10q10k10q10k.net

What changed in TOOTSIE ROLL INDUSTRIES INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of TOOTSIE ROLL INDUSTRIES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+148 added−148 removedSource: 10-K (2025-02-28) vs 10-K (2023-12-31)

Top changes in TOOTSIE ROLL INDUSTRIES INC's 2024 10-K

148 paragraphs added · 148 removed · 120 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

8 edited+0 added−0 removed21 unchanged
Biggest changeThe Company is currently in negotiations with its labor union at tis Canadian plant and expects this to be concluded sometime in first quarter 2024, however, labor union negotiations always bring some risk of work stoppages. ​ We believe our employees are among our most important resources and are critical to our continued success.
Biggest changeThe Company concluded negotiations with its labor union at its Canadian plant in first quarter 2024 and is now operating under a contract with the labor union in Canada that expires in January 2029. ​ We believe our employees are among our most important resources and are critical to our continued success.
Our business has seasonality which results in bringing on some additional employees to meet seasonal production demands principally in advance of the Halloween selling season in the third quarter each year. The Company experiences a relatively consistent sales level throughout the year except for an increase in the third quarter which reflects pre-Halloween and back-to-school sales.
Our business has seasonality which results in bringing on some additional employees to meet seasonal production demands principally in advance of the Halloween selling season. The Company experiences a relatively consistent sales level throughout the year except for an increase in the third quarter which reflects pre-Halloween and back-to-school sales.
They are sold through food and grocery brokers or directly by the Company itself to customers throughout the United States, Canada and Mexico.
They are sold through food and grocery brokers or directly by the Company to customers throughout the United States, Canada and Mexico.
A copy of our code of conduct can be found on our website, www.tootsie.com. ​ Our net product sales from Wal-Mart Stores, Inc. (“Wal-Mart”) aggregated approximately 22.2%, 23.0%, and 22.7% of net product sales during the years ended December 31, 2023, 2022 and 2021, respectively. Our net sales from Dollar Tree, Inc.
A copy of our Code of Conduct can be found on our website, www.tootsie.com. ​ Our net product sales from Wal-Mart Stores, Inc. (“Wal-Mart”) aggregated approximately 23.2%, 22.2%, and 23.0% of net product sales during the years ended December 31, 2024, 2023 and 2022, respectively. Our net sales from Dollar Tree, Inc.
In the markets in which the Company competes, the main forms of competition comprise brand recognition, as well as competition for retail shelf space and a fair price for the Company’s products at various retail price points. ​ The Company’s backlog of orders as of December 31, 2023 was approximately $7 million and is consistent with the prior year. ​ The Company has historically hedged certain of its future sugar needs with derivatives at such times that it believes that the forward markets are favorable.
In the markets in which the Company competes, the main forms of competition comprise brand recognition, as well as competition for retail shelf space and a fair price for the Company’s products at various retail price points. ​ The Company’s backlog of orders as of December 31, 2024 was approximately $10 million and is generally consistent with the prior year. ​ The Company has historically hedged certain of its future sugar needs with derivatives at such times that it believes that the forward markets are favorable.
Although accurate statistics are not available, the Company believes it is among the ten largest domestic manufacturers in this field.
Although accurate statistics are not available, the Company believes it is among the ten largest domestic manufacturers in this industry.
(“Dollar Tree”, which includes net sales from Family Dollar which is owned by Dollar Tree) 4 Table of Contents aggregated approximately 14.2%, 12.4%, and 12.1% of net product sales during the years ended December 31, 2023, 2022 and 2021, respectively.
(“Dollar Tree”, which includes net sales from Family Dollar which is owned by Dollar Tree) 4 Table of Contents aggregated approximately 12.6%, 14.2%, and 12.4% of net product sales during the years ended December 31, 2024, 2023 and 2022, respectively.
Net product sales revenues from McLane, which includes these Wal-Mart and Dollar Tree sales as well as sales and deliveries to other Company customers, were 20.1% in 2023 and 20.4% in 2022 and 22.0% in 2021. At December 31, 2023 and 2022, the Company’s three largest customers discussed above accounted for approximately 39.6% and 39.2% of total accounts receivable, respectively.
Net product sales revenues from McLane, which includes these Wal-Mart and Dollar Tree sales as well as sales and deliveries to other Company customers, were 20.7% in 2024 and 20.1% in 2023 and 20.4% in 2022. At December 31, 2024 and 2023, the Company’s three largest customers discussed above accounted for approximately 41.9% and 39.6% of total accounts receivable, respectively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

17 edited+1 added−8 removed27 unchanged
Biggest changeThe Company’s principal markets are the U.S.A., Canada, and Mexico. ​ 9 Table of Contents ● Risk of union labor stoppages, slowdowns or strikes- - Significant labor stoppages, strikes or possible labor shortages could negatively affect overall operations including production or shipments of finished product to customers which could have material effects on the Company’s sales and profits. ​ ● The Company is a controlled company due to the common stock holdings of the Gordon family - The Gordon family’s share ownership represents a majority of the combined voting power of all classes of the Company’s common stock as of December 31, 2023.
Biggest changeMoreover, in combination with adverse consumer sentiment regarding price increases, the Company may not be able to pass these cost increases to customers in the form of higher price; as a result, the imposition of tariffs may have an adverse impact on our profitability. ​ ● Risk of union labor stoppages, slowdowns or strikes - Significant labor stoppages, strikes or possible labor shortages could negatively affect overall operations including production or shipments of finished product to customers which could have material effects on the Company’s sales and profits. ​ ● The Company is a controlled company due to the common stock holdings of the Gordon family - The Gordon family’s share ownership represents a majority of the combined voting power of all classes of the Company’s common stock as of December 31, 2024.
Volatility in food and energy costs, rising unemployment and/or underemployment, declines in personal spending, recessionary economic conditions or other adverse market conditions, could adversely impact the Company’s revenues, profitability and financial condition. ​ ● Risks related to environmental matters - The Company’s operations are not particularly impactful on the environment, but increased government environmental regulation or legislation could adversely impact the Company’s profitability. ​ ● Risk of new governmental laws and regulations - Governmental laws and regulations, including those that affect food advertising and marketing to children, use of certain ingredients in products, new labeling requirements, income and other taxes and tariffs, including the effects of changes to international trade agreements, new taxes targeted toward confectionery products and the environment, both in and outside the U.S.A., are subject to change over time, which could adversely impact the Company’s results of operations and ability to compete in domestic or foreign marketplaces. ​ ● Risk of labor stoppages - To the extent the Company experiences any significant labor stoppages and disputes, labor organizing efforts, strikes or possible labor shortages, could negatively affect overall operations including production or shipments of finished product to customers. ​ ● Risk of the cost of energy increasing and overall inflation - Higher energy costs as well as overall inflation would likely result in higher plant overhead, distribution, freight and delivery, and other operating costs.
Volatility in food and energy costs, rising unemployment and/or underemployment, declines in personal spending, recessionary economic conditions or other adverse market conditions, could adversely impact the Company’s revenues, profitability and financial condition. ​ ● Risks related to environmental matters - The Company’s operations are not particularly impactful on the environment, but increased government environmental regulation or legislation could adversely impact the Company’s profitability. ​ ● Risk of new governmental laws and regulations - Governmental laws and regulations, including those that affect food advertising and marketing to children, use of certain ingredients in products, new labeling requirements, income and other taxes, tariffs on U.S. imports and retaliatory tariffs in response, including the effects of changes to international trade agreements, new taxes targeted toward confectionery products and the environment, both in and outside the U.S.A., are subject to change over time, which could adversely impact the Company’s results of operations and ability to compete in domestic or foreign marketplaces. ​ ● Risk of labor stoppages - To the extent the Company experiences any significant labor stoppages and disputes, labor organizing efforts, strikes or possible labor shortages, could negatively affect overall operations including production or shipments of finished product to customers. ​ ● Risk of the cost of energy increasing and overall inflation - Higher energy costs as well as overall inflation would likely result in higher plant overhead, distribution, freight and delivery, and other operating costs.
Software failure or corruption, including cyber-based attacks or network security breaches, or catastrophic hardware or software failures or other disasters could disrupt communications, supply chain planning and activities relating to sales demand forecasts, materials procurement, production and inventory planning, customer orders, shipments, and collections, and financial and accounting, all of which could negatively impact sales and profits. ​ ● Risk of releasing sensitive information - Although the Company does not believe that it maintains a large amount of sensitive data, a system breach, whether inadvertent or perpetrated by hackers, could result in identity theft, ransomware and/or a disruption in operations which could expose the Company to financial costs and adversely affect profitability. ​ 7 Table of Contents ● Disruption to the Company’s supply chain could impair the Company’s ability to produce or deliver its finished products, resulting in a negative impact on operating results - Disruptions to the manufacturing operations or supply chain, some of which are discussed above, could result from, but are not limited to, unpredictable events such as natural disasters, pandemics, weather, fire or explosion, earthquakes, terrorism or other acts of violence.
