UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

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

For the quarterly period ended September 30, ~~2022~~2023

☐

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

For the transition period from to

COMMISSION FILE NUMBER 1-1361

Tootsie Roll Industries, Inc.

(Exact Name of Registrant as Specified in its Charter)


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


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

773-838-3400

(Registrant’s Telephone Number, Including Area Code)

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 30, ~~2022)~~2023).


Class		Outstanding

Common Stock, ~~$0.69-4/9~~$0.694 par value		~~40,293,792~~40,172,228
Class B Common Stock, ~~$0.69-4/9~~$0.694 par value		~~28,622,421~~29,452,004

~~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 $0.69-4/9 per share~~	TR	~~New York Stock Exchange~~

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

SEPTEMBER 30, ~~2022~~2023

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	~~8-17~~8-16

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2423

Item 4.	Controls and Procedures	2423

Part II —	Other Information

Item 1.	~~Legal Proceedings~~	25

~~Item~~ 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	2524

Item 6.	Exhibits	25

Signatures		2625

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)



	September 30, 2022		December 31, 2021		September 30, 2021		September 30, 2023		December 31, 2022		September 30, 2022

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	57,216	$	105,840	$	76,210	$	47,320	$	53,270	$	57,216
Restricted cash		332		386		393		360		365		332
Investments		88,510		39,968		39,491		88,080		96,128		88,510
Accounts receivable trade, less allowances of $2,949, $2,281 and $2,706		82,315		54,921		80,877
Accounts receivable trade, less allowances of $3,302, $2,335 and $2,949								80,118		58,556		82,315
Other receivables		4,120		3,920		3,392		5,563		4,299		4,120
Inventories:
Finished goods and work-in-process		48,758		31,431		46,887		61,876		43,595		48,758
Raw materials and supplies		40,797		24,074		24,948		45,716		40,671		40,797
Prepaid expenses		2,018		7,761		5,706		7,027		12,144		2,018
Total current assets		324,066		268,301		277,904		336,060		309,028		324,066

PROPERTY, PLANT AND EQUIPMENT, at cost:
Land		21,673		21,704		21,710		21,758		21,715		21,673
Buildings		130,131		130,158		123,844		143,013		142,462		130,131
Machinery and equipment		446,487		446,777		421,233		468,292		467,977		446,487
Construction in progress		32,409		15,344		39,687		21,163		4,325		32,409
Operating lease right-of-use assets		4,746		7,419		7,617		5,991		4,703		4,746
		635,446		621,402		614,091		660,217		641,182		635,446
Less - accumulated depreciation		424,600		412,496		407,765		442,796		429,139		424,600
Net property, plant and equipment		210,846		208,906		206,326		217,421		212,043		210,846

OTHER ASSETS:
Goodwill		73,237		73,237		73,237		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024		175,024		175,024		175,024
Investments		241,308		291,175		280,326		243,205		247,528		241,308
Prepaid expenses and other assets		480		603		1,614		19,344		465		480
Deferred income taxes		1,394		1,372		1,010		1,617		1,454		1,394
Total other assets		491,443		541,411		531,211		512,427		497,708		491,443
Total assets	$	1,026,355	$	1,018,618	$	1,015,441	$	1,065,908	$	1,018,779	$	1,026,355

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

Table of Contents

(in thousands except per share data) (Unaudited)



	September 30, 2022		December 31, 2021		September 30, 2021		September 30, 2023		December 31, 2022		September 30, 2022

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	30,728	$	14,969	$	24,512	$	22,696	$	25,246	$	30,728
Bank loans		949		939		956		1,018		1,051		949
Dividends payable		6,200		6,042		6,042		6,261		6,154		6,200
Accrued liabilities		60,330		53,896		57,597		72,329		54,444		60,330
Postretirement health care benefits		616		616		544		658		658		616
Operating lease liabilities		833		1,072		1,102		1,073		791		833
Income taxes payable		1,863		2,434		3,884		1,599		1,790		1,863
Total current liabilities		101,519		79,968		94,637		105,634		90,134		101,519

NONCURRENT LIABILITIES:
Deferred income taxes		41,351		45,461		45,441		46,021		45,005		41,351
Postretirement health care benefits		12,609		12,619		12,971		9,321		9,303		12,609
Industrial development bonds		7,500		7,500		7,500		7,500		7,500		7,500
Liability for uncertain tax positions		3,540		3,415		3,177		3,818		3,747		3,540
Operating lease liabilities		3,936		6,347		6,515		5,002		3,952		3,936
Deferred compensation and other liabilities		72,577		94,511		88,684		85,045		76,256		72,577
Total noncurrent liabilities		141,513		169,853		164,288		156,707		145,763		141,513

TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value - 120,000 shares authorized; 40,294, 39,344 and 39,332, respectively, issued		27,982		27,322		27,314
Class B common stock, $.69-4/9 par value - 40,000 shares authorized; 28,622, 27,793 and 27,805, respectively, issued		19,877		19,300		19,309
Common stock, $0.694 par value - 120,000 shares authorized; 40,172, 39,721 and 40,294, respectively, issued								27,897		27,584		27,982
Class B common stock, $0.694 par value - 40,000 shares authorized; 29,452, 28,607 and 28,622, respectively, issued								20,453		19,866		19,877
Capital in excess of par value		743,084		709,880		709,880		742,948		719,606		743,084
Retained earnings		29,078		39,545		25,546		39,786		48,276		29,078
Accumulated other comprehensive loss		(34,428)		(25,013)		(23,295)		(25,218)		(30,169)		(34,428)
Treasury stock (at cost) - 99, 96 and 96 shares, respectively		(1,992)		(1,992)		(1,992)
Treasury stock (at cost) - 102, 99 and 99 shares, respectively								(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		783,601		769,042		756,762		803,874		783,171		783,601
Noncontrolling interests		(278)		(245)		(246)		(307)		(289)		(278)
Total equity		783,323		768,797		756,516		803,567		782,882		783,323
Total liabilities and shareholders’ equity	$	1,026,355	$	1,018,618	$	1,015,441	$	1,065,908	$	1,018,779	$	1,026,355

(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				Quarter Ended				Year to Date Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022

Net product sales	$	211,888	$	183,090	$	493,260	$	399,445	$	248,336	$	211,888	$	567,884	$	493,260
Rental and royalty revenue		1,285		1,075		3,990		3,407		1,516		1,285		4,205		3,990
Total revenue		213,173		184,165		497,250		402,852		249,852		213,173		572,089		497,250
Product cost of goods sold		141,243		118,446		328,995		259,959		164,163		141,243		382,644		328,995
Rental and royalty cost		388		332		1,153		1,005		489		388		1,340		1,153
Total costs		141,631		118,778		330,148		260,964		164,652		141,631		383,984		330,148
Product gross margin		70,645		64,644		164,265		139,486		84,173		70,645		185,240		164,265
Rental and royalty gross margin		897		743		2,837		2,402		1,027		897		2,865		2,837
Total gross margin		71,542		65,387		167,102		141,888		85,200		71,542		188,105		167,102
Selling, marketing and administrative expenses		35,957		35,743		83,704		94,930		39,300		35,957		114,656		83,704
Earnings from operations		35,585		29,644		83,398		46,958		45,900		35,585		73,449		83,398
Other income (loss), net		(1,246)		1,750		(17,399)		11,810		(718)		(1,246)		8,866		(17,399)
Earnings before income taxes		34,339		31,394		65,999		58,768		45,182		34,339		82,315		65,999
Provision for income taxes		7,778		6,675		15,438		13,494		10,805		7,778		19,824		15,438
Net earnings		26,561		24,719		50,561		45,274		34,377		26,561		62,491		50,561
Less: net loss attributable to noncontrolling interests		(16)		(14)		(32)		(20)		(5)		(16)		(18)		(32)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	26,577	$	24,733	$	50,593	$	45,294	$	34,382	$	26,577	$	62,509	$	50,593

Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.39	$	0.36	$	0.73	$	0.65	$	0.49	$	0.37	$	0.89	$	0.71
Dividends per share *	$	0.09	$	0.09	$	0.27	$	0.27	$	0.09	$	0.09	$	0.27	$	0.27

Average number of shares outstanding		68,876		69,250		68,952		69,555		69,621		70,915		69,973		70,992

Retained earnings at beginning of period	$	8,692	$	6,846	$	39,545	$	32,312	$	11,656	$	8,692	$	48,276	$	39,545
Net earnings attributable to Tootsie Roll Industries, Inc.		26,577		24,733		50,593		45,294		34,382		26,577		62,509		50,593
Cash dividends		(6,191)		(6,033)		(18,426)		(18,027)		(6,252)		(6,191)		(18,682)		(18,426)
Stock dividends		-		-		(42,634)		(34,033)		-		-		(52,317)		(42,634)
Retained earnings at end of period	$	29,078	$	25,546	$	29,078	$	25,546	$	39,786	$	29,078	$	39,786	$	29,078

