<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Purpose of amendment is to correct attached Exhibit 13)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, no par value New York Stock Exchange
Midwest Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Class B Common Stock, no par value
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 .
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulations S-K (Section 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
<PAGE>
As of February 23, 1995, there were outstanding 91,288,314
shares of Common Stock, no par value, and the aggregate market
value of the Common Stock (based upon the closing price of the
stock on the New York Stock Exchange on such date) held by
non-affiliates was approximately $2,814,480,000. As of February
23, 1995, there were outstanding 25,031,606 shares of Class B
Common Stock, no par value. Class B Common Stock is not traded on
the exchanges, is restricted as to transfer or other disposition,
and is convertible into Common Stock on a share-for-share basis.
Upon such conversion, the resulting shares of Common Stock are
freely transferable and publicly traded. Assuming all shares of
outstanding Class B Common Stock were converted into Common Stock,
the aggregate market value of Common Stock held by non-affiliates
on February 23, 1995 (based upon the closing price of the stock on
the New York Stock Exchange on such date) would have been
approximately $3,212,846,000. Determination of stock ownership by
non-affiliates was made solely for the purpose of this requirement,
and the Registrant is not bound by these determinations for any
other purpose.
Certain sections of the Registrant's definitive Proxy
Statement, dated February 8, 1995, for the March 9, 1995 Annual
Meeting of Stockholders and of the 1994 Annual Report to
Stockholders are incorporated by reference into portions of Parts
I, II, III and IV of this Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this Form 10-K/A Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: March 31, 1995 WM. WRIGLEY JR. COMPANY
(Registrant)
By: /s/ JOHN F. BARD
John F. Bard
Senior Vice President
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, this Report on Form 10-K/A has been signed
below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Signature Title
President, Chief
William Wrigley Executive Officer,
Director
Senior Vice President
John F. Bard (Principal Financial Officer)
Corporate Controller
Dennis J. Yarbrough (Principal Accounting Officer)
Director
Charles F. Allison III
Director
Lee Phillip Bell
Director
Robert P. Billingsley
Director By/s/ WM. M. PIET
R. Darrell Ewers Wm. M. Piet
Attorney-in-Fact
Director
Gary E. Gardner
Date: March 31, 1995
Director
Penny Pritzker
Director
Richard K. Smucker
Director
William Wrigley, Jr.
<PAGE>
THE GLOBE AND SPEAR
The Wrigley Spear has been associated with the established
brands of Wrigley's chewing gum since it was first used in 1893
and is recognized by consumers worldwide as a symbol of quality.
Back in the early 1970's, to reflect the Company's growing
international presence, a Wrigley artist first depicted the Spear
encircling the globe. The Globe and Spear is now a registered
trademark of the Wm. Wrigley Jr. Company. Wrigley brands are
produced in 12 factories around the world and sold in well over
100 countries. Wrigley's chewing gum represents a truly American
product known throughout the world and enjoyed daily by millions.
<PAGE>
[Insert Wrigley Letterhead]
To the Stockholders and Employees
of the Wm. Wrigley Jr. Company
Your Company's combination of quality products, quality
people and sound marketing programs resulted in our tenth
consecutive year of record sales and earnings. Volumes both
domestically and internationally reached new highs and, for the
first time in Company history, our international business
accounted for more than half our total volume. In the process,
your Company faced significantly greater competition pretty much
across the board, and this competitive activity gives no
indication of abating as we head into 1995.
Despite increased spending by competing brands, solid volume
gains were achieved in North America. In the U.S., Extra(R)
further extended its sugarfree market share lead, and all of our
long-established sugar brands added volume. Winterfresh(R), our
first new sugar chewing gum brand in nearly 20 years, was
launched nationally in August. Trade and consumer response to
this new entry has been very favorable. As Winterfresh gained
distribution, it made the largest contribution to the overall
domestic volume growth. Freedent(R), at the same time, was being
challenged by a new competitive brand. Before year end, we
responded by reformulating and relaunching Freedent peppermint
and spearmint. These new formulas have a softer texture and
longer lasting flavor. In the coming months, with the support of
new advertising, we will seek to restore growth to the brand.
