TOOTSIE ROLL INDUSTRIES INC

Previous wording

Product cost of goods sold was $148,266 in third quarter 2024 compared to $164,163 in third quarter 2023, and nine months 2024 product cost of goods sold was $350,730 compared to $382,644 in nine months 2023. Product cost of goods sold includes $240 and $(89) of certain deferred compensation expenses (credits) in third quarter 2024 and 2023, respectively, and $727 and $397 of certain deferred compensation expenses in nine months 2024 and 2023, respectively. These deferred compensation expenses (credits) 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. Adjusting for the aforementioned, product cost of goods sold decreased from $164,252 in third quarter 2023 to $148,026 in third quarter 2024, a decrease of $16,226 or 9.9%; and decreased from $382,247 in nine months 2023 to $350,003 in nine months 2024, a decrease of $32,244 or 8.4%. As a percentage of net product sales, adjusted product cost of goods sold was 66.1% in both third quarter 2024 and 2023; and adjusted product cost of goods sold was 66.8% and 67.3% in nine months 2024 and 2023, respectively, a favorable decrease of 0.5 percentage points. Third quarter and nine months 2024 gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and more favorable packaging material unit costs. Although we did achieve improvement in gross profit margin, higher overall ingredient costs, and increases in labor, employee benefits, and certain plant manufacturing costs offset some of these benefits in third quarter and nine months 2024.

Current wording

Product cost of goods sold was $95,500 in first quarter 2025 compared to $102,732 in first quarter 2024. Product cost of goods sold includes $(155) and $365 of certain deferred compensation (credits) expenses in first quarter 2025 and 2024, respectively. These deferred compensation (credits) 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 (credits) expenses, product cost of goods sold decreased from $102,367 in first quarter 2024 to $95,655 in first quarter 2025, a decrease of $6,712 or 6.6%. As a percentage of net product sales, adjusted product cost of goods sold was 65.3% and 67.6% in first quarter 2025 and 2024, respectively, a favorable decrease of 2.3 percentage points. First quarter 2025 product cost of goods sold and gross profit margins benefited from higher price realization, improvements in plant manufacturing operating efficiencies, and certain cost reductions.

Previous wording

In response to increases in input costs in recent years, many companies in the consumer products industry have increased selling prices. We have implemented price increases as well during this period with the objective of improving sales price realization in order to recover our margin declines. We made progress in restoring our margins in 2023 and have continued to do so in 2024. However, cocoa and chocolate costs have been moving significantly higher in the market during 2024, and we expect that these increases, as well as increased costs for many of our other ingredients, will have adverse effects on our input costs and margins for the remainder of 2024 and in 2025. 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. 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 the final consumers of our products.

Current wording

In response to increases in input costs in recent years, many companies in the consumer products industry have increased selling prices. We have implemented price increases as well during these periods with the objective of improving sales price realization in order to recover our margin declines. Although we made progress in restoring our margins in first quarter 2025, cocoa and chocolate markets continue at significantly elevated levels compared to historical prices in past years. As a result, we expect to incur even higher cocoa and chocolate costs during the balance of 2025 and into 2026 as many of our older supply contracts expire and new contracts at higher costs become effective. 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 the final consumers of our products.

Previous wording

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. Adjusting for the aforementioned deferred compensation expenses, selling, marketing and administrative expenses decreased from $40,896 in third quarter 2023 to $37,265 in third quarter 2024, a decrease of $3,631 or 8.9%; and selling, marketing and administrative expenses decreased from $107,460 in nine months 2023 to $101,928 in nine months 2024 a decrease of $5,532 or 5.1%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 16.5% in third quarter 2023 to 16.6% in third quarter 2024, an unfavorable increase of 0.1 percentage points as a percent of net product sales; and adjusted selling, marketing and administrative expenses increased from 18.9% in nine months 2023 to 19.4% in nine months 2024, an unfavorable increase of 0.5 percentage points as a percent of net sales. These higher expenses as a percentage of sales reflect the adverse effects of lower sales as certain expenses are generally fixed and do not change significantly with changes in sales.

