10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June  30, 2017

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

COMMISSION FILE NUMBER 1-1361

Tootsie Roll Industries, Inc.

(Exact Name of Registrant as Specified in its Charter)

VIRGINIA	22-1318955
(State of Incorporation)	(I.R.S. Employer Identification No.)

7401 South Cicero Avenue, Chicago, Illinois	60629
(Address of Principal Executive Offices)	(Zip Code)

773-838-3400

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

` Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐  No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date (June  30, 2017).

Class	Outstanding
Common Stock, $.69 4/9 par value	38,318,644
Class B Common Stock, $.69 4/9 par value	24,917,660

TOOTSIE ROLL INDUSTRIES, INC.

June 30, 2017

INDEX

		Page No.
Part I —	Financial Information
Item 1.
	Condensed Consolidated Statements of Financial Position	3-4
	Condensed Consolidated Statements of Earnings and Retained Earnings	5
	Condensed Consolidated Statements of Comprehensive Earnings	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8-15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
Part II —	Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 6.	Exhibits	20
Signatures		21

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See “Forward-Looking Statements” under Part I — Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands) (Unaudited)

	June 30, 2017		December 31, 2016		June 30, 2016
ASSETS
CURRENT ASSETS:
Cash & cash equivalents	$	57,804	$	119,145	$	91,950
Restricted cash		415		382		403
Investments		71,940		67,513		32,986
Trade accounts receivable, less allowances of $1,944,  $1,884 & $2,038		31,254		42,964		29,061
Other receivables		6,610		3,299		2,419
Inventories:
Finished goods & work-in-process		64,980		34,631		59,764
Raw material & supplies		29,606		22,900		33,899
Prepaid expenses		5,207		7,146		7,722
Deferred income taxes		-		1,320		3,155
Total current assets		267,816		299,300		261,359
PROPERTY, PLANT & EQUIPMENT, at cost:
Land		22,202		22,081		22,166
Buildings		116,547		116,398		114,504
Machinery & equipment		369,667		369,802		355,212
Construction in progress		10,245		3,546		14,993
		518,661		511,827		506,875
Less-accumulated depreciation		339,871		330,922		322,270
Net property, plant and equipment		178,790		180,905		184,605
OTHER ASSETS:
Goodwill		73,237		73,237		73,237
Trademarks		175,024		175,024		175,024
Investments		196,308		164,665		186,931
Split dollar officer life insurance		26,042		26,042		26,042
Prepaid expenses and other assets		40		602		1,739
Deferred income taxes		-		326		289
Total other assets		470,651		439,896		463,262
Total assets	$	917,257	$	920,101	$	909,226

(The accompanying notes are an integral part of these statements.)

3

(in thousands except per share data) (Unaudited)

	June 30, 2017		December 31, 2016		June 30, 2016
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	13,819	$	10,320	$	14,621
Bank loans		334		336		305
Dividends payable		5,692		5,573		5,625
Accrued liabilities		44,266		46,300		44,677
Postretirement health care		513		513		448
Income taxes payable		-		-		-
Deferred income taxes		-		519		667
Total current liabilities		64,624		63,561		66,343
NONCURRENT LIABILITIES:
Deferred income taxes		44,257		46,060		49,197
Bank loans		-		230		317
Postretirement health care		11,832		11,615		11,158
Industrial development bonds		7,500		7,500		7,500
Liability for uncertain tax positions		5,361		5,185		5,128
Deferred compensation and other liabilities		80,161		74,412		69,185
Total noncurrent liabilities		149,111		145,002		142,485
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 38,319,  37,701 & 38,231, respectively, issued		26,610		26,181		26,549
Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 24,918,  24,221 & 24,227, respectively, issued		17,304		16,820		16,824
Capital in excess of par value		670,477		646,768		666,322
Retained earnings		9,615		43,833		8,491
Accumulated other comprehensive loss		(18,581)		(20,246)		(16,059)
Treasury stock (at cost)- 85,  83 & 83 shares, respectively		(1,992)		(1,992)		(1,992)
Total Tootsie Roll Industries, Inc. shareholders’ equity		703,433		711,364		700,135
Noncontrolling interests		89		174		263
Total equity		703,522		711,538		700,398
Total liabilities and shareholders’ equity	$	917,257	$	920,101	$	909,226

(The accompanying notes are an integral part of these statements.)

4

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

EARNINGS AND RETAINED EARNINGS

(in thousands except per share amounts) (Unaudited)

	Quarter Ended				Year to Date Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Net product sales	$	104,897	$	104,259	$	208,322	$	207,621
Rental and royalty revenue		899		910		1,929		1,943
Total revenue		105,796		105,169		210,251		209,564
Product cost of goods sold		65,259		65,009		130,675		130,833
Rental and royalty cost		251		245		517		547
Total costs		65,510		65,254		131,192		131,380
Product gross margin		39,638		39,250		77,647		76,788
Rental and royalty gross margin		648		665		1,412		1,396
Total gross margin		40,286		39,915		79,059		78,184
Selling, marketing and administrative expenses		26,429		25,618		53,027		49,671
Earnings from operations		13,857		14,297		26,032		28,513
Other income (loss), net		2,465		2,239		4,444		2,204
Earnings before income taxes		16,322		16,536		30,476		30,717
Provision for income taxes		4,472		5,462		8,615		9,787
Net earnings		11,850		11,074		21,861		20,930
Less: Net earnings (loss) attributable to noncontrolling interests		(45)		(62)		(85)		(102)
Net earnings attributable to Tootsie Roll Industries, Inc.	$	11,895	$	11,136	$	21,946	$	21,032
Net earnings attributable to Tootsie Roll Industries, Inc. per share	$	0.19	$	0.17	$	0.35	$	0.33
Dividends per share *	$	0.09	$	0.09	$	0.18	$	0.18
Average number of shares outstanding		63,270		64,274		63,439		64,313
Retained earnings at beginning of period	$	3,405	$	2,972	$	43,833	$	52,349
Net earnings attributable to Tootsie Roll Industries, Inc.		11,895		11,136		21,946		21,032
Cash dividends		(5,685)		(5,617)		(11,240)		(11,074)
Stock dividends		-		-		(44,924)		(53,816)
Retained earnings at end of period	$	9,615	$	8,491	$	9,615	$	8,491

*Does not include 3% stock dividend to shareholders of record on 3/7/17 and 3/8/16.

(The accompanying notes are an integral part of these statements.)

5

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS

(in thousands except per share amounts) (Unaudited)

	Quarter Ended				Year to Date Ended
	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016
Net earnings	$	11,850	$	11,074	$	21,861	$	20,930
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		991		(1,636)		3,091		(1,431)
Pension and postretirement reclassification adjustments:
Unrealized gains (losses) for the period on postretirement and pension benefits		(175)		-		91		-
Less: reclassification adjustment for (gains) losses to net earnings		(366)		(410)		(731)		(821)
Unrealized gains (losses) on postretirement and pension benefits		(541)		(410)		(640)		(821)
Investments:
Unrealized gains (losses) for the period on investments		149		509		379		999
Less: reclassification adjustment for (gains) losses to net earnings		-		-		-		4
Unrealized gains (losses) on investments		149		509		379		1,003
Derivatives:
Unrealized gains (losses) for the period on derivatives		(1,204)		2,162		(1,754)		3,123
Less: reclassification adjustment for (gains) losses to net earnings		985		370		(137)		983
Unrealized gains (losses) on derivatives		(219)		2,532		(1,891)		4,106
Total other comprehensive income (loss), before tax		380		995		939		2,857
Income tax benefit (expense) related to items of other comprehensive income		333		(953)		726		(1,552)
Total comprehensive earnings		12,563		11,116		23,526		22,235
Comprehensive earnings (loss) attributable to noncontrolling interests		(45)		(62)		(85)		(102)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$	12,608	$	11,178	$	23,611	$	22,337

(The accompanying notes are an integral part of these statements.)

6

TOOTSIE ROLL INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands) (Unaudited)

	Year to Date Ended
	June 30, 2017		June 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	21,861	$	20,930
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization		9,338		10,069
Deferred income taxes		21		675
Amortization of marketable security premiums		1,216		1,503
Changes in operating assets and liabilities:
Accounts receivable		12,535		21,748
Other receivables		(4,522)		1,877
Inventories		(36,460)		(31,639)
Prepaid expenses and other assets		2,138		1,823
Accounts payable and accrued liabilities		1,820		(142)
Income taxes payable		79		(6,102)
Postretirement health care benefits		(423)		(615)
Deferred compensation and other liabilities		776		1,521
Net cash from operating activities		8,379		21,648
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash		(22)		(2)
Capital expenditures		(7,427)		(10,389)
Purchases of trading securities		(3,007)		(2,774)
Sales of trading securities		435		613
Purchase of available for sale securities		(40,622)		(34,826)
Sale and maturity of available for sale securities		10,985		12,777
Net cash used in investing activities		(39,658)		(34,601)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired		(20,140)		(9,166)
Dividends paid in cash		(11,282)		(11,077)
Proceeds from bank loans		724		1,762
Repayment of bank loans		(965)		(1,764)
Net cash used in financing activities		(31,663)		(20,245)
Effect of exchange rate changes on cash		1,601		(997)
Decrease in cash and cash equivalents		(61,341)		(34,195)
Cash and cash equivalents at beginning of year		119,145		126,145
Cash and cash equivalents at end of quarter	$	57,804	$	91,950
Supplemental cash flow information:
Income taxes paid, net	$	8,798	$	15,390
Interest paid	$	31	$	9
Stock dividend issued	$	69,739	$	61,671

(The accompanying notes are an integral part of these statements.)

