TOOTSIE ROLL INDUSTRIES INC

September 30, 2026

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, 2025 (the “2025 Form 10-K”).

Results of operations for the period ended September 30, 2026 are not necessarily indicative of results to be expected for the year to end December 31, 2026 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.

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, less allowances, was $83,168, $47,901, $72,975, and $43,811 as of September 30, 2026, December 31, 2025, September 30, 2025, and December 31, 2024, respectively. Accounts receivable trade are unsecured. Shipping and handling costs of $19,659 and $15,434 in third quarter 2026 and 2025, respectively; and $48,619 and $42,397 in nine months 2026 and 2025, respectively, are included in selling, marketing and administrative expenses. Advertising cost of $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, 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 presented separately from net product revenue as rental and royalty revenue.

Leases

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

Segment Information

The Company uses the management approach to determine segments by evaluating the nature of the Company’s operating activities, the relative significance of operating segments to consolidated results, how management organizes the business, and by evaluating what the Company’s chief operating decision maker (“CODM”) regularly reviews in deciding how to allocate resources and in assessing operating performance. The Company has determined that it currently hasone reportable segment. The Company’s Chief Executive Officer, the Company’s CODM, focuses on consolidated results, specifically consolidated net income (loss), in assessing operating performance and allocating resources.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40)”. The amendments in this update require disclosure, in the notes to the financial statements, of specific expense categories present within expense captions presented on the face of the income statement within continuing operations of public business entities. The amendments in this update are effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is currently evaluating the potential effects of these amendments on its Consolidated Financial Statements. As these amendments will provide additional information to the financial statement user, we believe the adoption of these amendments will impact the presentation of our disclosures, but will not significantly impact the presentation of our financial condition or results of operations.

In November 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging, Hedge Accounting Improvements. The new standard is intended to better align the hedge accounting model with risk management activities by expanding hedged risks permitted to be aggregated in a group of individual forecasted transactions. Aggregation under this amendment is permitted based on similar risk exposure and not shared risk exposure. The amendments in this update are effective for annual periods beginning after December 15, 2026. The Company is currently evaluating the potential effects of this amendment on its Consolidated Financial Statements. As these amendments are intended to simplify the reporting requirements for derivatives and hedge accounting, we believe the adoption of these amendments will not significantly impact the presentation of our financial condition, results of operations or disclosures.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270) – Narrow Scope Improvements. The new standard is intended to improve the navigability of the required interim disclosures under Topic 270 and to clarify when that guidance is applicable. The amendments in this update result in a comprehensive list of interim disclosures that are required by GAAP. The amendments also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this update are effective for annual periods beginning after December 15, 2027. The Company is currently evaluating the potential effects of this amendment on its Consolidated Financial Statements. Although these amendments will provide additional information to the financial statement user, we believe the adoption of these

amendments will not significantly impact the presentation of our financial condition, results of operations or disclosures.

In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. This evergreen project facilitates Codification updates for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. There are thirty-three issues addressed in this update, and the amendments in this update are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear. The amendments in this update are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the potential effects of this amendment on its Consolidated Financial Statements. As these amendments are intended to provide clarifications and minor improvements to the Codification, we believe the adoption of these amendments will not significantly impact the presentation of our financial condition, results of operations or disclosures.

In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). This update establishes guidance on the recognition, measurement, presentation, and disclosure of environmental credits and related obligations. The ASU introduces a comprehensive framework for accounting for environmental credits based on their intended use and clarifies the measurement of environmental credit obligations, including a model that incorporates both cost and fair value elements. The ASU is effective for public business entities for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential effects of this amendment on its Consolidated Financial Statements. Although this amendment will provide additional information to the financial statement user, we believe the adoption of this amendment will not significantly impact the presentation of our financial condition, results of operations or disclosures.

No other new accounting pronouncement issued or effective during the fiscal year had or is expected to have a material impact on our consolidated financial statements or disclosures.

Note 2 – Business Acquisitions

Acquisition Overview

On September 1, 2026, the Company acquired a confectionery business in Mexico for aggregate initial cash consideration of approximately $41,500 using cash on hand and available for sale investments. This acquired business principally comprises the Winis brand whose products are manufactured and sold in Mexico. Management believes that this product line will be complementary to the Company’s Mexican subsidiary’s confectionery business which manufactures and sells products under the Tutsi brand. The Company also entered into a sublease with the seller for the use of the existing manufacturing, distribution and office facility of this acquired business (see also Note 12 – Leases).

The transaction was accounted for as a business combination under ASC 805. The preliminary purchase price consideration was allocated to assets acquired and liabilities assumed based on their respective fair values, and consisted of $29,100 to definite-lived intangible assets, primarily trademarks, $7,400 to net operating assets including inventory and all related production equipment, and $5,000 to goodwill. The final fair value determination is not expected to result in material adjustments to our preliminary purchase price allocation, including goodwill. We expect to finalize the purchase price allocation no later than one year after the acquisition date.

Goodwill was determined as the excess of the purchase price over the fair value of the net assets acquired (including the identified intangible assets). The trademarks, other definite-lived intangible assets, and goodwill derived from this acquisition are expected to be deductible for income tax purposes. The goodwill reflects synergies expected when the Winis business is combined with the Company’s existing Mexican subsidiary’s capabilities. 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.

Note 3 — Average Shares Outstanding

The average number of shares outstanding for nine months 2026 reflects aggregate stock purchases of 443 shares for $17,558, excluding excise taxes, and a 3% stock dividend of 2,181 shares distributed on April 3, 2026. The average number of shares outstanding for nine months 2025 reflects aggregate stock purchases of 209 shares for $6,483, excluding excise taxes, and a 3% stock dividend of 2,118 shares distributed on April 4, 2025.