*Does not include 3% stock dividend to shareholders of record on 3/~~7/22~~6/23 and 3/~~5/21.~~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

September 30, 2022

September 30, 2021

September 30, 2022

September 30, 2021

Net earnings

$
26,561

$
24,719

$
50,561

$
45,274

Other comprehensive income (loss), before tax:

Foreign currency translation adjustments

120

(495)

583

(302)

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

(207)

(352)

(620)

(1,055)
Unrealized gains (losses) on postretirement and pension benefits

(207)

(352)

(620)

(1,055)

Investments:

Unrealized gains (losses) for the period on investments

(3,321)

(653)

(11,608)

(2,182)
Less: reclassification adjustment for (gains) losses to net earnings

(4)

(39)

(14)

(92)
Unrealized gains (losses) on investments

(3,325)

(692)

(11,622)

(2,274)

Derivatives:

Unrealized gains (losses) for the period on derivatives

(542)

307

(550)

1,624
Less: reclassification adjustment for (gains) losses to net earnings

(121)

(922)

(398)

(2,487)
Unrealized gains (losses) on derivatives

(663)

(615)

(948)

(863)

Total other comprehensive income (loss), before tax

(4,075)

(2,154)

(12,607)

(4,494)
Income tax benefit (expense) related to items of other comprehensive income

1,015

400

3,192

1,014
Total comprehensive earnings

23,501

22,965

41,146

41,794
Comprehensive earnings (loss) attributable to noncontrolling interests

(16)

(14)

(32)

(20)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.

$
23,517

$
22,979

$
41,178

$
41,814



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

Net earnings	$	34,377	$	26,561	$	62,491	$	50,561

Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		(543)		120		1,895		583

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		(188)		(207)		(567)		(620)
Unrealized gains (losses) on postretirement and pension benefits		(188)		(207)		(567)		(620)

Investments:
Unrealized gains (losses) for the period on investments		746		(3,321)		2,915		(11,608)
Less: reclassification adjustment for (gains) losses to net earnings		-		(4)		(1)		(14)
Unrealized gains (losses) on investments		746		(3,325)		2,914		(11,622)

Derivatives:
Unrealized gains (losses) for the period on derivatives		2,078		(542)		1,608		(550)
Less: reclassification adjustment for (gains) losses to net earnings		33		(121)		76		(398)
Unrealized gains (losses) on derivatives		2,111		(663)		1,684		(948)

Total other comprehensive income (loss), before tax		2,126		(4,075)		5,926		(12,607)
Income tax benefit (expense) related to items of other comprehensive income		(646)		1,015		(975)		3,192
Total comprehensive earnings		35,857		23,501		67,442		41,146
Comprehensive earnings (loss) attributable to noncontrolling interests		(5)		(16)		(18)		(32)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$	35,862	$	23,517	$	67,460	$	41,178

(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				Year to Date Ended
	September 30, 2022		September 30, 2021		September 30, 2023		September 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	50,561	$	45,274	$	62,491	$	50,561
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		13,250		12,793		13,783		13,250
Deferred income taxes		(921)		(1,444)		21		(921)
Amortization of marketable security premiums		4,313		2,645		3,188		4,313
Changes in operating assets and liabilities:
Accounts receivable		(27,489)		(39,947)		(20,580)		(27,489)
Other receivables		(823)		(291)		20		(823)
Inventories		(34,012)		(12,440)		(22,437)		(34,012)
Prepaid expenses and other assets		5,886		3,980		(15,472)		5,886
Accounts payable and accrued liabilities		22,126		22,182		14,023		22,126
Income taxes payable		(446)		(83)		4,134		(446)
Postretirement health care benefits		(630)		(1,026)		(551)		(630)
Deferred compensation and other liabilities		(1,219)		510		986		(1,219)
Net cash provided by operating activities		30,596		32,153		39,606		30,596
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(17,552)		(22,930)		(19,458)		(17,552)
Repayment of premiums on split dollar life insurance policies		—		2,514
Purchases of trading securities		(1,292)		(2,108)		(1,526)		(1,292)
Sales of trading securities		2,567		582		574		2,567
Purchase of available for sale securities		(75,125)		(87,060)		(65,616)		(75,125)
Sale and maturity of available for sale securities		38,439		34,510		86,259		38,439
Net cash used in investing activities		(52,963)		(74,492)
Net cash provided by (used in) investing activities						233		(52,963)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(8,024)		(30,184)		(27,550)		(8,024)
Dividends paid in cash		(18,438)		(18,100)		(18,825)		(18,438)
Proceeds from bank loans		3,240		2,970		2,922		3,240
Repayment of bank loans		(3,102)		(2,798)		(2,939)		(3,102)
Net cash used in financing activities		(26,324)		(48,112)		(46,392)		(26,324)
Effect of exchange rate changes on cash		13		(202)		598		13
Decrease in cash and cash equivalents		(48,678)		(90,653)		(5,955)		(48,678)
Cash, cash equivalents and restricted cash at beginning of year		106,226		167,256		53,635		106,226
Cash, cash equivalents and restricted cash at end of quarter	$	57,548	$	76,603	$	47,680	$	57,548
Supplemental cash flow information:
Income taxes paid/(received), net	$	15,580	$	15,237	$	15,524	$	15,580
Interest paid	$	36	$	5	$	187	$	36
Stock dividend issued	$	70,242	$	64,667	$	86,433	$	70,242

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

Table of Contents

TOOTSIE ROLL INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, ~~2022~~2023

(in thousands except per share amounts) (Unaudited)

Note 1 — Significant Accounting Policies

General Information

The foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the “Company”). In the opinion of 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, ~~2021~~2022 (the ~~“2021~~“2022 Form 10-K”).

Results of operations for the period ended September 30, ~~2022~~2023 are not necessarily indicative of results to be expected for the year to end December 31, ~~2022~~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.

On March 11, 2020, the World Health Organization designated the recent novel coronavirus ("COVID-19") as a global pandemic. The Company continues to actively monitor COVID-19 and its potential impact on our operations and financial results. The impact that COVID-19 will have on our consolidated financial statements throughout 2022 and beyond remains uncertain and ultimately will be dictated by the length and severity of the pandemic and Covid-19 variants, the pace of the “reopening” of the economy and economic recovery, and federal, state, local and foreign government actions taken in response. The effects of Covid-19 pandemic are unprecedented, and therefore the Company is unable to determine its effects on its net product sales and net earnings for the balance of 2022 and beyond.

Revenue Recognition

The Company’s revenues, primarily net product sales resulting from the sale of goods, reflect the consideration to which the Company expects to be entitled generally based on customer purchase orders. The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") Topic 606. Adjustments for 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 current business conditions and experience. A net product sale is recorded when the Company delivers the product to the customer or, in certain instances, when the customer picks up the goods at the Company’s distribution center and thereby obtains control of such product. Amounts billed and due from our customers are classified as accounts receivable trade on the balance sheet and require payment on a short-term basis. Accounts receivable trade are unsecured. Shipping and handling costs of ~~$19,060~~$17,997 and ~~$17,743~~$19,060 in third quarter ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$49,754~~$49,662 and ~~$40,319~~$49,754 in nine months ~~2022~~2023 and ~~2021,~~2022, respectively, are included in selling, marketing and administrative expenses. Royalty income from sales-based licensing arrangements, pursuant to which revenue is recognized 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 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

~~Table of Contents~~

incentives. The discount rate used to calculate the present value of the minimum lease payments is ~~typically~~ 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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Recently Adopted Accounting Pronouncements

As of the date of this report, there are no recent accounting pronouncements that have been adopted in the period nor any that have not yet been 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 months 2023 reflects aggregate stock purchases of 747 shares for $27,550, excluding excise taxes, and a 3% stock dividend of 2,040 shares distributed on April 7, 2023. The average number of shares outstanding for nine months 2022 reflects aggregate stock purchases of 230 shares for $8,024 and a 3% stock dividend of 2,006 shares distributed on April 8, 2022. ~~The average number of shares outstanding for nine months 2021 reflects aggregate stock purchases of 921 shares for $30,184 and a 3% stock dividend of 1,970 shares distributed on April 2, 2021.~~

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 ~~2019~~2020 through ~~2021.~~2022. The Company’s consolidated effective income tax rate was ~~22.7%~~23.9% and ~~21.3%~~22.7% in third quarter ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~23.4%~~24.1% and ~~23.0%~~23.4% in nine months ~~2022~~2023 and ~~2021,~~2022, respectively.