7

TOOTSIE ROLL INDUSTRIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June  30, 2017

(in thousands except per share amounts) (Unaudited)

Note 1 — Significant Accounting Policies

General Information

Foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the Company) and in the opinion of management all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim period have been reflected. Certain amounts previously reported have been reclassified to conform to the current year presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Results of operations for the period ended June 30, 2017 are not necessarily indicative of results to be expected for the year to end December 31, 2017 because of the seasonal nature of the Company’s operations. Historically, the third quarter has been the Company’s largest sales quarter due to pre-Halloween sales.

Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01 which modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. This guidance will be effective for the Company on January 1, 2019. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized over time or at a point in time. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

8

In August 2016, the FASB issued ASU 2016-15, which includes amendments addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendments to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, which requires employers who offer defined benefit and postretirement benefit plans to report the service cost component in the same line item as other compensation costs arising from services rendered by employees during the reporting period. The other components of net benefit costs will be presented in the income statement separately from the service cost and outside of a subtotal of income from operations. In addition, only the service cost component may be eligible for capitalization where applicable. This guidance is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

Recently Adopted Pronouncements

In November 2015, the FASB issued ASU 2015-17 which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. This guidance was adopted on January 1, 2017 on a prospective basis. Prior period balances have not been adjusted.

Note 2 — Average Shares Outstanding

The average number of shares outstanding for six months 2017 reflects stock purchases of 536 shares for $20,140 and a 3% stock dividend of 1,850 shares distributed on April 17, 2017. The average number of shares outstanding for six months 2016 reflects stock purchases of 283 shares for $9,166 and a 3% stock dividend of 1,819 shares distributed on April 8, 2016.

Note 3 — Income Taxes

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years 2013 through 2015. With few exceptions, the Company is no longer subject to examination by tax authorities for the year 2012 and prior. The consolidated effective tax rates were 27.4% and 33.0% in second quarter 2017 and 2016, respectively, and 28.3% and 31.9% in first half 2017 and 2016, respectively. The lower effective tax rate in second quarter and first half 2017 compared to second quarter and first half 2016 principally reflects certain benefits resulting from filing amended federal and state income tax returns, including a state income tax carry forward.

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received on the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

9

As of June 30, 2017, December 31, 2016 and June 30, 2016, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities. The Company’s available for sale securities principally consist of corporate and municipal bonds that are publicly traded and variable rate demand notes with interest rates that generally reset weekly and the security can be “put” back and sold weekly. Trading securities principally consist of equity mutual funds that are publicly traded.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of June 30, 2017, December 31, 2016 and June 30, 2016 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value June 30, 2017
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	57,804	$	57,804	$	-	$	-
Available for sale securities		192,983		2,406		190,577		-
Foreign currency forward contracts		83		-		83		-
Commodity futures contracts		(348)		(348)		-		-
Trading securities		75,265		75,265		-		-
Total assets measured at fair value	$	325,787	$	135,127	$	190,660	$	-
	Estimated Fair Value December 31, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	119,145	$	119,145	$	-	$	-
Available for sale securities		164,183		2,419		161,764		-
Foreign currency forward contracts		(119)		-		(119)		-
Commodity futures contracts, net		1,746		1,746		-		-
Trading securities		67,995		67,995		-		-
Total assets measured at fair value	$	352,950	$	191,305	$	161,645	$	-
	Estimated Fair Value June 30, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	91,950	$	91,950	$	-	$	-
Available for sale securities		156,051		2,440		153,611		-
Foreign currency forward contracts		(911)		-		(911)		-
Commodity futures contracts		2,661		2,661		-		-
Trading securities		63,866		63,866		-		-
Total assets measured at fair value	$	313,617	$	160,917	$	152,700	$	-

The fair value of the Company’s industrial revenue development bonds at June 30, 2017, December 31, 2016 and June 30, 2016 were valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. Interest rates on these bonds are reset weekly based on current market conditions.

10

Note 5 — Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including foreign currency forward contracts, commodity futures contracts and commodity option contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures contracts and most commodity option contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States. The Company does not engage in trading or other speculative use of derivative instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses either hedge accounting or mark-to-market accounting for its derivative instruments. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially all amounts reported in accumulated other comprehensive loss for commodity derivatives are expected to be reclassified to cost of goods sold. Substantially all amounts reported in accumulated other comprehensive loss for foreign currency derivatives are expected to be reclassified to other income, net.

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at June 30, 2017, December 31, 2016 and June 30, 2016:

	June 30, 2017
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	3,200	$	83	$	-
Commodity futures contracts		12,543		74		(422)
Total derivatives			$	157	$	(422)
	December 31, 2016
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	2,357	$	-	$	(119)
Commodity futures contracts		10,811		1,932		(186)
Total derivatives			$	1,932	$	(305)
	June 30, 2016
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	9,010	$	-	$	(911)
Commodity futures contracts		11,631		2,664		(3)
Total derivatives			$	2,664	$	(914)

11

The effects of derivative instruments on the Company’s Condensed Consolidated Statements of Earnings and Retained Earnings and the Condensed Consolidated Statements of Comprehensive Earnings for periods ended June 30, 2017 and June 30, 2016 are as follows:

	For Quarter Ended June 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	125	$	(29)	$	-
Commodity futures contracts		(1,329)		(956)		-
Total	$	(1,204)	$	(985)	$	-
	For Quarter Ended June 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	20	$	(420)	$	-
Commodity futures contracts		2,142		50		-
Total	$	2,162	$	(370)	$	-
	For Year to Date Ended June 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	148	$	(54)	$	-
Commodity futures contracts		(1,902)		191		-
Total	$	(1,754)	$	137	$	-
	For Year to Date Ended June 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	690	$	(1,026)	$	-
Commodity futures contracts		2,433		43		-
Total	$	3,123	$	(983)	$	-

12

Note 6 — Pension Plans

During 2017 and 2016, the Company received updated notices that the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Pension Plan (Plan), a multi-employer defined benefit pension plan for certain Company union employees, is in “critical and declining status”, as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC), and that the Plan is projected to become insolvent in 13 years. The Company has been advised that its withdrawal liability would have been $72,700 if it had withdrawn from the Plan during 2016. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than the above discussed amount, could be payable to the Plan.

The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore, is unable to determine the effects on its consolidated financial statements, but the ultimate outcome or the effects of any modifications to the current rehabilitation plan could be material to its consolidated results of operations or cash flows in one or more future periods. See also the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations incorporated into the Company’s 2016 Form 10-K.

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Note 7 — Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings (Loss) consists of the following components:

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2016	$	(25,460)	$	(697)	$	(76)	$	1,114	$	4,873	$	(20,246)
Other comprehensive earnings (loss) before reclassifications		3,091		242		95		(1,213)		4		2,219
Reclassifications from accumulated other comprehensive loss		-		-		34		(122)		(466)		(554)
Other comprehensive earnings (loss) net of tax		3,091		242		129		(1,335)		(462)		1,665
Balance at June 30, 2017	$	(22,369)	$	(455)	$	53	$	(221)	$	4,411	$	(18,581)
											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2015	$	(21,644)	$	(605)	$	(1,675)	$	173	$	6,387	$	(17,364)
Other comprehensive earnings (loss) before reclassifications		(1,431)		637		440		1,552		-		1,198
Reclassifications from accumulated other comprehensive loss		-		3		655		(27)		(524)		107
Other comprehensive earnings (loss) net of tax		(1,431)		640		1,095		1,525		(524)		1,305
Balance at June 30, 2016	$	(23,075)	$	35	$	(580)	$	1,698	$	5,863	$	(16,059)

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

Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016		Recognized in Earnings
Investments	$	-	$	-	$	-	$	4	Other income, net
Foreign currency derivatives		29		420		54		1,026	Other income, net
Commodity derivatives		956		(50)		(191)		(43)	Product cost of goods sold
Postretirement and pension benefits		(187)		(209)		(373)		(419)	Selling, marketing and administrative expenses
Postretirement and pension benefits		(179)		(201)		(358)		(402)	Product cost of goods sold
Total before tax		619		(40)		(868)		166
Tax (expense) benefit		(224)		15		314		(59)
Net of tax	$	395	$	(25)	$	(554)	$	107

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Note 8 — Restricted Cash

Restricted cash comprises certain cash deposits of the Company’s majority-owned Spanish companies with international banks that are pledged as collateral for letters of credit and bank borrowings.

Note 9 — Bank Loans

Long term bank loans comprise borrowings by the Company’s majority-owned Spanish companies which are held by international banks. The interest rate at June 30, 2017 and 2016 was 2.0 % and 2.2%, respectively, and maturity dates range from 1 to 2 years for both periods. Short term bank loans also relate to the Company’s majority-owned Spanish companies.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This financial review discusses the Company’s financial condition, results of operations, liquidity and capital resources and other matters. Dollars are presented in thousands, except per share amounts. This review should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related notes included in this Form 10-Q and with the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Net product sales were $104,897 in second quarter 2017 compared to $104,259 in second quarter 2016, an increase of $638 or 0.6%.First half 2017 net product sales were $208,322 compared to $207,621 in first half 2016, an increase of $701 or 0.3%. The timing of sales to certain customers as well as currency translation of foreign sales had some adverse impact on second quarter and first half 2017 sales compared to the prior year corresponding periods. 