Software failure or corruption, including cyber-based attacks or network security breaches, or catastrophic hardware or software failures or other disasters could disrupt communications, supply chain planning and activities relating to sales demand forecasts, materials procurement, production and inventory planning, customer orders, shipments, and collections, and financial and accounting, all of which could negatively impact sales and profits. ​ ● Risk of releasing sensitive information - Although the Company does not believe that it maintains a large amount of sensitive data, a system breach, whether inadvertent or perpetrated by hackers, could result in identity theft, ransomware and/or a disruption in operations which could expose the Company to financial costs and adversely affect profitability. ​ ● Disruption to the Company’s supply chain could impair the Company’s ability to produce or deliver its finished products, resulting in a negative impact on operating results - Disruptions to the manufacturing operations or supply chain, some of which are discussed above, could result from, but are not limited to, unpredictable events such as natural disasters, pandemics, weather, fire or explosion, earthquakes, terrorism or other acts of violence.
Circumstances surrounding Halloween could significantly affect the Company’s sales, such as, widespread adverse weather or other widespread events that affect consumer behavior, related media coverage at that time of year, or general changes in consumer interest in Halloween. ​ 6 Table of Contents ● Risk of changes in consumer preferences and tastes - Failure to adequately anticipate and react to changing demographics, consumer trends, consumer health concerns and product preferences, including product ingredients and packaging materials, could have an adverse impact on the Company’s results of operations and financial condition. ​ ● Risk of economic conditions on consumer purchases - The Company’s sales are impacted by consumer spending levels and impulse purchases which are affected by general macroeconomic conditions, consumer confidence, employment levels, disposable income, inflation, availability of consumer credit and interest rates on that credit, consumer debt levels, energy costs and other factors.
Circumstances surrounding Halloween could significantly affect the Company’s sales, such as, widespread adverse weather or other widespread events that affect consumer behavior, related media coverage at that time of year, or general changes in consumer interest in Halloween. ​ ● Risk of changes in consumer preferences and tastes - Failure to adequately anticipate and react to changing demographics, consumer trends, consumer health concerns and product preferences, including product ingredients and packaging materials, could have an adverse impact on the Company’s results of operations and financial condition. ​ ● Risk of economic conditions on consumer purchases - The Company’s sales are impacted by consumer spending levels and impulse purchases which are affected by general macroeconomic conditions, consumer confidence, employment levels, disposable income, inflation, availability of consumer credit and interest rates on that credit, consumer debt levels, energy costs and other factors.
Although the Company believes that these claims and other product labeling claims are without merit and has generally been successful in litigation and court decrees, the Company could be exposed to significant legal fees to defend its position, and in the event that it is not successful, could be subject to fines and costs of settlement, including class action settlements. ​ ● Risk related to international operations - To the extent there are political leadership or legislative changes, social and/or political unrest, civil war, pandemics such as the Covid-19, terrorism or significant economic or social instability in the countries in which the Company operates, the results of the Company’s business in such countries could be adversely impacted.
Although the Company believes that these claims and other product labeling claims are without merit and has generally been successful in litigation and court decrees, the Company could be exposed to significant legal fees to defend its position, and in the event that it is not successful, could be subject to fines and costs of settlement, including class action settlements. ​ ● Risk related to international operations - To the extent there are political leadership or legislative changes, social and/or political unrest, civil war, pandemics such as the Covid-19, terrorism, significant economic or social instability, or the imposition of retaliatory tariffs in the countries in which the Company operates, the results of the Company’s business in such countries could be adversely impacted.
See also Management’s Discussion and Analysis of Financial Condition and Results of Operations. ​ ● Risk of dependence on large customers - The Company’s largest customers, McLane, Wal-Mart and Dollar Tree, accounted for approximately 37% of net product sales in 2023, and other large national chains are also material to the Company’s sales.
See also Management’s Discussion and Analysis of Financial Condition and Results of Operations. ​ ● Risk of dependence on large customers - The Company’s largest customers, McLane, Wal-Mart and Dollar Tree, accounted for approximately 37% of net product sales in 2024, and other large national chains are also material to the Company’s sales.
In addition, it could become necessary to record an impairment which would have a further adverse impact on reported profits. ​ ● Risk of “slack fill” or other product label litigation - The Company, as well as other confectionery and food companies, have experienced a number of plaintiff claims that certain products are sold in boxes that are not completely full, and therefore such “slack filled” products are misleading, and even deceptive, to the consumer.
In addition, it could become necessary to record an impairment which would have a further adverse impact on reported profits. 8 Table of Contents ​ ● Risk of “slack fill” or other product label litigation - The Company, as well as other confectionery and food companies, have experienced a number of plaintiff claims that certain products are sold in boxes that are not completely full, and therefore such “slack filled” products are misleading, and even deceptive, to the consumer.
A failure of new or existing products to be favorably received, a failure to retain preferred shelf space at retailers or a failure to sufficiently counter aggressive promotional and price competition could have an adverse impact on the Company’s results of operations and financial condition. ​ ● Risk of discounting and other competitive actions - Discounting and pricing pressure by the Company’s retail customers and other competitive actions could make it more difficult for the Company to maintain its operating margins.
A failure of new or existing products to be favorably received, a failure to retain preferred shelf space at retailers or a failure to sufficiently counter aggressive promotional and price competition could have an adverse impact on the Company’s results of operations and financial condition. ​ ● Risk of discounting and other competitive actions - Discounting and pricing pressure by the Company’s retail customers and other competitive actions could make it more difficult for the Company to maintain its 5 Table of Contents operating margins.
Such investments could become impaired in the event of certain adverse economic and/or geopolitical events which, if severe, would adversely affect the Company’s financial condition. ​ ● Risk of further losses in Spain - The Company has continued to restructure its Spanish subsidiary and is exploring a variety of programs to increase sales and profitability.
Such investments could become impaired in the event of certain adverse economic and/or geopolitical events which, if severe, would adversely affect the Company’s financial condition. ​ ● Risk of further losses in Spain - The Company is exploring a variety of programs to increase sales and profitability of its Spanish subsidiary, which is experiencing losses.
Adverse 8 Table of Contents changes in any of these variables could affect the carrying value of these intangible assets and the Company’s reported profitability. ​ ● Risk of production interruptions - The majority of the Company’s products are manufactured in a single production facility on specialized equipment.
Adverse changes in any of these variables could affect the carrying value of these intangible assets and the Company’s reported profitability. ​ ● Risk of production interruptions - The majority of the Company’s products are manufactured in a single production facility on specialized equipment.
Costs associated with a product recall and related litigation or fines, and marketing costs relating to the re-launch of such products or brands, could negatively affect operating results.
Costs associated with a product recall and related litigation or fines, and marketing costs relating to the re-launch of such products or brands, could negatively 6 Table of Contents affect operating results.
Nonetheless, if our efforts are not successful, additional losses and impairments may be reported in the future.
Nonetheless, if the Company’s efforts are not successful, additional losses and impairments may be reported in the future.
Risk factors which we believe are principally specific to our Company (although some may apply to varying degrees to competitors in our industry) ​ ● Risks relating to participation in the multi-employer pension plan for certain Company union employees - As outlined in the Note 7 of the Company’s Notes to Consolidated Financial Statements and discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company participates in a multi-employer union pension plan (Plan) which is currently in “critical and declining status”, as defined by applicable law.
New legislation or an enforcement action in this area could harm our reputation and financial results. ​ ​ 7 Table of Contents Risk factors which we believe are principally specific to our Company (although some may apply to varying degrees to competitors in our industry) ​ ● Risks relating to participation in the multi-employer pension plan for certain Company union employees - As outlined in the Note 7 of the Company’s Notes to Consolidated Financial Statements and discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company participates in a multi-employer union pension plan (Plan) which is currently in “critical and declining status”, as defined by applicable law.
In addition, negative publicity associated with this type of event, including a product recall relating to product contamination or product tampering, whether valid or not, could negatively impact future demand for the Company’s products. ​ ● Risk of operational interruptions relating to computer software or hardware failures, including cyber-attacks - The Company is reliant on computer systems to operate its business and supply chain.
In addition, negative publicity associated with this type of event, including a product recall relating to product contamination or product tampering, whether valid or not, could negatively impact future demand for the specific products subject to the recall as well as present reputational risk that could negatively impact the Company and demand more broadly for its brands. ​ ● Risk of operational interruptions relating to computer software or hardware failures, including cyber-attacks - The Company is reliant on computer systems to operate its business and supply chain.
Currency exchange rate fluctuations between the U.S. dollar and foreign currencies could also have an adverse impact on the Company’s results of operations and financial condition.
Currency exchange rate fluctuations between the U.S. dollar and foreign currencies could also have an adverse impact on the Company’s results of operations and financial condition. The Company’s principal markets are the U.S.A., Canada, and Mexico. ​ ● Risk of tariffs – The Company has manufacturing operations outside the US and imports a significant amount of product specifically from Canada.
