TOOTSIE ROLL INDUSTRIES INC
For the period ended Sep 30, 2026. Filed Nov 6, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 6, 2026
TR$38.97-0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001104659-26-092633
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-06.
0001104659-26-123807
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 41 previous paragraphs and 43 current paragraphs.
14 unchanged; 22 reworded; 5 added; 4 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Selling, marketing and administrative expenses were $48,707 in third quarter 2026 compared to $47,031 in third quarter 2025; and $131,035 in nine months 2026 compared to $120,783 in nine months 2025. Selling, marketing and administrative expenses include $12 and $7,019 of certain deferred compensation expenses in third quarter 2026
Current report
The Company is continuing its higher support levels of its brands this year with increased advertising as well as higher trade promotions as discussed above. The Company’s advertising was significantly increased and concentrated in the third quarter this year. As a result, third quarter and nine months 2026 reflect significantly higher advertising expense compared to the corresponding periods in the prior year. As disclosed in Note 1 of the Condensed Consolidated Financial Statements, advertising expenses included in selling, marketing, and administrative expenses were $5,078 and $1,931 in third quarter 2026 and 2025, respectively; and $8,116 and $4,054 in nine months 2026 and 2025, respectively.
Current report
Selling, marketing and administrative expenses include $19,659 and $15,434 for customer freight, delivery and warehousing expenses in third quarter 2026 and 2025, respectively, an increase of $4,225 or 27.4%; and $48,619 and $42,397 in nine months 2026 and 2025, respectively, an increase of $6,222 or 14.7%. These expenses were 8.7% and 6.7% of net product sales in third quarter 2026 and 2025, respectively; and 9.2% and 8.0% of net product sales in nine months 2026 and 2025, respectively. During third quarter and nine months 2026, elevated energy costs contributed to significant increases in freight and delivery expenses, reflecting higher fuel surcharges driven by the increase in the cost of diesel fuel. This cost increase accelerated in third quarter 2026 and we expect freight and delivery costs to remain elevated through fourth quarter 2026 and likely into 2027.
Current report
As outlined in Note 2 of the Company’s Condensed Consolidated Financial Statements, on September 1, 2026, the Company acquired a confectionery business principally comprising the Winis brand whose products are manufactured and sold in Mexico. Management believes that this product line will be complementary to the Company’s existing Mexican subsidiary’s confectionery business which manufactures and sells products under the Tutsi brand. The sales and operating results of this acquisition were not material to the reported consolidated sales and operating results for the third quarter and nine months 2026. During third quarter and nine months 2026, the Company recognized approximately $1,300 and $2,500, respectively, of acquisition-related expenses which are included in selling, marketing and administrative expenses. The recognition of these expenses had an adverse effect on 2026 reported results when compared to the prior year corresponding periods.
Current report
Net cash flows provided by operating activities were $24,701 and $57,288 in nine months 2026 and 2025, respectively, a decrease of $32,587. The decrease in cash flows from operating activities principally reflects the $17,075 decline in net earnings as discussed above, and the changes in accounts receivable and income taxes payable in the comparative periods. The change in accounts receivable principally results from the timing of sales and collections in the comparative periods; and the change in income taxes payable principally reflects the timing and amounts of income tax payments in the comparative periods, including estimated payments made in the current periods for the respective years.
Removed paragraphs (4)
Previous report
marketing and administrative expenses increased from $33,959 in second quarter 2025 to $39,014 in second quarter 2026, an increase of $5,055 or 14.9%; and from $66,808 in first half 2025 to $72,285 in first half 2026, an increase of $5,477 or 8.2%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 22.2% in second quarter 2025 to 25.7% in second quarter 2026, an unfavorable change of 3.5 percentage points; and from 22.3% in first half 2025 to 24.0% in first half 2026, an unfavorable change of 1.7 percentage points.
Previous report
Selling, marketing and administrative expenses include $15,424 and $13,047 for customer freight, delivery and warehousing expenses in second quarter 2026 and 2025, respectively, an increase of $2,377 or 18.2%; and $28,960 and $26,963 in first half 2026 and 2025, respectively, an increase of $1,997 or 7.4%. These expenses were 10.2% and 8.5% of net product sales in second quarter 2026 and 2025, respectively; and 9.6% and 9.0% of net product sales in first half 2026 and 2025, respectively. Customer freight and delivery unit costs, which reflect the cost per pound shipped, increased in second quarter 2026, and first half 2026, compared to the corresponding periods in 2025. Increases in fuel costs, principally freight fuel surcharges, were driven by elevated energy markets. In addition, higher marketing and advertising expenses, as well as increased professional fees, in second quarter and first half 2026, contributed to these higher selling, marketing and administrative expenses.