Product cost of goods sold were $65,259 in second quarter 2017 compared to $65,009 in second quarter 2016, and first half 2017 product cost of goods sold were $130,675 compared to $130,833 in first half 2016. Product cost of goods sold includes $498 and $281 of certain deferred compensation expenses in second quarter 2017 and 2016, respectively, and $1,285 and $294 of certain deferred compensation expenses in first half 2017 and 2016, respectively. These deferred compensation expenses principally result from the changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years and are not reflective of current operating results. Adjusting for the aforementioned, product cost of goods sold increased from $64,728 in second quarter 2016 to $64,761 in second quarter 2017, an increase of $33 or 0.1%; but decreased from $130,539 in first half 2016 to $129,390 in first half 2017, a decrease of $1,149 or 0.9%. As a percentage of net product sales, adjusted product cost of goods sold was 61.7% and 62.1% in second quarter 2017 and 2016, respectively, a favorable decrease of 0.4%; and adjusted product cost of goods sold was 62.1% and 62.9% in first half 2017 and 2016, respectively, a favorable decrease of 0.8%. Adjusted cost of goods sold as a percent of sales benefited from continuing improvements in manufacturing operating efficiencies driven by capital improvements and ongoing cost containment programs. However, adjusted costs of goods sold in prior year second quarter and first half 2016 were adversely affected by higher manufacturing costs relating to uncertainties surrounding certain changes in state and national product labeling. The aforementioned reflects the adverse effects of lower production volumes and inventory reductions which resulted in reduced efficiencies during second quarter and first half 2016.

Selling, marketing and administrative expenses were $26,429 in second quarter 2017 compared to $25,618 in second quarter 2016, and first half 2017 selling, marketing and administrative expenses were $53,027 compared to $49,671 in first half 2016. Selling, marketing and administrative expenses includes $1,319 and $787 of certain deferred compensation expenses in second quarter 2017 and 2016, respectively, and $3,414 and $827 of certain deferred compensation expenses in first half 2017 and 2016, respectively. As discussed above, these expenses principally result from changes in the market value of investments and investment income from trading securities relating to compensation deferred in previous years, and are not reflective of current operating results. Adjusting for the aforementioned, selling, marketing and administrative expenses increased from $24,831 in second quarter 2016 to $25,110 in second quarter 2017, an increase of $279 or 1.1%; and selling, marketing and administrative expenses increased from $48,844 in first half 2016 to $49,613 in first half 2017, an increase of $769 or 1.6%. As a percentage

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of net product sales, adjusted selling, marketing and administrative expenses increased from 23.8% in second quarter 2016 to 23.9% in 2017, an unfavorable increase of 0.1% as a percent of net sales, and selling, marketing and administrative expenses increased from 23.5% in first half 2016 to 23.8% in first half 2017, an unfavorable increase of 0.3% as a percent of net sales. Additional expenses relating to changes in product labeling requirements contributed to these higher expenses in second quarter and first half 2017. Selling, marketing and administrative expenses include $9,409 and $9,459 for freight, delivery and warehousing expenses in second quarter 2017 and 2016, respectively, and $19,076 and $18,645 for freight, delivery and warehousing expenses in first half 2017 and 2016, respectively. These expenses were 9.0% and 9.1% of net product sales in second quarter 2017 and 2016, respectively,  and 9.2% and 9.0% of net product sales in first half 2017 and 2016, respectively.  

Earnings from operations were $13,857 in second quarter 2017 compared to $14,297 in second quarter 2016, and were $26,032 in first half 2017 compared to $28,513 in first half 2016. Earnings from operations include $1,817 and $1,068 of certain deferred compensation expenses in second quarter 2017 and 2016, respectively, and include $4,699 and $1,121 of certain deferred compensation expenses in first half 2017 and 2016, respectively, which are discussed above. Adjusting for these deferred compensation costs and expenses, operating earnings were $15,674 and $15,365 in second quarter 2017 and 2016, respectively, an increase of $309 or 2.0%; and adjusted operating earnings were $30,731 and $29,634 in first half 2017 and 2016, respectively, an increase of $1,097 or 3.7%. As a percentage of net product sales, these adjusted operating earnings were 14.9% and 14.7% in second quarter 2017 and 2016, respectively, a favorable increase of 0.2% as a percentage of net product sales; and as a percentage of net product sales, these adjusted operating earnings were 14.8% and 14.3% in first half 2017 and 2016, respectively, a favorable increase of 0.5% as a percentage of net product sales. These increases as a percentage of net product sales principally reflects the benefits of improved plant operating efficiencies and ongoing cost containment programs in second quarter and first half 2017. Increased aggregate operating losses from foreign operations in second quarter and first half 2017 also adversely affected adjusted consolidated operating earnings in second quarter and first half 2017. Management believes the presentation in this and the preceding paragraphs relating to amounts adjusted for deferred compensation expense are more reflective of the underlying operations of the Company.

Other income, net was $2,465 in second quarter 2017 compared to $2,239 in second quarter 2016, a favorable increase of $226; and other income, net, was $4,444 in first half 2017 compared to $2,204 in first half 2016, a favorable increase of $2,240. Other income, net for second quarter 2017 and 2016 includes net gains and investment income of $1,817 and $1,068, respectively, on trading securities which provide an economic hedge of the Company’s deferred compensation liabilities; and other income, net for first half 2017 and 2016 includes net gains and investment income of $4,699 and $1,121, respectively, on trading securities relating to these programs. These changes in trading securities were substantially offset by a like amount of deferred compensation expense included in product cost of goods sold and selling, marketing, and administrative expenses in the respective periods as discussed above. Other income, net includes gains (losses) on foreign exchange of $(64) and $645 in second quarter 2017 and 2016, respectively, and $(1,610) and $10 in first half 2017 and 2016, respectively.

The consolidated effective tax rates were 27.4% and 33.0% in second quarter 2017 and 2016, respectively, and 28.3% and 31.9% in first half 2017 and 2016, respectively. The lower effective tax rates in second quarter and first half 2017 compared to second quarter and first half 2016 principally reflect certain benefits resulting from filing amended federal and state income tax returns, including a state income tax carry forward benefit.

Net earnings attributable to Tootsie Roll Industries, Inc. were $11,895 (after $45 net loss attributed to non-controlling interests) in second quarter 2017 compared to $11,136 (after $62 net loss attributed to non-controlling interests) in second quarter 2016, and earnings per share were $0.19 and $0.17 in second quarter 2017 and 2016, respectively, an increase of $0.02 per share, or 12%. First half 2017 net earnings attributable to Tootsie Roll Industries, Inc. were $21,946 (after $85 net loss attributed to non-controlling interests) compared to first half 2016 net earnings of $21,032 (after $102 net earnings attributed to non-controlling interests), and net earnings per share were $0.35 and $0.33 in first half 2017 and first half 2016, respectively, an increase of $0.02 per share or 6%. Higher net earnings for second quarter and first half 2017 were principally the result of lower effective state and federal income tax rates and improved adjusted operating earnings as discussed above, but were adversely affected by unfavorable foreign exchange as discussed above.  Earnings per share attributable to Tootsie Roll Industries, Inc. for second quarter and first half 2017 did benefit from the reduction in average shares outstanding resulting from purchases in the open market by the Company of its common stock. Average shares outstanding decreased from 64,274 in second quarter 2016 to 63,270 in second quarter 2017, and from 64,313 in first half 2016 to 63,439 in first half 2017.

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Goodwill and intangibles are assessed annually as of December 31 or whenever events or circumstances indicate that the carrying values may not be recoverable from future cash flows. The Company has not identified any triggering events, as defined, or other adverse information that would indicate a material impairment of its goodwill or intangibles in first half 2017. There were also no impairments in the comparative first half 2016 period or calendar 2016.

Beginning in 2012, the Company received periodic notices from the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Pension Plan (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”, the “Red Zone”, 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 (and was further amended in 2016). During 2015, the Company received notices that 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 that the Plan was projected to have an accumulated funding deficiency for the 2017 through 2024 plan years. A designation of “critical and declining status” implies that the Plan is expected to become insolvent in the next 20 years. In April 2017, the Company received new notices that the Plan remains in “critical and declining status” and is projected to become insolvent in 13 years. These notices also advise that the Plan trustees are considering the reduction or elimination of certain retirement benefits and may seek assistance from the PBGC.

Based on these updated notices, the Plan’s funded percentages (plan investment assets as a percentage of plan liabilities), as defined, were 57.0%, 62.8% and 65.1% as of January 1, 2016 (most recent valuation date available), 2015, and 2014, respectively (these valuation dates are as of the beginning of each Plan year). These funded percentages are based on actuarial values, as defined, and do not reflect the actual market value of Plan investments as of these dates. If the market value of investments had been used as of January 1, 2016, the funded percentage would be 53.0% (not 57.0%). As of the January 1, 2016 valuation date (most recent valuation available), 20% of Plan participants were current active employees, 51% were retired or separated from service and receiving benefits, and 29% were retired or separated from service and entitled to future benefits. The number of current active employee Plan participants as of January 1, 2016 fell 2% from the previous year and 4% over the past two years. When compared to the Plan valuation date of January 1, 2011 (five years earlier), current active employees participants have declined 31%, whereas participants who were retired or separated from service and receiving benefits increased 6% and participants who were retired or separated from service and entitled to future benefits increased 8%. The bankruptcy of a major participating employer in the Plan contributed to the above discussed Plan results.