The intense competition in the region was most evident in
Canada where volume softened slightly following two years of
healthy gains. Sales in Mexico, on the other hand, made a
significant contribution to our North American growth in 1994.
Although starting from a relatively small base, our volume in
Mexico nearly doubled as distribution was expanded and
merchandising continued to improve. The recent devaluation of the
peso, however, will most likely have a substantial impact in 1995
on the volume and profitability of our business in Mexico.
Our associates at Amurol Confections also added to our
volume growth. They managed a gain over the prior year's record
production even with the complexities of their move to new
facilities.
The hard work of our associates throughout Europe has helped
to make this the Company's fastest growing region during the past
five years. Solid growth was recorded once again in France,
Germany, the United Kingdom, and across Scandinavia, with our
sugarfree products showing particular strength. Your Company also
stepped up its activity in Central and Eastern Europe where, as
merchandising efforts increased and further distribution was
achieved, volume nearly doubled. While these newer markets
accounted for half the European volume gain in 1994, it should be
noted that some of these business environments remain volatile.
In the Asia/Pacific region, results were mixed in 1994.
Production rose sharply at our plant in China during its second
year of operation. And by year end, our Chinese associates were
gearing up to accelerate distribution to other markets within the
country to blunt the effects of some very aggressive competition.
Sales in Australia benefitted from the combination of new product
introductions and continued economic recovery, while in Taiwan,
improved merchandising and advertising gave our business a boost.
Rising volumes in Malaysia and Indonesia continue to offer
promise for the future, but this growth will require ongoing
marketing investments, particularly in Indonesia. Double-digit
inflation in the Philippines drove up production costs and
dictated a hefty price increase on a majority of our products.
This, in turn, triggered a sizeable volume decrease.
<PAGE>
As suggested in last year's letter, 1994 turned out to be a
record-breaking year for capital expenditures and factory
construction. Without the dedication of our Engineering groups,
we would have been hard-pressed to meet the demands associated
with this expansion. They actively participated in the design and
construction of the new buildings, while also fabricating,
refurbishing, and relocating more pieces of equipment than at any
other time in the Company's history. Amurol's new facility, as
mentioned earlier, is already up and running. The plant addition
in France will be completed by the end of the first quarter; the
new factory in India should be operating by mid-year; and
construction of the Polish factory has begun. While some capacity
constraints have been relieved, we anticipate higher levels of
capital spending in 1995 and beyond. These expenditures,
approaching a quarter of a billion dollars in the past three
years alone, could place pressure on near-term earnings as
incremental depreciation costs rise.
In the quarter century that has passed since the last flurry
of construction activity for the Wrigley Company, we have
experienced tremendous growth and change in the geographic mix of
our business. In 1970, sales were less than $180 million and
international markets accounted for about a quarter of our
volume; in 1994, sales were $1.6 billion and over half of our
volume came from outside the U.S. Since our growth overseas has
accelerated in recent years, much of our energy and resources in
1995 will be devoted to absorbing and consolidating these gains
into a stable base, and making the necessary investments in
further volume-building opportunities.
While we are witnessing an unprecedented movement toward
market economies throughout the world, it is being tempered by
desires for strong national or regional identities. Although many
physical and political barriers to international markets have
been eliminated in recent years, significant economic hurdles
remain. Trade barriers as well as associations of countries with
like interests will continue to have a very real influence on our
business. And as we have seen in Mexico, we will be exposed to
more financial risks because of volatile exchange rates and/or
restrictions on currency convertibility.
Finally, while our rapid geographic expansion has been quite
successful to date, neither the potential of these markets nor
our efforts have gone unnoticed by competitors, especially in
Eastern Europe and China. The competition for advertising
opportunities in emerging markets has resulted in significant
media inflation, and staffing up to fully develop these markets
also adds to our costs. We must make these investments, however,
because advertising and merchandising, coupled with price
restraint wherever possible, are key ingredients to our success.