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NOTE 4—Share Capital and 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 June 30, 2022

40,379

$
28,041

28,623

$
19,877

99

$
(1,992)

$
746,026

Issuance of 3% stock dividend

—

—

—

—

—

—

—

Conversion of Class B common shares to common shares

—

—

—

—

—

—

—

Purchase and retirement of common shares and other

(85)

(59)

(1)

—

—

—

(2,942)

Balance at September 30, 2022

40,294

$
27,982

28,622

$
19,877

99

$
(1,992)

$
743,084

Balance at June 30, 2021

39,700

$
27,569

27,821

$
19,320

96

$
(1,992)

$
722,617

Issuance of 3% stock dividend

—

—

—

—

—

—

—

Conversion of Class B common shares to common shares

16

11

(16)

(11)

—

—

—

Purchase and retirement of common shares and other

(384)

(266)

—

—

—

—

(12,737)

Balance at September 30, 2021

39,332

$
27,314

27,805

$
19,309

96

$
(1,992)

$
709,880

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

(230)

(160)

—

1

—

—

(7,864)

Balance at September 30, 2022

40,294

$
27,982

28,622

$
19,877

99

$
(1,992)

$
743,084

Balance at December 31, 2020

39,073

$
27,134

27,012

$
18,758

93

$
(1,992)

$
706,930

Issuance of 3% stock dividend

1,163

808

809

562

3

—

32,495

Conversion of Class B common shares to common shares

16

11

(16)

(11)

—

—

—

Purchase and retirement of common shares and other

(920)

(639)

—

—

—

—

(29,545)

Balance at September 30, 2021

39,332

$
27,314

27,805

$
19,309

96

$
(1,992)

$
709,880


										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 June 30, 2023	40,490	$	28,118	29,452	$	20,453	102	$	(1,992)	$	753,839
Issuance of 3% stock dividend	-		-	-		-	-		-		-
Conversion of Class B common shares to common shares	-		-	-		-	-		-		-
Purchase and retirement of common shares and other	(318)		(221)	-		-	-		-		(10,891)
Balance at September 30, 2023	40,172	$	27,897	29,452	$	20,453	102	$	(1,992)	$	742,948

Balance at June 30, 2022	40,379	$	28,041	28,623	$	19,877	99	$	(1,992)	$	746,026
Issuance of 3% stock dividend	-		-	-		-	-		-		-
Conversion of Class B common shares to common shares	-		-	-		-	-		-		-
Purchase and retirement of common shares and other	(85)		(59)	(1)		-	-		-		(2,942)
Balance at September 30, 2022	40,294	$	27,982	28,622	$	19,877	99	$	(1,992)	$	743,084

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	(747)		(519)	-		-	-		-		(27,306)
Balance at September 30, 2023	40,172	$	27,897	29,452	$	20,453	102	$	(1,992)	$	742,948

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	(230)		(160)	-		1	-		-		(7,864)
Balance at September 30, 2022	40,294	$	27,982	28,622	$	19,877	99	$	(1,992)	$	743,084

Note 5 — Fair Value Measurements

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

~~Table of Contents~~

As of September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021,~~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 ~~bonds.~~

~~The fair value of the Company’s industrial revenue development~~and government bonds at September 30, 2022, December 31, 2021 and September 30, 2021 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.

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but also include variable rate demand notes. While the Company generally holds its available for sale 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. As such, 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.

The fair value of the Company’s industrial revenue development bonds at September 30, 2023, December 31, 2022 and September 30, 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 September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021~~2022 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:



	Estimated Fair Value September 30, 2022								Estimated Fair Value September 30, 2023
	Total		Input Levels Used						Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	57,216	$	57,216	$	—	$	—	$	47,320	$	47,320	$	-	$	-
Available for sale securities		262,159		742		261,417		—		251,531		4,479		247,052		-
Foreign currency forward contracts		(366)		—		(366)		—
Commodity futures contracts		(31)		(31)		—		—
Foreign currency derivatives										(141)		-		(141)		-
Commodity derivatives										1,554		1,554		-		-
Trading securities		67,659		52,900		14,759		—		79,754		63,350		16,404		-
Total assets measured at fair value	$	386,637	$	110,827	$	275,810	$	—	$	380,018	$	116,703	$	263,315	$	-


	Estimated Fair Value December 31, 2021								Estimated Fair Value December 31, 2022
		Total	Input Levels Used							Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	105,840	$	105,840	$	-	$	—	$	53,270	$	53,270	$	-	$	-
Available for sale securities		241,407		1,282		240,125		—		272,448		1,889		270,559		-
Foreign currency forward contracts		426		—		426		—
Commodity futures contracts		124		124		—		—
Foreign currency derivatives										(282)		-		(282)		-
Commodity derivatives										10		10		-		-
Trading securities		89,736		76,196		13,540		—		71,208		56,049		15,159		-
Total assets measured at fair value	$	437,533	$	183,442	$	254,091	$	—	$	396,654	$	111,218	$	285,436	$	-


	Estimated Fair Value September 30, 2021								Estimated Fair Value September 30, 2022
		Total	Input Levels Used							Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	76,210	$	76,210	$	-	$	—	$	57,216	$	57,216	$	-	$	-
Available for sale securities		235,912		2,313		233,599		—		262,159		742		261,417		-
Foreign currency forward contracts		504		—		504		—
Commodity futures contracts		352		352		—		—
Foreign currency derivatives										(366)		-		(366)		-
Commodity derivatives										(31)		(31)		-		-
Trading securities		83,905		70,762		13,143		—		67,659		52,900		14,759		-
Total assets measured at fair value	$	396,883	$	149,637	$	247,246	$	—	$	386,637	$	110,827	$	275,810	$	-

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Note 6 — Derivative Instruments and Hedging Activities

From time to time, the Company uses derivative instruments, including foreign currency forward contracts and commodity futures contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures 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, 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.

~~Table of Contents~~

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 ~~$31~~$1,293, and $261 of this accumulated comprehensive ~~loss~~gain (loss) is expected to be reclassified to earnings in ~~2023.~~2024, and 2025, respectively. Approximately ~~$41~~$(45) and ~~$325~~$(96) reported in accumulated other comprehensive ~~loss~~gain (loss) for foreign currency derivatives are expected to be reclassified to other income, net in ~~2022~~2023 and ~~2023,~~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 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021:~~2022:



	September 30, 2022						September 30, 2023
	Notional						Notional
	Amounts		Assets		Liabilities		Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	6,782	$	26	$	(392)
Commodity futures contracts		1,009		1		(32)
Foreign currency derivatives							$	10,498	$	1	$	(142)
Commodity derivatives								19,063		1,554		-
Total derivatives			$	27	$	(424)			$	1,555	$	(142)

	December 31, 2021						December 31, 2022
	Notional						Notional
	Amounts		Assets		Liabilities		Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	6,729	$	426	$	—
Commodity futures contracts		6,012		231		(107)
Foreign currency derivatives							$	7,264	$	-	$	(282)
Commodity derivatives								189		10		-
Total derivatives			$	657	$	(107)			$	10	$	(282)

	September 30, 2021						September 30, 2022
	Notional						Notional
	Amounts		Assets		Liabilities		Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	3,995	$	504	$	—
Commodity futures contracts		2,730		352		—
Foreign currency derivatives							$	6,782	$	26	$	(392)
Commodity derivatives								1,009		1		(32)
Total derivatives			$	856	$	—			$	27	$	(424)

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The effects of derivative instruments on the Company’s Condensed Consolidated Statements of Earnings and Retained Earnings and the Condensed Consolidated Statements of Comprehensive Earnings for periods ended September 30, ~~2022~~2023 and September 30, ~~2021~~2022 are as follows:



	For Quarter Ended September 30, 2022						For Quarter Ended September 30, 2023
					Gain (Loss)						Gain (Loss)
			Gain (Loss)		on Amount Excluded				Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness		Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized		Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings		in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(483)	$	48	$	—
Commodity futures contracts		(59)		73		—
Foreign currency derivatives							$	(276)	$	(27)	$	-
Commodity derivatives								2,354		(6)		-
Total	$	(542)	$	121	$	—	$	2,078	$	(33)	$	-

	For Quarter Ended September 30, 2021						For Quarter Ended September 30, 2022
					Gain (Loss)						Gain (Loss)
			Gain (Loss)		on Amount Excluded				Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness		Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized		Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings		in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(107)	$	106	$	—
Commodity futures contracts		414		816		—
Foreign currency derivatives							$	(483)	$	48	$	-
Commodity derivatives								(59)		73		-
Total	$	307	$	922	$	—	$	(542)	$	121	$	-

	For Year to Date Ended September 30, 2022						For Year to Date Ended September 30, 2023
					Gain (Loss)						Gain (Loss)
			Gain (Loss)		on Amount Excluded				Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness		Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized		Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings		in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	(556)	$	236	$	—
Commodity futures contracts		6		162		—
Foreign currency derivatives							$	(23)	$	(163)	$	-
Commodity derivatives								1,631		87		-
Total	$	(550)	$	398	$	—	$	1,608	$	(76)	$	-

	For Year to Date Ended September 30, 2021						For Year to Date Ended September 30, 2022
					Gain (Loss)						Gain (Loss)
			Gain (Loss)		on Amount Excluded				Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness		Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized		Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings		in OCI		into Earnings		in Earnings

Foreign currency forward contracts	$	66	$	340	$	—
Commodity futures contracts		1,558		2,147		—
Foreign currency derivatives							$	(556)	$	236	$	-
Commodity derivatives								6		162		-
Total	$	1,624	$	2,487	$	—	$	(550)	$	398	$	-

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Note 7 — Pension Plans

Beginning in 2012, the Company received periodic notices from the Bakery and Confectionery Union and Industry International Pension 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”, 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. ~~Beginning in 2015, the~~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 expected to become insolvent in 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 ~~2021~~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 $96,000, $104,300 ~~$99,300~~ and ~~$99,800~~$99,300 if it had withdrawn from the Plan during 2022, 2021 ~~2020~~ and ~~2019,~~2020, respectively. 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 ~~amounts, could be payable to the Plan.~~amounts.