The Company has been advised that its withdrawal liability would have been $72,700, $61,000 and $56,400 if it had withdrawn from the Plan during 2016, 2015 and 2014, respectively. The increase from 2015 to 2016 principally reflects poor investment returns of the plan in 2015, a decrease in the PBGC interest rates, and a higher share of the Plan’s unfunded vested benefits allocated to the Company. Based on the above, including the Plan’s projected insolvency in 13 years, management believes that the Company’s withdrawal liability will likely increase further in future years. Based on the Company’s actuarial study and certain provisions in ERISA and the law relating to withdrawal liability payments, management believes that the Company’s liability would likely be limited to twenty annual payments of $2,914 which have a present value in the range of $34,200 to $44,700. The aforementioned is based on a range of valuation interest rates which management understands is provided under the statute. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than the above discussed amounts, could be payable to the Plan.

The Company’s existing labor contract with the local union commits the Company’s participation in this Plan through third quarter 2017. The amended rehabilitation plan, which continues, requires that employer contributions include 5% compounded annual surcharge increases each year for an unspecified period of time beginning in 2012 as well as certain plan benefit reductions. The Company’s pension expense for this Plan for calendar years 2016 and 2015 was $2,541 and $2,574, respectively. The aforementioned expense includes surcharges of $542 and $447 in calendar years 2016 and 2015, respectively, as required under the plan of rehabilitation as amended. The Company’s pension expense for this Plan for first half 2017 and 2016 was $1,368 and $1,186 respectively, which includes surcharges of $343 and $253 respectively.

The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore, is unable to determine the effects on its consolidated financial statements, but the ultimate outcome or the effects of any

17

modifications to the current rehabilitation plan could be material to its consolidated results of operations or cash flows in one or more future periods. See also the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2016 Form 10-K.

LIQUIDITY AND CAPITAL RESOURCES

Net cash flows provided by operating activities were $8,379 and $21,648 in first half 2017 and 2016, respectively, a decrease of $13,269. The decrease in first half 2017 cash flows from operating activities principally reflects the timing of sales and collections of account receivables, the effects of higher finished goods inventories reflecting changes in the annual production plans, the timing of payments of income taxes, and changes in other receivables primarily due to increased broker margin deposit requirements on commodity hedges.

Net cash used in investing activities was $39,658 in first half 2017 compared to $34,601 in first half 2016. Cash flows from investing activities reflect $40,622 and $34,826 of purchases of available for sale securities during first half 2017 and 2016, respectively, and $10,985 and $12,777 of sales and maturities of available for sale securities during first half 2017 and 2016, respectively. First half 2017 and 2016 investing activities include capital expenditures of $7,427 and $10,389, respectively. All capital expenditures in 2017 are expected to be funded from the Company’s cash flow from operations and internal sources. In addition, Company management has committed approximately $15,000 to a manufacturing plant rehabilitation upgrade and expansion of one of its manufacturing facilities in the U.S.A. Management anticipates capital outlays for this project to approximate  $2,000 in 2017, $9,000 in 2018,  $2,000 in 2019 and $2,000 in 2020.

The Company’s consolidated financial statements include bank borrowings of $334 and $622 at June 30, 2017 and 2016, respectively, all of which relates to its two majority-owned and controlled Spanish companies. The Company had no other outstanding bank borrowings at June 30, 2017.

Financing activities include Company common stock purchases and retirements of $20,140 and $9,166 in first half 2017 and 2016, respectively. Cash dividends of $11,282 and $11,077 were paid in first half 2017 and 2016, respectively.

The Company’s current ratio (current assets divided by current liabilities) was 4.1 to 1 at June 30, 2017 compared to 4.7 to 1 at December 31, 2016 and 3.9 to 1 at June 30, 2016. Net working capital was $203,192 at June 30, 2017 compared to $235,739 and $195,016 at December 31, 2016 and June 30, 2016, respectively.

The aforementioned net working capital amounts are principally reflected in aggregate cash and cash equivalents and short-term investments of $129,744 at June 30, 2017 compared to $186,658 and $124,936 at December 31, 2016 and June 30, 2016, respectively. In addition, long term investments, principally debt securities comprising corporate and municipal bonds were $196,308 at June 30, 2017, as compared to $164,665 and $186,931 at December 31, 2016 and June 30, 2016, respectively. Aggregate cash and cash equivalents and short and long-term investments were $326,052, $351,323, and $311,867, at June 30, 2017, December 31, 2016 and June 30, 2016, respectively. The aforementioned includes $75,265, $67,995, and $63,866 at June 30, 2017, December 31, 2016 and June 30, 2016, respectively, relating to trading securities which are used as an economic hedge for the Company’s deferred compensation liabilities. Investments in corporate and municipal bonds, variable rate demand notes, and other debt securities that matured during first half 2017 and 2016 were generally used to purchase the Company’s common stock or were replaced with debt securities of similar maturities.

The Company periodically contributes to a VEBA trust, managed and controlled by the Company, to fund the estimated future costs of certain employee health, welfare and other benefits. The Company is currently using these VEBA funds to pay the actual cost of such benefits through a portion of 2017. The VEBA trust held $1,305, $3,027 and $4,635 of aggregate cash and cash equivalents at June 30, 2017, December 31, 2016 and June 30, 2016, respectively. This asset value is included in prepaid expenses in the Company’s Consolidated Statement of Financial Position. These assets are categorized as Level 1 within the fair value hierarchy. The Company is planning to make a contribution to this VEBA in the range of $10,000 to $15,000 in fourth quarter 2017. This contribution would result in the prepayment of these employee benefits.

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ACCOUNTING PRONOUNCEMENTS

See Note 1 of the Company’s condensed consolidated financial statements.

RISK FACTORS

There were no material changes to the risk factors disclosed in the Company’s 2016 Form 10-K.

FORWARD-LOOKING STATEMENTS

This discussion and certain other sections contain forward-looking statements that are based largely on the Company’s current expectations and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as “anticipated,” “believe,” “expect,” “intend,” “estimate,” “project,” “plan” and other words of similar meaning in connection with a discussion of future operating or financial performance and are subject to certain factors, risks, trends and uncertainties that could cause actual results and achievements to differ materially from those expressed in the forward-looking statements. Such factors, risks, trends and uncertainties, which in some instances are beyond the Company’s control, include the overall competitive environment in the Company’s industry, changes in assumptions and judgments discussed above under the heading “Significant Accounting Policies and Estimates,” and factors identified and referred to above under the heading “Risk Factors.”

The risk factors identified and referred to above are believed to be significant factors, but not necessarily all of the significant factors that could cause actual results to differ from those expressed in any forward-looking statement. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made only as of the date of this report. The Company undertakes no obligation to update such forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to various market risks, including fluctuations in and sufficient availability of sugar, corn syrup, edible oils, including palm oils, cocoa, dextrose, milk and whey, and gum-base input ingredients and packaging, and fuel costs principally relating to freight and delivery fuel surcharges. The Company is exposed to exchange rate fluctuations in the Canadian dollar which is the currency used for a portion of the raw material and packaging material costs and all labor, benefits and local plant operating costs at its Canadian plants. The Company is exposed to exchange rate fluctuations in Mexico, Canada, and Spain where its subsidiaries sell products in their local currencies. The Company invests in securities with maturities dates of up to approximately three years which are generally held to maturity, and variable rate demand notes where interest rates are generally reset weekly, all of which limits the Company’s exposure to interest rate fluctuations. There have been no material changes in the Company’s market risks that would significantly affect the disclosures made in the Form 10-K for the year ended December 31, 2016. 

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of management, the Chief Executive Officer and Chief Financial Officer of the Company have evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2017 and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective. Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended June 30, 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes the Company’s purchases of its common stock during the quarter ended June 30, 2017:

					Approximate Dollar
	(a) Total			Shares	Value of Shares that
	Number of	(b) Average		Purchased as Part of	May Yet Be Purchased
	Shares	Price Paid per		Publicly Announced Plans	Under the Plans
Period	Purchased	Share		Or Programs	or Programs
Apr 1 to Apr 30	86,343	$	37.74	Not Applicable	Not Applicable
May 1 to May 31	182,007		36.34	Not Applicable	Not Applicable
Jun 1 to Jun 30	7,721		35.22	Not Applicable	Not Applicable
Total	276,071	$	36.74	Not Applicable	Not Applicable

While the Company does not have a formal or publicly announced stock purchase program, the Company’s board of directors periodically authorizes a dollar amount for share purchases. The treasurer executes share purchase transactions according to these guidelines.

ITEM 6. EXHIBITS

Exhibits 31.1 — Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibits 31.2 — Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 — Certification pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101.INS - XBRL Instance Document.

Exhibit 101.SCH - XBRL Taxonomy Extension Schema Document.

Exhibit 101.CAL - XBRL Taxonomy Extension Calculation Linkbase Document.