Current wording

Selling, marketing and administrative expenses were $29,390 in first quarter 2025 compared to $38,918 in first quarter 2024. Selling, marketing and administrative expenses include $(3,459) and $6,925 of certain deferred compensation (credits) expenses in first quarter 2025 and 2024, 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 (credits) expenses, selling, marketing and administrative expenses increased from $31,993 in first quarter 2024 to $32,849 in first quarter 2025, an increase of $856 or 2.7%. As a percentage of net product sales, adjusted selling, marketing and administrative expenses increased from 21.1% in first quarter 2024 to 22.4% in first quarter 2025, an unfavorable increase of 1.3 percentage points. These higher expenses as a percentage of sales reflect the adverse effects of lower sales as certain expenses are generally fixed and do not change significantly with changes in sales.

Previous wording

Selling, marketing and administrative expenses include $15,442 and $17,997 for customer freight, delivery and warehousing expenses in third quarter 2024 and 2023, respectively, a decrease of $2,555 or 14.2%; and $42,897 and $49,662 in nine months 2024 and 2023, respectively, a decrease of $6,765 or 13.6%. These expenses were 6.9% and 7.2% of net product sales in third quarter 2024 and 2023, respectively; and were 8.2% and 8.7% of net product sales in nine months 2024 and 2023, respectively. Customer freight and delivery unit costs, including the cost per pound shipped, was more favorable in nine months 2024 compared to the corresponding period in 2023. Increased over-the-road truck availability in 2024 relative to tight freight markets over the past few years has resulted in a more competitive market and resulting lower costs.

Current wording

Selling, marketing and administrative expenses include $13,916 and $13,616 for customer freight, delivery and warehousing expenses in first quarter 2025 and 2024, respectively, an increase of $300 or 2.2%. These expenses were 9.5% and 9.0% of net product sales in first quarter 2025 and 2024, respectively. Customer freight and delivery unit costs, including the cost per pound shipped, was less favorable in first quarter 2025 compared to the corresponding period in 2024.

Previous wording

Other income (loss), net was $7,188 in third quarter 2024 compared to $(718) in third quarter 2023; and $21,120 in nine months 2024 compared to $8,866 in nine months 2023. Other income, net for third quarter 2024 and 2023 includes net gains (loss) and investment income of $4,800 and $(1,685), respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities on trading securities; and other income, net for nine months 2024 and 2023 includes net gains and investment income of $14,582 and $7,593, respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities on trading securities. The investment gains on trading securities in third quarter and nine months 2024 and 2023 reflect the overall changes in the equity markets during these periods. These changes in market values 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 (loss) income, net was $(51) in first quarter 2025 compared to $9,032 in first quarter 2024. Other (loss) income, net for first quarter 2025 and 2024 includes net (losses) gains and investment income of $(3,614) and $7,290, 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 first quarter 2025 and 2024 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

Net earnings attributable to Tootsie Roll Industries, Inc. were $32,844 (after $11 net loss attributed to non-controlling interests) in third quarter 2024 compared to $34,382 (after $5 net loss attributed to non-controlling interests) in third quarter 2023, and earnings per share were $0.46 and $0.48 in third quarter 2024 and 2023, respectively, a decrease of $0.02 per share, or 4.2%. Nine months 2024 net earnings attributable to Tootsie Roll Industries, Inc. were $64,318 (after $16 net loss attributed to non-controlling interests) compared to nine months 2023 net earnings of $62,509 (after $18 net loss attributed to non-controlling interests), and net earnings per share were $0.90 and $0.87 in nine months 2024 and nine months 2023, respectively, an increase of $0.03 per share or 3.4%. Earnings per share attributable to Tootsie Roll Industries, Inc. for third quarter and nine months 2024 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 71,696 at third quarter 2023 to 71,379 at third quarter 2024, and from 72,049 in nine months 2023 to 71,402 in nine months 2024.

