INCOME TAXES

12 Months Ended

Dec. 31, 2025

INCOME TAXES

INCOME TAXES

NOTE 4—INCOME TAXES:

The domestic and foreign components of pretax income are as follows:

	2025		2024		2023
Domestic	$	129,580	$	110,569	$	105,018
Foreign		7,656		16,302		14,876
	$	137,236	$	126,871	$	119,894

The provision for income taxes is comprised of the following:

	2025		2024		2023
Current:
Federal	$	19,148	$	24,804	$	21,710
Foreign		2,074		2,676		3,775
State		4,225		3,531		3,738
		25,447		31,011		29,223
Deferred:
Federal		10,151		6,981		(1,209)
Foreign		330		1,041		658
State		1,326		1,030		(664)
		11,807		9,052		(1,215)
	$	37,254	$	40,063	$	28,008

Deferred taxes reflect temporary differences between the tax basis and financial statement carrying value of assets and liabilities. The significant temporary differences that comprised the deferred tax assets and liabilities are as follows:

	December 31,
	2025		2024
Deferred tax assets:
Accrued customer promotions	$	250	$	218
Deferred compensation		15,233		14,886
Postretirement benefits		2,392		2,326
Other accrued expenses		3,477		993
Foreign subsidiary tax loss carry forward		6,474		4,681
Outside basis difference in foreign subsidiary		362		361
Capitalized research and development costs		—		9,965
Deductible state tax depreciation		1,325		1,286
Tax credit carry forward		2,855		2,565
		32,368		37,281
Valuation allowances		(7,630)		(6,180)
Total deferred tax assets	$	24,738	$	31,101
Deferred tax liabilities:
Depreciation	$	25,999	$	26,851
Deductible goodwill and trademarks		41,098		37,902
Accrued export company commissions		5,222		5,012
Employee benefit plans		1,723		2,894
Inventory reserves		2,124		1,465
Prepaid insurance		1,020		1,122
Unrealized capital gains		5,066		3,598
Bond discount accretion		1,427		—
Other Prepaid		323		13
Deferred gain on sale of real estate		5,256		5,240
Total deferred tax liabilities	$	89,258	$	84,097
Net deferred tax liability	$	64,520	$	52,996

The valuation allowances as of December 31, 2025 and 2024 were primarily related to foreign jurisdictions’ net operating loss carryforwards and state credits that we do not expect to realize.

The amounts of the Company’s foreign subsidiary valuation allowances for net operating loss carryforwards were $6,474 and $4,681 at December 31, 2025 and 2024, respectively.

The Company has benefits related to state tax credit carryforwards valuation allowances were $1,669 and $1,499 at December 31, 2025 and 2024, respectively.

The effective income tax rate differs from the statutory rate as follows:

		2025
		Amount	Percent
U.S. statutory rate	$	28,820	21.0	%
State and local income taxes, net of federal income tax(a)		4,077	3.0
Foreign tax effects		484	0.4
Effect of changes in tax laws or rates enacted in the current period		—	—
Effect of cross-border tax laws		218	0.2
Tax credits		(1,156)	(0.8)
Change in Valuation Allowances		—	—
Nontaxable or Nondeductible Items
Non-Deductible Deferred Compensation		3,096	2.3
Non-Deductible Executive Compensation		1,042	0.8
Other Adjustments, net		(81)	(0.1)
Changes in Unrecognized Tax Benefits		754	0.5
Other Adjustments, net		—	—
Effective income tax rate	$	37,254	27.1	%

(a) State and local taxes in California and Illinois made up the majority (greater than 50 percent) of the tax effect in this category.

The comparative prior periods’ effective income tax rate differs from the statutory rate as follows:

	2024		2023
U.S. statutory rate	21.0	%	21.0	%
State income taxes, net	2.6		3.7
Foreign income tax rates	0.1		0.3
Income tax credits and adjustments	(0.4)		(0.6)
Adjustment of deferred tax balances related to Deferred Compensation	8.7		—
Other adjustment of deferred tax balances	0.1		(0.2)
Reserve for uncertain tax benefits	(0.1)		(0.2)
Other, net	(0.6)		(0.6)
Effective income tax rate	31.6	%	23.4	%

In 2024 the Board revoked its authorization that permitted management to take appropriate action to preserve the full income tax deductibility of certain amounts under its nonqualified deferred compensation plans after determining that it was no longer feasible in light of changes to Section 162(m) of the Internal Revenue Code made by the Tax Cuts and Jobs Act of 2017. Given this Board action and the resulting expectation that certain additional amounts of deferred compensation will not be tax deductible in future years, the Company concluded that it will be required under generally accepted accounting principles in the United States of America to write off the related deferred tax assets. The adjustment to the deferred tax assets resulted in a non-cash tax charge of $11,010 in 2024. The remaining balance represents deferred compensation amounts that are expected to be tax deductible in the future.

Income taxes paid, net of refunds, as shown in the consolidated statement of cash flows are as follows:

	2025
U.S. Federal	$	16,506
Foreign		3,586
State & Local		5,047
	$	25,139

Income taxes paid, net of refunds, exceeded 5 percent of total income taxes paid in the following jurisdictions:

State
Illinois	$	1,825
Foreign
Canada	$	3,440

The income taxes paid for the years ended December 31, 2024 and 2023 were $38,165 and $19,583, respectively.

As a result of the 2017 Tax Cuts and Jobs Act, the Company asserts it is permanently reinvested in its foreign subsidiaries earnings outside of United States.

At December 31, 2025 and 2024, the Company had unrecognized tax benefits of $2,873 and $2,114, respectively. Included in this balance is $2,271 and $1,671, respectively, of unrecognized tax benefits that, if recognized, would favorably affect the annual effective income tax rate. As of December 31, 2025 and 2024, $609 and $450, respectively, of interest and penalties were included in the liability for uncertain tax positions.

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:

	2025		2024		2023
Unrecognized tax benefits at January 1	$	2,114	$	2,313	$	3,392
Increases in tax positions for the current year		1,230		285		510
Reductions in tax positions for lapse of statute of limitations		(471)		(484)		(1,589)
Unrecognized tax benefits at December 31	$	2,873	$	2,114	$	2,313

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes on the Consolidated Statements of Earnings and Retained Earnings.

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions, primarily Canada and Mexico. The Company generally remains subject to examination by U.S. federal, state and foreign tax authorities for the years 2023 through 2025. With few exceptions, the Company is no longer subject to examinations by tax authorities for the years 2022 and prior.

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OBBBA”) which includes, among other provisions, changes to the U.S. corporate income tax system, including the allowance of 100% expensing of qualified asset expenditures, immediate expensing of qualifying domestic research and development expenses and permanent extensions of certain other provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for 2025, beginning January 19, 2025. The enactment did not have a material impact on our effective tax rate for the year ended December 31, 2025.