The amended rehabilitation plan, which continues, requires that employer contributions include 5% compounded annual surcharge increases each year for an unspecified period of time beginning January 2013 (in addition to the 5% interim surcharge initiated in 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 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 consenting agreement by March 31, 2021. During 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 nine months 2023 and 2022 was $2,785 and ~~2021 was~~ $2,754, ~~and $2,419,~~ respectively. The aforementioned expense includes surcharges of ~~$971~~$982 and ~~$853~~$971 for nine months ~~2022~~2023 and ~~2021,~~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 ~~2020 was~~ $3,156, ~~and $2,866,~~ respectively, which includes surcharges of $1,237 and $1,112, ~~and $1,010,~~ 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 PBGC for Special Financial Assistance under the American Rescue Plan Act of 2021. The Plan subsequently withdrew the application in the second quarter of 2023 and resubmitted the application in the fourth quarter of 2023. 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 amended rehabilitation plan could be material to its~~Company’s consolidated results of operations or cash flows in one or more future periods.

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Note 8 — Accumulated Other Comprehensive Earnings (Loss)

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



											Accumulated
	Foreign				Foreign				Postretirement		Other												Accumulated
	Currency				Currency		Commodity		and Pension		Comprehensive		Foreign				Foreign				Postretirement		Other
													Currency				Currency		Commodity		and Pension		Comprehensive
													Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at June 30, 2023													$	(21,357)	$	(7,166)	$	79	$	(609)	$	2,355	$	(26,698)
Other comprehensive earnings (loss) before reclassifications														(543)		567		(209)		1,783		-		1,598
Reclassifications from accumulated other comprehensive loss														-		-		22		4		(144)		(118)
Other comprehensive earnings (loss) net of tax														(543)		567		(187)		1,787		(144)		1,480
Balance at September 30, 2023													$	(21,900)	$	(6,599)	$	(108)	$	1,178	$	2,211	$	(25,218)
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at June 30, 2022	$	(24,419)	$	(7,575)	$	124	$	76	$	426	$	(31,368)	$	(24,419)	$	(7,575)	$	124	$	76	$	426	$	(31,368)
Other comprehensive earnings (loss) before reclassifications		120		(2,518)		(365)		(45)		—		(2,808)		120		(2,518)		(365)		(45)		-		(2,808)
Reclassifications from accumulated other comprehensive loss		-		(3)		(37)		(55)		(157)		(252)		-		(3)		(37)		(55)		(157)		(252)
Other comprehensive earnings (loss) net of tax		120		(2,521)		(402)		(100)		(157)		(3,060)		120		(2,521)		(402)		(100)		(157)		(3,060)
Balance at September 30, 2022	$	(24,299)	$	(10,096)	$	(278)	$	(24)	$	269	$	(34,428)	$	(24,299)	$	(10,096)	$	(278)	$	(24)	$	269	$	(34,428)

Balance at June 30, 2021	$	(24,388)	$	793	$	543	$	572	$	939	$	(21,541)
Balance at December 31, 2022													$	(23,795)	$	(8,809)	$	(215)	$	8	$	2,642	$	(30,169)
Other comprehensive earnings (loss) before reclassifications		(495)		(496)		(82)		313		-		(760)		1,895		2,210		(17)		1,236		-		5,324
Reclassifications from accumulated other comprehensive loss		-		(29)		(81)		(618)		(266)		(994)		-		-		124		(66)		(431)		(373)
Other comprehensive earnings (loss) net of tax		(495)		(525)		(163)		(305)		(266)		(1,754)		1,895		2,210		107		1,170		(431)		4,951
Balance at September 30, 2021	$	(24,883)	$	268	$	380	$	267	$	673	$	(23,295)
Balance at September 30, 2023													$	(21,900)	$	(6,599)	$	(108)	$	1,178	$	2,211	$	(25,218)

Balance at December 31, 2021	$	(24,882)	$	(1,286)	$	322	$	94	$	739	$	(25,013)	$	(24,882)	$	(1,286)	$	322	$	94	$	739	$	(25,013)
Other comprehensive earnings (loss) before reclassifications		583		(8,799)		(421)		5		—		(8,632)		583		(8,799)		(421)		5		-		(8,632)
Reclassifications from accumulated other comprehensive loss		-		(11)		(179)		(123)		(470)		(783)		-		(11)		(179)		(123)		(470)		(783)
Other comprehensive earnings (loss) net of tax		583		(8,810)		(600)		(118)		(470)		(9,415)		583		(8,810)		(600)		(118)		(470)		(9,415)
Balance at September 30, 2022	$	(24,299)	$	(10,096)	$	(278)	$	(24)	$	269	$	(34,428)	$	(24,299)	$	(10,096)	$	(278)	$	(24)	$	269	$	(34,428)

Balance at December 31, 2020	$	(24,581)	$	1,992	$	589	$	713	$	1,472	$	(19,815)
Other comprehensive earnings (loss) before reclassifications		(302)		(1,655)		49		1,182		—		(726)
Reclassifications from accumulated other comprehensive loss		-		(69)		(258)		(1,628)		(799)		(2,754)
Other comprehensive earnings (loss) net of tax		(302)		(1,724)		(209)		(446)		(799)		(3,480)
Balance at September 30, 2021	$	(24,883)	$	268	$	380	$	267	$	673	$	(23,295)

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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	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		Recognized in Earnings	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022		Recognized in Earnings
Investments	$	(4)	$	(39)	$	(14)	$	(92)	Other income, net	$	-	$	(4)	$	(1)	$	(14)	Other income, net
Foreign currency derivatives		(48)		(106)		(236)		(340)	Other income, net		27		(48)		163		(236)	Other income, net
Commodity derivatives		(73)		(816)		(162)		(2,147)	Product cost of goods sold		6		(73)		(87)		(162)	Product cost of goods sold
Postretirement and pension benefits		(207)		(352)		(620)		(1,055)	Other income, net		(188)		(207)		(567)		(620)	Other income, net
Total before tax		(332)		(1,313)		(1,032)		(3,634)			(155)		(332)		(492)		(1,032)
Tax (expense) benefit		80		319		249		880			37		80		119		249
Net of tax	$	(252)	$	(994)	$	(783)	$	(2,754)		$	(118)	$	(252)	$	(373)	$	(783)

Note 9 — Restricted Cash

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

Note 10 — Bank Loans

Bank loans consist of short term (less than 120 days) borrowings by the Company’s Spanish subsidiary that are held by international banks. The weighted-average interest rate as of September 30, 2023 and 2022 ~~and 2021~~ was ~~3.1%~~6.8% and 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 1918 years. Operating lease cost totaled ~~$231~~$372 and ~~$272~~$231 in the third quarter of ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$783~~$971 and ~~$781~~$783 for the ~~first~~ nine months of ~~2022~~2023 and ~~2021,~~2022, respectively. Cash paid for operating lease liabilities ~~is substantially~~totaled $354 and $275 in the ~~same as operating lease cost~~third quarter of 2023 and 2022, respectively, and $918 and $813 for the nine months of 2023 and 2022, respectively, and is presented in cash flows from operating activities. As of September 30, ~~2022~~2023 and ~~2021,~~2022, operating lease right-of-use assets were ~~$4,746~~$5,991 and ~~$7,617,~~$4,746, respectively, and operating lease liabilities were ~~$4,769~~$6,075 and ~~$7,617,~~$4,769, respectively. The weighted-average remaining lease term related to these operating leases was ~~16.1~~12.9 years and ~~8.1~~16.1 years as of September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The weighted-average discount rate related to the Company’s operating leases was ~~3.3%~~3.4% and ~~2.3%~~3.3% as of September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Maturities of the Company’s operating lease liabilities at September 30, ~~2022~~2023 are as follows: ~~$178~~$242 in ~~2022~~2023 (rest of year), ~~$584 in 2023, $133~~$821 in 2024, ~~$138~~$702 in 2025, ~~$131~~$428 in 2026, $320 in 2027 and ~~$3,605~~$3,562 thereafter.