Note 4 — 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 2022 through 2024. The Company’s consolidated effective income tax rate was 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.

NOTE 5—Share Capital and Capital In Excess of Par Value:

Note 6 — 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.

As of September 30, 2026, December 31, 2025 and September 30, 2025 the Company had certain financial assets and liabilities that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the foreign currency forward contracts and purchase of certain raw materials, investments in trading securities and available for sale securities. The Company’s available for sale securities principally consist of corporate bonds. The Company’s trading securities principally consist of mutual funds. The Company’s available for sale and trading securities, which utilize Level 1 and Level 2 inputs, are valued based on quoted market prices or alternative pricing sources with reasonable levels of price transparency.

The fair value of the Company’s industrial development bond at September 30, 2026, December 31, 2025 and September 30, 2025 was valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. The industrial development bond is classified in current bank loans at September 30, 2026 as it matures in June 2027. Interest rates on the bond reset weekly based on current market conditions.

The following tables present information about the Company’s financial assets and liabilities measured at fair value as of September 30, 2026, December 31, 2025 and September 30, 2025 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

In connection with the acquisition by our Mexican subsidiary on September 1, 2026, as discussed in Note 2 of the Condensed Consolidated Financial Statements, we used various valuation techniques to determine fair value, with the primary techniques using discounted cash flow analyses including the multi-period excess earnings, relief-from-royalty, and with-and-without methods, which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.

Note 7 — Derivative Instruments and Hedging Activities

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 used as hedges of market price risks associated with the anticipated purchases of certain raw materials (primarily sugar). Foreign currency forward contracts are used 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 long-term other assets. Derivative liabilities are recorded in accrued liabilities and long-term other liabilities. The Company uses hedge accounting for its foreign currency and commodity derivative instruments. 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. As of September 30, 2026, December 31, 2025 and September 30, 2025, all derivative instruments were accounted for using hedge accounting.

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 $(639) and $(44) of this accumulated comprehensive loss (gain) is expected to be reclassified to earnings in 2027 and 2028, respectively. Approximately $85 and $149 of the foreign currency derivatives loss, reported in accumulated other comprehensive loss, is expected to be reclassified to other income, net in 2026 and 2027, respectively.

The following tables summarize the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at September 30, 2026, December 31, 2025 and September 30, 2025:

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, 2026 and September 30, 2025 are as follows:

Note 8 — Pension Plans

Beginning in 2012, the Company has received periodic notices from 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 be until the plan year ending in 2051 as a result of the Special Financial Assistance received.

The Company has been advised that its withdrawal liability would have been $102,800, $97,500 and $102,200 if it had withdrawn from the Plan during 2025, 2024 and 2023 respectively. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be different than the above discussed amounts, could be payable to the Plan.

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. 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.

The Plan was granted approximately $3.4 billion in Special Financial Assistance funds and received those funds in 2024. The Company’s actuary believes that it still 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. The most recent withdrawal liability estimate from the Plan, since it is calculated as of the end of 2024 as if the Company were to have withdrawn in 2025, does not include any of the $3.4 billion of assets received. The Company is currently unable to determine the ultimate outcome of the above discussed multi-employer union pension matters and therefore is unable to determine the effects on its consolidated financial statements, but the ultimate outcome could have a material adverse effect on the Company’s consolidated results of operations or cash flows in one or more future periods.

Note 9 — Accumulated Other Comprehensive Earnings (Loss)

The following tables set forth information with respect to accumulated other comprehensive earnings (loss):

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

Note 10 — 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 11 — 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, 2026 and 2025 was 5.4% and 4.9%, respectively. Additionally, current bank loans per the Company’s condensed consolidated financial statements include the industrial development bond valued at $7,500 that matures and is payable in June of 2027.

Note 12 — 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 15 years. Operating lease cost totaled $332 and $373 in the third quarter 2026 and 2025, respectively, and $974 and $1,104 in nine months 2026 and 2025, respectively. Cash paid for operating lease liabilities totaled $327 and $363 in the third quarter of 2026 and 2025, respectively, and $954 and $1,071 in nine months 2026 and 2025, respectively. As of September 30, 2026 and 2025, operating lease right-of-use assets were $9,048 and $5,293, respectively, and operating lease liabilities were $9,432 and $5,649, respectively. The increase in operating lease right-of-use assets and operating lease liabilities is a result of a sublease entered into by the Company on September 1, 2026 for the use of the existing manufacturing, distribution and office facility of the business acquired in Mexico (see Note 2 to the Condensed Consolidated Financial Statements). This sublease has an initial term of 3 years and 10 months with a 5-year renewal option. Right-of-use assets obtained in exchange for operating lease liabilities during the nine months ended September 30, 2026 were approximately $5,000. The weighted-average remaining lease term related to these operating leases was 10.1 years and 11.0 years as of September 30, 2026 and 2025, respectively. The weighted-average discount rate related to the Company’s operating leases was 4.2% and 3.6% as of September 30, 2026 and September 30, 2025, respectively. Maturities of the Company’s operating lease liabilities at September 30, 2026 are as follows: $488 in 2026 (rest of year), $1,172 in 2027, $808 in 2028, $625 in 2029, $624 in 2030 and $5,715 thereafter.

The Company, as lessor, rents certain commercial real estate to third-party lessees. The September 30, 2026 and 2025 cost related to these leased properties was $51,228 and $51,228, respectively, and the accumulated depreciation related to these leased properties was $21,030 and $19,898, respectively. Terms of such leases, including renewal options, may be extended for up tofifty-four years, many of which provide for periodic adjustments to 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 was $1,813 and $1,831 in third quarter 2026 and 2025, respectively, and $5,480 and $5,444 in nine months 2026 and 2025, respectively, and is classified in cash flows from operating activities.