Previous report
tax returns for 2022 to 2024 calendar years. The audit is in the early stages and the Company in not able to predict the outcome of this audit.
Previous report
Net cash flows used in operating activities were $(10,879) and $(4,935) in first half 2026 and 2025, respectively, an unfavorable decrease of $5,944, primarily driven by the Company’s seasonal Halloween business whereby inventories are historically built in second quarter for planned Halloween sales primarily in third quarter. The decrease in cash flows from operating activities principally reflects lower net income and changes in working capital, primarily relating to the timing of income tax payments and prepaid expenses in the comparative periods.
Reworded paragraphs (22)
Previous wording
Net product sales were $151,943 in second quarter 2026 compared to $153,190 in second quarter 2025, a decrease of $1,247 or 0.8%. First half 2026 net product sales were $301,431 compared to $299,711 in first half 2025, an increase of $1,720 or 0.6%. Domestic (U.S.) net product sales in second quarter decreased by 2.5% but increased by 0.3% in first half 2026 compared to the corresponding period in the prior year; and foreign net product sales, including exports to foreign markets and the effects of foreign translations, increased 25.1% and 3.4%, respectively, compared to the corresponding periods in the prior year. For the second quarter and first half 2026, domestic sales represented 92.2% and 92.4%, respectively, of total consolidated net product sales. Second quarter and first half 2026 sales were adversely impacted by the timing of sales, including seasonal sales, between second and third quarter 2026 when compared to the prior years’ corresponding quarterly periods. We are focused on the long term and have continued to support our brands with increased trade promotions, as well as advertising in the second quarter and first half 2026. Because trade promotions are accounted for as a reduction in reported net sales, these higher levels of trade promotions had some adverse effects on our reported net sales for second quarter and first half 2026.
Current wording
Net product sales were $227,163 in third quarter 2026 compared to $230,614 in third quarter 2025, a decrease of $3,451 or 1.5%. Nine months 2026 net product sales were $528,594 compared to $530,325 in nine months 2025, a decrease of $1,731 or 0.3%. Domestic (U.S.) net product sales in third quarter and nine months 2026 decreased by 2.2% and 0.8% compared to the corresponding period in the prior year; and foreign net product sales, including exports to foreign markets, increased 7.3% and 5.1%, respectively, compared to the corresponding periods in the prior year. For the third quarter and nine months 2026, domestic sales represented 91.6% and 92.1%, respectively, of total consolidated net product sales. Third quarter and nine months 2026 were adversely impacted by the timing of sales, including seasonal Halloween sales, between third and fourth quarter 2026 when compared to the prior year’s corresponding quarterly periods. We are focused on the long term and have continued to support our brands with increased trade promotions, as well as advertising, in the third quarter and nine months 2026. Because trade promotions are accounted for as a reduction in reported net sales, these higher levels of trade promotions had some adverse effects on our reported net sales for third quarter and nine months 2026.
Previous wording
Product cost of goods sold was $100,965 in second quarter 2026 compared to $98,127 in second quarter 2025, and $200,687 in first half 2026 compared to $193,627 in first half 2025. Product cost of goods sold includes $718 and $467 of certain deferred compensation expenses in second quarter 2026 and 2025, respectively, and $473 and $312 of certain deferred compensation expenses in first half 2026 and 2025, respectively. These deferred compensation expenses principally 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. Excluding the adjustment for deferred compensation expenses, product cost of goods sold increased from $97,660 in second quarter 2025 to $100,247 in second quarter 2026, an increase of $2,587 or 2.6%; and from $193,315 in first half 2025 to $200,214 in first half 2026, an increase of $6,899 or 3.6%. As a percentage of net product sales, adjusted product cost of goods sold was 66.0% and 63.8% in second quarter 2026 and 2025, respectively, an increase of 2.2 percentage points; and 66.4% and 64.5% in first half 2026 and 2025, respectively, an increase of 1.9 percentage points. In addition to the sales impact of timing between second and third quarter as discussed above, second quarter and first half 2026 cost of goods sold and gross profit margins were adversely affected by significantly higher cocoa and chocolate unit costs, when compared to the corresponding periods in 2025. Cocoa commodities markets have retreated from their extraordinarily high price levels in 2025 but still remain above historical levels. As these lower costs begin to be reflected in our supply chain costs, we should realize lower cocoa and chocolate costs in second half 2026 and into 2027. During second quarter and first half 2026, elevated energy costs also contributed to higher costs for resin-based packaging materials, as well as certain other materials and supplies.