Customers, consumers, and government regulators have increasingly focused on the environmental or sustainability practices of companies. New legislation or an enforcement action in this area could harm our reputation and financial results.
Customers, consumers, and government regulators have increasingly focused on the environmental or sustainability practices of companies.
Changes in consumer behaviors, traditions, and interest in Halloween activities and events, or changes mandated or recommended by government or health officials, as well as negative media coverage, could significantly affect the Company’s seasonal sales. ​ ● Risk of changes in the price and availability of ingredients and raw materials - The principal ingredients used by the Company are subject to price volatility.
Risk Factor s. ​ Significant factors that could impact the Company’s financial condition or results of operations include, without limitation, the following: ​ ​ Risk factors which we believe affect all competitors in our industry ​ ● Risk of changes in the price and availability of ingredients and raw materials - The principal ingredients used by the Company are subject to price volatility.
Removed
Risk Factor s. ​ Significant factors that could impact the Company’s financial condition or results of operations include, without limitation, the following: ​ ​ Risk factors which we believe affect all competitors in our industry ​ ● Our business and financial results may be negatively impacted by changes in confectionary trade practices and consumer patterns, or operational challenges associated with the actual or perceived effects of a disease or pandemic outbreak, such as the Covid-19 pandemic including variants and sub variants, and other public health concerns, consumer spending levels, shopping habits and behaviors (including changes in impulse purchase behaviors), consumer activities, work routines, events and traditions where confectionary products are consumed, the availability of our products at retail, including at large retail customers, and our ability to manufacture and distribute products to our customers and consumers in an effective and efficient manner.
Added
The imposition of tariffs on goods and services imported from Canada to the US may have a material impact on our input costs.
Removed
Government mandates to “shelter in place” or “closing of the economy”, public health guidelines, or fear of exposure or actual effects of a disease or pandemic, such as the Covid-19 pandemic, could negatively impact our overall business and financial results.
Removed
Specific factors that may impact our operations, some of which have had, and in the future could have, an unfavorable impact on our operations as a result of pandemics, such as Covid-19, include, but are not limited to: ​ a.
Removed
Significant reductions in demand for one or more of our products - Changes in demand may be caused by, among other things, the temporary inability of consumers to purchase our products due to illness, quarantine, travel restrictions, financial hardship, “shelter in place” directives, or overall fear to return to past behaviors.
Removed
Shifts in demand for one or more of our products, changes in trade and distribution patterns, or changes in consumer buying habits, if prolonged, could negatively impact our results. ​ b.
Removed
The inability to meet our customers’ needs and achieve efficient production of finished products - Disruptions in our manufacturing operations or supply chain delivery disruptions caused by the loss or 5 Table of Contents disruption of essential manufacturing ingredients, materials, supplies and services, transportation resources, workforce availability, or other manufacturing and distribution capability could have significant adverse effects on our business and financial results. ​ c.
Removed
Significant adverse changes in the political conditions and government mandates or directives - In markets in which we manufacture, sell or distribute our products, governmental or regulatory actions in response to pandemics, including Covid-19, closures or other restrictions such as quarantine or travel restrictions, that limit or close our manufacturing, distribution or office facilities, or otherwise prevent our third-party suppliers, sales brokers, or customers from achieving the level of operations necessary for the production, distribution, sale, and support of our products, could negatively impact our results. ​ d.
Removed
Risk related to Halloween and other seasonal sales - The Company’s net product sales are highest during the Halloween season which have historically comprised approximately 50% of third quarter domestic net product sales.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−0 removed10 unchanged
Biggest changeAccordingly, no matter how well controls are designed and implemented, we will not be able to anticipate all cybersecurity attacks, ransomware and other security breaches and we may not be able to implement effective preventive measures against such security breaches in a timely manner. ​ The Company’s cybersecurity risk program is supervised by members of our executive team and administered by internal information technology leadership with the assistance of third-party experts, including consultants and a computer security firm.
Biggest changeAccordingly, no matter how well controls are designed and implemented, we will not be able to anticipate all cybersecurity attacks, ransomware and other security breaches and we may not be able to implement effective preventive measures against such security breaches in a timely manner. ​ The Company’s cybersecurity risk program is supervised by members of our executive team.
In addition, the Company’s cyber insurance may not be sufficient in type or amount to cover claims related to security breaches and cyber-attacks. ​ The Company has not experienced any material cybersecurity incidents or a series of related unauthorized occurrences for the year ended December 31, 2023, and the Company is not currently aware of any cyber security attacks or breaches that are reasonably likely to materially affect the Company’s business, business strategy, operating results or financial condition.
In addition, the Company’s cyber insurance may not be sufficient in type or amount to cover claims related to security breaches and cyber-attacks. ​ The Company has not experienced any material cybersecurity incidents or a series of related unauthorized occurrences for the year ended December 31, 2024, and the Company is not currently aware of any cyber security attacks or breaches that are reasonably likely to materially affect the Company’s business, business strategy, operating results or financial condition.
Our Company-wide information security training program includes security awareness training, including regular phishing simulations, cyber wellness training and other targeted training and simulations. These programs provide employees the opportunity to gain an understanding and awareness of the various forms of cybersecurity incidents, including how to identify and report any suspicious activity or threat. ​ ​ 11 Table of Contents ​
Our Company-wide information security training program includes security awareness training, including regular phishing simulations, cyber wellness training and other targeted training and simulations. These programs provide employees the opportunity to gain an understanding and awareness of the various forms of cybersecurity incidents, including how to identify and report any suspicious activity or threat. ​ ​ 10 Table of Contents ​
Our cybersecurity risk program is designed to identify, assess, prioritize and mitigate risks across the organization; and to ensure that cyber risks are not viewed in isolation, but are assessed, prioritized and managed in alignment with the Company’s other operational, financial and strategic risk mitigation strategies. ​ We continuously monitor and update our information technology networks and infrastructure in an effort to prevent, detect, address and mitigate risks associated with unauthorized access, misuse, computer viruses and other events that could have a security impact.
Our cybersecurity risk program is designed to identify, assess, prioritize and mitigate risks across the organization; and to ensure that cyber risks are not viewed in isolation, but are 9 Table of Contents assessed, prioritized and managed in alignment with the Company’s other operational, financial and strategic risk mitigation strategies. ​ We continuously monitor and update our information technology networks and infrastructure in an effort to prevent, detect, address and mitigate risks associated with unauthorized access, misuse, computer viruses and other events that could have a security impact.
However, as discussed under Item 1A “Risk Factors,” specifically the risks titled 10 Table of Contents “Risk of operational interruptions relating to computer software or hardware failures, including cyber-attacks,” a cybersecurity incident could negatively impact sales and profits.
However, as discussed under Item 1A “Risk Factors,” specifically the risks titled “Risk of operational interruptions relating to computer software or hardware failures, including cyber-attacks,” a cybersecurity incident could negatively impact sales and profits.
Added
The program is led and managed by the Director of Information Technology, whose experience includes over ten years in information security leadership roles, with the assistance of third-party experts, including consultants and a computer security firm.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed2 unchanged
Biggest changeThe Company also owns domestic manufacturing, warehousing and distribution facilities in Tennessee (Covington), Massachusetts (Cambridge), and Wisconsin (Delavan) and international manufacturing facilities in Mexico (Mexico City), Spain (Barcelona) and two in Canada (Concord, Ontario). In addition, the Company leases warehouse facilities near it’s Chicago and Covington facilities as well as a smaller manufacturing facility at a second location in Chicago.
Biggest changeThe Company also owns domestic manufacturing, warehousing and distribution facilities in Tennessee (Covington), Massachusetts (Cambridge), and Wisconsin (Delavan) and international manufacturing facilities in Mexico (Mexico City), Spain (Barcelona) and two in Canada (Concord, Ontario).
The Company also holds four commercial real estate properties for investment which were acquired with the proceeds from a sale of surplus real estate in 2005 as well as two warehouse facilities (in Concord, Ontario, Canada, and Hazelton, Pennsylvania, U.S.A.) that are currently leased to third parties. ​ ​
The Company also holds four commercial real estate properties for investment which were acquired with the proceeds from a sale of surplus real estate in 2005 as well as two warehouse facilities (in Concord, Ontario, Canada, and Hazelton, Pennsylvania) that are currently leased to third parties. ​ ​
Added
In addition, the Company leases warehouse facilities near its Chicago, Covington, and Mexico City facilities as well as a smaller manufacturing facility at a second location in Chicago.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−1 removed1 unchanged
Biggest changeWhile it is not possible to predict the outcome of such matters with certainty, in the Company’s opinion, both individually and in the aggregate, they are not expected to have a material effect on the Company’s financial condition, results of operations or cash flows. ​ ​ ITEM 4.