Exhibit 101.LAB - XBRL Taxonomy Extension Label Linkbase Document.

Exhibit 101.PRE - XBRL Taxonomy Extension Presentation Linkbase Document.

Exhibit 101.DEF - XBRL Taxonomy Extension Definition Linkbase Document.

20

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 undersigned thereunto duly authorized.

		TOOTSIE ROLL INDUSTRIES, INC.
Date:	August 4, 2017	BY:	/S/ELLEN R. GORDON
			Ellen R. Gordon
			Chairman and Chief
			Executive Officer
Date:	August 4, 2017	BY:	/S/G. HOWARD EMBER, JR.
			G. Howard Ember, Jr.
			Vice President Finance and
			Chief Financial Officer

21

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Ellen R. Gordon, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Tootsie Roll Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 4, 2017
By:	/S/ELLEN R. GORDON
	Ellen R. Gordon
	Chairman and Chief
	Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, G. Howard Ember, Jr. certify that:

1.I have reviewed this quarterly report on Form 10-Q of Tootsie Roll Industries, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 4, 2017
By:	/S/G. HOWARD EMBER, JR.
	G. Howard Ember, Jr.
	Vice President Finance and
	Chief Financial Officer

EX-32

Exhibit 32

Certificate Pursuant to Section 1350 of Chapter 63

Of Title 18 of the United States Code

Each of the undersigned officers of Tootsie Roll Industries, Inc. certifies that (i) the Quarterly Report on Form 10-Q of Tootsie Roll Industries, Inc. for the quarterly period ended June 30, 2017 (the Form 10-Q) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Tootsie Roll Industries, Inc.

Dated:	August 4, 2017	/S/ELLEN R. GORDON
		Ellen R. Gordon
		Chairman and Chief
		Executive Officer
Dated:	August 4, 2017	/S/G. HOWARD EMBER, JR.
		G. Howard Ember, Jr.
		Vice President Finance and
		Chief Financial Officer

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Document and Entity Information	6 Months Ended
	Jun. 30, 2017 shares
Entity Registrant Name	TOOTSIE ROLL INDUSTRIES INC
Entity Central Index Key	0000098677
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Common Stock
Entity Common Stock, Shares Outstanding	38,318,644
Class B Common Stock
Entity Common Stock, Shares Outstanding	24,917,660

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CONSOLIDATED STATEMENTS OF Financial Position - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
CURRENT ASSETS:
Cash & cash equivalents	$ 57,804	$ 119,145	$ 91,950
Restricted cash	415	382	403
Investments	71,940	67,513	32,986
Trade accounts receivable, less allowances of $1,944, $1,884 & $2,038	31,254	42,964	29,061
Other receivables	6,610	3,299	2,419
Inventories:
Finished goods & work-in-process	64,980	34,631	59,764
Raw material & supplies	29,606	22,900	33,899
Prepaid expenses	5,207	7,146	7,722
Deferred income taxes		1,320	3,155
Total current assets	267,816	299,300	261,359
PROPERTY, PLANT & EQUIPMENT, at cost:
Land	22,202	22,081	22,166
Buildings	116,547	116,398	114,504
Machinery & equipment	369,667	369,802	355,212
Construction in progress	10,245	3,546	14,993
Property, plant and equipment, gross	518,661	511,827	506,875
Less-accumulated depreciation	339,871	330,922	322,270
Net property, plant and equipment	178,790	180,905	184,605
OTHER ASSETS:
Goodwill	73,237	73,237	73,237
Trademarks	175,024	175,024	175,024
Investments	196,308	164,665	186,931
Split dollar officer life insurance	26,042	26,042	26,042
Prepaid expenses and other	40	602	1,739
Deferred income taxes		326	289
Total other assets	470,651	439,896	463,262
Total assets	917,257	920,101	909,226
CURRENT LIABILITIES:
Accounts payable	13,819	10,320	14,621
Bank loan	334	336	305
Dividends payable	5,692	5,573	5,625
Accrued liabilities	44,266	46,300	44,677
Postretirement health care	513	513	448
Deferred income taxes		519	667
Total current liabilities	64,624	63,561	66,343
NONCURRENT LIABILITIES:
Deferred income taxes	44,257	46,060	49,197
Bank loans		230	317
Postretirement health care	11,832	11,615	11,158
Industrial development bonds	7,500	7,500	7,500
Liability for uncertain tax positions	5,361	5,185	5,128
Deferred compensation and other liabilities	80,161	74,412	69,185
Total noncurrent liabilities	149,111	145,002	142,485
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY:
Capital in excess of par value	670,477	646,768	666,322
Retained earnings	9,615	43,833	8,491
Accumulated other comprehensive loss	(18,581)	(20,246)	(16,059)
Treasury stock (at cost)- 85, 83 & 83 shares, respectively	(1,992)	(1,992)	(1,992)
Total Tootsie Roll Industries, Inc. shareholders' equity	703,433	711,364	700,135
Noncontrolling interests	89	174	263
Total equity	703,522	711,538	700,398
Total liabilities and shareholders' equity	917,257	920,101	909,226
Common Stock
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 38,319, 37,701 & 38,231, respectively, issued. Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 24,918, 24,221 & 24,227, respectively, issued	26,610	26,181	26,549
Class B Common Stock
TOOTSIE ROLL INDUSTRIES, INC. SHAREHOLDERS' EQUITY:
Common stock, $.69-4/9 par value- 120,000 shares authorized; 38,319, 37,701 & 38,231, respectively, issued. Class B common stock, $.69-4/9 par value- 40,000 shares authorized; 24,918, 24,221 & 24,227, respectively, issued	$ 17,304	$ 16,820	$ 16,824

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CONSOLIDATED STATEMENTS OF Financial Position (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Trade accounts receivable, allowances	$ 1,944	$ 1,884	$ 2,038
Treasury stock, shares	85,000	83,000	83,000
Common Stock
Common stock, par value (in dollars per share)	$ 0.6944	$ 0.6944	$ 0.6944
Common stock, shares authorized	120,000,000	120,000,000	120,000,000
Common stock, shares issued	38,319,000	37,701,000	38,231,000
Class B Common Stock
Common stock, par value (in dollars per share)	$ 0.6944	$ 0.6944	$ 0.6944
Common stock, shares authorized	40,000,000	40,000,000	40,000,000
Common stock, shares issued	24,918,000	24,221,000	24,227,000

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CONSOLIDATED STATEMENTS OF Earnings and Retained Earnings - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONSOLIDATED STATEMENTS OF Earnings and Retained Earnings
Net product sales		$ 104,897	$ 104,259	$ 208,322	$ 207,621
Rental and royalty revenue		899	910	1,929	1,943
Total revenue		105,796	105,169	210,251	209,564
Product cost of goods sold		65,259	65,009	130,675	130,833
Rental and royalty cost		251	245	517	547
Total costs		65,510	65,254	131,192	131,380
Product gross margin		39,638	39,250	77,647	76,788
Rental and royalty gross margin		648	665	1,412	1,396
Total gross margin		40,286	39,915	79,059	78,184
Selling, marketing and administrative expenses		26,429	25,618	53,027	49,671
Earnings from operations		13,857	14,297	26,032	28,513
Other income (loss), net		2,465	2,239	4,444	2,204
Earnings before income taxes		16,322	16,536	30,476	30,717
Provision for income taxes		4,472	5,462	8,615	9,787
Net earnings		11,850	11,074	21,861	20,930
Less: Net earnings (loss) attributable to noncontrolling interests		(45)	(62)	(85)	(102)
Net earnings attributable to Tootsie Roll Industries, Inc.		$ 11,895	$ 11,136	$ 21,946	$ 21,032
Net earnings attributable to Tootsie Roll Industries, Inc. per share (in dollars per share)		$ 0.19	$ 0.17	$ 0.35	$ 0.33
Dividends per share (in dollars per share)		$ 0.09	$ 0.09	$ 0.18	$ 0.18
Average number of shares outstanding (in shares)		63,270	64,274	63,439	64,313
Retained earnings at beginning of period		$ 3,405	$ 2,972	$ 43,833	$ 52,349
Net earnings attributable to Tootsie Roll Industries, Inc.		11,895	11,136	21,946	21,032
Cash dividends		(5,685)	(5,617)	(11,240)	(11,074)
Stock dividends	[1]			(44,924)	(53,816)
Retained earnings at end of period		$ 9,615	$ 8,491	$ 9,615	$ 8,491

[1] Does not include 3% stock dividend to shareholders of record on 3/7/17 and 3/8/16.