Current wording
Product cost of goods sold was $155,180 in third quarter 2026 compared to $152,741 in third quarter 2025, and $355,867 in nine months 2026 compared to $346,368 in nine months 2025. Product cost of goods sold includes $1 and $315 of certain deferred compensation expenses in third quarter 2026 and 2025, respectively, and $474 and $627 of certain deferred compensation expenses in nine months 2026 and 2025, respectively. These deferred compensation expenses principally 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. Excluding the adjustment for deferred compensation expenses, product cost of goods sold increased from $152,426 in third quarter 2025 to $155,179 in third quarter 2026, an increase of $2,753 or 1.8%; and increased from $345,741 in nine months 2025 to $355,393 in nine months 2026, an increase of $9,652 or 2.8%. As a percentage of net product sales, adjusted product cost of goods sold was 68.3% and 66.1% in third quarter 2026 and 2025, respectively, an increase of 2.2 percentage points; and 67.2% and 65.2% in nine months 2026 and 2025, respectively, an increase of 2.0 percentage points. Third quarter and nine months 2026 product cost of goods sold and gross profit margins were adversely affected by higher unit costs for ingredients, primarily cocoa and chocolate, and packaging materials. However, our cocoa and chocolate unit costs were more favorable in third quarter 2026 compared to first half 2026 and we expect this to continue in fourth quarter 2026. Cocoa commodities markets have retreated from their extraordinarily high price levels in 2025 but remain well above historical levels. Higher energy costs have driven increases in unit costs for resin-based packaging materials which contributed to higher packaging costs primarily beginning in third quarter 2026. Increased costs, including the effects of inflation, for plant labor and benefits, maintenance, and supplies, also had an adverse effect on margins in third quarter and nine months 2026 compared to the corresponding periods in the prior year.
Previous wording
The Company uses the Last-In-First-Out (LIFO) method of accounting for inventory and costs of goods sold which generally results in lower current net earnings during such periods of increasing costs and higher inflation. Under the LIFO method, the most current costs are charged to cost of goods sold thereby accelerating the realization of higher costs during such periods of rising costs. Although the Company continues to monitor its input costs, we are mindful of the effects and limits when passing on the above-discussed higher input costs to our customers as well as to the final consumers of our products.
Current wording
The Company uses the Last-In-First-Out (LIFO) method of accounting for inventory and costs of goods sold which generally results in lower current net earnings during such periods of increasing costs and higher inflation. Under the LIFO method, the most current costs are charged to cost of goods sold thereby accelerating the realization of higher costs during such periods of rising costs. As the Company moves its product portfolio from synthetic colors to natural colors beginning in 2027, the related higher costs of these inputs will be realized earlier given that the most current costs are charged to cost of goods sold under the LIFO method. Although the Company continues to monitor its input costs, we are mindful of the effects and limits when passing on the above-discussed higher input costs to our customers as well as to the final consumers of our products.
Previous wording
Selling, marketing and administrative expenses were $54,247 in second quarter 2026 compared to $44,362 in second quarter 2025; and $82,328 in first half 2026 compared to $73,752 in first half 2025. Selling, marketing and administrative expenses include $15,233 and $10,403 of certain deferred compensation expenses in second quarter 2026 and 2025, respectively, and $10,043 and 6,944 of certain deferred compensation expenses in first half 2026 and 2025, respectively. As discussed above, these expenses 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. Excluding the adjustment for deferred compensation expenses, selling,
Current wording
and 2025, respectively, and $10,055 and $13,963 of certain deferred compensation expenses in nine months 2026 and 2025, respectively. As discussed above, these expenses 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. Excluding the adjustment for deferred compensation expenses, selling, marketing and administrative expenses increased from $40,012 in third quarter 2025 to $48,695 in third quarter 2026, an increase of $8,683 or 21.7%; and increased from $106,820 in nine months 2025 to $120,980 in nine months 2026, an increase of $14,160 or 13.3%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 17.4% in third quarter 2025 to 21.4% in third quarter 2026, an unfavorable change of 4.0 percentage points; and from 20.1% in nine months 2025 to 22.9% in nine months 2026, an unfavorable change of 2.8 percentage points. These higher expenses as a percentage of sales principally reflect higher freight and delivery, advertising and marketing expenses as well as the adverse effects of higher wages, salaries, and benefits, and certain other expenses. Many of our selling, marketing and administrative expenses are fixed and increase with wage and other inflationary increases and do not change significantly with changes in sales. In addition, during third quarter and nine months 2026 the Company recognized approximately $1,300 and $2,500 of acquisition-related expenses as required under accounting guidance, which had an adverse effect on 2026 results when compared to the corresponding periods in 2025.