Biggest changeWhile it is not possible to predict the outcome of such matters with certainty, in the Company’s opinion, both individually and in the aggregate, they are not expected to have a material effect on the Company’s financial condition, results of operations or cash flows. ​ ​
Removed
Mine Safety Disclosure s . ​ None. ​ ​ 12 Table of Contents PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed1 unchanged
Biggest changeIn addition, the Company estimates that as of February 9, 2024 there were 120,300 and 200 beneficial holders of common and Class B common stock, respectively. ​ The following table sets forth information about the shares of its common stock the Company purchased on the open market during the fiscal quarter ended December 31, 2023: ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Maximum Number (or ​ ​ Total ​ Average ​ Shares Purchased ​ Approximate Dollar Value) ​ ​ Number ​ Price ​ as Part of Publicly ​ of Shares that May Yet ​ ​ of Shares ​ Paid per ​ Announced Plans ​ be Purchased Under the Period ​ Purchased ​ Share ​ or Programs ​ Plans or Programs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Oct 1 to Oct 31 180,664 ​ $ 30.76 Not Applicable Not Applicable ​ Nov 1 to Nov 30 — ​ — Not Applicable Not Applicable ​ Dec 1 to Dec 31 — ​ — Not Applicable Not Applicable ​ Total 180,664 ​ $ 30.76 ​ ​ ​ ​ ​ ​ The Company does not have a formal dividend policy, but has historically issued quarterly dividends and in 2023 issued a quarterly dividend of $0.09 per share.
Biggest changeIn addition, the Company estimates that as of February 9, 2025 there were 87,000 and 130 beneficial holders of common and Class B common stock, respectively. ​ The following table sets forth information about the shares of its common stock the Company purchased on the open market during the fiscal quarter ended December 31, 2024: ​ ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Maximum Number (or ​ ​ Total ​ Average ​ Shares Purchased ​ Approximate Dollar Value) ​ ​ Number ​ Price ​ as Part of Publicly ​ of Shares that May Yet ​ ​ of Shares ​ Paid per ​ Announced Plans ​ be Purchased Under the Period ​ Purchased ​ Share ​ or Programs ​ Plans or Programs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Oct 1 to Oct 31 217,418 ​ $ 30.02 Not Applicable Not Applicable ​ Nov 1 to Nov 30 70,952 ​ 30.09 Not Applicable Not Applicable ​ Dec 1 to Dec 31 82,867 ​ 32.10 Not Applicable Not Applicable ​ Total 371,237 ​ $ 30.50 ​ ​ ​ ​ ​ ​ All of the above share purchases were made in the open market.
The Class B common stock is convertible at the option of the holder into shares of common stock on a share-for-share basis. As of February 9, 2024 there were approximately 2,200 and 800 registered holders of record of common and Class B common stock, respectively.
The Class B common stock is convertible at the option of the holder into shares of common stock on a share-for-share basis. As of February 9, 2025 there were approximately 2,200 and 800 registered holders of record of common and Class B common stock, respectively.
While the Company plans to continue to issue quarterly cash dividends and the annual stock dividend there can be no assurance that it will continue to do so in the future. ​ 13 Table of Contents ​ Performance Graph ​ The following performance graph compares the cumulative total shareholder return on the Company’s common stock for a five-year period (December 31, 2018 to December 31, 2023) with the cumulative total return of Standard & Poor’s 500 Stock Index (“S&P 500”) and the Dow Jones Industry Food Index (“Peer Group,” which includes the Company), assuming (i) $100 invested on December 31 of the first year of the chart in each of the Company’s common stock, S&P 500 and the Dow Jones Industry Food Index and (ii) the reinvestment of cash and stock dividends. ​ ITEM 6. [RESERVED] ​
While the Company plans to continue to issue quarterly cash dividends and the annual stock dividend there can be no assurance that it will continue to do so in the future. ​ 12 Table of Contents ​ Performance Graph ​ The following performance graph compares the cumulative total shareholder return on the Company’s common stock for a five-year period (December 31, 2019 to December 31, 2024) with the cumulative total return of Standard & Poor’s 500 Stock Index (“S&P 500”) and the Dow Jones Industry Food Index (“Peer Group,” which includes the Company), assuming (i) $100 invested on December 31 of the first year of the chart in each of the Company’s common stock, S&P 500 and the Dow Jones Industry Food Index and (ii) the reinvestment of cash and stock dividends. ​ ​ ITEM 6. [RESERVED] ​
The Company has also historically distributed an annual 3% stock dividend.
The Company does not have a formal dividend policy, but has historically issued quarterly dividends and in 2024 issued quarterly dividends of $0.09 per share. The Company has also historically distributed an annual 3% stock dividend.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 6. [RESERVED] 14 ​ ​ ​ ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14 ​ ​ ​ ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 25 ​ ​ ​ ITEM 8. Financial Statements and Supplementary Data 25 ​ ​ ​
Biggest changeITEM 6. [RESERVED] 13 ​ ​ ​ ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13 ​ ​ ​ ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 24 ​ ​ ​ ITEM 8. Financial Statements and Supplementary Data 24 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+25 added−19 removed41 unchanged
Biggest changeThe Company’s actuary advised that the regulations under the aforementioned PBGC financial assistance could result in a higher withdrawal liability even with PBGC financial assistance. ​ During second quarter 2023, the Company and the union concluded negotiations and entered into a new contract, which expires in September 2027, replacing a prior contract, which expired in September 2022.
Biggest changeWhile 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 previously discussed and that those payments will not be affected by Special Financial Assistance regulation. ​ During second quarter 2023, the Company and the union associated with the Plan concluded negotiations and entered into a new labor contract which expires in September 2027.
The Company does not invest in Level 3 securities, as defined, but may utilize third-party professional valuation firms as necessary to assist in the determination of the value of investments that utilize Level 3 inputs (as defined by guidance) should any of its investments be downgraded to Level 3. ​ Other matters ​ In the opinion of management, other than contracts for foreign currency forwards and raw materials, including currency and commodity hedges and outstanding purchase orders for packaging, ingredients, supplies, operational services, and capital expenditures, all entered into in the ordinary course of business, the Company does not have any significant contractual obligations or future commitments. ​ RECENT ACCOUNTING PRONOUNCEMENTS ​ See Note 1 of the Company’s Notes to Consolidated Financial Statements. ​ MARKET RISKS ​ The Company is exposed to market risks related to commodity prices, interest rates, investments in marketable securities, equity price and foreign exchange. ​ The Company’s ability to forecast the direction and scope of changes to its major input costs is impacted by significant potential volatility in crude oil and energy, sugar, corn, edible oils, cocoa and cocoa powder, and dairy products markets.
The Company does not invest in Level 3 securities, as defined, but may utilize third-party professional valuation firms as necessary to assist in the determination of the value of investments that utilize Level 3 inputs (as defined by guidance) should any of its investments be downgraded to Level 3. ​ Other matters ​ In the opinion of management, other than contracts for foreign currency forwards and raw materials, including currency and commodity hedges and outstanding purchase orders for packaging, ingredients, supplies, operational services, and capital expenditures, all entered into in the ordinary course of business, the Company does not have any significant contractual obligations or future commitments. ​ RECENT ACCOUNTING PRONOUNCEMENTS ​ See Note 1 of the Company’s Notes to Consolidated Financial Statements. ​ MARKET RISKS ​ The Company is exposed to market risks related to commodity prices, interest rates, investments in marketable securities, equity price and foreign exchange. 21 Table of Contents ​ The Company’s ability to forecast the direction and scope of changes to its major input costs is impacted by significant potential volatility in crude oil and energy, sugar, corn, edible oils, cocoa and cocoa powder, and dairy products markets.
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. ​ Other than the bank loans and the related restricted cash of the Company’s Spanish subsidiary which are discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements, the Company had no bank borrowings or repayments in 2021, 2022, or 2023, and had no outstanding bank borrowings as of December 31, 2022 or 2023.
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. ​ Other than the bank loans and the related restricted cash of the Company’s Spanish subsidiary which are discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements, the Company had no bank borrowings or repayments in 2022, 2023, or 2024, and had no outstanding bank borrowings as of December 31, 2023 or 2022.
In accordance with current accounting guidance, these indefinite-lived intangible assets are assessed at least annually for impairment as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. No impairments were recorded in 2023, 2022 or 2021.
In accordance with current accounting guidance, these indefinite-lived intangible assets are assessed at least annually for impairment as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. No impairments were recorded in 2024, 2023 or 2022.
These trading securities provide an economic hedge of the Company’s deferred compensation liabilities; and the related net gains (losses) and investment income were offset by a like amount of expense (credit) in aggregate product cost of goods sold and selling, marketing, and administrative expenses in the respective years as discussed above.
These trading securities provide an economic hedge of the Company’s deferred compensation liabilities; and the related net gains and investment income were offset by a like amount of expense in aggregate product cost of goods sold and selling, marketing, and administrative expenses in the respective years as discussed above.
The Company has no special financing arrangements or “off-balance sheet” special purpose entities. Cash flows from operations plus maturities of short-term investments are expected to be adequate to meet the Company’s overall financing needs, including capital expenditures, in 2024.