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CONSOLIDATED STATEMENTS OF Earnings and Retained Earnings (Parenthetical)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONSOLIDATED STATEMENTS OF Earnings and Retained Earnings
Stock dividends (as a percent)	3.00%	3.00%	3.00%	3.00%

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CONSOLIDATED STATEMENTS OF Comprehensive Earnings - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONSOLIDATED STATEMENTS OF Comprehensive Earnings
Net earnings	$ 11,850	$ 11,074	$ 21,861	$ 20,930
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments	991	(1,636)	3,091	(1,431)
Pension and postretirement reclassification adjustment:
Unrealized gains (losses) for the period on postretirement and pension benefits	(175)		91
Less: reclassification adjustment for (gains) losses to net earnings	(366)	(410)	(731)	(821)
Unrealized gains (losses) on postretirement and pension benefits	(541)	(410)	(640)	(821)
Investments:
Unrealized gains (losses) for the period on investments	149	509	379	999
Less: reclassification adjustment for (gains) losses to net earnings				4
Unrealized gains (losses) on investments	149	509	379	1,003
Derivatives:
Unrealized gains (losses) for the period on derivatives	(1,204)	2,162	(1,754)	3,123
Less: reclassification adjustment for (gains) losses to net earnings	985	370	(137)	983
Unrealized gains (losses) on derivatives	(219)	2,532	(1,891)	4,106
Total other comprehensive income (loss), before tax	380	995	939	2,857
Income tax benefit (expense) related to items of other comprehensive income	333	(953)	726	(1,552)
Total comprehensive earnings	12,563	11,116	23,526	22,235
Comprehensive earnings (loss) attributable to noncontrolling interests	(45)	(62)	(85)	(102)
Total comprehensive earnings attributable to Tootsie Roll Industries, Inc.	$ 12,608	$ 11,178	$ 23,611	$ 22,337

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CONSOLIDATED STATEMENTS OF Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 21,861	$ 20,930
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization	9,338	10,069
Deferred income taxes	21	675
Amortization of marketable security premiums	1,216	1,503
Changes in operating assets and liabilities:
Accounts receivable	12,535	21,748
Other receivables	(4,522)	1,877
Inventories	(36,460)	(31,639)
Prepaid expenses and other assets	2,138	1,823
Accounts payable and accrued liabilities	1,820	(142)
Income taxes payable	79	(6,102)
Postretirement health care benefits	(423)	(615)
Deferred compensation and other liabilities	776	1,521
Net cash from operating activities	8,379	21,648
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash	(22)	(2)
Capital expenditures	(7,427)	(10,389)
Purchases of trading securities	(3,007)	(2,774)
Sales of trading securities	435	613
Purchase of available for sale securities	(40,622)	(34,826)
Sale and maturity of available for sale securities	10,985	12,777
Net cash used in investing activities	(39,658)	(34,601)
CASH FLOWS FROM FINANCING ACTIVITIES:
Shares purchased and retired	(20,140)	(9,166)
Dividends paid in cash	(11,282)	(11,077)
Proceeds from bank loans	724	1,762
Repayment of bank loans	(965)	(1,764)
Net cash used in financing activities	(31,663)	(20,245)
Effect of exchange rate changes on cash	1,601	(997)
Decrease in cash and cash equivalents	(61,341)	(34,195)
Cash and cash equivalents at beginning of year	119,145	126,145
Cash and cash equivalents at end of year	57,804	91,950
Supplemental cash flow information:
Income taxes paid	8,798	15,390
Interest paid	31	9
Stock dividend issued	$ 69,739	$ 61,671

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2017

Significant Accounting Policies

Significant Accounting Policies

Note 1 — Significant Accounting Policies

General Information

Foregoing data has been prepared from the unaudited financial records of Tootsie Roll Industries, Inc. (the Company) and in the opinion of management all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the interim period have been reflected. Certain amounts previously reported have been reclassified to conform to the current year presentation. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”).

Results of operations for the period ended June 30, 2017 are not necessarily indicative of results to be expected for the year to end December 31, 2017 because of the seasonal nature of the Company’s operations. Historically, the third quarter has been the Company’s largest sales quarter due to pre-Halloween sales.

Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01 which modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cash flows. This guidance will be effective for the Company on January 1, 2019. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, which contains amendments to the new revenue recognition standard on identifying performance obligations and accounting for licenses of intellectual property. The amendments related to identifying performance obligations clarify when a promised good or service is separately identifiable and allows entities to disregard items that are immaterial in the context of a contract. The licensing implementation amendments clarify how an entity should evaluate the nature of its promise in granting a license of intellectual property, which will determine whether revenue is recognized over time or at a point in time. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, which includes amendments addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The effective date of the amendments to the standard is for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, which requires employers who offer defined benefit and postretirement benefit plans to report the service cost component in the same line item as other compensation costs arising from services rendered by employees during the reporting period. The other components of net benefit costs will be presented in the income statement separately from the service cost and outside of a subtotal of income from operations. In addition, only the service cost component may be eligible for capitalization where applicable. This guidance is effective for annual periods beginning after December 15, 2017. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

Recently Adopted Pronouncements

In November 2015, the FASB issued ASU 2015-17 which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be classified as non-current in a classified statement of financial position. This guidance was adopted on January 1, 2017 on a prospective basis. Prior period balances have not been adjusted.

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Average Shares Outstanding

6 Months Ended

Jun. 30, 2017

Average Shares Outstanding

Average Shares Outstanding

Note 2 — Average Shares Outstanding

The average number of shares outstanding for six months 2017 reflects stock purchases of 536 shares for $20,140 and a 3% stock dividend of 1,850 shares distributed on April 17, 2017. The average number of shares outstanding for six months 2016 reflects stock purchases of 283 shares for $9,166 and a 3% stock dividend of 1,819 shares distributed on April 8, 2016.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Taxes

Income Taxes

Note 3 — Income Taxes

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years 2013 through 2015. With few exceptions, the Company is no longer subject to examination by tax authorities for the year 2012 and prior. The consolidated effective tax rates were 27.4% and 33.0% in second quarter 2017 and 2016, respectively, and 28.3% and 31.9% in first half 2017 and 2016, respectively. The lower effective tax rate in second quarter and first half 2017 compared to second quarter and first half 2016 principally reflects certain benefits resulting from filing amended federal and state income tax returns, including a state income tax carry forward.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2017

Fair Value Measurements

Fair Value Measurements

Note 4 — Fair Value Measurements

Current accounting guidance defines fair value as the price that would be received on the sale of an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance requires disclosure of the extent to which fair value is used to measure financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date. Guidance establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability. The use of observable and unobservable inputs is reflected in the hierarchy assessment disclosed in the table below.

As of June 30, 2017, December 31, 2016 and June 30, 2016, the Company held certain financial assets that are required to be measured at fair value on a recurring basis. These included derivative hedging instruments related to the purchase of certain raw materials and foreign currencies, investments in trading securities and available for sale securities. The Company’s available for sale securities principally consist of corporate and municipal bonds that are publicly traded and variable rate demand notes with interest rates that generally reset weekly and the security can be “put” back and sold weekly. Trading securities principally consist of equity mutual funds that are publicly traded.

The following table presents information about the Company’s financial assets and liabilities measured at fair value as of June 30, 2017, December 31, 2016 and June 30, 2016 and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Estimated Fair Value June 30, 2017
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	57,804	$	57,804	$	-	$	-
Available for sale securities		192,983		2,406		190,577		-
Foreign currency forward contracts		83		-		83		-
Commodity futures contracts		(348)		(348)		-		-
Trading securities		75,265		75,265		-		-
Total assets measured at fair value	$	325,787	$	135,127	$	190,660	$	-
	Estimated Fair Value December 31, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	119,145	$	119,145	$	-	$	-
Available for sale securities		164,183		2,419		161,764		-
Foreign currency forward contracts		(119)		-		(119)		-
Commodity futures contracts, net		1,746		1,746		-		-
Trading securities		67,995		67,995		-		-
Total assets measured at fair value	$	352,950	$	191,305	$	161,645	$	-
	Estimated Fair Value June 30, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	91,950	$	91,950	$	-	$	-
Available for sale securities		156,051		2,440		153,611		-
Foreign currency forward contracts		(911)		-		(911)		-
Commodity futures contracts		2,661		2,661		-		-
Trading securities		63,866		63,866		-		-
Total assets measured at fair value	$	313,617	$	160,917	$	152,700	$	-

The fair value of the Company’s industrial revenue development bonds at June 30, 2017, December 31, 2016 and June 30, 2016 were valued using Level 2 inputs which approximates the carrying value of $7,500 for the respective periods. Interest rates on these bonds are reset weekly based on current market conditions.

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Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

Note 5 — Derivative Instruments and Hedging Activities

The Company uses derivative instruments, including foreign currency forward contracts, commodity futures contracts and commodity option contracts, to manage its exposures to foreign exchange and commodity prices. Commodity futures contracts and most commodity option contracts are intended and effective as hedges of market price risks associated with the anticipated purchase of certain raw materials (primarily sugar). Foreign currency forward contracts are intended and effective as hedges of the Company’s exposure to the variability of cash flows, primarily related to the foreign exchange rate changes of products manufactured in Canada and sold in the United States. The Company does not engage in trading or other speculative use of derivative instruments.

The Company recognizes all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Statement of Financial Position. Derivative assets are recorded in other receivables and derivative liabilities are recorded in accrued liabilities. The Company uses either hedge accounting or mark-to-market accounting for its derivative instruments. Derivatives that qualify for hedge accounting are designated as cash flow hedges by formally documenting the hedge relationships, including identification of the hedging instruments, the hedged items and other critical terms, as well as the Company’s risk management objectives and strategies for undertaking the hedge transaction.

Changes in the fair value of the Company’s cash flow hedges are recorded in accumulated other comprehensive loss, net of tax, and are reclassified to earnings in the periods in which earnings are affected by the hedged item. Substantially all amounts reported in accumulated other comprehensive loss for commodity derivatives are expected to be reclassified to cost of goods sold. Substantially all amounts reported in accumulated other comprehensive loss for foreign currency derivatives are expected to be reclassified to other income, net.

