loss		-		(4)		(65)		(47)		(156)		(272)
Other comprehensive earnings (loss) net of tax		(106)		(1,853)		(178)		(108)		(156)		(2,401)
Balance at June 30, 2022	$	(24,419)	$	(7,575)	$	124	$	76	$	426	$	(31,368)

Balance at December 31, 2022	$	(23,795)	$	(8,809)	$	(215)	$	8	$	2,642	$	(30,169)
Other comprehensive earnings (loss) before reclassifications		2,438		1,643		192		(547)		-		3,726
Reclassifications from accumulated other comprehensive loss		-		-		102		(70)		(287)		(255)
Other comprehensive earnings (loss) net of tax		2,438		1,643		294		(617)		(287)		3,471
Balance at June 30, 2023	$	(21,357)	$	(7,166)	$	79	$	(609)	$	2,355	$	(26,698)

Balance at December 31, 2021	$	(24,882)	$	(1,286)	$	322	$	94	$	739	$	(25,013)
Other comprehensive earnings (loss) before reclassifications		463		(6,281)		(56)		50		-		(5,824)
Reclassifications from accumulated other comprehensive loss		-		(8)		(142)		(68)		(313)		(531)
Other comprehensive earnings (loss) net of tax		463		(6,289)		(198)		(18)		(313)		(6,355)
Balance at June 30, 2022	$	(24,419)	$	(7,575)	$	124	$	76	$	426	$	(31,368)

Accumulated

Foreign

Foreign

Postretirement

Other

Currency

Currency

Commodity

and Pension

Comprehensive

Translation

Investments

Derivatives

Derivatives

Benefits

Earnings (Loss)
Balance at December 31, 2016

$
(25,460)

$
(697)

$
(76)

$
1,114

$
4,873

$
(20,246)
Other comprehensive earnings (loss) before reclassifications

2,875

319

170

(1,276)

6

2,094
Reclassifications from accumulated other comprehensive loss

-

-

-

(69)

(700)

(769)
Other comprehensive earnings (loss) net of tax

2,875

319

170

(1,345)

(694)

1,325
Balance at September 30, 2017

$
(22,585)

$
(378)

$
94

$
(231)

$
4,179

$
(18,921)











Accumulated

Foreign

Foreign

Postretirement

Other

Currency

Currency

Commodity

and Pension

Comprehensive

Translation

Investments

Derivatives

Derivatives

Benefits

Earnings (Loss)
Balance at December 31, 2015

$
(21,644)

$
(605)

$
(1,675)

$
173

$
6,387

$
(17,364)
Other comprehensive earnings (loss) before reclassifications

(2,337)

451

391

2,424

-

929
Reclassifications from accumulated other comprehensive loss

-

3

946

(533)

(786)

(370)
Other comprehensive earnings (loss) net of tax

(2,337)

454

1,337

1,891

(786)

559
Balance at September 30, 2016

$
(23,981)

$
(151)

$
(338)

$
2,064

$
5,601

$
(16,805)

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


Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022		Recognized in Earnings
Investments	$	-	$	(5)	$	(1)	$	(10)	Other income, net
Foreign currency derivatives		48		(86)		136		(188)	Other income, net
Commodity derivatives		-		(62)		(93)		(89)	Product cost of goods sold
Postretirement and pension benefits		(189)		(206)		(379)		(413)	Other income, net
Total before tax		(141)		(359)		(337)		(700)
Tax (expense) benefit		34		87		82		169
Net of tax	$	(107)	$	(272)	$	(255)	$	(531)

Details about Accumulated Other

Quarter Ended

Year to Date Ended

Location of (Gain) Loss
Comprehensive Income Components

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Recognized in Earnings
Investments

$
-

$
-

$
-

$
4

Other income, net
Foreign currency derivatives

(55)

456

(1)

1,482

Other income, net
Commodity derivatives

83

(793)

(108)

(836)

Product cost of goods sold
Postretirement and pension benefits

(187)

(209)

(560)

(628)

Selling, marketing and administrative expenses
Postretirement and pension benefits

(179)

(202)

(537)

(604)

Product cost of goods sold
Total before tax

(338)

(748)

(1,206)

(582)

Tax (expense) benefit

123

271

437

212

Net of tax

$
(215)

$
(477)

$
(769)

$
(370)

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Note 89 — Restricted Cash

Restricted cash comprises certain cash deposits of the Company’s ~~majority-owned~~ Spanish ~~companies~~subsidiary with international banks that are pledged as collateral for letters of credit and bank borrowings.

Note 910 — Bank Loans

Bank loans ~~comprise~~consist of short term (less than 120 days) borrowings by the Company’s ~~majority-owned~~ Spanish ~~companies which~~subsidiary that are held by international banks. The weighted-average interest rate as of ~~September~~June 30, ~~2017~~2023 and ~~2016~~2022 was ~~1.9 %~~5.9% and ~~2.0%~~3.1%, respectively.

Note 11 — Leases

The Company leases certain buildings, land and equipment that are classified as operating leases. These leases have remaining lease terms of up to approximately 18 years. Operating lease cost totaled $367 and $277 in the second quarter of 2023 and 2022, respectively, and ~~maturity dates range~~$602 and $556 for the first half of 2023 and 2022, respectively. Cash paid for operating lease liabilities is substantially the same as operating lease cost and is presented in cash flows from 1operating activities. As of June 30, 2023 and 2022, operating lease right-of-use assets were $6,291 and $7,019, respectively, and operating lease liabilities were $6,354 and $7,019, respectively. The weighted-average remaining lease term related to 2these operating leases was 12.5 years and 7.1 years as of June 30, 2023 and 2022, respectively. The weighted-average discount rate related to the Company’s operating leases was 3.4% and 2.0% as of June 30, 2023 and 2022, respectively. Maturities of the Company’s operating lease liabilities at June 30, 2023 are as follows: $549 in 2023 (rest of year), $781 in 2024, $712 in 2025, $431 in 2026, $320 in 2027 and $3,561 thereafter.