The Company has no special financing arrangements or “off-balance sheet” special purpose entities. Cash flows from operations plus maturities of short-term investments are expected to be adequate to meet the Company’s overall financing needs, including capital expenditures, in 2025.
During fourth quarter 2023, the Company performed a “step zero” test of its goodwill and certain trademarks, and concluded that there was no impairment based on this guidance. ​ The Company determines the fair value of certain trademarks using discounted cash flows and estimates of royalty rates.
During fourth quarter 2024, the Company performed a “step zero” test of its goodwill and certain trademarks, and concluded that there was no impairment based on this guidance. ​ The Company determines the fair value of certain trademarks using discounted cash flows and estimates of royalty rates.
In the event that the Company determines that an investment security’s fair value is permanently impaired, the Company will record the amount of the impairment attributable to credit factors in earnings as credit loss expense or, as applicable, a reversal of that expense, with the amount attributable to non-credit factors in other comprehensive income, net of applicable taxes.
In the event that the Company determines that a security’s fair value is permanently impaired, the Company will record the amount of the impairment attributable to credit factors in earnings as credit loss expense or, as applicable, a reversal of that expense, with the amount attributable to non-credit factors in other comprehensive income, net of applicable taxes.
As of the January 1, 2022 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 service and entitled to future benefits.
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 service and entitled to future benefits.
The Company’s significant accounting policies are discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements. ​ Following is a summary and discussion of the more significant accounting policies and estimates which management believes to have a significant impact on the Company’s operating results, financial position, cash flows and footnote disclosure. ​ Revenue recognition ​ As further discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements, the Company follows the revenue recognition guidance in ASC 606.
The Company’s significant accounting policies are discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements. ​ Following is a summary and discussion of the more significant accounting policies and estimates which management believes to have a significant impact on the Company’s operating results, financial position, cash flows and footnote disclosure. ​ 19 Table of Contents Revenue recognition ​ As further discussed in Note 1 of the Company’s Notes to Consolidated Financial Statements, the Company follows the revenue recognition guidance in ASC 606.
During fourth quarter 2023 (and fourth quarters 2022 and 2021), the Company performed a “step zero” test of its goodwill and certain trademarks, and concluded that there was no impairment based on this guidance.
During fourth quarter 2024 (and fourth quarters 2023 and 2022), the Company performed a “step zero” test of its goodwill and certain trademarks, and concluded that there was no impairment based on this guidance.
Discussions comparing the results of the twelve months ended December 31, 2022 as compared to same period of 2021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Form 10-K for the year ended December 31, 2022. ​ 14 Table of Contents FINANCIAL REVIEW ​ This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources, significant accounting policies and estimates, new accounting pronouncements, market risks and other matters.
Discussions comparing the results of the twelve months ended December 31, 2023 as compared to same period of 2022 can be found in 13 Table of Contents “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Form 10-K for the year ended December 31, 2023. ​ FINANCIAL REVIEW ​ This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources, significant accounting policies and estimates, new accounting pronouncements, market risks and other matters.
ASC 606 requires adjustments for estimated customer cash discounts upon 20 Table of Contents payment, discounts for price adjustments, product returns, allowances, and certain advertising and promotional costs, including consumer coupons, which are variable consideration and are recorded as a reduction of product sales revenue in the same period the related product sales are recorded.
ASC 606 requires adjustments for estimated customer cash discounts upon payment, discounts for price adjustments, product returns, allowances, and certain advertising and promotional costs, including consumer coupons, which are variable consideration and are recorded as a reduction of product sales revenue in the same period the related product sales are recorded.
The unrealized gains and losses on such contracts are deferred as a component of accumulated other comprehensive loss (or gain) and are recognized as a component of product cost of goods sold when the related inventory is sold. ​ The potential change in fair value of commodity and foreign currency derivative instruments held by the Company at December 31, 2023, assuming a 10% change in the underlying contract price, was $4,458.
The unrealized gains and losses on such contracts are deferred as a component of accumulated other comprehensive loss (or gain) and are recognized as a component of product cost of goods sold when the related inventory is sold. ​ The potential change in fair value of commodity and foreign currency derivative instruments held by the Company at December 31, 2024, assuming a 10% change in the underlying contract price, was $4,709.
If the entity determines, on the basis of certain qualitative factors, that it is more-likely-than-not that the intangibles (goodwill and certain trademarks) are not impaired, the entity would not need to proceed to 16 Table of Contents the two step impairment testing process (quantitative analysis) as prescribed in the guidance.
If the entity determines, on the basis of certain qualitative factors, that it is more-likely-than-not that the intangibles (goodwill and certain trademarks) are not impaired, the entity would not need to proceed to the two step impairment testing process (quantitative analysis) as prescribed in the guidance.
These reviews include an evaluation of the risk factors relating to market place acceptance of such changes and their potential effect on future sales 22 Table of Contents volumes. In addition, the estimated cost of packaging modifications associated with weight changes, if applicable, is evaluated.
These reviews include an evaluation of the risk factors relating to market place acceptance of such changes and their potential effect on future sales volumes. In addition, the estimated cost of packaging modifications associated with weight changes, if applicable, is evaluated.
Such impairments have not historically been material to the Company’s operating results. 21 Table of Contents ​ Income taxes ​ Deferred income taxes are recognized for future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse.
Such impairments have not historically been material to the Company’s operating results. ​ Income taxes ​ Deferred income taxes are recognized for future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse.
Cash dividends of $25,076, $24,629, and $24,136 were paid in 2023, 2022 and 2021, respectively. ​ CRITICAL ACCOUNTING POLICIES AND ESTIMATES ​ Preparation of the Company’s financial statements involves judgments and estimates due to uncertainties affecting the application of accounting policies, and the likelihood that different amounts would be reported under different conditions or using different assumptions.
Cash dividends of $25,515, $25,076, and $24,629 were paid in 2024, 2023 and 2022, respectively. ​ CRITICAL ACCOUNTING POLICIES AND ESTIMATES ​ Preparation of the Company’s financial statements involves judgments and estimates due to uncertainties affecting the application of accounting policies, and the likelihood that different amounts would be reported under different conditions or using different assumptions.
The Company also invests in variable rate demand notes which have interest rates that are reset weekly and can be “put back” and sold each week through a remarketing agent, generally a large financial broker, which also substantially eliminates the Company’s exposure to interest rate fluctuations on the principal invested.
The Company also invests in variable rate demand notes which have interest rates that are reset weekly and can be “put back” and sold each week through a remarketing agent, generally a large financial broker, which also substantially eliminates the Company’s 22 Table of Contents exposure to interest rate fluctuations on the principal invested.
The Company is currently exploring a plant expansion, including additional and replacement of, certain processing and packaging lines, to better meet its higher level of demand for certain products on a timelier and more cost effective basis.
The Company is currently pursuing a plant expansion, including additional and replacement of certain processing and packaging lines, to better meet its higher level of forecasted demand for certain products on a timelier and more cost effective basis.
This section of this Form 10-K generally discusses the twelve months ended December 31, 2023 as compared to the same period of 2022.
This section of this Form 10-K generally discusses the twelve months ended December 31, 2024 as compared to the same period of 2023.
Write-offs of bad debts did not exceed 0.1% of net product sales in each of 2023, 2022 and 2021, and accordingly, have not been significant to the Company’s financial position or results of operations. ​ Intangible assets ​ The Company’s intangible assets consist primarily of goodwill and acquired trademarks.
Write-offs of bad debts did not exceed 0.2% of net product sales in each of 2024, 2023 and 2022, and accordingly, have not been significant to the Company’s financial position or results of operations. ​ Intangible assets ​ The Company’s intangible assets consist primarily of goodwill and acquired trademarks.
A reconciliation of the differences between the U.S. statutory rate and these effective tax rates is provided in Note 4 of the Company’s Notes to Consolidated Financial Statements. ​ The Company has provided a full valuation allowance on its Spanish subsidiaries’ tax loss carry-forward benefits of $4,836 and $4,497 as of December 31, 2023 and 2022, respectively, because the Company has concluded that it is not more-likely-than-not that these losses will be utilized before their expiration dates.
A reconciliation of the differences between the U.S. statutory rate and these effective tax rates is provided in Note 4 of the Company’s Notes to Consolidated Financial Statements. ​ 16 Table of Contents The Company has provided a full valuation allowance on its Spanish subsidiaries’ tax loss carry-forward benefits of $4,681 and $4,836 as of December 31, 2024 and 2023, respectively, because the Company has concluded that it is not more-likely-than-not that these losses will be utilized before their expiration dates.
Product cost of goods sold includes $814 and $(893) in certain deferred compensation expenses (credits) in 2023 and 2022, respectively. These deferred compensation expenses (credits) principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results.
Product cost of goods sold includes $803 and $814 in certain deferred compensation expenses in 2024 and 2023, respectively. These deferred compensation 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.