Previous wording
Earnings (losses) from operations were $(1,617) in second quarter 2026 compared to $12,121 in second quarter 2025; and were $21,596 in first half 2026 compared to $35,181 in first half 2025. Earnings from operations include $15,951 and $10,870 of certain deferred compensation expenses in second quarter 2026 and 2025, respectively; and include $10,516 and $7,256 of certain deferred compensation expenses in first half 2026 and 2025, respectively, which is discussed above. Adjusting for these deferred compensation expenses, adjusted earnings from operations were $14,334 and $22,991 in second quarter 2026 and 2025, respectively, a decrease of $8,657 or 37.7%; and $32,112 and $42,437 in first half 2026 and 2025, respectively, a decrease of $10,325 or 24.3%. As a percentage of net product sales, these adjusted operating earnings were 9.4% and 15.0% in second quarter 2026 and 2025, respectively, an unfavorable 5.6 percentage point change; and 10.7% and 14.2% in first half 2026 and 2025, respectively, an unfavorable 3.5 percentage point change. As discussed above, higher trade promotions and the timing of sales between second and third quarter 2026, as well as the higher costs and expenses noted above, contributed to the decrease in adjusted operating earnings in second quarter and first half 2026 when compared to the corresponding periods in the prior year. Declines in international operating income, including exports to foreign countries also contributed to the decline in adjusted operating earnings in second quarter and first half 2026.
Current wording
Earnings (losses) from operations were $24,703 in third quarter 2026 compared to $32,367 in third quarter 2025; and were $46,299 in nine months 2026 compared to $67,548 in nine months 2025. Earnings from operations include $13 and $7,334 of certain deferred compensation expenses in third quarter 2026 and 2025, respectively; and include $10,529 and $14,590 of certain deferred compensation expenses in nine months 2026 and 2025, respectively, which are discussed above. Adjusting for these deferred compensation expenses, adjusted earnings from operations were $24,716 and $39,701 in third quarter 2026 and 2025, respectively, a decrease of $14,985 or 37.7%; and $56,828 and $82,138 in nine months 2026 and 2025, respectively, a decrease of $25,310 or 30.8%. As a percentage of net product sales, these adjusted operating earnings were 10.9% and 17.2% in third quarter 2026 and 2025, respectively, an unfavorable 6.3 percentage point change; and 10.8% and 15.5% in nine months 2026 and 2025, respectively, an unfavorable 4.7 percentage point change. As discussed above, higher costs and expenses contributed to the decrease in adjusted operating earnings in third quarter and nine months 2026 when compared to the corresponding periods in the prior year.
Previous wording
Other income, net was $19,854 in second quarter 2026 compared to $14,072 in second quarter 2025; and $20,170 in first half 2026 compared to $14,021 in first half 2025. Other income, net includes net gains and investment income of $15,952 and $10,870 for second quarter 2026 and 2025, respectively, and $10,516 and $7,256 in first half 2026 and 2025, respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities on trading securities. The changes in net investment activity on trading securities in second quarter and first half 2026 and 2025 primarily reflect the overall changes in the equity markets during these periods. These changes were substantially offset by a like amount of deferred compensation expense included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above.
Current wording
Other income, net was $6,455 in third quarter 2026 compared to $16,233 in third quarter 2025; and $26,625 in nine months 2026 compared to $30,254 in nine months 2025. Other income, net also includes net gains and investment income of $13 and $7,334 for third quarter 2026 and 2025, respectively, and $10,529 and $14,590 in nine months 2026 and 2025, respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities. The changes in net investment activity on trading securities in third quarter and nine months 2026 and 2025 reflect the overall changes in the equity markets during these periods. These changes were substantially offset by a like amount of deferred compensation expense included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above.
Previous wording
Other income, net includes investment income from available for sale securities and cash equivalents of $4,468 and $3,485 for second quarter 2026 and 2025, respectively; and $10,495 and $6,946 in first half 2026 and 2025, respectively. The increases in 2026 investment income reflects the higher average balances held in second quarter and first half 2026 compared to the corresponding period in the prior year. In addition, other income, net also includes pre-tax (loss) on foreign exchange of $(619) and $(843) in second quarter 2026 and 2025, respectively; and $(658) and $(1,387) in first half 2026 and 2025, respectively.
Current wording
Other income, net includes investment income from available for sale securities and cash equivalents of $3,863 and $8,614 for third quarter 2026 and 2025, respectively; and $14,359 and $15,560 in nine months 2026 and 2025, respectively. The prior year third quarter and nine months 2025 includes a favorable cumulative adjustment to record bond accretion not previously reported on certain bonds purchased at a discount. As a result, third quarter and nine months 2026 had lower reported investment income on available for sale securities compared to the corresponding periods in the prior year. In addition, other income, net also includes pre-tax gains (losses) on foreign exchange of $566 and $91 in third quarter 2026 and 2025, respectively, and $(94) and $(1,297) in nine months 2026 and 2025, respectively. Also, the Company collected and realized $1,800 in tariff refund recoveries in third quarter and nine months 2026.