The Company, as lessor, rents certain commercial real estate to third-party lessees. The September 30, ~~2022~~2023 and ~~2021~~2022 cost related to these leased properties was $51,370 and ~~$51,402,~~$51,370, respectively, and the accumulated depreciation related to these leased properties was ~~$16,638~~$17,697 and ~~$15,314,~~$16,638, respectively. Terms of such leases, including renewal options, may be extended for up to ~~fifty-eight~~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 third quarter 2022 and 2021 was $1,233 and $945, respectively, and in nine months 2022 and 2021 was $3,691 and $3,021, respectively,~~term and is classified in cash flows from operating activities. Lease income in third quarter 2023 and 2022 was $1,341 and $1,233, respectively, and for nine months 2023 and 2022 was $3,784 and $3,691, respectively.

On August 22, 2023, the Company, as lessee, amended an existing lease agreement to use warehouse space that will commence in the fourth quarter of 2023. The lease amendment secures the balance of the adjacent space in the same industrial building where the Company leases warehouse space under an existing lease that commenced in the second quarter of 2023. The lease amendment is coterminous with the original lease with a remaining term of 4.5 years.

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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

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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, ~~2021~~2022 (the ~~“2021~~“2022 Form 10-K”).

Net product sales were $248,336 in third quarter 2023 compared to $211,888 in third quarter 2022, ~~compared to $183,090 in third quarter 2021,~~ an increase of ~~$28,798~~$36,448 or ~~15.7%~~17.2%. Nine months ~~2022~~2023 net product sales were ~~$493,260~~$567,884 compared to ~~$399,445~~$493,260 in nine months ~~2021,~~2022, an increase of ~~$93,815~~$74,624 or ~~23.5%~~15.1%. Domestic (U.S.) net product sales in third quarter and nine months ~~2022~~2023 increased ~~15.5%~~17.0% and ~~24.4%~~14.3%, respectively, compared to the corresponding periods in the prior year, and, foreign net product sales, including exports to foreign markets, increased ~~18.7%~~19.4% and ~~13.8%~~24.6%, respectively, compared to the corresponding periods in the prior year. For the third quarter and nine months ~~2022,~~2023, domestic sales represented ~~91.6%~~91.4% and ~~91.9%~~91.3%, respectively, of total consolidated net product sales.

~~The sales~~ Sales growth in third quarter and nine months ~~2022~~2023 was driven by ~~an overall increase in demand and higher sales price realization. Effective~~effective sales and marketing programs, including ~~pre-Halloween~~seasonal sales programs during these periods. Higher sales price realization was the primary contributor to the sales increase in ~~the~~ third quarter ~~2022, also contributed to higher sales. The Company had continuing improvement in customer orders~~ and ~~sales throughout 2021 and into the first~~ nine months ~~of 2022 as consumers returned~~2023, however, higher sales volumes were also achieved in third quarter and nine months 2023 compared to ~~more activities~~third quarter and lifestyles that they experienced prior to the Covid-19 pandemic. These activities include planned purchases of the Company’s products for “sharing” and “give-a-way” occasions. Many of the Company’s products are consumed at group events, outings, and other gatherings, including Halloween events, which had been curtailed or in some cases eliminated in response to the Covid-19 pandemic. nine months 2022.Third quarter and nine months ~~2022~~2023 net sales also ~~exceeded~~benefited from the timing of earlier pre-Halloween and other sales in 2023 when compared to the prior comparative 2022 periods. As a result, we expect that the aforementioned timing of sales between the comparative third and fourth quarters in 2023 and 2022 will have some adverse effect on sales and earnings in fourth quarter 2023 when compared to fourth quarter 2022.

Although the increase in third quarter and nine months ~~2019~~2023 sales ~~by 16% and 27%, respectively, which provides a sales comparison prior to the pandemic.~~

~~Although higher third quarter and nine months 2022 sales, including sales price increases,~~ contributed to improved net earnings, ~~compared to the corresponding prior year periods in 2021, significantly~~ higher input costs significantly mitigated ~~much of~~ the benefits of these higher sales. ~~When compared to the same periods in prior years, third~~Third quarter and nine months ~~2022~~2023 gross profit margins ~~and net earnings~~ were adversely affected by ~~significantly~~ higher costs for ingredients, packaging materials, ~~freight~~labor and ~~delivery,~~employee fringe benefits, plant manufacturing repairs and maintenance, and many manufacturing supplies and services. We also incurred additional ~~production~~ costs, including overtime and extended operating shifts for plant manufacturing, to meet ~~this higher demand.~~our sales demands in 2023.

Supply chain challenges and limited availability of certain ingredients and materials, as well as generally higher commodity markets, have driven up our costs for many key ingredients and materials in 2022. Our input unit costs ~~increased~~moved significantly higher in ~~the~~third quarter and nine months ~~2022 period~~2023 as most of our supply contracts for ingredients, packaging materials and manufacturing supplies and services expired at the end of ~~2021~~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 ~~at higher market prices. In certain instances,~~when compared to 2021. We believe that the increases in ingredients and packaging materials since 2021 are the greatest that we have ~~expanded our annual commitments~~experienced over a two-year period in over twenty years. Limited supply and continuing high demand for some ingredients from our suppliers to meet higher demand, however, certain markets are very tight and this incremental expansion has and will continue to result in yet higher unit costs for these additional materials. Supplier and transportation delays also caused us to purchase limited quantities of certain ingredients, ~~in the spot market at substantially higher costs than~~as well as generally elevated commodity markets and overall inflation, have driven up our contracted prices. The adverse effects of higher energy costs, including higher fuel surcharges, have also added to our input costs with respect to both customer and supplier freight and delivery in 2022. These higher energy costs have also increased our costs for utilities to operate our manufacturing plants this year. We expect these higher input costs to continue through the balance of 2022 and are seeing even higherunit costs for many ingredients and materials in ~~2023.~~ 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 was $164,163 in third quarter 2023 compared to $141,243 in third quarter 2022, ~~compared to $118,446 in third quarter 2021,~~ and nine months ~~2022~~2023 product cost of goods sold ~~were $328,995~~was $382,644 compared to ~~$259,959~~$328,995 in nine months ~~2021.~~2022. Product cost of goods sold includes ~~$41~~$(89) and ~~$(5)~~$41 of certain deferred compensation expenses (credits) in third quarter ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$(1,093)~~$397 and ~~$411~~$(1,093) of certain deferred compensation expenses (credits) in nine months ~~2022~~2023 and ~~2021,~~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 ~~$118,451 in third quarter 2021 to~~ $141,202 in third quarter 2022 to $164,252 in third quarter 2023, an increase of ~~$22,751~~$23,050 or ~~19.2%~~16.3%; and increased from ~~$259,548 in nine months 2021 to~~ $330,088 in nine months 2022 to $382,247 in nine months 2023, an increase of ~~$70,540~~$52,159 or ~~27.2%~~15.8%.

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As a percentage of net product sales, adjusted product cost of goods sold was ~~66.6%~~66.1% and ~~64.7%~~66.6% in third quarter 2023 and 2022, ~~and 2021,~~ respectively, ~~an unfavorable increase~~a favorable decrease of ~~1.9~~0.5 percentage points; and adjusted product cost of goods sold was ~~66.9%~~67.3% and ~~65.0%~~66.9% in nine months ~~2022~~2023 and ~~2021,~~2022, respectively, an unfavorable increase of ~~1.9~~0.4 percentage points. Third quarter and nine months ~~2022~~2023 adjusted product cost of goods sold ~~as a percentage of sales were~~was adversely affected by increasing

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costs for ingredients and packaging materials as discussed above, as well as for certain manufacturing supplies and services, plant utilities, repairs and maintenance, and labor and benefits, ~~for~~including overtime and extended work ~~shifts as discussed above.~~shifts. Although the above discussed higher costs for ingredients and packaging materials adversely affected results for third quarter and nine months ~~2022,~~2023, higher sales, including higher price realization, and production volumes ~~did provide~~provided some benefit as certain plant manufacturing overhead costs are generally fixed and do not change significantly when ~~volume increases.~~sales increase. In addition, certain cost and expense reductions ~~which include~~initiated by the Company ~~initiatives to reduce costs,~~ mitigated some of the cost increase in adjusted product cost of goods sold in third quarter and nine months ~~2022~~2023 compared to the corresponding period in the prior year.