This asset value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position and is categorized as Level 1 within the fair value hierarchy. ​ Cash flows from investing activities reflect capital expenditures of $26,796, $23,356, and $31,426 in 2023, 2022 and 2021, respectively.
This asset value is included in prepaid expenses and long-term other assets in the Company’s Consolidated Statement of Financial Position and is categorized as Level 1 within the fair value hierarchy. ​ Cash flows from investing activities reflect capital expenditures of $17,997, $26,796, and $23,356 in 2024, 2023 and 2022, respectively.
Nonetheless, management believes that operating losses at its Spanish subsidiary may continue beyond 2024 and that these future losses, as well as some capital expenditures, may require some additional cash financing. ​ The Company believes that the carrying values of its goodwill and trademarks have indefinite lives as they are expected to generate cash flows indefinitely.
Management believes that operating losses at its Spanish subsidiary are expected to continue beyond 2025 and that these future losses, as well as some capital expenditures, will likely require additional cash financing. ​ The Company believes that the carrying values of its goodwill and trademarks have indefinite lives as they are expected to generate cash flows indefinitely.
The aforementioned is based on a range of valuations and interest rates which the Company’s actuary has advised is 18 Table of Contents provided under the statute.
The aforementioned is based on a range of valuations and interest rates which the Company’s actuary has advised is provided under the statute.
All investments are reviewed for impairment at each reporting period by comparing the carrying value or amortized cost to the fair market value.
Available for sale investments are reviewed for impairment at each reporting period by comparing the carrying value or amortized cost to the fair market value.
A contribution of $20,000 and $5,000 was made to this trust in 2023 and 2022, respectively; no contribution was made to the trust during 2021. The Company uses these funds to pay the actual cost of such benefits over each union contract period.
Contributions of $20,000 and $5,000 were made to this trust in 2023 and 2022, respectively; no contribution was made to the trust during 2024. The Company uses these funds to pay the actual cost of such benefits over each union contract period.
The Spanish subsidiary has a history of net operating losses and it is not known when and if they will generate taxable income in the future. ​ U.S. tax reform (US Tax Cuts and Jobs Act enacted in December 2017) changed the United States approach to the taxation of foreign earnings to a territorial system by providing a one hundred percent dividends received deduction for certain qualified dividends received from foreign subsidiaries.
The Spanish subsidiary has a history of net operating losses and it is not known when and if they will generate taxable income in the future. ​ U.S. tax reform (the TCJA) changed the United States approach to the taxation of foreign earnings to a territorial system by providing a one hundred percent dividends received deduction for certain qualified dividends received from foreign subsidiaries.
Current accounting guidance provides entities an option of performing a qualitative assessment (a "step-zero" test) before performing a quantitative analysis.
Current accounting guidance provides entities an option of performing a qualitative assessment (a "step-zero" test) before 15 Table of Contents performing a quantitative analysis.
The Company records valuation allowances in situations where the realization of deferred tax assets, including those relating to net operating tax losses, is not more-likely-than-not; and the Company adjusts and releases such valuation allowances when realization becomes more-likely-than-not as defined by accounting guidance.
The Company records valuation allowances, or may actually adjust or write-off deferred tax assets, in situations where the realization of deferred tax assets, including those relating to net operating tax losses, is not more-likely-than-not; and the Company adjusts and releases such valuation allowances when realization becomes more-likely-than-not as defined by accounting guidance.
For the fair value assessment of certain trademarks where the “step-zero” analysis was not considered appropriate, impairment testing was performed in fourth quarter 2023 (and fourth quarters 2022 and 2021) using discounted cash flows and estimated royalty rates.
For the fair value assessment of certain trademarks where the “step-zero” analysis was not considered appropriate, impairment testing was performed in fourth quarter 2024 (and fourth quarters 2023 and 2022) using discounted cash flows and estimated royalty rates and concluded that the trademarks were not impaired.
Nonetheless, the Company would consider bank borrowing or other financing in the event that a business acquisition is completed. ​ Financing activities include Company common stock purchases and retirements of $33,114, $31,910, and $30,184 in 2023, 2022 and 2021, respectively.
Nonetheless, the Company would consider bank borrowing or other financing in the event that a business acquisition is completed. ​ Financing activities include Company common stock purchases and retirements of $13,534, $33,114, and $31,910 in 2024, 2023 and 2022, respectively.
See Note 10 of the Company’s Notes to Consolidated Financial Statements for outstanding foreign exchange forward contracts as of December 31, 2023. ​ 24 Table of Contents ​ ​
See Note 10 of the Company’s Notes to Consolidated Financial Statements for outstanding foreign exchange forward contracts as of December 31, 2024. ​ 23 Table of Contents ​ ​
Selling, marketing and administrative expenses include $14,675 and $(16,370) in certain deferred compensation expenses (credits) in 2023 and 2022, respectively. These deferred compensation expenses (credits) principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results.
Selling, marketing and administrative expenses include $15,521 and $14,675 in certain deferred compensation expenses in 2024 and 2023, respectively. These deferred compensation 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.
At December 31, 2023 and 2022, the VEBA trust held $19,126 and $3,879 respectively, of aggregate cash and cash equivalents, which the Company expects to use to pay certain union employee benefits through part or all of 2027.
At December 31, 2024 and 2023, the VEBA trust held $13,926 and $19,126 respectively, of aggregate cash and cash equivalents, which the Company expects to use to pay certain union employee benefits through part or all of 2027.
Other income (expense), net includes investment income on available for sale securities of $5,211 and $2,641 in 2023 and 2022, respectively, which reflects both higher interest rates and related investment returns on the Company’s available for sale marketable securities, as well as an increase in the average balances in 2023 on such securities.
Other income, net includes investment income from available for sale securities of $9,598 and $5,211 in 2024 and 2023, respectively, which reflects both higher interest rates and related investment returns on the Company’s available for sale marketable securities, as well as an increase in the average balances in 2024 on such securities.
The number of current active employee Plan participants as of January 1, 2022 fell 5% from the previous year and 10% over the past two years.
The number of current active employee Plan participants as of January 1, 2023 fell 1% from the previous year and 6% over the past two years.
It should be read in conjunction with the Consolidated Financial Statements and related Notes that follow this discussion. ​ FINANCIAL CONDITION ​ The Company’s overall financial position remains strong given that aggregate cash, cash equivalents and investments is $427,028 at December 31, 2023, including $87,800 in trading securities discussed below.
It should be read in conjunction with the Consolidated Financial Statements and related Notes that follow this discussion. ​ FINANCIAL CONDITION ​ The Company’s overall financial position remains strong given that aggregate cash, cash equivalents and investments is $526,968 at December 31, 2024, including $105,067 in trading securities discussed below.
Individually, a 100 basis point increase in the discount rate or a 100 basis point decrease in the royalty rate would not resul t in a potential impairment as of December 31, 2023. ​ Earnings from operations were $101,828 in 2023 compared to $110,755 in 2022, a decrease of $8,927.
Individually, a 100 basis point increase in the discount rate or a 100 basis point decrease in the royalty rate would not resul t in a potential impairment as of December 31, 2024. ​ Earnings from operations were $100,505 in 2024 compared to $101,828 in 2023, a decrease of $1,323.
Cash flows from 2023 operating activities totaled $94,611 compared to $72,051 in 2022, and are discussed in the section entitled Liquidity and Capital Resources.
Cash flows from 2024 operating activities totaled $138,889 compared to $94,611 in 2023, and are discussed in the section entitled Liquidity and Capital Resources.
The Company invests in trading securities to provide an economic hedge for its deferred compensation liabilities, as further discussed herein and in Note 9 of the Company’s Notes to Consolidated Financial Statements. ​ Shareholders’ equity increased from $783,171 at December 31, 2022 to $823,422 as of December 31, 2023, which principally reflects 2023 net earnings of $91,912, less cash dividends of $25,076 and share repurchases of $33,114. ​ The Company has a relatively straight-forward financial structure and has historically maintained a conservative financial position.
The Company invests in trading securities to provide an economic hedge for its deferred compensation liabilities, as further discussed herein and in Note 7 of the Company’s Notes to Consolidated Financial Statements. ​ Shareholders’ equity increased from $823,422 at December 31, 2023 to $870,743 as of December 31, 2024, which principally reflects 2024 net earnings of $86,827, less cash dividends of $25,515 and share repurchases of $13,534. ​ The Company has a relatively straight-forward financial structure and has historically maintained a conservative financial position.
Based on the same actuarial estimates, the present value of such perpetuities had a mass withdrawal occurred in 2022 is in the range of $44,472 to $115,808 and would apply in the unlikely event that substantially all employers withdraw from the Plan.
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.
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 3% and participants who were retired or separated from service and entitled to future benefits increased 8%. ​ The Company has been advised that its withdrawal liability would have been $96,000, $104,300, and $99,300 if it had withdrawn from the Plan during 2022, 2021, and 2020, respectively, which is the most recent information available to the Company.