Previous wording
The Company’s effective income tax rates were 26.9% and 33.1% in second quarter 2026 and 2025, respectively, and 25.9% and 27.7% in first half 2026 and 2025, respectively. The changes in the effective tax rates in the comparative periods principally reflect the effects of changes in certain deferred compensation that will not be deductible for income taxes when paid in future periods. The Company is currently under audit for its federal income
Current wording
The Company’s effective income tax rates were 25.6% and 26.7% in third quarter 2026 and 2025, respectively, and 25.8% and 27.2% in nine months 2026 and 2025, respectively. The changes in the effective tax rates in the comparative periods principally reflect the effects of changes in certain deferred income taxes relating to deferred compensation that will not be deductible for income taxes when paid in future periods. The Company is currently under audit for its federal income tax returns for 2022 to 2024 calendar years. The Company has not been advised of any proposed audit adjustments that would be material.
Previous wording
Net earnings attributable to Tootsie Roll Industries, Inc. were $13,347 (after $21 net loss attributed to non-controlling interests) in second quarter 2026 compared to $17,544 (after $14 net loss attributed to non-controlling interests) in second quarter 2025, and earnings per share were $0.18 and $0.23 in second quarter 2026 and 2025, respectively, a decrease of $0.05 per share, or 21.7%. First half 2026 net earnings attributable to Tootsie Roll Industries, Inc. were $31,008 (after $56 net loss attributed to non-controlling interests) compared to first half 2025 net earnings of $35,602 (after $31 net loss attributed to non-controlling interests), and net earnings per share were $0.41 and $0.47 in first half 2026 and first half 2025, respectively, a decrease of $0.06 per share or 12.8%. Average shares outstanding decreased from 75,060 at second quarter 2025 to 75,035 at second quarter 2026, and from 75,105 in first half 2025 to 75,046 in first half 2026.
Current wording
Net earnings attributable to Tootsie Roll Industries, Inc. were $23,216 (after $25 net loss attributed to non-controlling interests) in third quarter 2026 compared to $35,659 (after $12 net loss attributed to non-controlling interests) in third quarter 2025, and earnings per share were $0.31 and $0.48 in third quarter 2026 and 2025, respectively, a decrease of $0.17 per share, or 35.4%. Nine months 2026 net earnings attributable to Tootsie Roll Industries, Inc. were $54,224 (after $81 net loss attributed to non-controlling interests) compared to nine months 2025 net earnings of $71,261 (after $43 net loss attributed to non-controlling interests), and net earnings per share were $0.72 and $0.95 in nine months 2026 and nine months 2025, respectively, a decrease of $0.23 per share or 24.2%. Earnings per share attributable to Tootsie Roll Industries, Inc. for third quarter and nine months 2026 benefited from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock during the preceding twelve months. Average shares outstanding decreased from 75,060 at third quarter 2025 to 74,806 at third quarter 2026, and from 75,091 in nine months 2025 to 74,959 in nine months 2026.
Previous wording
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 second quarter or first half 2025. Although Management has not identified any triggering events at this time relating to its intangibles, factors outlined in the Company’s risk factors discussed on Form 10-K for the year ended December 31, 2025, could change this assessment in the future.
Current wording
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 third quarter or nine months 2026. Although management has not identified any triggering events at this time relating to its intangibles, factors outlined in the Company’s risk factors discussed on Form 10-K for the year ended December 31, 2025 or as discussed in previous Form 10-Qs filed during 2026, could change this assessment in the future.
Previous wording
Beginning in 2012, the Company has 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 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 2024, prior to receipt of Special Financial Assistance, have continued to classify the Plan in the “critical and declining status” category. In 2024 the Plan received Special Financial Assistance of $3.4 billion. As required by federal law, the Plan is certified to be in “critical status” for plan year 2026 and will likely remain in this status until the plan year ending in 2051 as a result of the Special Financial Assistance received.
Current wording
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 2024, prior to receipt of Special Financial Assistance, have continued to classify the Plan in the “critical and declining status” category. In 2024 the Plan received Special Financial Assistance of $3.4 billion. As required by federal law, the Plan is certified to be in “critical status” for plan year 2026 and will be in this status until the plan year ending in 2051 as a result of the Special Financial Assistance received.