Current wording

Net earnings attributable to Tootsie Roll Industries, Inc. were $18,058 (after $17 net loss attributed to non-controlling interests) in first quarter 2025 compared to $15,834 (after $1 net income attributed to non-controlling interests) in first quarter 2024, and earnings per share were $0.25 and $0.22 in first quarter 2025 and 2024, respectively, an increase of $0.03 per share, or 13.6%. Earnings per share attributable to Tootsie Roll Industries, Inc. for first quarter 2025 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 73,536 at first quarter 2024 to 72,957 at first quarter 2025.

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 nine months 2024. Although Company management has not identified any trigging 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, 2023, 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 first quarter 2025. Although Management has not identified any trigging 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, 2024, could change this assessment in the future.

Previous wording

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. 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 has continued. 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 have continued to classify the Plan in the “critical and declining status” category.

Current 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 have continued to classify the Plan in the “critical and declining status” category. In June 2024, the PBGC announced that it has approved the Plan’s application for Special Financial Assistance under the American Rescue Plan Act of 2021. The Plan was granted approximately $3.4 billion in Special Financial Assistance funds and received those funds in July 2024. As a result of the Special Financial Assistance the plan status changed to “critical status” for 2024 and will be until the plan year ending in 2051.

Previous wording

In June 2024, the PBGC announced that it had approved the Plan’s application for Special Financial Assistance under the American Rescue Plan Act of 2021. 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. The Plan advised the Company that it was granted approximately $3.4 billion in Special Financial Assistance funds and received those funds in July 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, as defined, and a phase-in of the Special Financial Assistance in determining the Company’s withdrawal liability. While it is uncertain how the requirements imposed by the Special

Current wording

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. 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 continue to be limited to the twenty annual payments discussed below and that those payments will not be affected by Special Financial Assistance regulation.

Previous wording

Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were 47.0%, 49.3%, and 48.5% as of January 1, 2023, 2022, and 2021, 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, 2023, the funded percentage would be 43.6% (not 47.0%). As of the January 1, 2023 valuation date (most recent valuation available), only 14% of Plan participants were current active employees, 55% were retired or separated from service and receiving benefits, and 31% were retired or separated from

Current wording

Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were 45.2%, 47.0%, and 49.3% as of January 1, 2024, 2023, and 2022, respectively (these valuation dates are as of the beginning of each Plan year and reflect the most recent information available). 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, 2024, the funded percentage would be 41.7% (not 45.2%). As of the January 1, 2024 valuation date (most recent valuation available), only 15% of Plan participants were current active employees, 55% were retired or separated from service and receiving benefits, and 30% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, 2024 rose 2% from the previous year and 1% 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 54%, whereas participants who were retired or separated from service and receiving benefits increased 1% and participants who were retired or separated from service and entitled to future benefits increased 2%.

Previous wording

Based on the Company’s most recent actuarial estimates using the information provided by the Plan with respect to its 2023 withdrawal liability (based on most recent information provided to the Company) and certain provisions in ERISA and laws relating to withdrawal liability payments, management believes that the Company’s liability had the Company withdrawn in 2023 would likely be limited to twenty annual payments of $2,654 which have a present value in the range of $31,142 to $37,808 depending on the interest rate used to discount these payments. While the Company’s actuarial consultant did not believe that the Plan will suffer a future mass withdrawal (as defined) of participating employers, in the event of a mass withdrawal, the Company’s annual withdrawal payments would theoretically be payable in perpetuity. Based on the same actuarial estimates, had a mass withdrawal occurred in 2023, the present value of such perpetuities is in the range of $43,483 to $70,702 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.