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 55%, whereas participants who were retired or separated from service and receiving benefits increased 3% and participants who were retired or separated from service and entitled to future benefits increased 6%. ​ The Company has been advised that its withdrawal liability would have been $97,500, $102,200 and $96,000 if it had withdrawn from the Plan during 2024, 2023 and 2022 respectively (most recent information provided by the Plan).
Such adjustments have not historically been material to the Company’s operating results. ​ Valuation of long-lived assets ​ Long-lived assets, primarily property, plant and equipment, are reviewed for impairment as events or changes in business circumstances occur indicating that the carrying value of the asset may not be recoverable.
Although the Company recorded a $5,665 favorable change in this estimate in 2024, as discussed above, such adjustments have not historically been material to the Company’s operating results. ​ 20 Table of Contents Valuation of long-lived assets ​ Long-lived assets, primarily property, plant and equipment, are reviewed for impairment as events or changes in business circumstances occur indicating that the carrying value of the asset may not be recoverable.
The Company is currently studying this area and believes that this will take place over the next five years, however, most of the actual expenditures are expected to occur in the next three years. Company management believes that the total cost this expansion, including new machinery, equipment and food processing infrastructure, will approximate $70,000 to $80,000.
The Company expects that this will take place over the next seven years, however, most of the actual expenditures are expected to occur in 2025 and 2026. Company management believes that the total cost of this expansion, including new machinery, equipment and food processing infrastructure, and warehousing will approximate $100,000.
Periodically, the Company considers possible acquisitions, and if the Company were to pursue and complete such an acquisition, that could result in bank borrowings or other financing. ​ RESULTS OF OPERATIONS ​ 2023 vs. 2022 ​ The consolidated net product sales for the twelve months of 2023 were $763,252 compared to the twelve months 2022 of $681,440, an increase of $81,812 or 12.0%.
Periodically, the Company considers possible acquisitions, and if the Company were to pursue and complete such an acquisition, that could result in bank borrowings or other financing. ​ RESULTS OF OPERATIONS ​ 2024 vs. 2023 ​ The consolidated net product sales for the twelve months of 2024 were $715,530 compared to the twelve months 2023 of $763,252, a decrease of $47,722 or 6.3%.
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. ​ In response to these higher input costs, many companies in the consumer products industry have increased selling prices during the 2021 through 2023 period.
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 usually accelerates the realization of these higher costs.
Other income (expense), net principally reflects $15,489 and $(17,263) of aggregate net gains (losses) and investment income on trading securities in 2023 and 2022, respectively.
Other income, net principally reflects $16,324 and $15,489 of aggregate net gains and investment income on trading securities in 2024 and 2023, respectively.
During 2023, the Company paid cash dividends of $25,076, purchased and retired $33,114 of its outstanding shares, and made capital expenditures of $26,796, all of which was financed from internal sources. ​ The Company’s net working capital was $245,763 at December 31, 2023 compared to $218,894 at December 31, 2022.
During 2024, the Company paid cash dividends of $25,515, purchased and retired $13,534 of its outstanding shares, and made capital expenditures of $17,997, all of which was financed from internal sources. ​ The Company’s net working capital was $246,319 at December 31, 2024 compared to $245,763 at December 31, 2023.
As a percent of net product sales, these adjusted expenses decreased from 9.9% in 2022 to 8.6% in 2022, a 1.3 favorable percentage point change. ​ The Company has foreign operating businesses in Mexico, Canada and Spain, and exports products to many foreign markets.
As a percent of net product sales, these adjusted expenses decreased from 8.6% in 2023 to 8.0% in 2024, a 0.6 favorable percentage point change, which generally reflects the benefits of lower freight surcharges and a more favorable freight market. ​ The Company has foreign operating businesses in Mexico, Canada and Spain, and exports products to many foreign markets.
The Company periodically reviews assumptions and estimates of the Company’s probable tax obligations and effects on its liability for uncertain tax positions, using informed judgment which may include the use of third-party consultants, advisors and legal counsel, as well as historical experience. ​ Valuation of investments ​ Investments classified as available for sale primarily comprise high quality corporate bonds which are generally not sold prior to maturity, which is typically three to five years.
The Company periodically reviews assumptions and estimates of the Company’s probable tax obligations and effects on its liability for uncertain tax positions, using informed judgment which may include the use of third-party consultants, advisors and legal counsel, as well as historical experience. ​ Valuation of investments ​ Investments are classified as either available for sale or trading.
The Company’s Spanish subsidiary (97% owned by the Company) incurred an operating loss of $828 in 2023 compared to its $1,430 loss in 2022. Company management expects the competitive and business challenges in Spain to continue, however, Company management believes that we will continue to make progress on reducing this operating loss in 2024.
The Company’s Spanish subsidiary (97% owned by the Company) incurred an operating loss of $611 in 2024 compared to its $828 loss in 2023. Company management expects the competitive and business challenges in Spain to continue.
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 the Plan was projected to have an accumulated funding deficiency for the 2017 through 2024 plan years.
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.
Adjusting for the aforementioned, selling, marketing and administrative expenses increased from $138,346 in 2022 to $140,337 in 2023, an increase of $1,991 or 1.4%. As a percent of net product sales, these adjusted expenses decreased from 20.3% of net product sales in 2022 to 18.4% of net product sales in 2023, a 1.9 favorable percentage point change.
Adjusting for the aforementioned, selling, marketing and administrative expenses decreased from $140,337 in 2023 to $137,154 in 2024, a decrease of $3,183 or 2.3%. As a percent of net product sales, these adjusted expenses increased from 18.4% of net product sales in 2023 to 19.2% of net product sales in 2024, a 0.8 unfavorable percentage point change.
For these trademarks, holding all other assumptions constant at the test date, a 100 basis point increase in the discount rate or a 100 basis point decrease in the royalty rate would reduce the fair value of these trademarks by approximatel y 14% and 10%, respectively.
For these trademarks, holding all other assumptions constant, as of December 31, 2024, a 100 basis point increase in the discount rate would reduce the fair value of these trademarks by approximately 12% and a 100 basis point decrease in the royalty rate would increase the fair value of these trademarks by approximately 16%.
The accompanying chart summarizes the maturities of the Company’s investments in debt securities at December 31, 2023. ​ ​ ​ ​ ​ ​ Less than 1 year $ 95,507 1 – 2 years ​ 47,848 2 – 3 years ​ ​ 46,226 3 – 4 years ​ 73,732 Total ​ $ 263,313 ​ 23 Table of Contents The Company’s outstanding debt at December 31, 2023 and 2022 was $7,500 in an industrial revenue bond in which interest rates reset each week based on the current market rate.
The accompanying chart summarizes the maturities of the Company’s investments in debt securities at December 31, 2024. ​ ​ ​ ​ ​ ​ Less than 1 year $ 55,789 1 – 2 years ​ 46,980 2 – 5 years ​ ​ 180,291 Total ​ $ 283,060 ​ The Company’s outstanding debt at December 31, 2024 and 2023 was $7,500 in an industrial development bond in which interest rates reset each week based on the current market rate.
The aforementioned expense includes surcharges of $1,239, $1,237 and $1,112 in 2023, 2022 and 2021, respectively, as required under the amended rehabilitation plan discussed above. ​ The Company is currently unable to determine the ultimate outcome of the above discussed multi-employer union pension matter and therefore is unable to determine the effects on its consolidated financial statements, but the ultimate outcome could be material to its consolidated results of operations or cash flows in one or more future periods.
The Company is unable to determine the ultimate outcome of the above discussed multi-employer union pension matter and therefore is unable to determine the effects on its consolidated financial statements, but the ultimate outcome could have a material adverse effect on the Company’s consolidated results of operations or cash flows in one or more future periods.
Adjusting for the aforementioned, product cost of goods sold increased from $453,445 in 2022 to $509,923 in 2023, an increase of $56,478 or 12.5%. As a percent of net product sales, these adjusted costs increased from 66.5% in 2022 to 66.8% in 2023, a 0.3 unfavorable percentage point change.
Adjusting for the aforementioned, product cost of goods sold decreased from $509,923 in 2023 to $467,253 in 2024, a decrease of $42,670 or 8.4%. As a percent of net product sales, these adjusted costs decreased from 66.8% in 2023 to 65.3% in 2024, a 1.5 favorable percentage point change.
After carefully considering these facts, the Company determined that it asserts the permanent reinvestment of all of its foreign subsidiaries earnings as of December 31, 2023. ​ Net earnings were $91,912 in 2023 compared to $75,937 in 2022, and net earnings per share were $1.32 and $1.07 in 2023 and 2022, respectively, an increase of $0.25 per share or 23.4%.
After carefully considering these facts, the Company determined that it asserts the permanent reinvestment of all of its foreign subsidiaries’ earnings as of December 31, 2024. ​ Net earnings attributable to Tootsie Roll Industries, Inc. were $86,827 in twelve months 2024 compared to $91,912 in 2023, and net earnings per share were $1.22 and $1.28 in 2024 and 2023, respectively, a decrease of $0.06 per share or 4.7%.