The Company, as lessor, rents certain commercial real estate to third-party lessees. The June 30, 2023 and 2022 cost related to these leased properties was $51,370 and $51,370, respectively, and the accumulated depreciation related to these leased properties was $17,432 and $16,373, respectively. Terms of such leases, including renewal options, may be extended for ~~both periods.~~up to fifty-seven years, many of which provide for periodic adjustment of rent payments based on changes in consumer or other price indices. The Company recognizes lease income on a straight-line basis over the lease term. Lease income in second quarter and first half 2023 and 2022 was $1,222 and $1,245, respectively, and $2,443 and $2,458, respectively, and is classified in cash flows from operating activities.

On June 28, 2023, the Company, as lessor, entered into a lease agreement with a new tenant that will commence in the second quarter of 2024. The lease is for an industrial building the Company owns in Canada that is currently being leased under an agreement that will expire in the first quarter of 2024. The new lease has an initial term of 15 years and allows the tenant to extend for up to 10 years. The deferred impact of initial direct costs and any deferred rent adjustments, as they are recorded, are included in long term Prepaid expense and other assets on the Consolidated Statements of Financial Position

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

This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources and other matters. Dollars are presented in thousands, except per share amounts. This review should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes included in this Form 10-Q and with the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Form 10-K for the year ended December 31, ~~2016~~2022 (the ~~“2016~~“2022 Form 10-K”).

Net product sales were ~~$182,173~~$158,837 in ~~third~~second quarter ~~2017~~2023 compared to ~~$185,473~~$142,081 in ~~third~~second quarter ~~2016, a decrease~~2022, an increase of ~~$3,300~~$16,756 or ~~1.8%~~11.8%.~~Nine months 2017~~ First half 2023 net product sales were ~~$390,495~~$319,548 compared to ~~$393,094~~$281,372 in ~~nine months 2016, a decrease~~first half 2022, an increase of ~~$2,599~~$38,176 or ~~0.7%~~13.6%. ~~Third quarter~~Domestic (U.S.) net product sales ~~continue to be the Company’s largest quarterly sales period due to back-to-school and pre-Halloween seasonal sales. The timing of sales to certain customers had some adverse impact on third~~in second quarter and ~~nine months 2017 sales~~first half 2023 increased 10.3% and 12.3%, respectively, compared to the corresponding periods in the prior year, and, foreign net product sales, including exports to foreign markets, increased 28.6% and 28.7%, respectively, compared to the corresponding ~~periods.~~ periods in the prior year. For the second quarter and first half 2023, domestic sales represented 90.8% and 91.2%, respectively, of total consolidated net product sales. Sales growth in second quarter and first half 2023 was driven by effective sales and marketing programs, including seasonal sales programs during this period. Higher sales price realization was the primary contributor to the sales increase in second quarter and first half 2023, however, higher sales volumes were also achieved in second quarter and first half 2023 compared to second quarter and first half 2022.

Although the increase in second quarter and first half 2023 sales contributed to improved net earnings, higher input costs significantly mitigated the benefits of these higher sales. Second quarter and first half 2023 gross profit margins were adversely affected by higher costs for ingredients, packaging materials, labor and employee fringe benefits, plant manufacturing repairs and maintenance, and many manufacturing supplies and services. We also incurred additional costs, including overtime and extended operating shifts for plant manufacturing, to meet our sales demands in 2023.

Our input unit costs moved significantly higher in second quarter and first half 2023 as most of our supply contracts for ingredients, packaging materials and manufacturing supplies and services expired at the end of 2022, and new supply agreements at higher prices became effective in early first quarter 2023. These higher costs in 2023 are incremental to the significant increase in input costs that we experienced last year in 2022 when compared to 2021. We believe that the increases in ingredients and packaging materials since 2021 are the greatest that we have experienced over a two-year period in over twenty years. Limited supply and continuing high demand for certain ingredients, as well as generally elevated commodity markets and overall inflation, have driven up our unit costs for many ingredients and materials in each of the past two years.The Company uses the Last-In-First-Out (LIFO) method of accounting for inventory and costs of goods sold which results in lower current income taxes during such periods of increasing costs and higher inflation, but this method does charge the most current costs to cost of goods sold and thereby accelerates the realization of these higher costs.

Product cost of goods sold ~~were $114,848~~was $107,075 in ~~third~~second quarter ~~2017~~2023 compared to ~~$114,748~~$95,402 in ~~third~~second quarter ~~2016,~~2022, and ~~nine months 2017~~first half 2023 product cost of goods sold ~~were $245,523~~was $218,481 compared to ~~$245,581~~$187,752 in ~~nine months 2016.~~first half 2022. Product cost of goods sold includes ~~$560~~$256 and ~~$522~~$(865) of certain deferred compensation expenses (credits) in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$1,845~~$486 and ~~$816~~$(1,134) of certain deferred compensation expenses (credits) in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively. These deferred compensation expenses (credits) principally ~~result~~resulted from the changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, product cost of goods sold increased from ~~$114,226~~$96,267 in ~~third~~second quarter ~~2016~~2022 to ~~$114,288~~$106,819 in ~~third~~second quarter ~~2017,~~2023, an increase of ~~$62~~$10,552 or ~~0.1%~~11.0%; ~~but decreased~~and increased from ~~$244,765~~$188,886 in ~~nine months 2016~~first half 2022 to ~~$243,678~~$217,995 in ~~nine months 2017, a decrease~~first half 2023, an increase of ~~$1,087~~$29,109 or ~~0.4%~~15.4%. As a percentage of net product sales, adjusted product cost of goods sold was ~~62.7%~~67.3% and ~~61.6%~~67.8% in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, ~~an unfavorable increase~~a favorable decrease of ~~1.1%;~~0.5 percentage points; and adjusted product cost of goods sold was ~~62.4%~~68.2% and ~~62.3%~~67.1% in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively, an unfavorable increase of ~~0.1%. Adjusted~~1.1 percentage points. Second quarter and first half 2023 adjusted product cost of goods sold as a ~~percent~~percentage of sales ~~reflects~~was adversely affected by increasing costs for ingredients and packaging materials as discussed above, as well as for certain manufacturing supplies and services, plant utilities, and labor and benefits, including overtime and extended work shifts. Although the above discussed higher costs for ingredients and packaging materials adversely affected results for second quarter and first half 2023, higher sales and production volumes provided some benefit as certain plant manufacturing overhead costs

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are generally fixed and do not change significantly when volume increases. In addition, certain cost and expense reductions initiated by the Company mitigated some of the cost increase in adjusted product cost of goods sold in second quarter and first half 2023 compared to the corresponding period in the prior year.

