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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1994 Commission file number 1-800
WM. WRIGLEY JR. COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-1988190
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
410 North Michigan Avenue
Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 312-644-2121
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 x .
No .
91,130,913 shares of Common Stock and 25,156,937 shares of Class B Common
Stock were outstanding as of October 14, 1994.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1
WM. WRIGLEY JR. COMPANY
STATEMENT OF CONSOLIDATED EARNINGS (CONDENSED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 404,087 360,541 1,205,692 1,079,041
Investment and other income 17,530 3,961 22,864 8,561
Nonrecurring gain on sale of
Singapore property - - 38,102 -
Total revenues 421,617 364,502 1,266,658 1,087,602
Costs and expenses:
Cost of sales 172,838 153,679 521,535 464,093
Selling, distribution, and
general administrative 159,879 133,206 446,128 394,886
Interest 221 641 1,194 1,150
Total costs and expenses 332,938 287,526 968,857 860,129
Earnings before income taxes 88,679 76,976 297,801 227,473
Income taxes 27,058 27,862 101,891 82,439
Net earnings 61,621 49,114 195,910 145,034
Net earnings per average
share of common stock $ .53 .42 1.68 1.24
Dividends declared per share of
common stock $ .12 .10 .36 .30
Average number of shares
outstanding for the period 116,373,180 116,400,489 116,380,124 116,547,872
All dollar amounts in thousands except for per share amounts.
SEE ACCOMPANYING NOTES ON PAGE 5
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS (CONDENSED)
<CAPTION>
Nine Months Ended
September 30,
1994 1993
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CASH FLOWS - OPERATING ACTIVITIES
Net earnings $ 195,910 145,034
Adjustments to reconcile net earnings to net
cash flows from operating activities:
Depreciation 29,593 24,711
Gain on sales of property, plant, and
equipment (39,054) (1,253)
(Increase) decrease in:
Accounts receivable (45,399) (44,250)
Inventories (45,140) (21,724)
Other current assets (2,875) (2,716)
Other assets and deferred charges 10,144 (4,154)
Increase (decrease) in:
Accounts payable 23,671 11,849
Accrued expenses 17,475 31,002
Income and other taxes payable 26,847 (1,740)
Deferred taxes (5,793) (2,705)
Other noncurrent liabilities 768 4,105
Net cash flows - operating activities 166,147 138,159
CASH FLOWS - INVESTING ACTIVITIES
Additions to property, plant, and equipment (52,152) (43,276)
Proceeds from property retirements 40,599 3,220
Purchase of short-term investments (177,375) -
Maturities of short-term investments 182,776 -
Net increase in short-term investments - (8,331)
Net cash flows - investing activities (6,152) (48,387)
CASH FLOWS - FINANCING ACTIVITIES
Dividends paid (39,570) (34,963)
Common stock purchased (9,315) (15,077)
Net cash flows - financing activities (48,885) (50,040)
Effect of exchange rate changes on cash and
cash equivalents 1,180 1,083
Net increase in cash and cash equivalents 112,290 40,815
Cash and cash equivalents at beginning of period 86,290 84,144
Cash and cash equivalents at end of period $ 198,580 124,959
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 80,337 88,587
Interest paid $ 1,193 1,121
Interest and dividends received $ 8,321 8,773
All dollar amounts in thousands.
SEE ACCOMPANYING NOTES ON PAGE 5.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED BALANCE SHEET (CONDENSED)
<CAPTION>
September 30, December 31,
1994 1993
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 198,580 86,290
Short-term investments 98,764 103,556
Accounts receivable 171,118 118,222
(less allowance for doubtful accounts:
9/30/94 - $5,225; 12/31/93-$4,407)
Inventories -
Finished goods 57,793 47,471
Raw materials and supplies 170,477 129,325
228,270 176,796
Other current assets 14,935 11,511
Deferred income taxes - current 6,592 5,918
Total current assets 718,259 502,293
Marketable equity securities at fair value 15,417 31,417
Other assets and deferred charges 20,566 25,881
Deferred income taxes - noncurrent 19,772 15,865
Property, plant and equipment, at cost 606,195 550,877
Less accumulated depreciation 340,133 311,009
266,062 239,868
Total assets $1,040,076 815,324
Current liabilities:
Accounts payable $ 88,923 62,621
Accrued expenses 87,965 67,137
Dividends payable 13,965 11,640
Income and other taxes payable 46,178 17,127
Deferred income taxes - current 1,082 636
Total current liabilities 238,113 159,161
Deferred income taxes-noncurrent 15,713 22,716
Other noncurrent liabilities 60,396 58,265
Stockholders' equity:
Preferred stock - no par value
Authorized - 20,000,000 shares
Issued - None
Common stock - no par value
Common Stock
Authorized - 400,000,000 shares
Issued - 91,100,724 shares at 9/30/94;
90,588,065 shares at 12/31/93 12,144 12,078
Class B Common Stock - convertible
Authorized - 80,000,000 shares
Issued and outstanding -
25,187,126 shares at 9/30/94;
25,812,424 shares at 12/31/93 3,376 3,442
Additional paid-in capital 1,457 1,467
Retained earnings 718,655 564,640
Foreign currency translation adjustment (13,054) (24,757)
Unrealized holding gains on marketable
equity securities 8,325 18,312
Common Stock in treasury, at cost - 112,639
shares at 9/30/94; 0 shares at 12/31/93 (5,049) -
Total stockholders' equity 725,854 575,182
Total liabilities & stockholders' equity $1,040,076 815,324
All dollar amounts in thousands.