Previous wording
The Company’s pension expense for this Plan for first half 2026 and 2025 was $1,777 and $1,744, respectively. The aforementioned expense includes surcharges of $626 and $615 for first half 2026 and 2025, respectively, as required under the amended plan of rehabilitation. The Company’s twelve months pension expense for this Plan for 2025 and 2024 was $3,290 and $3,332 respectively, which includes surcharges of $1,160 and $1,174, respectively.
Current wording
The Company’s pension expense for this Plan for nine months 2026 and 2025 was $2,647 and $2,572, respectively. The aforementioned expense includes surcharges of $933 and $907 for nine months 2026 and 2025, respectively, as required under the amended plan of rehabilitation. The Company’s twelve months pension expense for this Plan for 2025 and 2024 was $3,290 and $3,332 respectively, which includes surcharges of $1,160 and $1,174, respectively.
Previous wording
The Plan advised the Company that it was granted approximately $3.4 billion in Special Financial Assistance funds and received those funds in 2024. According to the Company’s actuary, it remains unclear if the Plan can remain solvent through the targeted date of 2051, although as a requirement of the American Rescue Plan Act of 2021, the Plan must remain in “critical status” through 2051 regardless of solvency. The regulations under the aforementioned PBGC financial assistance could result in a higher withdrawal liability even with PBGC financial assistance since those regulations require use of settlement interest rates to value all, instead of a portion, of the present value of vested benefits in determining the Company’s withdrawal liability. In addition, for withdrawal liability purposes, PBGC regulations require the Special Financial Assistance to be phased-in over a period of time instead of fully recognized immediately. While it is uncertain how the requirements imposed by the Special Financial Assistance will impact the Company’s withdrawal liability in the future, the Company’s actuary believes any withdrawal will likely continue to be limited to the twenty annual payments previously discussed and that those payments will not be affected by Special Financial Assistance regulation.
Current wording
The Plan advised the Company that it was granted approximately $3.4 billion in Special Financial Assistance funds and received those funds in 2024. According to the Company’s actuary, it remains unclear if the Plan can remain solvent through the targeted date of 2051, although as a requirement of the American Rescue Plan Act of 2021, the Plan must remain in “critical status” through 2051 regardless of solvency. The regulations under the aforementioned PBGC financial assistance could result in a higher withdrawal liability even with PBGC financial assistance since those regulations require use of settlement interest rates to value all, instead of a portion, of the present value of vested benefits in determining the Company’s withdrawal liability. In addition, for withdrawal liability purposes, PBGC regulations require the Special Financial Assistance to be phased-in over a period of time instead of fully recognized immediately. While it is uncertain how the requirements imposed by the Special Financial Assistance will impact the Company’s withdrawal liability in the future, the Company’s actuary believes any withdrawal will likely continue to
Previous wording
Our operations and sales are principally in North America, and our cross border transactions with Canada and Mexico qualify under the USMCA free-trade agreement. Certain ingredients, including cocoa, chocolate and edible oils, as well as some packaging and other purchases, do have foreign origins outside of USMCA and the related higher tariffs on these purchases added to our costs in 2025 and early 2026. During fourth quarter 2025, tariffs on cocoa were rescinded and therefore we realized some additional tariff cost reductions on these purchases in 2026 as these lower costs begin to be reflected in our supply chain. In February 2026, the Supreme Court of the United States issued a ruling that stated the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs that were imposed by the President in 2025. Management estimates that the Company could recoup up to $1.3 million in tariffs previously paid directly by the Company. The Company intends to record any refund benefits when such funds are received.
Current wording
Our operations and sales are principally in North America, and our cross border transactions with Canada and Mexico qualify under the USMCA free-trade agreement. Certain ingredients, including cocoa, chocolate and edible oils, as well as some packaging and other purchases, do have foreign origins outside of USMCA and the related higher tariffs on these purchases added to our costs in 2025 and early 2026. Tariffs on cocoa and palm oil were rescinded during fourth quarter 2025 and third quarter 2026, respectively, which will reduce the annualized impact of these tariffs as the ingredients work their way through our supply chain. We estimated that the incremental cost of tariffs, including those paid directly by our suppliers and passed on to us, negatively impacted our business in 2025 by $3,700 between when they were implemented in second quarter 2025 and the end of 2025. We estimate that the impact on the full year 2026 will also be approximately $3,700. In February 2026, the Supreme Court of the United States issued a ruling that stated the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs that were imposed by the President in 2025. In third quarter 2026 the Company collected $1,800 in tariffs previously paid both directly by the Company and indirectly to its suppliers. The Company records any refund benefits when such funds are received.
Previous wording
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.
Current wording
The Company is focused on the longer term and therefore is continuing to support our brands with higher levels of advertising and trade promotions. We are also continuing to make investments in plant manufacturing operations to meet new customer and consumer product demands, achieve product quality improvements, expand capacity in certain product lines, and increase operational efficiencies in order to provide genuine value to consumers.
