Tootsie Roll Industries Reports Material Impairment

TL;DR

Tootsie Roll just disclosed a major impairment. Big red flag.

AI Summary

Tootsie Roll Industries, Inc. filed an 8-K on December 9, 2024, reporting a material impairment as of December 3, 2024. The filing indicates a significant event related to the company's assets or operations that requires disclosure.

Why It Matters

A material impairment suggests a significant negative revaluation of company assets, which could impact future profitability and investor confidence.

Risk Assessment

Risk Level: medium — Material impairments can signal underlying financial distress or operational issues that could negatively affect the company's value.

Key Players & Entities

• TOOTSIE ROLL INDUSTRIES, INC. (company) — Registrant
• December 3, 2024 (date) — Date of earliest event reported
• December 9, 2024 (date) — Date of Report
• 7401 South Cicero Avenue Chicago, IL 60629 (address) — Principal executive offices

FAQ

Key Financial Figures

• $0.694 — h registered: Common Stock, par value $0.694 per share TR New York Stock Exchang
• $11 — n-cash tax charge between approximately $11 and $12 million in fourth quarter 2024.
• $12 million — ax charge between approximately $11 and $12 million in fourth quarter 2024. This charge wil

Filing Documents

• tr-20241203x8k.htm (8-K) — 35KB
• 0001558370-24-016099.txt ( ) — 149KB
• tr-20241203.xsd (EX-101.SCH) — 3KB
• tr-20241203_lab.xml (EX-101.LAB) — 15KB
• tr-20241203_pre.xml (EX-101.PRE) — 10KB
• tr-20241203x8k_htm.xml (XML) — 5KB

06

Item 2.06. Material Impairments. On December 3, 2024, the Board of Directors (the "Board") of Tootsie Roll Industries, Inc. (the "Company") revoked its prior action dated December 28, 2018 that permitted management to take appropriate action to preserve the full income tax deductibility of certain amounts under its nonqualified deferred compensation plans in light of changes to Section 162(m) of Internal Revenue Code made by the Tax Cuts and Jobs Act of 2017 ("TCJA"). The Board revoked its authorization after determining that it was no longer feasible, after considering the purpose of these plans, to secure tax deductions on all accrued deferred compensation by further deferring payment amounts, in large part, due to interpretations of TCJA later adopted by the IRS and the subsequent growth of plan account balances due to sustained equity market appreciation. Given this Board action and the resulting expectation that certain additional amounts of deferred compensation will not be tax deductible in future years, the Company concluded that it will be required under generally accepted accounting principles in the United States of America to write off the related deferred tax assets. The adjustment to the deferred tax assets is expected to result in a non-cash tax charge between approximately $11 and $12 million in fourth quarter 2024. This charge will be reflected in the Company's annual report on Form 10-K for fiscal year 2024. The Company does not anticipate that this write off will result in future cash expenditures other than the Company's inability to deduct certain deferred compensation payments against future taxable income.

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the expected amount and timing of charges the Company expects to record as a result of the impairment of its deferred tax assets, as well as the events, circumstances and assumptions that underly these matters. These forward-looking statements are based on management's reasonable expectations and assumptions as of the date of this report. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management, including the risk that the charges may be in excess of the estimated amounts or may occur in different fiscal periods than expected and other risk factors, including those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof, except as required under applicable law. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the under-signed thereunto duly authorized. December 9, 2024 TOOTSIE ROLL INDUSTRIES, INC. By: /S/ G. HOWARD EMBER, JR. G. Howard Ember, Jr. Vice President Finance and Chief Financial Officer 3

View Full Filing

View this 8-K filing on SEC EDGAR