SEE ACCOMPANYING NOTES ON PAGE 5.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
1. The Statement of Consolidated Earnings (Condensed) for the
three and nine month periods ended September 30, 1994 and 1993,
the Statement of Consolidated Cash Flows (Condensed) for the nine
month periods ended September 30, 1994 and 1993, and the
Consolidated Balance Sheet (Condensed) at September 30, 1994 are
unaudited. In the Company's opinion, the accompanying
financial statements reflect all adjustments (which include
only normal recurring adjustments) necessary to present fairly
the results for the periods, and have been prepared on a basis
consistent with the 1993 audited consolidated financial
statements. These condensed financial statements should be
read in conjunction with the 1993 consolidated financial
statements and related notes.
2. An analysis of the cumulative foreign currency translation
adjustment follows (in thousands of dollars).
Decrease (Increase) to
Stockholders' Equity
Third Quarter 1994 1993
Balance at July 1 $16,531 16,424
Translation adjustment for the
third quarter (3,477) 3,836
Balance at September 30 $13,054 20,260
Nine Months
Balance at January 1 $24,757 9,692
Translation adjustment for
the nine-month period (11,703) 10,568
Balance at September 30 $13,054 20,260
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Revenues
Net Sales
1994 third quarter and first nine months' net sales exceeded the same
periods last year by 12.1% and 11.7%, respectively. Higher
international volume accounted for the majority of the sales gain with
over half of the volume increase coming from the emerging markets of
Central and Eastern Europe and Latin America.
Investment and Other Interest Income
1994 third quarter and first nine months' investment and other
interest income increased $13.6 million (343%) and $14.3 million
(167%), respectively. At the end of 1994, Section 170(e) (5) of the
U.S. Internal Revenue Code expires, greatly reducing the tax
deductibility of appreciated securities contributed to private
foundations. In anticipation of this change, a contribution of
securities was made to the Company's charitable foundation.
Recognition of the $14,342,000 appreciation in the market value of the
securities contributed in the third quarter from their original cost
of $624,000 favorably effected investment and other interest income.
Costs and Expenses
Cost of Sales
Cost of sales for the third quarter and first nine months of 1994
increased by 12.5% and 12.4%, respectively compared with the same
periods last year. The increases were primarily due to worldwide
shipment volume increases.
The Company's consolidated gross profit percentages were as follows:
1994 1993
Third Quarter 57.2% 57.4%
First Nine Months 56.7% 57.0%
Selling, Distribution, and General Administrative
The selling, distribution, and general administrative expenses for the
third quarter and the first nine months of 1994 exceeded the same
periods last year by 20% and 13%, respectively. About $14 million of
the increase was from the contribution to the Company's charitable
foundation in the third quarter. Excluding this expense, these
expenses exceeded the same periods last year by 9.5% and 9.4%,
respectively. This increase was primarily due to higher marketing and
selling expenses, mainly in the International Group.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(Cont'd)
Income Taxes
The effective tax rates for the third quarter and first nine months of
1994 and 1993 are shown below:
1994 1993
Third quarter 30.5% 36.2%
First nine months 34.2% 36.2%
The lower rates for 1994 result primarily from the U.S. income tax
benefit of the contribution to the Company's charitable foundation of
marketable securities valued at nearly $15 million.
Net Earnings
Consolidated net earnings totaled $61.6 million or $.53 per share for
the third quarter of 1994 - a 26% increase of $12.5 million or
$.11 per share from the third quarter of 1993. Excluding the income
tax benefit from the Foundation contribution noted above, net earnings
were up $.08 per share or 19%.