Previous wording
Cash flows provided by (used in) investing activities were $(37,596) and $5,670 in first half 2026 and 2025, respectively, a decrease of $43,266, which principally reflects an increase in purchases of available for sale securities, and a corresponding decrease in cash and cash equivalents during the comparative periods. First half 2026 and 2025 investing activities also include capital expenditures of $20,614 and $10,363, respectively. The Company is currently undergoing a plant expansion at one of its manufacturing facilities in the USA, including additional and replacement of certain processing and packaging lines, to better meet the level of forecasted demand for certain products on a timelier and more cost-effective basis. The Company expects that this will take place over the next seven years, however, most of the actual expenditures, which related to the building construction, are expected to occur in 2026 and early 2027. We have incurred $18,200 of capital expenditures relating to this expansion to date. Company management believes that the total cost of this expansion, including new machinery and equipment, some of which is normal and recurring replacements over the next seven years, for food processing infrastructure and raw materials warehousing will approximate $75,000 to $85,000. All capital expenditures have been and are expected to be funded from the Company’s cash flow from operations and internal sources including investments in available for sale securities.
Current wording
Cash flows used in investing activities were $56,361 and $91,843 in nine months 2026 and 2025, respectively, a change of $35,482. The decrease in cash flows used in investing activities principally reflects a decrease in purchases of available for sale securities, and an increase in sales and maturities of available for sale investments, partially offset by the $41,471 business acquisition (see Note 2 to the Condensed Consolidated Financial Statements). Nine months 2026 and 2025 investing activities also include capital expenditures of $31,847 and $21,914, respectively. The Company is currently undergoing a plant expansion at one of its manufacturing facilities in the USA, including additional and replacement of certain processing and packaging lines, to better meet the level of forecasted demand for certain products on a timelier and more cost-effective basis. The Company expects that this will take place over the next several years, however, most of the actual expenditures, which relate to the building construction, are expected to occur in 2026 and 2027. We have incurred approximately $29,000 of capital expenditures relating to this expansion to date. Company management believes that the total cost of this expansion, including new machinery and equipment, some of which is normal and recurring replacements, and for food processing infrastructure, and raw materials warehousing will approximate $75,000 to $85,000 over the seven years beginning in 2026. All capital expenditures have been and are expected to be funded from the Company’s cash flow from operations and internal sources including investments in available for sale securities.
Previous wording
The Company’s condensed consolidated financial statements include short term bank borrowings of $8,333 and $1,018 at June 30, 2026 and 2025, respectively, of which $7,500 of the June 30, 2026 balance relates to the Company’s industrial development bond that matures and is payable in June of 2027. The remaining $833 of bank borrowings at June 30, 2026 and all of the bank borrowings as of June 30, 2025 relate to the Company’s Spanish subsidiary. The Company had no other outstanding bank borrowings at June 30, 2026 and 2025.
Current wording
The Company’s condensed consolidated financial statements include short term bank borrowings of $8,325 and $1,011 at September 30, 2026 and 2025, respectively, of which $7,500 of the September 30, 2026 balance relates to the Company’s industrial development bond that matures and is payable in June of 2027. The remaining $825 of bank borrowings at September 30, 2026 and all of the bank borrowings as of September 30, 2025 relate to the Company’s Spanish subsidiary. The Company had no other outstanding bank borrowings at September 30, 2026 and 2025.
Previous wording
Financing activities include Company common stock purchases and retirements of $3,822 and $6,483 in first half 2026 and 2025, respectively. Cash dividends of $13,326 and $12,928 were paid in first half 2026 and 2025, respectively.
Current wording
Financing activities include Company common stock purchases and retirements of $17,558 and $6,483 in nine months 2026 and 2025, respectively. Cash dividends of $20,103 and $19,497 were paid in nine months 2026 and 2025, respectively.
Previous wording
The Company’s current ratio (current assets divided by current liabilities) was 2.9 to 1 at June 30, 2026 compared to 3.3 to 1 at December 31, 2025 and 4.0 to 1 at June 30, 2025. Net working capital was $219,163 at June 30, 2026 compared to $223,016 and $273,269 at December 31, 2025 and June 30, 2025, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling $141,124 at June 30, 2026 compared to $176,633 and $170,531 at December 31, 2025 and June 30, 2025, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were $431,784 at June 30, 2026, as compared to $437,114 and $333,626 at December 31, 2025 and June 30, 2025, respectively. Aggregate cash and cash equivalents and short and long-term investments were $572,908, $613,747, and $504,157, at June 30, 2026, December 31, 2025 and June 30, 2025, respectively, including $130,723, $121,541, and $112,009 at June 30, 2026, December 31, 2025 and June 30, 2025, respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities.