Our supply chain ~~has continued~~improved in nine months 2023 compared to present logistical challenges in 2022 in addition to the economic headwinds discussed above. Supplier lead times have expanded greatly and in certain instances our suppliers have been unable to meet promised delivery dates. In some cases,2022. However, we have been unable to secure timely delivery of additional ingredients and packaging materials to meet our higher demand in 2022 and have limited our customer sales order volumes of some products as a result. We are continuing to focusremain focused on the supply chain ~~and possible~~in order to insure that we avoid delays and disruptions ~~but this area continues to have much less predictability compared to past history. Although we are cautiously optimistic, it is possible that supply chain disruptions~~which could result in the temporary ~~shut-down~~shutdown of one or more manufacturing lines resulting in lost sales and profits in ~~2022 and into~~ 2023. ~~Labor shortages~~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~~locations. We did expand our work shifts and overtime in nine months 2023 in order to increase production and inventory levels, and insure that we can meet our sales demands in 2023.

In response to higher costs for ingredients, packaging materials, and other input costs, many companies in the consumer products industry have ~~contributed to some production limitations~~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 phased in principally beginning in second half 2021 and have continued into 2023. We have made some ~~adverse impact on the fulfillment of customer orders. Nonetheless,~~progress in restoring our margins this year, but we have ~~been able~~not as yet restored our margins to ~~meet substantially~~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 the effects and limits of passing on all of these higher input costs to our ~~labor needs to date, including for~~customers as well as the final consumers of our ~~seasonal increases in production, however, the current tight labor market has created much more uncertainty than in the past.~~products.

Selling, marketing and administrative expenses were $39,300 in third quarter 2023 compared to $35,957 in third quarter 2022, ~~compared to $35,743 in third quarter 2021,~~ and nine months ~~2022~~2023 selling, marketing and administrative expenses were ~~$83,704~~$114,656 compared to ~~$94,930~~$83,704 in nine months ~~2021.~~2022. Selling, marketing and administrative expenses include ~~$(2,680)~~$(1,596) and ~~$(103)~~$(2,680) of certain deferred compensation expenses (credits) in third quarter 2023 and 2022, respectively; and ~~2021, respectively,~~$7,196 and $(19,709) ~~and $8,141~~ of certain deferred compensation expenses (credits) in nine months ~~2022~~2023 and ~~2021,~~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 ~~$35,846 in third quarter 2021 to~~ $38,637 in third quarter 2022 to $40,896 in third quarter 2023, an increase of ~~$2,791~~$2,259 or ~~7.8%~~5.8%; and selling, marketing and administrative expenses increased from ~~$86,789 in nine months 2021 to~~ $103,413 in nine months 2022 to $107,460 in nine months 2023 an increase of ~~$16,624~~$4,047 or ~~19.2%~~3.9%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses decreased from ~~19.6% in third quarter 2021 to~~ 18.2% in third quarter 2022 to 16.5% in third quarter 2023, a favorable decrease of ~~1.4~~1.7 percentage points as a percent of net product ~~sales,~~sales; and adjusted selling, marketing and administrative expenses decreased from ~~21.7% in nine months 2021 to~~ 21.0% in nine months 2022 to 18.9% in nine months 2023, a favorable decrease of ~~0.7~~2.1 percentage points as a percent of net sales. ~~The~~These lower expenses as a percentage of sales reflect the benefits of higher sales, including higher price ~~increases,~~realization, against certain expenses that are generally fixed and do not change significantly with changes in ~~sales volumes.~~sales.

Selling, marketing and administrative expenses include ~~$19,060~~$17,997 and ~~$17,743~~$19,060 for customer freight, delivery and warehousing expenses in third quarter 2023 and 2022, respectively, a decrease of $1,063 or 5.6%; and ~~2021, respectively, an increase of $1,317 or 7.4%,~~$49,662 and $49,754 ~~and $40,319~~ in nine months 2023 and 2022, ~~and 2021,~~ respectively, ~~an increase~~a decrease of ~~$9,435~~$92 or ~~23.4%~~0.2%. These expenses were ~~9.0%~~7.2% and ~~9.7%~~9.0% of net product sales in third quarter 2023 and 2022, ~~and 2021, respectively,~~respectively; and were 8.7% and 10.1% of net product sales in ~~both~~ nine months 2023 and 2022, ~~and 2021.~~respectively. Customer freight and delivery unit costs, including the cost per pound shipped, ~~did increase~~was more favorable in ~~both~~ third quarter and nine months 2022, however sales price increases mitigated the adverse effects of these cost increases when viewed as a percentage of net sales. Although unit freight and delivery costs increased in third quarter 20222023 compared to ~~third quarter 2021,~~ the ~~quarterly increase was less than earlier~~corresponding periods in 2022.

Earnings from operations were $45,900 in third quarter 2023 compared to $35,585 in third quarter ~~2022~~2022; and were $73,449 in nine months 2023 compared to ~~$29,644 in third quarter 2021, and were~~ $83,398 in nine months ~~2022 compared to $46,958 in nine months 2021.~~2022. Earnings from operations include ~~$(2,639)~~$(1,685) and ~~$(108)~~$(2,639) of certain deferred compensation expenses (credits) in third quarter 2023 and 2022, ~~and 2021, respectively,~~respectively; and include ~~$(20,802)~~$7,593 and ~~$8,552~~$(20,802) of certain deferred compensation expenses (credits) in nine months ~~2022~~2023 and ~~2021,~~ 2022,

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respectively, which is discussed above. Adjusting for these deferred compensation costs and expenses (credits),

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adjusted earnings from operations were ~~$32,946~~$44,215 and ~~$29,536~~$32,946 in third quarter ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$3,410~~$11,269 or ~~11.5%~~34.2%; and adjusted operating earnings were ~~$62,596~~$81,042 and ~~$55,510~~$62,596 in nine months ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$7,086~~$18,446 or ~~12.8%~~29.5%.As a percentage of net product sales, these adjusted operating earnings were ~~15.5%~~17.8% and ~~16.1%~~15.5% in third quarter 2023 and 2022, ~~and 2021,~~ respectively, ~~an unfavorable decrease~~a favorable increase of ~~0.6~~2.3 percentage points; and as a percentage of net product sales, these adjusted operating earnings were ~~12.7%~~14.3% and ~~13.9%~~12.7% in nine months 2023 and 2022, ~~and 2021,~~ respectively, ~~an unfavorable decrease~~a favorable increase of ~~1.2~~1.6 percentage ~~points as a percentage of net product sales.~~points. Although higher third quarter and nine months ~~2022~~2023 sales contributed to improved operating earnings compared to the corresponding prior year periods, higher input costs, as discussed above, ~~mitigated~~substantially offset much of the benefits of increased sales.

In response to these higher input costs, many companies in the consumer products industry have increased selling prices throughout 2021 and 2022. We have followed with price increases as well with the objective of improving sales price realization and restoring some of our margin declines. Price increases were phased in principally beginning in second half 2021 and are continuing through the balance of 2022 and into 2023. Although our price increases have generally reflected the overall price increases in our industry, they have not as yet resulted in restoring our margins to historical levels. Company management believes that we should be able to make meaningful progress in restoring our lost margins in 2023 when all of our price increases take full effect. However, continuing increases in input costs and overall higher inflation may inhibit us from accomplishing this objective. Although the Company continues to monitor these higher input costs and price increases in the industry, we are mindful of the effects and limits of passing on all of the above-discussed higher input costs to consumers of our products.

Other income (loss), net was $(718) in third quarter 2023 compared to $(1,246) in third quarter ~~2022~~2022; and $8,866 in nine months 2023 compared to ~~$1,750 in third quarter 2021, and~~ $(17,399) in nine months ~~2022 compared to $11,810 in nine months 2021.~~2022. Other income (loss), net for third quarter ~~2022~~2023 and ~~2021~~2022 includes net gains (losses) and investment income of ~~$(2,639)~~$(1,685) and ~~$(108)~~$(2,639), respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities; and other income, net for nine months ~~2022~~2023 and ~~2021~~2022 includes net gains (losses) and investment income of ~~$(20,802)~~$7,593 and ~~$8,552,~~$(20,802), respectively, on trading securities. The investment ~~losses~~gains and (losses) on trading securities in third quarter and nine months 2023 and 2022 reflect the overall ~~declines~~changes in the equity markets during these periods. These changes in 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 third quarter ~~2022~~2023 and ~~2021~~2022 includes investment income on available for sale securities of $1,227 and $548 in 2023 and ~~$714 in~~ 2022, ~~and 2021,~~ respectively; and other income, net for nine months ~~2022~~2023 and ~~2021~~2022 includes investment income on available for sale securities of $3,534 and $1,617 in 2023 and ~~$2,100~~2022, respectively. The aforementioned increases in ~~2022 and 2021, respectively.~~2023 investment income reflects the higher interest rate environment in 2023. Other income (loss), net also includes pre-tax gain (loss) on foreign exchange of ~~$730~~$(130) and ~~$742~~$730 in third quarter 2023 and 2022, respectively; and ~~2021, respectively,~~$(2,189) and $1,240 ~~and $507~~ in nine months ~~2022~~2023 and ~~2021,~~2022, respectively.