Current wording

Based on the Company’s most recent actuarial estimates using the information provided by the Plan with respect to its 2024 withdrawal liability (based on most recent information provided to the Company) and certain provisions in ERISA and laws relating to withdrawal liability payments, management believes that the Company’s liability had the Company withdrawn in 2024 would likely be limited to twenty annual payments of $2,664 which have a present value in the range of $31,262 to $37,654 depending on the interest rate used to discount these payments. While the Company’s actuarial consultant did not believe that the Plan will suffer a future mass withdrawal (as defined) of participating employers, in the event of a mass withdrawal, the Company’s annual withdrawal payments would theoretically be payable in perpetuity. Based on the same actuarial estimates, had a mass withdrawal occurred in 2024, the present value of such perpetuities is in the range of $43,650 to $69,266 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.

Previous wording

The Company’s pension expense for this Plan for nine months 2024 and 2023 was $2,579 and $2,785, respectively. The aforementioned expense includes surcharges of $909 and $982 for nine months 2024 and 2023, respectively, as required under the amended plan of rehabilitation. The decrease in the nine months 2024 expense compared to nine months 2023 reflects the effects of lower sales volumes in nine months 2024, and corresponding reductions in lower production and labor hours worked. The Company’s twelve months pension expense for this Plan for 2023 and 2022 was $3,516 and $3,510, respectively, which includes surcharges of $1,239 and $1,237, respectively.

Current wording

The Company’s pension expense for this Plan for first quarter 2025 and 2024 was $698 and $704, respectively. This expense includes surcharges of $246 and $248 for first quarter 2025 and 2024, respectively, as required under the amended plan of rehabilitation. The Company’s twelve months pension expense for this Plan for 2024 and 2023 was $3,332 and $3,516, respectively, which includes surcharges of $1,174 and $1,239, respectively.

Previous wording

Net cash (used in) provided by investing activities was $(32,176) in nine months 2024 compared to $233 in nine months 2023. Cash flows used in investing activities reflect $82,391 and $65,616 of purchases of available for sale securities during nine months 2024 and 2023, respectively, and $65,578 and $86,259 of sales and maturities of available for sale securities during nine months 2024 and 2023, respectively. Nine months 2024 and 2023 investing activities include capital expenditures of $13,911 and $19,458, respectively. The Company is evaluating a plant expansion, including both the addition and replacement of certain processing and packaging lines, to better meet its higher level of projected demand for certain products on a timelier and more cost effective basis. The Company believes that this plant expansion would take place over the next five years, but most of the actual expenditures would likely occur during the next three years. Company management believes that the total cost of this expansion, including new machinery, equipment and food processing infrastructure, will approximate $70,000 to $80,000. All capital expenditures have been and are expected to be funded from the Company’s cash flow from operations and internal sources including available for sale securities.

Current wording

Cash flows used in investing activities reflect $13,110 and $27,297 of purchases of available for sale securities during first quarter 2025 and 2024, respectively, and $11,727 and $12,655 of sales and maturities of available for sale securities during first quarter 2025 and 2024, respectively. First quarter 2025 and 2024 investing activities also include capital expenditures of $2,852 and $4,494, respectively. The Company is currently pursuing a plant expansion, including additions to and replacement of certain processing and packaging lines, to better meet higher level of forecasted demand for certain products on a timelier and more cost effective basis. The plant expansion is expected to take place over the next seven years with most of the expenditures expected to occur during 2025 through 2027. The total cost of this expansion will approximate $95,000 to $100,000, which includes estimated normal and recurring capital expenditures at this plant location, and is expected to be funded from the Company’s cash flow from operations and internal sources.

Previous wording

The Company’s consolidated financial statements include bank borrowings of $1,078 and $1,018 at September 30, 2024 and 2023, respectively, all of which relate to its Spanish subsidiary. The Company had no other outstanding bank borrowings at September 30, 2024.

Current wording

The Company’s condensed consolidated financial statements include bank borrowings of $975 and $1,050 at March 31, 2025 and 2024, respectively, all of which relate to its Spanish subsidiary. The Company had no other outstanding bank borrowings at March 31, 2025 and 2024.

Previous wording

Financing activities include Company common stock purchases and retirements of $2,196 and $27,550 in nine months 2024 and 2023, respectively. Cash dividends of $19,062 and $18,825 were paid in nine months 2024 and 2023, respectively.