Our supply chain improved in first half 2023 compared to 2022. However, we remain focused on the supply chain in order to insure that we avoid delays and disruptions which could result in the temporary shut-down of one or more manufacturing lines resulting in lost sales and profits in 2023. Although the labor market is not as tight this year compared to a year ago, we continue to experience some labor challenges at some of our manufacturing plant locations. We did expand our work shifts and overtime in first half 2023 in order to increase production and inventory levels, and to help insure that we can meet our sales demands in 2023.

In response to higher costs ~~but~~for ingredients, packaging materials, and other input costs, many companies in the consumer products industry have increased selling prices during the 2021 through 2023 period. We have and continue to implement price increases as well with the objective of improving sales price realization in order to pass along some of these higher input costs and restore some of our margin declines. Price increases were ~~mitigated by continuing improvements~~phased in ~~manufacturing operating efficiencies driven by capital improvements~~principally beginning in second half 2021 and ~~ongoing cost containment programs. Adjusted~~have continued into 2023. We have made some progress in restoring our margins this year, but we have not as yet restored our margins to historical levels. As we look into 2024, we believe that our costs for ingredients will be even higher in 2024 than in 2023. Continuing increases in input costs and overall high inflation may not allow us to fully restore our margins to historical levels. Although the Company continues to monitor these higher input costs and price increases, we are mindful of ~~goods sold in prior year third quarter~~the effects and ~~nine months 2016 were adversely affected by~~limits of passing on all of these higher ~~manufacturing~~input costs ~~relating~~ to ~~uncertainties surrounding certain changes in state and national product labeling.~~our customers as well as the final consumers of our products.

Selling, marketing and administrative expenses were ~~$33,095~~$37,857 in ~~third~~second quarter ~~2017~~2023 compared to ~~$32,101~~$20,674 in ~~third~~second quarter ~~2016,~~2022, and ~~nine months 2017~~first half 2023 selling, marketing and administrative expenses were ~~$86,122~~$75,356 compared to ~~$81,772~~$47,747 in ~~nine months 2016.~~first half 2022. Selling, marketing and administrative expenses ~~includes $1,717~~include $4,675 and ~~$1,439~~$(11,693) of certain deferred compensation expenses (credits) in ~~third~~second quarter ~~2017~~2023 and ~~2016, respectively,~~2022, respectively; and ~~$5,131~~$8,792 and ~~$2,266~~$(17,029) of certain deferred compensation expenses (credits) in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively. As discussed above, these expenses (credits) principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned deferred compensation expenses (credits), selling, marketing and administrative expenses increased from ~~$30,662~~$32,367 in ~~third~~second quarter ~~2016~~2022 to ~~$31,378~~$33,182 in ~~third~~second quarter ~~2017,~~2023, an increase of ~~$716~~$815 or ~~2.3%~~2.5%; and ~~adjusted~~ selling, marketing and administrative expenses increased from ~~$79,506~~$64,776 in ~~nine months 2016~~first half 2022 to ~~$80,991~~$66,564 in ~~nine months 2017,~~first half 2023 an increase of ~~$1,485~~$1,788 or ~~1.9%~~2.8%.

~~Table of Contents~~

As a percentage of net product sales, adjusted selling, marketing and administrative expenses ~~increased~~decreased from ~~16.5%~~22.8% in ~~third~~second quarter ~~2016~~2022 to ~~17.2%~~20.9% in ~~2017, an unfavorable increase~~second quarter 2023, a favorable decrease of ~~0.7%~~1.9 percentage points as a percent of net ~~sales,~~product sales; and adjusted selling, marketing and administrative expenses ~~increased~~decreased from ~~20.2%~~23.0% in ~~nine months 2016~~first half 2022 to ~~20.7%~~20.8% in ~~nine months 2017, an unfavorable increase~~first half 2023, a favorable decrease of ~~0.5%~~2.2 percentage points as a percent of net sales. These lower expenses as a percentage of sales reflect the benefits of higher sales, including higher price realization, against certain expenses that are generally fixed and do not change significantly with changes in sales.

Selling, marketing and administrative expenses include ~~$12,699~~$15,432 and ~~$11,620~~$14,156 for customer freight, delivery and warehousing expenses in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, an increase of $1,276 or 9.0%; and ~~$31,775~~$31,665 and ~~$30,265 for customer freight, delivery~~$30,694 in first half 2023 and ~~warehousing expenses in nine months 2017 and 2016, respectively.~~2022, respectively, an increase of $971 or 3.2%. These expenses were ~~7.0%~~9.7% and ~~6.3%~~10.0% of net product sales in ~~third~~second quarter ~~2017~~2023 and ~~2016, respectively,~~2022, respectively; and ~~8.1%~~were 9.9% and ~~7.7%~~10.9% of net product sales in ~~nine months 2017~~first half 2023 and ~~2016, respectively,~~2022, respectively. Customer freight and ~~are~~delivery unit costs, including the ~~principal reasons for the above discussed increases~~cost per pound shipped, was more favorable in ~~2017 adjusted selling, marketing and administrative expenses.~~ first half 2023 compared to first half 2022.