Total net earnings for the first nine months of 1994 were $195.9
million, an increase of $50.9 million or 35%. On a per share basis,
earnings were $1.68, an increase of $.44 or 35%. In January, 1994,
the Company sold its real estate holding in Singapore for a pre-tax
gain of $38.1 million. This non-recurring gain increased net earnings
by an after-tax amount of $24.8 million or $.21 per share. Excluding
the non-recurring Singapore gain, the earnings increases were $26.1
million or 18% and $.23 per share or 19%. Further excluding the
income tax benefit from the Foundation contribution noted above, net
earnings increases were $.20 per share or 16%.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1994, the Company's cash and cash equivalents and
short-term investments totaled $297.3 million compared to
$189.8 million at December 31, 1993 - an increase of $107.5 million.
The ratio of current assets to current liabilities (current ratio) was
3.0 to 1 at September 30, 1994 compared to 3.2 to 1 at
December 31, 1993.
Capital expenditures for 1994 are expected to be higher than
1993's expenditures of $63.1 million and are expected to be funded
from the Company's operations and internal sources including the
proceeds from the sale of real estate holdings in Singapore.
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FORM 10-Q
PART II - OTHER INFORMATION
Item 5 - Other Information
At its meeting of August 18, 1993, the Board of Directors adopted
a resolution authorizing the Company to purchase from time to time
shares of the Company's Common Stock not to exceed $100,000,000 in
aggregate price.
The Company's Management Incentive Plan (MIP) authorizes the
granting of up to 5,400,000 shares of the Company's Common Stock
(including 492,222 shares issued under the predecessor 1984 Stock
Award Plan) to key managers in various forms including stock grants
and stock appreciation rights. Shares so awarded may be issued from
the Company Treasury or purchased in the open market.
The Company Stock Retirement Plan for Non-employee Directors
authorizes award of up to 300,000 shares in the aggregate to non-
employee directors upon their retirement from the Board. Shares so
awarded may be issued from the Company Treasury or purchased in the
open market.
On June 9, 1994, pursuant to an unsolicited offer received by the
Company from the Wrigley Memorial Garden Foundation, the Company
entered into an agreement to purchase a total of 345,072 shares of the
Company's Common Stock, no par value, held by this Foundation. The
agreement provides that the Company purchase the shares from the
Foundation for cash in four equal quarterly increments of 86,268
shares beginning with the third calendar quarter of 1994. The
purchase price per share of each quarterly increment will be the
average closing price of the Company's Common Stock on the New York
Stock Exchange during each respective quarter.
Under these resolutions and agreements, the Company has acquired
and distributed stock in 1994 as follows:
Aggregate
Shares Purchase Shares Shares in
Period Acquired Price Distributed Treasury
1st Quarter 120,000 $5,600,150 93,629 26,371
2nd Quarter 0 0 0 0
3rd Quarter 86,268 $3,715,084 0 86,268
206,268 $9,315,234 93,629 112,639
Item 6 - Exhibits and Reports on Form 8-K
(b) The Company has not filed a Form 8-K for the three month period
ended September 30, 1994.
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FORM 10-Q
SIGNATURES
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.
WM. WRIGLEY JR. COMPANY
(Registrant)
By
Dennis J. Yarbrough
Corporate Controller
By
Dushan Petrovich
Vice President - Treasurer
Date November 14, 1994
[ARTICLE] 5
[MULTIPLIER] 1,000
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<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1994
[PERIOD-START] JAN-01-1994
[PERIOD-END] SEP-30-1994
[CASH] 198,580
[SECURITIES] 114,181
[RECEIVABLES] 176,343
[ALLOWANCES] 5,225
[INVENTORY] 228,270
[CURRENT-ASSETS] 718,259
[PP&E] 606,195
[DEPRECIATION] 340,133
[TOTAL-ASSETS] 1,040,076
[CURRENT-LIABILITIES] 238,113
[BONDS] 0
[COMMON] 15,520
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 710,334
[TOTAL-LIABILITY-AND-EQUITY] 1,040,076
[SALES] 1,205,692
[TOTAL-REVENUES] 1,266,658
[CGS] 521,535
[TOTAL-COSTS] 968,857
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 1,194
[INCOME-PRETAX] 297,801
[INCOME-TAX] 101,891
[INCOME-CONTINUING] 195,910
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 195,910
[EPS-PRIMARY] 1.68
[EPS-DILUTED] 1.68
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