Current wording

Financing activities include Company common stock purchases and retirements of $6,483 and $0 in first quarter 2025 and 2024, respectively. Cash dividends of $12,781 and $12,491 were paid in first quarter 2025 and 2024, respectively.

Previous wording

The Company’s current ratio (current assets divided by current liabilities) was 3.6 to 1 at September 30, 2024 compared to 3.6 to 1 at December 31, 2023 and 3.2 to 1 at September 30, 2023. Net working capital was $247,685 at September 30, 2024 compared to $245,763 and $230,426 at December 31, 2023 and September 30, 2023, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling $163,211 at September 30, 2024 compared to $171,422 and $135,400 at December 31, 2023 and September 30, 2023, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were $318,344 at September 30, 2024, as compared to $255,606 and $243,205 at December 31, 2023 and September 30, 2023, respectively. Aggregate cash and cash equivalents and short and long-term investments were $481,555, $427,028, and $378,605, at September 30, 2024, December 31, 2023 and September 30, 2023, respectively, including $103,875,

Current wording

The Company’s current ratio (current assets divided by current liabilities) was 4.2 to 1 at March 31, 2025 compared to 3.8 to 1 at December 31, 2024 and 3.8 to 1 at March 31, 2024. Net working capital was $250,938 at March 31, 2025 compared to $246,319 and $241,272 at December 31, 2024 and March 31, 2024, respectively. Included in net working capital is cash and cash equivalents and short-term investments totaling $176,607 at March 31, 2025 compared to $194,630 and $159,361 at December 31, 2024 and March 31, 2024, respectively. In addition, long term investments, principally debt securities comprising corporate bonds, were $330,949 at March 31, 2025, as compared to $332,338 and $278,953 at December 31, 2024 and March 31, 2024, respectively. Aggregate cash and cash equivalents and short and long-term investments were $507,556, $526,968, and $438,314, at March 31, 2025, December 31, 2024 and March 31, 2024, respectively, including $100,892, $105,067, and $95,957 at March 31, 2025, December 31, 2024 and March 31, 2024, 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 nine months 2024 and 2023, were generally used in working capital or were replaced with debt securities of similar maturities. The net unrealized loss on available for sale investments was approximately $4,300 and $6,600 at September 30, 2024 and 2023, respectively, which principally reflects the increase in market interest rates since such securities were purchased. The Company expects to hold most of these securities to maturity and therefore does not expect to ultimately realize a substantial portion of the aforementioned unrealized losses (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 first quarter 2025 and 2024, 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 $3,300 and $(2,200) at March 31, 2025 and 2024, 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 losses on

Previous wording

The Company periodically contributes to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company added $20,000 in additional funding to the VEBA trust in 2023. No contribution was made during nine months 2024. The Company expects to use these VEBA funds to pay the actual cost of such benefits through part or all of 2027. The VEBA trust held $16,345, $19,126 and $21,965 of aggregate cash and cash equivalents at September 30, 2024, December 31, 2023 and September 30, 2023, 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.

Current wording

The Company periodically contributes to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company funded $20,000 to the VEBA trust in 2023. No contribution was made during first quarter. 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 $14,090, $13,926 and $19,258 of aggregate cash and cash equivalents at March 31, 2025, December 31, 2024 and March 31, 2024, 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 ability to recover increases in input costs through price increases and restoring margins, the overall competitive environment in the Company’s industry, successful distribution and sell-through during Halloween and other seasons, the availability of cocoa and chocolate at reasonable prices given that these markets are significantly elevated and volatile, and changes in assumptions, judgments and risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2023.

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 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 and restoring margins, the overall competitive environment in the Company’s industry, successful distribution and sell-through during Halloween and other seasons, the availability of cocoa and chocolate at reasonable prices given that these markets are significantly elevated and volatile, and changes in assumptions, judgments and risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2024.