Earnings from operations were ~~$34,832~~$14,753 in ~~third~~second quarter ~~2017~~2023 compared to ~~$39,273~~$26,978 in ~~third~~second quarter ~~2016,~~2022; and were ~~$60,864~~$27,549 in ~~nine months 2017~~first half 2023 compared to ~~$67,786~~$47,813 in ~~nine months 2016.~~first half 2022. Earnings from operations include ~~$2,277~~$4,931 and ~~$1,961~~$(12,558) of certain deferred compensation expenses (credits) in ~~third~~second quarter ~~2017~~2023 and ~~2016, respectively,~~2022, respectively; and include ~~$6,976~~$9,278 and ~~$3,082~~$(18,163) of certain deferred compensation expenses (credits) in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively, which ~~are~~is discussed above. Adjusting for these deferred compensation costs and expenses ~~operating~~(credits), adjusted earnings from operations were ~~$37,109~~$19,684 and ~~$41,234~~$14,420 in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, ~~a decrease~~an increase of ~~$4,125~~$5,264 or ~~10.0%~~36.5%; and adjusted operating earnings were ~~$67,840~~$36,827 and ~~$70,868~~$29,650 in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively, ~~a decrease~~an increase of ~~$3,028~~$7,177 or ~~4.3%~~24.2%. As a percentage of net product sales, these adjusted operating earnings were ~~20.4%~~12.4% and ~~22.2%~~10.1% in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, ~~an unfavorable decrease~~a favorable increase of ~~1.8% as a~~2.3 percentage points;

Table of ~~net product sales;~~ Contents

and as a percentage of net product sales, these adjusted operating earnings were ~~17.4%~~11.5% and ~~18.0%~~10.5% in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively, an unfavorable decrease of 0.6% as a percentage of net product sales. These declines in operating earnings principally reflect the adverse effects of lower sales, higher ingredient costs and increases in customer freight, delivery and warehousing expenses as discussed above. Management believes the presentation in this and the preceding paragraphs relating to amounts adjusted for deferred compensation expense are more reflective of the underlying operations of the Company.

~~Other income, net was $4,121 in third quarter 2017 compared to $1,943 in third quarter 2016,~~ a favorable increase of ~~$2,178;~~1.0 percentage points. Although higher second quarter and ~~other~~first half 2023 sales contributed to improved operating earnings compared to the corresponding prior year period, higher input costs, as discussed above, substantially offset much of the benefits of increased sales.

Other income (loss), net was ~~$8,565~~$4,804 in ~~nine months 2017~~second quarter 2023 compared to ~~$4,147~~$(11,137) in ~~nine months 2016, a favorable increase of $4,418.~~second quarter 2022; and $9,584 in first half 2023 compared to $(16,153) in first half 2022. Other income (loss), net for ~~third~~second quarter ~~2017~~2023 and ~~2016~~2022 includes net gains (losses) and investment income of ~~$2,277~~$4,931 and ~~$1,961,~~$(12,558), respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities; and other income, net for ~~nine months 2017~~first half 2023 and ~~2016~~2022 includes net gains (losses) and investment income of ~~$6,976~~$9,278 and ~~$3,082,~~$(18,163), respectively, on trading securities. The investment gains and (losses) on trading securities ~~relating to~~in second quarter and first half 2023 and 2022 reflect the overall changes in the equity markets during these ~~programs.~~periods. These changes in ~~trading securities~~market values were substantially offset by a like amount of deferred compensation expense (credits) included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above.

Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred compensation, are more reflective of the underlying operations of the Company.

Other income (loss), net for second quarter 2023 and 2022 includes ~~gains (losses)~~investment income on available for sale securities of $1,145 and $513 in 2023 and 2022, respectively; and other income, net for first half 2023 and 2022 includes investment income on available for sale securities of $2,308 and $1,069 in 2023 and 2022, respectively. Other income (loss), net also includes pre-tax gain (loss) on foreign exchange of ~~$1,082~~$(1,315) and ~~$(582)~~$662 in ~~third~~second quarter ~~2017~~2023 and ~~2016, respectively,~~2022, respectively; and ~~$(527)~~$(2,060) and ~~$(572)~~$510 in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively.

The consolidated effective tax rates were ~~31.0%~~24.7% and ~~30.6%~~24.4% in ~~third~~second quarter ~~2017~~2023 and ~~2016, respectively,~~2022, respectively; and ~~29.8%~~24.3% and ~~31.1%~~24.2% in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively. The lower effective tax rates for nine months 2017 compared to nine months 2016 principally reflect certain benefits resulting from filing amended federal and state income tax returns, including a state income tax carry forward benefit.

Net earnings attributable to Tootsie Roll Industries, Inc. were ~~$26,933~~$14,726 (after ~~$46~~$6 net loss attributed to non-controlling interests) in ~~third~~second quarter ~~2017~~2023 compared to ~~$28,637~~$11,989 (after ~~$40~~$8 net loss attributed to non-controlling interests) in ~~third~~second quarter ~~2016,~~2022, and earnings per share were ~~$0.43~~$0.21 and ~~$0.45~~$0.17 in ~~third~~second quarter ~~2017~~2023 and ~~2016,~~2022, respectively, ~~a decrease~~an increase of ~~$0.02~~$0.04 per share, or 4%23.5%. ~~Nine months 2017~~First half 2023 net earnings attributable to Tootsie Roll Industries, Inc. were ~~$48,879~~$28,127 (after ~~$131~~$13 net loss attributed to non-controlling interests) compared to ~~nine months 2016~~first half 2022 net earnings of ~~$49,669~~$24,016 (after ~~$142~~$16 net ~~earnings~~loss attributed to non-controlling interests), and net earnings per share were ~~$0.77~~$0.40 and $0.34 in ~~both nine months 2017~~first half 2023 and ~~nine months 2016.~~first half 2022, respectively, an increase of $0.06 per share or 17.6%. Earnings per share attributable to Tootsie Roll Industries, Inc. for ~~third~~second quarter and ~~nine months 2017 did benefit~~first half 2023 benefited from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock. Average shares outstanding decreased from ~~64,021 in third~~70,985 at second quarter ~~2016~~2022 to ~~62,986 in third~~70,089 at second quarter ~~2017,~~2023, and from ~~64,205~~71,029 in ~~nine months 2016~~first half 2022 to ~~63,286~~70,156 in ~~nine months 2017.~~first half 2023.