Current wording
The Company’s current ratio (current assets divided by current liabilities) was 2.7 to 1 at September 30, 2026 compared to 3.3 to 1 at December 31, 2025 and 2.8 to 1 at September 30, 2025. Net working capital was $206,936 at September 30, 2026 compared to $223,016 and $196,184 at December 31, 2025 and September 30, 2025, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling $132,461 at September 30, 2026 compared to $176,633 and $119,830 at December 31, 2025 and September 30, 2025, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were $396,569 at September 30, 2026, as compared to $437,114 and $436,532 at December 31, 2025 and September 30, 2025, respectively. Aggregate cash and cash equivalents and short and long-term investments were $529,030, $613,747, and $556,362, at September 30, 2026, December 31, 2025 and September 30, 2025, respectively, including $131,379, $121,541, and $119,592 at September 30, 2026, December 31, 2025 and September 30, 2025, respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities.
Previous wording
Investments in available for sale securities, primarily high-quality corporate bonds, that matured during first half 2026 and 2025, were generally used in working capital, capital expenditures or were replaced with debt securities of similar maturities. The net unrealized gain (loss) on available for sale investments was approximately $(2,500) and $4,600 at June 30, 2026 and 2025, respectively. The Company expects to hold most of these securities to maturity and therefore does not expect to ultimately realize a substantial portion of any of unrealized gains or losses on individual investments (see also Item 3 below, QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK).
Current wording
Investments in available for sale securities, primarily high-quality corporate bonds, that matured during nine months 2026 and 2025, were generally used in the business acquisition as discussed above and capital expenditures or were replaced with debt securities of similar maturities. The net unrealized gain (loss) on available for sale investments was approximately $(6,500) and $1,600 at September 30, 2026 and 2025, respectively, which generally reflects the higher interest rate environment. The Company believes it is likely to hold most of these securities to maturity and therefore does not expect to ultimately realize significant unrealized losses on these investments (see also Item 3 below, QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK).
Previous wording
or 2025. The Company has and will continue to use these VEBA funds to pay the actual cost of such benefits through part or all of 2027. The VEBA trust held $7,484, $8,953 and $12,509 of aggregate cash and cash equivalents at June 30, 2026, December 31, 2025 and June 30, 2025, respectively. This asset value is included in prepaid expenses and long-term other assets in the Company’s Condensed Consolidated Statement of Financial Position. These assets primarily comprise cash and corporate bonds and are categorized as Level 1 and Level 2 within the fair value hierarchy.
Current wording
The Company periodically contributes to a Voluntary Employee Benefit Association (VEBA) trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company funded $20,000 to the VEBA trust in 2023. No contribution was made during nine months 2026 or 2025. The Company has and will continue to use these VEBA funds to pay the actual cost of such benefits through part or all of 2027. The VEBA trust held $5,042, $8,953 and $10,989 of aggregate cash and cash equivalents at September 30, 2026, December 31, 2025 and September 30, 2025, respectively. This asset value is included in prepaid expenses and long-term other assets in the Company’s Condensed Consolidated Statement of Financial Position. These assets primarily comprise cash and corporate bonds and are categorized as Level 1 and Level 2 within the fair value hierarchy.
Previous wording
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 the effects of U.S. tariffs as well as retaliatory tariffs and other import fees and surcharges by other countries, the overall competitive environment in the Company’s industry, the ability to recover increases in input costs and tariffs through price increases, successful distribution and sell-through during Halloween and other seasons, the effects of future changes to natural colors, including related higher costs and availability of supply, and changes in assumptions, judgments and risk factors are discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Current wording
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: the effects of implementing natural colors in products, including related higher costs and availability of supply; changes in and the effects of U.S. tariffs as well as retaliatory tariffs and other import fees and surcharges by other countries; the ability to recover increases in input costs through price increases; successful distribution and sell-through during Halloween and other seasons; the overall competitive environment in the Company’s industry; and the risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025 and as updated in previously filed Form 10-Qs in 2026.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Beginning in 2012, the Company has 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 Plan was reclassified to “critical and declining
Current report — wording carried from elsewhere
be limited to the twenty annual payments previously discussed and that those payments will not be affected by Special Financial Assistance regulation.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The Company periodically contributes to a Voluntary Employee Benefit Association (VEBA) trust, managed and controlled by the Company, to fund the estimated future costs of certain union employee health, welfare and other benefits. The Company funded $20,000 to the VEBA trust in 2023. No contribution was made during first half 2026