The following table summarizes the Company’s outstanding derivative contracts and their effects on its Condensed Consolidated Statements of Financial Position at June 30, 2017, December 31, 2016 and June 30, 2016:

	June 30, 2017
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	3,200	$	83	$	-
Commodity futures contracts		12,543		74		(422)
Total derivatives			$	157	$	(422)
	December 31, 2016
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	2,357	$	-	$	(119)
Commodity futures contracts		10,811		1,932		(186)
Total derivatives			$	1,932	$	(305)
	June 30, 2016
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	9,010	$	-	$	(911)
Commodity futures contracts		11,631		2,664		(3)
Total derivatives			$	2,664	$	(914)

The effects of derivative instruments on the Company’s Condensed Consolidated Statements of Earnings and Retained Earnings and the Condensed Consolidated Statements of Comprehensive Earnings for periods ended June 30, 2017 and June 30, 2016 are as follows:

	For Quarter Ended June 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	125	$	(29)	$	-
Commodity futures contracts		(1,329)		(956)		-
Total	$	(1,204)	$	(985)	$	-
	For Quarter Ended June 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	20	$	(420)	$	-
Commodity futures contracts		2,142		50		-
Total	$	2,162	$	(370)	$	-
	For Year to Date Ended June 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	148	$	(54)	$	-
Commodity futures contracts		(1,902)		191		-
Total	$	(1,754)	$	137	$	-
	For Year to Date Ended June 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	690	$	(1,026)	$	-
Commodity futures contracts		2,433		43		-
Total	$	3,123	$	(983)	$	-

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Pension Plans

6 Months Ended

Jun. 30, 2017

Pension Plans

Pension Plans

Note 6 — Pension Plans

During 2017 and 2016, the Company received updated notices that the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union Pension Plan (Plan), a multi-employer defined benefit pension plan for certain Company union employees, is in “critical and declining status”, as defined by the Pension Protection Act (PPA) and the Pension Benefit Guaranty Corporation (PBGC), and that the Plan is projected to become insolvent in 13 years. The Company has been advised that its withdrawal liability would have been $72,700 if it had withdrawn from the Plan during 2016. Should the Company actually withdraw from the Plan at a future date, a withdrawal liability, which could be higher than the above discussed amount, could be payable to the Plan.

The Company is currently unable to determine the ultimate outcome of the above discussed matter and therefore, is unable to determine the effects on its consolidated financial statements, but the ultimate outcome or the effects of any modifications to the current rehabilitation plan could be material to its consolidated results of operations or cash flows in one or more future periods. See also the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations incorporated into the Company’s 2016 Form 10-K.

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Accumulated Other Comprehensive Earnings (Loss)

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings (Loss)

Note 7 — Accumulated Other Comprehensive Earnings (Loss)

Accumulated Other Comprehensive Earnings (Loss) consists of the following components:

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2016	$	(25,460)	$	(697)	$	(76)	$	1,114	$	4,873	$	(20,246)
Other comprehensive earnings (loss) before reclassifications		3,091		242		95		(1,213)		4		2,219
Reclassifications from accumulated other comprehensive loss		-		-		34		(122)		(466)		(554)
Other comprehensive earnings (loss) net of tax		3,091		242		129		(1,335)		(462)		1,665
Balance at June 30, 2017	$	(22,369)	$	(455)	$	53	$	(221)	$	4,411	$	(18,581)
											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2015	$	(21,644)	$	(605)	$	(1,675)	$	173	$	6,387	$	(17,364)
Other comprehensive earnings (loss) before reclassifications		(1,431)		637		440		1,552		-		1,198
Reclassifications from accumulated other comprehensive loss		-		3		655		(27)		(524)		107
Other comprehensive earnings (loss) net of tax		(1,431)		640		1,095		1,525		(524)		1,305
Balance at June 30, 2016	$	(23,075)	$	35	$	(580)	$	1,698	$	5,863	$	(16,059)

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

Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016		Recognized in Earnings
Investments	$	-	$	-	$	-	$	4	Other income, net
Foreign currency derivatives		29		420		54		1,026	Other income, net
Commodity derivatives		956		(50)		(191)		(43)	Product cost of goods sold
Postretirement and pension benefits		(187)		(209)		(373)		(419)	Selling, marketing and administrative expenses
Postretirement and pension benefits		(179)		(201)		(358)		(402)	Product cost of goods sold
Total before tax		619		(40)		(868)		166
Tax (expense) benefit		(224)		15		314		(59)
Net of tax	$	395	$	(25)	$	(554)	$	107

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Restricted Cash

6 Months Ended

Jun. 30, 2017

Restricted Cash

Restricted Cash

Note 8 — Restricted Cash

Restricted cash comprises certain cash deposits of the Company’s majority-owned Spanish companies with international banks that are pledged as collateral for letters of credit and bank borrowings.

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Bank Loans

6 Months Ended

Jun. 30, 2017

Bank Loans

Bank Loans

Note 9 — Bank Loans

Long term bank loans comprise borrowings by the Company’s majority-owned Spanish companies which are held by international banks. The interest rate at June 30, 2017 and 2016 was 2.0 % and 2.2%, respectively, and maturity dates range from 1 to 2 years for both periods. Short term bank loans also relate to the Company’s majority-owned Spanish companies.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Measurements

Schedule of financial assets and liabilities measured at fair value

	Estimated Fair Value June 30, 2017
	Total		Input Levels Used
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	57,804	$	57,804	$	-	$	-
Available for sale securities		192,983		2,406		190,577		-
Foreign currency forward contracts		83		-		83		-
Commodity futures contracts		(348)		(348)		-		-
Trading securities		75,265		75,265		-		-
Total assets measured at fair value	$	325,787	$	135,127	$	190,660	$	-
	Estimated Fair Value December 31, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	119,145	$	119,145	$	-	$	-
Available for sale securities		164,183		2,419		161,764		-
Foreign currency forward contracts		(119)		-		(119)		-
Commodity futures contracts, net		1,746		1,746		-		-
Trading securities		67,995		67,995		-		-
Total assets measured at fair value	$	352,950	$	191,305	$	161,645	$	-
	Estimated Fair Value June 30, 2016
		Total	Input Levels Used
		Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	91,950	$	91,950	$	-	$	-
Available for sale securities		156,051		2,440		153,611		-
Foreign currency forward contracts		(911)		-		(911)		-
Commodity futures contracts		2,661		2,661		-		-
Trading securities		63,866		63,866		-		-
Total assets measured at fair value	$	313,617	$	160,917	$	152,700	$	-

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2017

Derivative Instruments and Hedging Activities

Summary of the Company's outstanding derivative contracts and their effects on the Condensed Consolidated Statements of Financial Position

	June 30, 2017
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	3,200	$	83	$	-
Commodity futures contracts		12,543		74		(422)
Total derivatives			$	157	$	(422)
	December 31, 2016
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	2,357	$	-	$	(119)
Commodity futures contracts		10,811		1,932		(186)
Total derivatives			$	1,932	$	(305)
	June 30, 2016
	Notional
	Amounts		Assets		Liabilities
Derivatives designated as hedging instruments:
Foreign currency forward contracts	$	9,010	$	-	$	(911)
Commodity futures contracts		11,631		2,664		(3)
Total derivatives			$	2,664	$	(914)

Effects of derivative instruments on the Condensed Consolidated Statement of Earnings and Retained Earnings, and the Condensed Consolidated Statement of Comprehensive Earnings

	For Quarter Ended June 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	125	$	(29)	$	-
Commodity futures contracts		(1,329)		(956)		-
Total	$	(1,204)	$	(985)	$	-
	For Quarter Ended June 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	20	$	(420)	$	-
Commodity futures contracts		2,142		50		-
Total	$	2,162	$	(370)	$	-
	For Year to Date Ended June 30, 2017
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	148	$	(54)	$	-
Commodity futures contracts		(1,902)		191		-
Total	$	(1,754)	$	137	$	-
	For Year to Date Ended June 30, 2016
					Gain (Loss)
			Gain (Loss)		on Amount Excluded
	Gain (Loss)		Reclassified from		from Effectiveness
	Recognized		Accumulated OCI		Testing Recognized
	in OCI		into Earnings		in Earnings
Foreign currency forward contracts	$	690	$	(1,026)	$	-
Commodity futures contracts		2,433		43		-
Total	$	3,123	$	(983)	$	-

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Accumulated Other Comprehensive Earnings (Loss) (Tables)

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Earnings (Loss)

Schedule of accumulated other comprehensive earnings (loss):

											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2016	$	(25,460)	$	(697)	$	(76)	$	1,114	$	4,873	$	(20,246)
Other comprehensive earnings (loss) before reclassifications		3,091		242		95		(1,213)		4		2,219
Reclassifications from accumulated other comprehensive loss		-		-		34		(122)		(466)		(554)
Other comprehensive earnings (loss) net of tax		3,091		242		129		(1,335)		(462)		1,665
Balance at June 30, 2017	$	(22,369)	$	(455)	$	53	$	(221)	$	4,411	$	(18,581)
											Accumulated
	Foreign				Foreign				Postretirement		Other
	Currency				Currency		Commodity		and Pension		Comprehensive
	Translation		Investments		Derivatives		Derivatives		Benefits		Earnings (Loss)
Balance at December 31, 2015	$	(21,644)	$	(605)	$	(1,675)	$	173	$	6,387	$	(17,364)
Other comprehensive earnings (loss) before reclassifications		(1,431)		637		440		1,552		-		1,198
Reclassifications from accumulated other comprehensive loss		-		3		655		(27)		(524)		107
Other comprehensive earnings (loss) net of tax		(1,431)		640		1,095		1,525		(524)		1,305
Balance at June 30, 2016	$	(23,075)	$	35	$	(580)	$	1,698	$	5,863	$	(16,059)