Goodwill and intangibles, principally trademarks, are assessed annually as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. The Company has not identified any triggering

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events, as defined, or other adverse information that would indicate a material impairment of its goodwill or intangibles in ~~nine months 2017. There were also no impairments~~first half 2023. Although Company management has not identified any trigging events at this time relating to its intangibles, factors that may have longer term effects on consumer lifestyles and behavior, as outlined in the ~~comparative nine months 2016 period or calendar 2016.~~Company’s risk factors discussed on Form 10-K for the year ended December 31, 2022, could change this assessment in the future.

Beginning in 2012, the Company received periodic notices from the Bakery and Confectionery Union and Industry International Pension ~~Plan~~Fund (Plan), a multi-employer defined benefit pension plan for certain Company union employees, that the Plan’s actuary certified the Plan to be in “critical status”, ~~the “Red Zone”,~~ as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC),; and that a plan of rehabilitation was adopted by the trustees of the Plan in ~~2012 (and was further amended in 2016). During 2015, the Company received notices that the~~2012. The Plan’s status was changed to “critical and declining status”, as defined by the PPA and PBGC, for the plan year beginning January 1, 2015, and ~~that the Plan was projected~~this status continues to ~~have an accumulated funding deficiency for the 2017 through 2024 plan years.~~date. A designation of “critical and declining status” implies that the Plan is expected to become insolvent in the next 20 years. In ~~April 2017,~~2016, the Company

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received new notices that the Plan’s trustees adopted an updated Rehabilitation Plan ~~remains~~effective January 1, 2016, and all annual notices through 2023 have continued to classify the Plan in the “critical and declining status” and is projected to become insolvent in 13 years. These notices also advise that the Plan trustees are considering the reduction or elimination of certain retirement benefits and may seek assistance from the PBGC.category.

Based on these updated notices, the Plan’s funded ~~percentages~~percentage (plan investment assets as a percentage of plan liabilities), as defined, were ~~57.0%~~49.4%, ~~62.8%~~48.5%, and ~~65.1%~~48.3% as of January 1, ~~2016 (most recent valuation date available), 2015,~~2022, 2021, and ~~2014,~~2020, respectively (these valuation dates are as of the beginning of each Plan year). These funded percentages are based on actuarial values, as defined, and do not reflect the actual market value of Plan investments as of these dates. If the market value of investments had been used as of January 1, ~~2016,~~2022 the funded percentage would be ~~53.0%~~56.7% (not ~~57.0%~~49.4%). As of the January 1, ~~2016~~2022 valuation date (most recent valuation available), ~~20%~~only 14% of Plan participants were current active employees, ~~51%~~55% were retired or separated from service and receiving benefits, and ~~29%~~31% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, ~~2016~~2022 fell 2%5% from the previous year and 4%10% over the past two years. When compared to the Plan valuation date of January 1, 2011 ~~(five years earlier)~~(just prior to the Plan being certified to be in “critical status”), current active ~~employees~~employee participants have declined ~~31%~~54%, whereas participants who were retired or separated from service and receiving benefits increased 6%3% and participants who were retired or separated from service and entitled to future benefits increased 8%. The bankruptcy of a major participating employer in the Plan contributed to the above discussed Plan results. The Internal Revenue Service recently issued updated mortality tables (increasing life expectancy) effective January 1, 2018 which will likely increase the Plan’s liabilities and further decrease the above discussed funding percentages.

The Company has been advised that its withdrawal liability would have been ~~$72,700, $61,000~~$104,300, $99,300 and ~~$56,400~~$99,800 if it had withdrawn from the Plan during ~~2016, 2015~~2021, 2020 and ~~2014,~~2019, respectively. The ~~increase~~Plan has not yet provided an actuarial estimate of a withdrawal liability calculated as if the Company were to have withdrawn from ~~2015 to 2016 principally reflects poor investment returns of~~ the ~~plan in 2015, a decrease in the PBGC interest rates, and a higher~~Plan during 2022. The Company’s relative share of the Plan’s ~~unfunded vested benefits allocated to~~contribution base, driven by employer withdrawals, has increased in the ~~Company.~~last several years, and management believes that this trend could continue indefinitely and add upward pressure on the Company’s withdrawal liability. Based on the above, including the Company’s increase in such union labor hours to meet its higher product demand and the Plan’s projected insolvency in 13the next 20 years, management believes that the Company’s withdrawal liability will likely increase further in future years.

Based on the Company’s most recent actuarial ~~study~~estimates using the information provided by the Plan with respect to its 2021 withdrawal liability and certain provisions in ERISA and ~~the law~~laws relating to withdrawal liability payments, management believes that the Company’s liability had the Company withdrawn in 2022 would likely be limited to twenty annual payments of ~~$2,914~~$2,714 which have a present value in the range of ~~$34,200~~$31,851 to ~~$44,700.~~$43,741 depending on the interest rate used to discount these payments. While the Company’s actuarial consultant did not believe that the Plan will suffer a future mass withdrawal (as defined) of participating employers, in the event of a mass withdrawal, the Company’s annual withdrawal payments would theoretically be payable in perpetuity. Based on the same actuarial estimates, had a mass withdrawal occurred in 2022, the present value of such perpetuities is in the range of $44,472 to $115,808 and would apply in the unlikely event that substantially all employers withdraw from the Plan. The aforementioned is based on a range of ~~valuation~~valuations and interest rates which ~~management understands~~the Company’s actuary has advised is provided under the statute. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than the above discussed amounts, could be payable to the Plan.