Although the Company continues to monitor its input costs, we are mindful of the effects and limits of passing on all of the above-discussed higher input costs to our customers as well as the final consumers of our products.
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. ​ Selling, marketing and administrative expenses were $152,675 in 2024 compared to $155,012 in 2023, a decrease of $2,337 or 1.5%.
Although higher 2023 sales contributed to improved operating earnings compared to 2022, higher input costs mitigated much of the benefits of increased sales. ​ Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred compensation, are more reflective of the underlying operations of the Company. ​ Other income (expense), net was $18,066 in 2023 compared to $(12,614) in 2022, an increase of $30,680.
The above discussed decrease in net product sales was the principal driver of lower adjusted operating earnings in 2024 compared to 2023. ​ Management believes the comparisons presented in the preceding paragraphs, after adjusting for changes in deferred compensation, are more reflective of the underlying operations of the Company. ​ Other income, net was $26,366 in 2024 compared to $18,066 in 2023, an increase of $8,300.
Earnings from operations include $15,489 and $(17,263) in certain deferred compensation expense (credits) in 2023 and 2022, respectively, which are discussed above. Adjusting for these deferred compensation expenses (credits), adjusted earnings from operations increased from $93,492 in 2022 to $117,317 in 2023, an increase of $23,825 or 25.5%.
Earnings from operations include $16,324 and $15,489 in certain deferred compensation expense in 2024 and 2023, respectively, which are discussed above. Adjusting for these deferred compensation expenses, adjusted earnings from operations decreased from $117,317 in 2023 to $116,829 in 2024, a decrease of $488 or 0.4%.
The Company uses a “ladder” approach to its maturities so that approximately 20% to 35% of the portfolio matures each year with the objective of achieving higher yields with minimum interest rate risk.
Investments classified as available for sale primarily comprise high quality corporate bonds which are generally not sold prior to maturity, which is typically three to five years. The Company uses a “ladder” approach to its maturities so that approximately 20% to 35% of the portfolio matures each year with the objective of achieving higher yields with minimum interest rate risk.
Based on these updated notices, the Plan’s funded percentage (plan investment assets as a percentage of plan liabilities), as defined, were 49.4%, 48.5%, and 48.3% as of the most recent valuation dates available, January 1, 2022, 2021, and 2020, respectively (these valuation dates are as of the beginning of each Plan year).
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. ​ 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).
The $13,247 decrease in cash flows from operating activities from 2021 to 2022 primarily reflects increases in inventories during 2022 including higher unit costs for materials, offset by increases in net earnings and accounts receivable due to increased sales. ​ The Company manages and controls a VEBA trust, to fund the estimated future costs of certain union employee health, welfare and other benefits.
The $22,560 increase in cash flows from operating activities from 2022 to 2023 primarily reflects increases net earnings during 2023, lower inventories, and changes in deferred income taxes including the write-off of deferred tax assets relating to deferred compensation as discussed above. ​ The Company manages and controls a VEBA trust, to fund the estimated future costs of certain union employee health, welfare and other benefits.
Fourth quarter 2023 and 2022 net earnings attributable to Tootsie Roll Industries, Inc. were 17 Table of Contents $29,403 and $25,344, respectively, and net earnings per share were $0.42 and $0.36, respectively, an increase of $0.06 per share or 16.7%. ​ 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 (the “Trustees”) in 2012.
Average shares outstanding decreased from 71,903 in 2023 to 71,320 in 2024 which reflects share repurchases of $13,534 during 2024. ​ 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.
This increase principally reflects the effects of increased short-term investments and inventories which is discussed below. As of December 31, 2023, the Company’s total cash, cash equivalents and investments, including all long-term investments, was $427,028 compared to $396,926 at December 31, 2022, an increase of $30,102. See Liquidity And Capital Resources section below for discussion.
As of December 31, 2024, the Company’s total cash, cash equivalents and investments, including all long-term investments, was $526,968 compared to $427,028 at December 31, 2023, an increase of $99,940. See Liquidity And Capital Resources section below for discussion. The aforementioned includes $105,067 and $87,800 of investments in trading securities as of December 31, 2024 and 2023, respectively.
The most recent decrease in the withdrawal liability as advised by the Plan was primarily driven by an increase in the PBGC interest rates used to value a portion of the liability as well as the positive market value investment performance in 2021.
The most recent decrease in the withdrawal liability as advised by the Plan was primarily driven by an increase in the PBGC interest rates used to value a portion of the present value of vested benefits (the Plan uses a blended interest rate assumption). As discussed below, the Plan was granted $3.4 billion in Special Financial Assistance in July 2024.
Based on the above, including the Company’s increase in such union labor hours to meet its higher product demand in 2022 and 2023, and the Plan’s projected insolvency in the next 20 years, management believes that the Company’s withdrawal liability will likely increase further in future years. ​ Based on the Company’s most recent actuarial estimates using the information provided by the Plan with respect to the 2022 withdrawal liability (which is the most recent information available 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 2022 would likely be limited to twenty annual payments of $2,714 which have a present value in the range of $31,851 to $43,741 depending on the interest rate used to discount these payments.
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. 17 Table of Contents ​ 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.
Earnings per share in 2023 benefited from the reduction in average shares outstanding resulting from purchases of the Company’s common stock in the open market by the Company. Average shares outstanding decreased from 70,868 in 2022 to 69,827 in 2023 which reflects share repurchases of $33,114 during 2023.
Earnings per share in both fourth quarter and twelve months 2024 benefited by the reduction in average shares outstanding resulting from purchases of the Company’s common stock in the open market by the Company.
See also Note 7 of the Company’s Note to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2023. ​ ​ 19 Table of Contents LIQUIDITY AND CAPITAL RESOURCES ​ Cash flows from operating activities were $94,611, $72,051 and $85,298 in 2023, 2022 and 2021, respectively.
See also Note 7 of the Company’s Notes to Consolidated Financial Statements on Form 10-K for the year ended December 31, 2024. ​ 18 Table of Contents 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. ​ LIQUIDITY AND CAPITAL RESOURCES ​ Cash flows from operating activities were $138,889, $94,611 and $72,051 in 2024, 2023 and 2022, respectively.
Fourth quarter 2023 net product sales were $195,368 compared to $188,180 in fourth quarter 2022, an increase of $7,188, or 3.8%. The sales growth in fourth quarter and twelve months 2023 was driven primarily by higher sales price realization.
Fourth quarter 2024 net product sales were $191,356 compared to $195,368 in fourth quarter 2023, a decrease of $4,012, or 2.1%. The sales decline in fourth quarter and twelve months 2024 was driven primarily by lower sales volumes.
Other income, net also includes foreign exchange (losses) gains of $(2,803) and $1,307 in 2023 and 2022, respectively. ​ The Company’s effective income tax rates were 21.8% and 21.2% in fourth quarter 2023 and 2022, respectively, and 23.4% and 22.7% in twelve months 2023 and 2022, respectively.
Excluding the effects of the write-off of deferred tax assets as discussed above, the Company’s effective income tax rates were 23.8% and 21.8% in fourth quarter 2024 and 2023, respectively, and 22.9% and 23.4% in twelve months 2024 and 2023, respectively.
We have implemented price increases as well with the objective of improving sales price realization in order to pass along some of these higher input costs and restore some of our margin declines. We made progress in restoring our margins in 2023, but we have not yet restored our margins to historical levels.
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.
Under terms of this new union contract, the Company is obligated to continue its participation in the Plan. The Company’s pension expense for this Plan for 2023, 2022 and 2021 was $3,516, $3,510 and $3,156, respectively.
Under terms of the union contract the Company is obligated to continue its participation in the Plan during the contract period.
The Plan has recently advised that the information discussed herein, including the Company’s withdrawal liability, is the most current available information. 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.
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%).
The $22,560 increase in cash flows from operating activities from 2022 to 2023 primarily reflects higher net income and a lower investment in net working capital despite a $20,000 contribution to a Voluntary Employee Benefit Association (“VEBA”) trust as discussed below. Inventories increased in 2022 to better meet demand on a timely basis as well as higher input costs.
The $44,278 increase in cash flows from operating activities from 2023 to 2024 primarily reflects a lower investment in net working capital. Inventories decreased by $17,296 or 18.2% in 2024 to better meet demand on a timely basis.
In first quarter 2021, the local bargaining union and the Company executed this agreement which resulted in the “freezing” of such surcharges as of December 31, 2020. ​ The Plan advised the Company that it is in the process of applying for benefits available to financial troubled plans under the American Rescue Plan Act of 2021 after having submitted the initial application to the PBGC on March 1, 2023.
In first quarter 2021, the local bargaining union and the Company executed this agreement which resulted in the “freezing” of such surcharges as of December 31, 2020. ​ The Company’s pension expense for this Plan for twelve months 2024 and 2023 was $3,332 and $3,516, respectively.

… 46 more changes not shown on this page.

Other TR 10-K year-over-year comparisons