TOOTSIE ROLL INDUSTRIES INC Fair Value Disclosure
NOTE 9—FAIR VALUE MEASUREMENTS:
Current accounting guidance defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.
As of December 31, 2025 and 2024, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These include derivative hedging instruments related to the foreign currency forward contracts and purchase of certain raw materials, investments in trading securities and available for sale securities. The Company’s available for sale securities principally consist of corporate bonds. The Company’s trading securities principally consist of mutual funds.
The fair value of the Company’s industrial development bond at December 31, 2025 and 2024 was valued using Level 2 inputs which approximates the carrying value of $7,500 for both periods. Interest rates on the bond reset weekly based on current market conditions.
The following tables present information about the Company’s financial assets and liabilities measured at fair value as of December 31, 2025 and 2024, and indicate the fair value hierarchy and the valuation techniques utilized by the Company to determine such fair value:
Estimated Fair Value December 31, 2025 |
| ||||||||||||
Total | Input Levels Used |
| |||||||||||
| Fair Value | | Level 1 | | Level 2 | | Level 3 |
| |||||
Cash and equivalents | $ | 127,165 | $ | 127,165 | $ | — | $ | — | |||||
Available for sale securities |
| 365,041 | 2,961 | 362,080 | — | ||||||||
Foreign currency derivatives |
| 92 | — | 92 | — | ||||||||
Commodity derivatives |
| (1,748) | (1,748) | — | — | ||||||||
Trading securities |
| 121,541 | 104,642 | 16,899 | — | ||||||||
Total assets measured at fair value | $ | 612,091 | $ | 233,020 | $ | 379,071 | $ | — | |||||
Estimated Fair Value December 31, 2024 |
| ||||||||||||
Total | Input Levels Used |
| |||||||||||
| Fair Value | | Level 1 | | Level 2 | | Level 3 |
| |||||
Cash and equivalents | $ | 138,841 | $ | 138,841 | $ | — | $ | — | |||||
Available for sale securities |
| 283,060 |
| 4,102 |
| 278,958 |
| — | |||||
Foreign currency derivatives |
| (818) |
| — |
| (818) |
| — | |||||
Commodity derivatives |
| (2,166) |
| (2,166) |
| — |
| — | |||||
Trading securities |
| 105,067 |
| 86,925 |
| 18,142 |
| — | |||||
Total assets measured at fair value | $ | 523,984 | $ | 227,702 | $ | 296,282 | $ | — | |||||
Available for sale securities which utilize Level 2 inputs consist primarily of corporate bonds, which are valued based on quoted market prices or alternative pricing sources with reasonable levels of price transparency.
A summary of the aggregate fair value, gross unrealized gains, gross unrealized losses and amortized cost basis of the Company’s investment portfolio by major security type is as follows:
December 31, 2025 |
| |||||||||||||
Amortized | Fair | Unrealized |
| |||||||||||
Available for Sale: | | Cost | | Value | | Gains | | Losses | |
| ||||
Variable rate demand notes | — | — | — | — | ||||||||||
Corporate bonds |
| 360,094 |
| 362,080 |
| 1,986 |
| — | ||||||
Government securities |
| 2,953 |
| 2,961 | 8 |
| — | |||||||
$ | 363,047 | $ | 365,041 | $ | 1,994 | $ | — | |||||||
December 31, 2024 |
| |||||||||||||
Amortized | Fair | Unrealized |
| |||||||||||
Available for Sale: | | Cost | | Value | | Gains | | Losses | |
| ||||
Variable rate demand notes | 5,485 | 5,485 | — | — | ||||||||||
Corporate bonds |
| 271,978 |
| 273,473 |
| 1,495 |
| — | ||||||
Government securities |
| 4,036 |
| 4,102 | 66 |
| — | |||||||
$ | 281,499 | $ | 283,060 | $ | 1,561 | $ | — | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.