The Company’s existing labor contract with the local union commits the Company’s participation in this Plan. The Company’s labor contract expired on September 30, 2017 but has provisions for automatic extensions unless the one of the parties provides a 60 day notice that they will not extend. Both parties are currently continuing under this automatic extension provision. The amended rehabilitation plan, which also continues, ~~requires~~required that employer contributions include 5% compounded annual surcharge increases each year for an unspecified period of time beginning in 2012 as well as certain plan benefit reductions. In fourth quarter 2020, the Plan Trustees advised the Company that the surcharges would no longer increase annually and therefore be “frozen” at the rates and amounts in effect as of December 31, 2020 provided that the local bargaining union and the Company executed a formal consent agreement by June 30, 2021. The Trustees advised that they have concluded that continuing increases in surcharges would likely have a long-term adverse effect on the solvency of the Plan. The Trustees concluded that further increases would result in increasing financial hardships and withdrawals of participating employers, and that this change will not have a material effect on the Plan’s insolvency date. In first quarter 2021, the local bargaining union and the Company executed this agreement which resulted in the “freezing” of such surcharges as of December 31, 2020.

The Company’s pension expense for this Plan for ~~calendar years 2016~~first half 2023 and ~~2015~~2022 was ~~$2,541~~$1,951 and ~~$2,574,~~$1,822, respectively. The aforementioned expense includes surcharges of ~~$542~~$688 and ~~$447 in calendar years 2016~~$642 for first half 2023 and ~~2015,~~2022, respectively, as required under the amended plan of ~~rehabilitation as amended.~~rehabilitation. The Company’s twelve months pension expense for this Plan for ~~nine months 2017~~2022 and ~~2016~~2021 was ~~$2,064~~$3,510 and ~~$1,959~~$3,156, respectively, which includes surcharges of ~~$517~~$1,237 and ~~$417~~$1,112, respectively. From 2012 through 2020, the Company’s employer contributions were subject to annual 5% compounded surcharge increases. Beginning in 2021, the Plan ceased additional surcharges, but the prior surcharges remain in effect indefinitely.

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~~During third quarter 2017,~~On March 1, 2023, the Plan ~~representatives informed~~submitted an initial application to the ~~Company~~PBGC for Special Financial Assistance under the American Rescue Plan Act of 2021. On June 13, 2023, the Plan advised us that they ~~had received preliminary approval~~withdrew the application and intends to resubmit after resolving certain aspects identified through discussions with the PBGC. Company management understands that this legislation would provide financial assistance from the PBGC to shore up financially distressed multi-employer plans to ensure that ~~would transform~~they can remain solvent and continue to pay benefits to retirees through 2051 without any reduction in retiree benefits. Nonetheless, the Company’s actuary believes that given the Plan’s projected insolvency within the next 20 years as well as other factors, that it still remains unclear if the Plan can remain solvent through the targeted date of 2051. The Company’s actuary also advised that the regulations under the aforementioned PBGC financial assistance could result in a higher Company withdrawal liability even with PBGC financial assistance.

During second quarter 2023, the Company and the union concluded negotiations and entered into a ~~“hybrid plan”~~new five year contract which ~~would comprise both an “old pool” and a “new pool” for participating employers. The “hybrid plan” would allow current participating employers~~expires in September 2027 (prior contract expired in September 2022). Under terms of this new union contract the Company is obligated to enter a “new pool” and withdraw from the “old pool” if they agree to 30 years of additional annual installment payments to discharge their existing withdrawal liability of the “old pool”. The “new pool” option would provide certain protections from future withdrawal liabilities and reduced surcharges relating to future plan contributions, but would require employers to remain a participating employercontinue its participation in the “new pool” Plan for 30 years. The Plan believes that this “hybrid plan” as restructured will avoid insolvency. If the Company were to exercise this option, it would be required to make additional annual installment payments (which are in addition to the annual pension expense and surcharges discussed above) to the Plan of $2.1 million for 30 years ($63.0 million total) beginning in 2019, or a lump-sum payment of approximately $40.7 million in 2019.Plan. The Company is currently evaluating this proposal with its actuaries and legal counsel. If the Company were to decide to enter this “hybrid plan” agreement, it would record a charge to net after-tax earnings of approximately $25.6 million which reflects the aforementioned lump-sum pre-tax payment of $40.7 million (or the present value of the $2.1 million annual payments for 30 years discussed above), net of the Company’s estimated future income tax benefits.

~~The Company is currently~~ unable to determine the ultimate outcome of the above discussed multi-employer union pension matter and therefore is unable to determine the effects on its consolidated financial statements, but the ultimate outcome orcould have a material adverse effect on the ~~effects of any modifications to the current rehabilitation plan could be material to its~~Company’s consolidated results of operations or cash flows in one or more future periods. See also Note 7 of the Company’s Note to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2022

The Company is focused on the longer term and ~~related notes~~therefore is continuing to make investments in plant manufacturing operations to meet new consumer and ~~Management’s Discussion~~customer product demands, achieve product quality improvements, expand capacity in certain product lines, and ~~Analysis of Financial Condition and Results of Operations~~increase operational efficiencies in ~~the Company’s 2016 Form 10-K.~~order to provide genuine value to consumers.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows (used in) provided by operating activities were ~~$18,420~~$(5,142) and ~~$47,032~~$617 in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively, aan unfavorable decrease of ~~$28,612.~~$5,759. The $5,759 decrease in ~~nine months 2017~~ cash flows from operating activities ~~principally~~from 2023 to 2022 reflects ~~the timing of sales~~significantly higher production and ~~collections of account receivables~~inventory levels, including the effects of ~~seasonal (pre-Halloween)~~higher costs for materials as discussed above, resulting in more cash used in inventories in first half 2023. We have accelerated our production plans in 2023 to increase our production capacity to help insure that we can meet our 2023 sales ~~payment terms, the effects of higher finished goods inventories at September 30, 2017 reflecting the timing of~~demands and customer deliveries, including pre-Halloween ~~shipments during the comparative September and October periods, and changes~~2023 sales demands in ~~other receivables primarily due to increased broker margin deposit requirements on commodity hedges.~~third quarter 2023.