The consolidated effective tax rates were ~~22.7%~~23.9% and ~~21.3%~~22.7 in third quarter 2023 and 2022, respectively; and ~~2021, respectively,~~24.1% and 23.4% ~~and 23.0%~~ in nine months ~~2022~~2023 and ~~2021,~~2022, respectively.

Net earnings attributable to Tootsie Roll Industries, Inc. were $34,382 (after $5 net loss attributed to non-controlling interests) in third quarter 2023 compared to $26,577 (after $16 net loss attributed to non-controlling interests) in third quarter 2022, ~~compared to $24,733 (after $14 net loss attributed to non-controlling interests) in third quarter 2021,~~ and earnings per share were ~~$0.39~~$0.49 and ~~$0.36~~$0.37 in third quarter ~~2022~~2023 and ~~2021,~~2022, respectively, an increase of ~~$0.03~~$0.12 per share, or ~~8.3%~~32.4%. Nine months ~~2022~~2023 net earnings attributable to Tootsie Roll Industries, Inc. were ~~$50,593~~$62,509 (after ~~$32~~$18 net loss attributed to non-controlling interests) compared to nine months ~~2021~~2022 net earnings of ~~$45,294~~$50,593 (after ~~$20~~$32 net loss attributed to non-controlling interests), and net earnings per share were ~~$0.73~~$0.89 and ~~$0.65~~$0.71 in nine months ~~2022~~2023 and nine months ~~2021,~~2022, respectively, an increase of ~~$0.08~~$0.18 per share or ~~12.3%~~25.4%. Earnings per share attributable to Tootsie Roll Industries, Inc. for third quarter ~~2022~~ and nine months 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 ~~69,250 at third quarter 2021 to 68,876~~70,915 at third quarter 2022 to 69,621 at third quarter 2023, and from ~~69,555~~70,992 in nine months ~~2021~~2022 to ~~68,952~~69,973 in nine months ~~2022.~~2023.

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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 events, as defined, or other adverse information that would indicate a material impairment of its goodwill or intangibles in nine months ~~2022.~~2023. Although Company management has not identified any trigging events at this time relating to its intangibles, ~~the ultimate effects of the Covid-19 pandemic, including possible~~factors that may have longer term effects on consumer lifestyles and behavior, ~~could change this assessment in the future,~~ as outlined in the Company’s risk factors discussed on Form 10-K for the year ended December 31, ~~2021.~~2022, could change this assessment in the future.

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(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’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 this status continues to date. A designation of “critical and declining status” implies that the Plan is expected to become insolvent in 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.

Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were ~~48.5%~~49.4%, ~~48.3%~~48.5%, and ~~50.4%~~48.3% as of ~~the most recent valuation dates available,~~ January 1, 2022, 2021, ~~2020,~~ and ~~2019,~~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, ~~2021~~2022 the funded percentage would be ~~52.8%~~56.7% (not ~~48.5%~~49.4%). As of the January 1, ~~2021~~2022 valuation date (most recent valuation available), only ~~15%~~14% of Plan participants were current active employees, ~~54%~~55% were retired or separated from service and receiving benefits, and 31% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, ~~2021~~2022 fell 6%5% from the previous year and 10% over the past two years. When compared to the Plan valuation date of January 1, 2011 (just prior to the Plan being certified to be in “critical status”), current active employee participants have declined ~~52%~~54%, whereas participants who were retired or separated from service and receiving benefits increased 3% and participants who were retired or separated from service and entitled to future benefits increased ~~10%~~8%.

The Company has been advised by the Plan that its withdrawal liability would have been $96,000, $104,300 ~~$99,300~~ and ~~$99,800~~$99,300 if it had withdrawn from the Plan during 2022, 2021 and 2020, respectively. The most recent decrease in the withdrawal liability as advised by the Plan was primarily driven by an increase in the PBGC interest rates used to value a portion of the liability as well as the positive market value investment performance in 2021. Not all mortality and ~~2019, respectively.~~certain other assumption changes made in 2022 have been fully updated in the calculation of the Company’s withdrawal liability had the Company withdrawn from the Plan during 2022. Updating these assumptions may result in a change in the Company’s withdrawal liability. The Company’s relative share of the Plan’s contribution base, driven by employer withdrawals, has increased ~~for~~in the last several years, and management believes that this trend could continue indefinitely ~~which will continue to~~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 the ~~future, Management~~next 20 years, management believes that the Company’s withdrawal liability ~~could~~will likely increase further in future years.

Based on the Company’s ~~updated~~most recent actuarial ~~study~~estimates using the information provided by the Plan with respect to its 2022 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 ~~$2,793~~$2,714 which have a present value in the range of ~~$32,800~~$31,851 to ~~$46,600~~$43,741 depending on the interest rate used to discount these payments. While the Company’s actuarial consultant ~~does~~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 ~~Company’s updated~~same actuarial ~~study,~~estimates, had a mass withdrawal occurred in 2022, the present value of such perpetuities is in the range of ~~$45,764~~$44,472 to ~~$142,447~~$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 valuations and interest rates which 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 amended rehabilitation plan, which also continues, 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 March 31, 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

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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.

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The Company’s pension expense for this Plan ~~has advised~~for nine months 2023 and 2022 was $2,785 and $2,754, respectively. The aforementioned expense includes surcharges of $982 and $971 for nine months 2023 and 2022, respectively, as required under the ~~Company that it will be applying~~amended plan of rehabilitation. The Company’s twelve months pension expense for ~~benefits available~~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 ~~financial troubled plans~~annual 5% compounded surcharge increases. Beginning in 2021, the Plan ceased additional surcharges, but the prior surcharges remain in effect indefinitely.

On March 1, 2023, the Plan submitted an initial application to the PBGC for Special Financial Assistance under the American Rescue Plan Act of 2021. The Plan advised us that they subsequently withdrew the application in the second quarter of 2023 and resubmitted the application on October 6, 2023. Company management understands that this legislation would provide financial assistance from the PBGC to shore up financially distressed multi-employer plans to ensure that 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 ~~date of 2031~~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 new five year contract which expires in September 2027 (prior contract expired in September 2022). Under terms of this new union contract the Company is obligated to continue its participation in the Plan. 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 could behave a material ~~to its~~adverse effect on the Company’s consolidated results of operations or cash flows in one or more future periods. See also Note 7 of the Company’s ~~Note~~Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, ~~2021.~~

~~The Company’s pension expense for this Plan for nine months~~ 2022 and 2021 was $2,754 and $2,419, respectively ($3,156 and $2,866 for twelve months 2021 and 2020, respectively). The aforementioned expense includes surcharges (reflecting the “frozen” surcharge rate) of $971 and $853 for nine months 2022 and 2021, respectively ($1,112 and $1,010 for twelve months 2021 and 2020, respectively), as required under the amended plan of rehabilitation.

The Company’s labor contract at its principal manufacturing plant and distribution center expired on September 30, 2022. However, this contract has provisions for automatic extensions unless one of the parties provides a 60-day notice that they will not extend. Both parties are currently continuing, negotiations and operations under this automatic extension provision, which is consistent with historical precedent.

The Company is focused on the longer term and therefore is continuing to make investments in plant manufacturing operations to meet new consumer and customer product demands, achieve product quality improvements, expand capacity in certain product lines, and increase operational efficiencies in order to provide genuine value to consumers. The Company continues to actively monitor the Covid-19 pandemic, including existing and developing variants and subvariants, and its potential impact on our operations and financial results, prioritizing employee health and safety.The effects of the Covid-19 pandemic are unprecedented, and therefore the Company is unable to determine the related effects on its sales and net earnings for the balance of 2022 and beyond. Because the Company has a sizable investment in marketable securities (see Liquidity and Capital Resources section below), the Company continues to be well positioned financially to respond to any further adverse effects of this pandemic in the short and intermediate-terms, as well as for a longer period of time, if necessary.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows provided by operating activities were ~~$30,596~~$39,606 and ~~$32,153~~$30,596 in nine months 2023 and 2022, ~~and 2021,~~ respectively, ~~an unfavorable decrease~~a favorable increase of ~~$1,557.~~$9,010. The ~~$1,557 decrease~~$9,010 increase in cash flows from operating activities from ~~2021~~2023 to 2022 principally reflects ~~significantly~~ higher ~~production and inventory levels, including the effects of higher costs for materials~~net earnings as discussed above ~~resulting~~and a greater benefit from changes in ~~more cash used in inventories in~~working capital during nine months ~~2022. In addition, changes in net cash flows in~~2023 as compared to nine months 2022 ~~reflects~~partially offset by a $20,000 contribution to fund the Company’s Voluntary Employees’ Beneficiary Association plan (“VEBA”) in third quarter 2023 as further discussed below. While increased production volume to support expected demand and higher ~~earnings as well as~~costs of raw materials combined to grow inventory balances during the ~~timing~~first six months of 2023, strong sales in third quarter 2023 resulted in significantly higher cash conversion from inventory sell-through and ~~collections~~collection of ~~accounts receivable.~~receivables than in third quarter 2022.