Amount reclassified from accumulated other comprehensive income

Details about Accumulated Other	Quarter Ended				Year to Date Ended				Location of (Gain) Loss
Comprehensive Income Components	June 30, 2017		June 30, 2016		June 30, 2017		June 30, 2016		Recognized in Earnings
Investments	$	-	$	-	$	-	$	4	Other income, net
Foreign currency derivatives		29		420		54		1,026	Other income, net
Commodity derivatives		956		(50)		(191)		(43)	Product cost of goods sold
Postretirement and pension benefits		(187)		(209)		(373)		(419)	Selling, marketing and administrative expenses
Postretirement and pension benefits		(179)		(201)		(358)		(402)	Product cost of goods sold
Total before tax		619		(40)		(868)		166
Tax (expense) benefit		(224)		15		314		(59)
Net of tax	$	395	$	(25)	$	(554)	$	107

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Average Shares Outstanding (Details) - USD ($) shares in Thousands, $ in Thousands			3 Months Ended		6 Months Ended
	Apr. 17, 2017	Apr. 08, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Average Shares Outstanding
Stock purchases (in shares)					536	283
Purchase of common shares					$ 20,140	$ 9,166
Stock dividends (as a percent)			3.00%	3.00%	3.00%	3.00%
Stock dividend shares distributed	1,850	1,819

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Income Taxes - Income tax rates (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Effective income tax rate differs from the statutory rate
Effective income tax rate (as a percent)	27.40%	33.00%	28.30%	31.90%

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Fair Value Measurements (Details) - Fair value measured on a recurring basis - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Fair value measurements
Cash and cash equivalents	$ 57,804	$ 119,145	$ 91,950
Available for sale securities	192,983	164,183	156,051
Trading securities	75,265	67,995	63,866
Total assets measured at fair value	325,787	352,950	313,617
Foreign currency forward contracts
Fair value measurements
Derivative instruments, net	83	(119)	(911)
Commodity futures contracts
Fair value measurements
Derivative instruments, net	(348)	1,746	2,661
Level 1
Fair value measurements
Cash and cash equivalents	57,804	119,145	91,950
Available for sale securities	2,406	2,419	2,440
Trading securities	75,265	67,995	63,866
Total assets measured at fair value	135,127	191,305	160,917
Level 1 | Commodity futures contracts
Fair value measurements
Derivative instruments, net	(348)	1,746	2,661
Level 2
Fair value measurements
Available for sale securities	190,577	161,764	153,611
Total assets measured at fair value	190,660	161,645	152,700
Level 2 | Foreign currency forward contracts
Fair value measurements
Derivative instruments, net	$ 83	$ (119)	$ (911)

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Fair Value Measurements - Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Fair value on a recurring basis
Industrial revenue development bonds, carrying amount, approximates fair value	$ 7,500	$ 7,500	$ 7,500
Cost Basis | Level 2
Fair value on a recurring basis
Industrial revenue development bonds, carrying amount, approximates fair value	7,500	7,500	7,500
Estimated Fair Value | Level 2
Fair value on a recurring basis
Industrial revenue development bonds, carrying amount, approximates fair value	$ 7,500	$ 7,500	$ 7,500

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Derivative Instruments and Hedging Activities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Derivative contracts
Assets	$ 157	$ 1,932	$ 2,664
Liabilities	(422)	(305)	(914)
Derivatives designated as hedging instruments: | Foreign currency forward contracts
Derivative contracts
Notional Amounts	3,200	2,357	9,010
Assets	83
Liabilities		(119)	(911)
Derivatives designated as hedging instruments: | Commodity futures contracts
Derivative contracts
Notional Amounts	12,543	10,811	11,631
Assets	74	1,932	2,664
Liabilities	$ (422)	$ (186)	$ (3)

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Derivative Instruments and Hedging Activities - OCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Effect of derivative instruments on earnings
Gain (Loss) Recognized in OCI	$ (1,204)	$ 2,162	$ (1,754)	$ 3,123
Reclassified from Accumulated OCI into Earnings
Effect of derivative instruments on earnings
Gain (Loss) Reclassified from Accumulated OCI into Earnings	(985)	(370)	137	(983)
Foreign currency forward contracts
Effect of derivative instruments on earnings
Gain (Loss) Recognized in OCI	125	20	148	690
Foreign currency forward contracts | Reclassified from Accumulated OCI into Earnings
Effect of derivative instruments on earnings
Gain (Loss) Reclassified from Accumulated OCI into Earnings	(29)	(420)	(54)	(1,026)
Commodity futures contracts
Effect of derivative instruments on earnings
Gain (Loss) Recognized in OCI	(1,329)	2,142	(1,902)	2,433
Commodity futures contracts | Reclassified from Accumulated OCI into Earnings
Effect of derivative instruments on earnings
Gain (Loss) Reclassified from Accumulated OCI into Earnings	$ (956)	$ 50	$ 191	$ 43

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Pension Plans (Details) - Multi-employer defined benefit pension plan $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Pension Plans
Estimated liability upon withdrawal from plan	$ 72,700
Insolvent period	13 years

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Accumulated Other Comprehensive Earnings (Loss) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	$ 711,364
Balance at the end of the period	703,433	$ 700,135
AOCI from Derivatives | Foreign currency forward contracts
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	(76)	(1,675)
Other comprehensive earnings (loss) before reclassifications	95	440
Reclassifications from accumulated other comprehensive loss	34	655
Other comprehensive earnings (loss) net of tax	129	1,095
Balance at the end of the period	53	(580)
AOCI from Derivatives | Commodity futures contracts
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	1,114	173
Other comprehensive earnings (loss) before reclassifications	(1,213)	1,552
Reclassifications from accumulated other comprehensive loss	(122)	(27)
Other comprehensive earnings (loss) net of tax	(1,335)	1,525
Balance at the end of the period	(221)	1,698
Investments
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	(697)	(605)
Other comprehensive earnings (loss) before reclassifications	242	637
Reclassifications from accumulated other comprehensive loss		3
Other comprehensive earnings (loss) net of tax	242	640
Balance at the end of the period	(455)	35
Postretirement and Pension Benefits
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	4,873	6,387
Other comprehensive earnings (loss) before reclassifications	4
Reclassifications from accumulated other comprehensive loss	(466)	(524)
Other comprehensive earnings (loss) net of tax	(462)	(524)
Balance at the end of the period	4,411	5,863
Foreign Currency Translation
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	(25,460)	(21,644)
Other comprehensive earnings (loss) before reclassifications	3,091	(1,431)
Other comprehensive earnings (loss) net of tax	3,091	(1,431)
Balance at the end of the period	(22,369)	(23,075)
Accumulated Other Comprehensive Earnings ( Loss )
Accumulated other comprehensive earnings (loss), net of tax
Balance at the beginning of the period	(20,246)	(17,364)
Other comprehensive earnings (loss) before reclassifications	2,219	1,198
Reclassifications from accumulated other comprehensive loss	(554)	107
Other comprehensive earnings (loss) net of tax	1,665	1,305
Balance at the end of the period	$ (18,581)	$ (16,059)

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Accumulated Other Comprehensive Earnings (Loss) - Reclassification from AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Other income, net	$ (2,465)	$ (2,239)	$ (4,444)	$ (2,204)
Product cost of goods sold	65,259	65,009	130,675	130,833
Selling, marketing and administrative expenses	26,429	25,618	53,027	49,671
Total before tax	(16,322)	(16,536)	(30,476)	(30,717)
Tax expense (benefit)	4,472	5,462	8,615	9,787
Net earnings	(11,850)	(11,074)	(21,861)	(20,930)
Reclassified from Accumulated OCI into Earnings
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Total before tax	619	(40)	(868)	166
Tax expense (benefit)	(224)	15	314	(59)
Net earnings	395	(25)	(554)	107
AOCI from Derivatives | Foreign currency forward contracts | Reclassified from Accumulated OCI into Earnings
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Other income, net	29	420	54	1,026
AOCI from Derivatives | Commodity futures contracts | Reclassified from Accumulated OCI into Earnings
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Product cost of goods sold	956	(50)	(191)	(43)
Investments | Reclassified from Accumulated OCI into Earnings
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Other income, net				4
Postretirement and Pension Benefits | Reclassified from Accumulated OCI into Earnings
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Product cost of goods sold	(179)	(201)	(358)	(402)
Selling, marketing and administrative expenses	$ (187)	$ (209)	$ (373)	$ (419)

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Bank Loans (Details) - Spanish Companies	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Bank Loans
Average weighted interest rate (as a percent)	2.00%	2.20%
Minimum
Bank Loans
Maturity period	1 year	1 year
Maximum
Bank Loans
Maturity period	2 years	2 years