Net cash provided by (used in) investing activities was $6,432 in first half 2023 compared to $(42,839) in first half 2022. Cash flows used in investing activities ~~was $42,166 in nine months 2017 compared to $34,267 in nine months 2016. Cash flows from investing activities~~ reflect ~~$51,935~~$48,522 and ~~$45,298~~$57,731 of purchases of available for sale securities during ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively, and ~~$21,328~~$66,507 and ~~$26,517~~$25,993 of sales and maturities of available for sale securities during ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively. ~~Nine months 2017~~First half 2023 and ~~2016~~2022 investing activities include capital expenditures of ~~$11,699~~$10,723 and ~~$13,067,~~$10,194, respectively. All capital expenditures ~~in 2017~~have been or are expected to be funded from the Company’s cash flow from operations and internal sources. In addition, Company management has committed approximately $15,000 to a manufacturing plant rehabilitation upgrade and expansion of one of its manufacturing facilities in the U.S.A. Management anticipates capital outlayssources including available for ~~this project to approximate $500 in 2017, $6,000 in 2018, $6,000 in 2019 and $2,500 in 2020.~~sale securities.

The Company’s consolidated financial statements include bank borrowings of ~~$404~~$1,051 and ~~$447~~$1,020 at ~~September~~June 30, ~~2017~~2023 and ~~2016,~~2022, respectively, all of which ~~relates~~relate to its ~~two majority-owned and controlled~~ Spanish ~~companies.~~subsidiary. The Company had no other outstanding bank borrowings at ~~September~~June 30, ~~2017.~~2023.

Financing activities include Company common stock purchases and retirements of ~~$30,027~~$16,548 and ~~$26,293~~$5,023 in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively. Cash dividends of ~~$16,965~~$12,531 and ~~$16,694~~$12,237 were paid in ~~nine months 2017~~first half 2023 and ~~2016,~~2022, respectively.

The Company’s current ratio (current assets divided by current liabilities) was ~~3.8~~3.5 to 1 at ~~September~~June 30, ~~2017~~2023 compared to ~~4.7~~3.4 to 1 at December 31, ~~2016~~2022 and ~~3.6~~3.4 to 1 at ~~September~~June 30, ~~2016.~~2022. Net working capital was ~~$217,650~~$223,596 at ~~September~~June 30, ~~2017~~2023 compared to ~~$235,739~~$218,894 and ~~$202,304~~$198,283 at December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016,~~2022, respectively.

~~The aforementioned~~ Included in net working capital ~~amounts are principally reflected in aggregate~~is cash and cash equivalents and short-term investments ~~of $123,784~~totaling $109,212 at ~~September~~June 30, ~~2017~~2023 compared to ~~$186,658~~$149,398 and ~~$122,144~~$123,090 at December 31, ~~2016~~

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2022 and ~~September~~June 30, ~~2016,~~2022, respectively. In addition, long term investments, principally debt securities comprising corporate ~~and municipal~~ bonds, were ~~$193,991~~$252,459 at ~~September~~June 30, ~~2017,~~2023, as compared to ~~$164,665~~$247,528 and ~~$189,956~~$258,075 at December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016,~~2022, respectively. Aggregate cash and cash equivalents and short and long-term investments were ~~$317,775, $351,323,~~$361,671, $396,926, and ~~$312,100,~~$381,165, at ~~September~~June 30, ~~2017,~~2023, December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016, respectively. The aforementioned includes $75,094, $67,995,~~2022, respectively, including $81,319, $71,208, and ~~$66,085~~$72,480 at ~~September~~June 30, ~~2017,~~2023, December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016,~~ 2022,

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respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities.

Investments in available for sale securities, primarily high quality corporate ~~and municipal~~ bonds, ~~variable rate demand notes, and other debt securities~~ that matured during ~~nine months 2017~~first half 2023 and ~~2016~~2022 were generally used in working capital and to purchase the Company’s common stock, or were replaced with debt securities of similar maturities. The net unrealized loss on available for sale investments was approximately $7,200 and $7,600 at June 30 2023 and 2022, respectively, which principally reflects the increase in interest rates since such securities were purchased. The Company expects to hold these securities to maturity and therefore does not expect to ultimately realized the aforementioned unrealized losses (see also Item 3 below, QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK).

The Company periodically contributes to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company is currently using these VEBA funds to pay the actual cost of such benefits through ~~most~~part or all of ~~2017.~~2023. The VEBA trust held ~~$602, $3,027~~$1,942, $3,879 and ~~$3,379~~$3,050 of aggregate cash and cash equivalents at ~~September~~June 30, ~~2017,~~2023, December 31, ~~2016~~2022 and ~~September~~June 30, ~~2016,~~2022, respectively. The Company is currently reviewing the longer term funding needs for this VEBA and will likely add additional funding in third quarter 2023. This asset value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position. These assets are categorized as Level 12 within the fair value hierarchy. ~~The Company is planning to make a contribution to this VEBA in the range of $10,000 to $15,000 in fourth quarter 2017. This contribution would result in the prepayment of these employee benefits.~~

~~ACCOUNTING~~ACCOUNTING PRONOUNCEMENTS

See Note 1 of the Company’s ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

~~RISK FACTORS~~

~~There were no material changes to the risk factors disclosed in the Company’s 2016 Form 10-K.~~

FORWARD-LOOKING STATEMENTS

This discussion and certain other sections contain forward-looking statements that are based largely on the Company’s current expectations and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “anticipated,” “believe,” “expect,” “intend,” “estimate,” “project,” “plan” and other words of similar meaning in connection with a discussion of future operating or financial performance and are subject to certain factors, risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. Such factors, risks, trends and uncertainties, which in some instances are beyond the Company’s control, include high input costs, the overall competitive environment in the Company’s industry, successful distribution and sell-through during Halloween and other seasons, supply chain disruptions, availability of labor, and changes in assumptions, judgments and ~~judgments~~risk factors discussed ~~above under~~in our Annual Report on Form 10-K for the ~~heading “Significant Accounting Policies and Estimates,” and factors identified and referred to above under the heading “Risk Factors.”~~year ended December 31, 2022.