Net cash ~~used in~~provided by (used in) investing activities was ~~$52,963~~$233 in nine months ~~2022~~2023 compared to ~~$74,492~~$(52,963) in nine months ~~2021.~~2022. Cash flows used in investing activities reflect ~~$75,125~~$65,616 and ~~$87,060~~$75,125 of purchases of available for sale securities during nine months ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$38,439~~$86,259 and ~~$34,510~~$38,439 of sales and maturities of available for sale securities during nine months ~~2022~~2023 and ~~2021,~~2022, respectively. Nine months ~~2022~~2023 and ~~2021~~2022 investing activities include capital expenditures of ~~$17,552~~$19,458 and $22,930, respectively. The Company has committed approximately $30,000 to a rehabilitation upgrade and expansion of one of its manufacturing plants in the U.S. The Company spent approximately $15,000, $6,000 and $2,000 in 2021, 2020 and 2019, respectively, on the aforementioned project and expects additional cash outlays for this project to approximate $4,000 and $3,000 in 2022 and 2023,$17,552, respectively. All capital expenditures have been or are expected to be funded from the Company’s cash flow from operations and internal sources including available for sale securities.

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The Company’s consolidated financial statements include bank borrowings of ~~$949~~$1,018 and ~~$956~~$949 at September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, all of which relate to its Spanish subsidiary. The Company had no other outstanding bank borrowings at September 30, ~~2022.~~2023.

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Financing activities include Company common stock purchases and retirements of ~~$8,024~~$27,550 and ~~$30,184~~$8,024 in nine months ~~2022~~2023 and ~~2021,~~2022, respectively. Cash dividends of ~~$18,438~~$18,825 and ~~$18,100~~$18,438 were paid in nine months ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company’s current ratio (current assets divided by current liabilities) was 3.2 to 1 at September 30, ~~2022~~2023 compared to 3.4 to 1 at December 31, ~~2021~~2022 and ~~2.9~~3.2 to 1 at September 30, ~~2021.~~2022. Net working capital was ~~$222,547~~$230,426 at September 30, ~~2022~~2023 compared to ~~$188,333~~$218,894 and ~~$183,267~~$222,547 at December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling ~~$145,726~~$135,400 at September 30, ~~2022~~2023 compared to ~~$145,808~~$149,398 and ~~$115,701~~$145,726 at December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were ~~$241,308~~$243,205 at September 30, ~~2022,~~2023, as compared to ~~$291,175~~$247,528 and ~~$280,326~~$241,308 at December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, respectively. Aggregate cash and cash equivalents and short and long-term investments were ~~$387,034, $436,983,~~$378,605, $396,926, and ~~$396,027,~~$387,034, at September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, respectively, including ~~$67,659, $89,736,~~$79,754, $71,208, and ~~$83,905~~$67,659 at September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, 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 bonds, that matured during nine months ~~2022~~2023 and ~~2021~~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 $6,600 and $10,100 at September 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. After reviewing the longer term funding needs for this VEBA, the Company added $20,000 in additional funding to the VEBA trust in third quarter 2023. The Company is ~~currently~~ using these VEBA funds to pay the actual cost of such benefits through ~~most~~part or all of ~~2022.~~2026. The VEBA trust held ~~$577, $3,941~~$21,965, $3,879 and ~~$5,308~~$577 of aggregate cash and cash equivalents at September 30, ~~2022,~~2023, December 31, ~~2021~~2022 and September 30, ~~2021,~~2022, respectively. This asset value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position. These assets are categorized as Level 2 within the fair value hierarchy.

ACCOUNTING PRONOUNCEMENTS

See Note 1 of the Company’s Condensed Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

See Note 1 of the Company’s Condensed Consolidated Financial Statements for more information related to our use of estimates in the preparation of financial statements as well as information related to material changes in our significant accounting policies that were included in our 2022 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, ~~and~~ availability of ~~ingredients and materials, increasing input costs, inflationary pricing pressures and consumer acceptance of resulting price increases,~~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” in this report and under the heading “Risk Factors” in the Company’s 2021 Form 10-K.year ended December 31, 2022.

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The risk factors 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.

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, gum-base input ingredients, 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 ~~2022~~2023 as the Company’s prior ~~2021~~2022 supply contracts and many of its previous hedges have ~~expired.~~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 ~~maturity dates of up to approximately four years which are generally held to maturity and the~~an average maturity of ~~these investments is 2.0~~three to ~~2.5 years. The Company also invests in~~five years and variable rate demand notes where interest rates are generally reset 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 ~~guidelines~~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, ~~2021.~~2022.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of Management, the Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, ~~2022~~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, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 30, ~~2022~~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 1. LEGAL PROCEEDINGS~~

In the ordinary course of business, the Company is, from time to time, subject to a variety of active or threatened legal proceedings and claims. There are also potential claims and employer liability which could result in litigation, including defense costs, relating to the Covid-19 pandemic. While it is not possible to predict the outcome of such matters with certainty, in the Company’s opinion, both individually and in the aggregate, they are not expected to have a material effect on the Company’s financial condition, results of operations or cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASE OF EQUITY SECURITIES

The following table summarizes the Company’s purchases of its common stock during the quarter ended September 30, ~~2022:~~2023:

Approximate Dollar

(a) Total

Value of Shares that

(a) Total

Value of Shares that

Number of

(b) Average

Purchased as Part of

May Yet Be Purchased

Number of

(b) Average

Purchased as Part of

May Yet Be Purchased

Price Paid per

Publicly Announced Plans

Under the Plans

Price Paid per

Publicly Announced Plans

Under the Plans

Period

Purchased

Or Programs

or Programs

Purchased

Or Programs

or Programs

Jul 1 to Jul 31

—

Not Applicable

244,546

34.51

Not Applicable

Aug 1 to Aug 31

23,272

35.92

Not Applicable

73,664

34.61

Not Applicable

Sep 1 to Sep 30

61,892

34.94

Not Applicable

Total

85,164

35.21

Not Applicable

318,210

34.54

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 - 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.

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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 8, ~~2022~~2023	BY:	/S/ELLEN R. GORDON

			Ellen R. Gordon
			Chairman and Chief
			Executive Officer

Date:	November 8, ~~2022~~2023	BY:	/S/G. HOWARD EMBER, JR.

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

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								��
											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 June 30, 2022	40,379	$	28,041	28,623	$	19,877	99		$	(1,992)	$	746,026
Issuance of 3% stock dividend	—		—	—		—	—			—		—
Conversion of Class B common shares to common shares	—		—	—		—	—			—		—
Purchase and retirement of common shares and other	(85)		(59)	(1)		—	—			—		(2,942)
Balance at September 30, 2022	40,294	$	27,982	28,622	$	19,877	99		$	(1,992)	$	743,084

Balance at June 30, 2021	39,700	$	27,569	27,821	$	19,320	96		$	(1,992)	$	722,617
Issuance of 3% stock dividend	—		—	—		—	—			—		—
Conversion of Class B common shares to common shares	16		11	(16)		(11)	—			—		—
Purchase and retirement of common shares and other	(384)		(266)	—		—	—			—		(12,737)
Balance at September 30, 2021	39,332	$	27,314	27,805	$	19,309	96		$	(1,992)	$	709,880

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	(230)		(160)	—		1	—			—		(7,864)
Balance at September 30, 2022	40,294	$	27,982	28,622	$	19,877	99		$	(1,992)	$	743,084

Balance at December 31, 2020	39,073	$	27,134	27,012	$	18,758	93		$	(1,992)	$	706,930
Issuance of 3% stock dividend	1,163		808	809		562	3			—		32,495
Conversion of Class B common shares to common shares	16		11	(16)		(11)	—			—		—
Purchase and retirement of common shares and other	(920)		(639)	—		—	—			—		(29,545)
Balance at September 30, 2021	39,332	$	27,314	27,805	$	19,309	96		$	(1,992)	$	709,880