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

~~statements.~~

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to various market risks, including fluctuations in and sufficient availability of sugar, corn syrup, edible oils, including palm oils, cocoa, dextrose, milk and whey, ~~and~~ gum-base input ingredients, ~~and~~ packaging, and fuel costs principally relating to freight and delivery fuel surcharges. The Company generally enters into annual supply contracts and hedges certain commodities (primarily sugar) to control and plan for such cost changes, however, the Company has experienced significant increases in its costs in 2023 as the Company’s prior 2022 supply contracts and many of its previous hedges have been utilized. The Company is exposed to exchange rate fluctuations in the Canadian dollar which is the currency used for a portion of the raw material and packaging material costs and all labor, benefits and local plant operating costs at its Canadian plants. The Company is exposed to exchange rate fluctuations in Mexico, Canada, and Spain where its subsidiaries sell products in their local currencies. The Company invests in ~~securities~~corporate bonds with ~~maturities dates~~an average maturity of upthree to ~~approximately three~~five years ~~which are generally held to maturity,~~ and variable rate demand notes where interest rates are generally reset ~~weekly, all of which limits~~weekly. While the Company generally holds its investments to maturity, the Company would sell prior to maturity if it was considered beneficial to do so for tax-planning strategies or if the Company required the funds to finance a significant reinvestment in the Company, including an acquisition. The Company believes that the above discussed policies and programs limit the Company’s exposure to significant interest rate fluctuations. There have been no material changes in the Company’s market risks that would significantly affect the disclosures made in the Form 10-K for the year ended December 31, ~~2016.~~ 2022.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of ~~management,~~Management, the Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of ~~September~~June 30, ~~2017~~2023 and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to ~~management,~~Management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended ~~September~~June 30, ~~2017~~2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II —– OTHER INFORMATION

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

The following table summarizes the Company’s purchases of its common stock during the quarter ended ~~September~~June 30, ~~2017:~~2023:



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

Apr 1 to Apr 30	-	$	-	Not Applicable	Not Applicable

May 1 to May 31	184,165		38.37	Not Applicable	Not Applicable

Jun 1 to Jun 30	207,626		37.86	Not Applicable	Not Applicable

Total	391,791	$	38.10	Not Applicable	Not Applicable

Approximate Dollar

(a) Total

Shares

Value of Shares that

Number of

(b) Average

Purchased as Part of

May Yet Be Purchased

Shares

Price Paid per

Publicly Announced Plans

Under the Plans
Period

Purchased

Share

Or Programs

or Programs

Jul 1 to Jul 31

116,012

$
35.78

Not Applicable

Not Applicable

Aug 1 to Aug 31

156,575

36.56

Not Applicable

Not Applicable

Sep 1 to Sep 30

-

-

Not Applicable

Not Applicable

Total

272,587

$
36.23

Not Applicable

Not Applicable

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

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ITEM 6. EXHIBITS

~~Exhibits~~Exhibit 31.1 — Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~Exhibits~~Exhibit 31.2 — Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 — Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS - XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Exhibit 101.SCH - XBRL Taxonomy Extension Schema Document.

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

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

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

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

Exhibit 104 - Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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


		TOOTSIE ROLL INDUSTRIES, INC.

Date:	~~November 7, 2017~~August 8, 2023	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	~~November 7, 2017~~August 8, 2023	BY:	/S/G. HOWARD EMBER, JR.

			G. Howard Ember, Jr.
			Vice President Finance and
			Chief Financial Officer

2025



	Estimated Fair Value September 30, 2017
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	49,512	$	49,512	$	-	$	-
Available for sale securities		193,169		2,402		190,767		-
Foreign currency forward contracts		147		-		147		-
Commodity futures contracts		(364)		(364)		-		-
Trading securities		75,094		75,094		-		-
Total assets measured at fair value	$	317,558	$	126,644	$	190,914	$	-


	Estimated Fair Value December 31, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	119,145	$	119,145	$	-	$	-
Available for sale securities		164,183		2,419		161,764		-
Foreign currency forward contracts		(119)		-		(119)		-
Commodity futures contracts, net		1,746		1,746		-		-
Trading securities		67,995		67,995		-		-
Total assets measured at fair value	$	352,950	$	191,305	$	161,645	$	-


	Estimated Fair Value September 30, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	94,239	$	94,239	$	-	$	-
Available for sale securities		151,776		2,429		149,347		-
Foreign currency forward contracts		(532)		-		(532)		-
Commodity futures contracts		3,234		3,234		-		-
Trading securities		66,085		66,085		-		-
Total assets measured at fair value	$	314,802	$	165,987	$	148,815	$	-



	For Quarter Ended September 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	118	$	55	$	-
Commodity futures contracts		(99)		(83)		-
Total	$	19	$	(28)	$	-

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

Foreign currency forward contracts	$	(77)	$	(456)	$	-
Commodity futures contracts		1,365		793		-
Total	$	1,288	$	337	$	-

	For Year to Date Ended September 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	266	$	1	$	-
Commodity futures contracts		(2,001)		108		-
Total	$	(1,735)	$	109	$	-

	For Year to Date Ended September 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	613	$	(1,482)	$	-
Commodity futures contracts		3,798		836		-
Total	$	4,411	$	(646)	$	-