The net result of these factors is that 1995 will be a
demanding year for the Wrigley Company. Our history has proven
that it is wiser to spend money now to sustain and build market
share than to spend more money later to regain lost market share.
Nevertheless, we remain optimistic that our strengths -
well-advertised worldwide brands that are known for quality,
talented and hard-working employees around the globe and focus on
the long-term success of the Company - will serve us well in
these increasingly challenging times.
Sincerely,
[SIG]
William Wrigley
<PAGE>
TABLE OF CONTENTS
5 Highlights
6 Statement of Earnings and Retained Earnings
7 Statement of Cash Flows
8 Balance Sheet
10 Notes to Financial Statements
18 Report of Independent Auditors
19 Selected Five Year Financial Data
20 Quarterly Data
21 Management's Discussion and Analysis
24 Directors
26 Elected Officers
27 Corporate Facilities and Associated
Companies
28 Stockholder Information
<PAGE>
<TABLE>
HIGHLIGHTS OF OPERATIONS
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
1994 1993 1992
In thousands of dollars except for per share amounts
<S> <C> <C> <C>
Net Sales $1,596,551 1,428,504 1,286,921
Earnings before nonrecurring
gain on sale of Singapore
property in 1994 and cumulative
effect of accounting changes
in 1992 205,767 174,891 148,573
- Per Share of Common Stock 1.77 1.50 1.27
Net Earnings 230,533 174,891 141,295
- Per Share of Common Stock 1.98 1.50 1.21
Dividends Paid 104,694 87,344 72,511
- Per Share of Common Stock .90 .75 .62
Property Additions 87,013 63,095 66,682
Stockholders' Equity 688,470 575,182 498,935
Return on Average Equity 36.5% 32.6% 29.4%
Stockholders at Close of Year 24,078 18,567 14,546
Average Shares Outstanding (000) 116,358 116,511 117,055
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF
CONSOLIDATED EARNINGS AND RETAINED EARNINGS
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
YEAR ENDED DECEMBER 31 1994 1993 1992
In thousands of dollars except for per share amounts
<S> <C> <C> <C>
EARNINGS
Revenues:
Net sales $1,596,551 1,428,504 1,286,921
Investment and other income 26,597 11,938 14,346
Nonrecurring gain on sale of
Singapore property 38,102 - -
Total revenues 1,661,250 1,440,442 1,301,267
Costs and expenses:
Cost of sales 697,442 617,156 572,468
Selling, distribution and
general administrative 609,039 542,944 495,323
Interest 1,490 1,507 1,173
Total costs and expenses 1,307,971 1,161,607 1,068,964
Earnings before income taxes and
cumulative effect of accounting
changes 353,279 278,835 232,303
Income taxes 122,746 103,944 83,730
Earnings before cumulative effect of
accounting changes 230,533 174,891 148,573
Cumulative effect of accounting changes
for:
Postretirement benefits -
net of income tax effect - - (10,143)
Income taxes - - 2,865
Net earnings 230,533 174,891 141,295
RETAINED EARNINGS
Retained earnings at beginning
of year 564,640 491,481 579,665
Dividends declared
(per share: 1994-$.94; 1993-$.75;
1992-$.63) (109,323) (87,301) (74,409)
Treasury stock retirement - (14,431) (155,070)
Retained earnings at end
of year $685,850 564,640 491,481
PER SHARE AMOUNTS
Earnings before cumulative effect of
accounting changes $ 1.98 1.50 1.27
Cumulative effect of accounting
changes, net - - (.06)
Net earnings per average share of
common stock $ 1.98 1.50 1.21
Dividends paid per share of
common stock $ .90 .75 .62
See accompanying accounting policies and notes.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF
CONSOLIDATED CASH FLOWS
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
YEAR ENDED DECEMBER 31 1994 1993 1992
In thousands of dollars
<S> <C> <C> <C>
CASH FLOWS-OPERATING ACTIVITIES
Net earnings $ 230,533 174,891 141,295
Adjustments to reconcile net earnings to
net cash flows from operating activities:
Depreciation 41,057 34,565 29,806
Gain on sales of property, plant
and equipment (38,762) (806) (3,985)
(Increase) decrease in:
Accounts receivable (13,608) (26,754) (10,652)
Inventories (38,086) (24,771) 205
Other current assets (13,578) (1,551) (115)
Other assets and deferred
charges 461 (3,929) (6,216)
Increase (decrease) in:
Accounts payable 3,086 10,298 7,937
Accrued expenses (525) 18,157 9,724
Income and other taxes payable 35,774 (14,241) 8,944
Deferred income taxes (7,894) (3,834) (11,551)
Other noncurrent liabilities 5,078 9,345 23,876
Net cash flows-operating activities 203,536 171,370 189,268
CASH FLOWS-INVESTING ACTIVITIES
Additions to property, plant and
equipment (87,013) (63,095) (66,682)
Proceeds from property retirements 40,855 4,042 7,983
Purchases of short-term investments (232,591) (140,186) -
Maturities of short-term investments 234,092 135,204 -
Net increase in short-term
investments - - (26,132)
Net cash flows-investing activities (44,657) (64,035) (84,831)
CASH FLOWS-FINANCING ACTIVITIES
Dividends paid (104,694) (87,344) (72,511)
Common stock purchased (13,225) (15,077) (17,579)
Net cash flows-financing activities (117,919) (102,421) (90,090)
Effect of exchange rate changes on
cash and cash equivalents 319 (2,768) (3,538)
Net increase in cash and cash
equivalents 41,279 2,146 10,809
Cash and cash equivalents at
beginning of year 86,290 84,144 73,335
Cash and cash equivalents at end
of year $ 127,569 86,290 84,144
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 94,576 124,127 78,938
Interest paid $ 1,508 1,491 1,177
Interest and dividends received $ 12,135 12,164 10,893
See accompanying accounting policies and
notes.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF
CONSOLIDATED CASH FLOWS
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
YEAR ENDED DECEMBER 31 1994 1993 1992
In thousands of dollars
<S> <C> <C> <C>
CASH FLOWS-OPERATING ACTIVITIES
Net earnings $ 230,533 174,891 141,295
Adjustments to reconcile net earnings to
net cash flows from operating activities:
Depreciation 41,057 34,565 29,806
Gain on sales of property, plant
and equipment (38,762) (806) (3,985)
(Increase) decrease in:
Accounts receivable (13,608) (26,754) (10,652)
Inventories (38,086) (24,771) 205
Other current assets (13,578) (1,551) (115)
Other assets and deferred
charges 461 (3,929) (6,216)
Increase (decrease) in:
Accounts payable 3,086 10,298 7,937
Accrued expenses (525) 18,157 9,724
Income and other taxes payable 35,774 (14,241) 8,944
Deferred income taxes (7,894) (3,834) (11,551)
Other noncurrent liabilities 5,078 9,345 23,876
Net cash flows-operating activities 203,536 171,370 189,268
CASH FLOWS-INVESTING ACTIVITIES
Additions to property, plant and
equipment (87,013) (63,095) (66,682)
Proceeds from property retirements 40,855 4,042 7,983
Purchases of short-term investments (232,591) (140,186) -
Maturities of short-term investments 234,092 135,204 -
Net increase in short-term
investments - - (26,132)
Net cash flows-investing activities (44,657) (64,035) (84,831)
CASH FLOWS-FINANCING ACTIVITIES
Dividends paid (104,694) (87,344) (72,511)
Common stock purchased (13,225) (15,077) (17,579)
Net cash flows-financing activities (117,919) (102,421) (90,090)
Effect of exchange rate changes on
cash and cash equivalents 319 (2,768) (3,538)
Net increase in cash and cash
equivalents 41,279 2,146 10,809
Cash and cash equivalents at beginning
of year 86,290 84,144 73,335
Cash and cash equivalents at end
of year $ 127,569 86,290 84,144
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 94,576 124,127 78,938
Interest paid $ 1,508 1,491 1,177
Interest and dividends received $ 12,135 12,164 10,893
See accompanying accounting policies and
notes.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
AS OF DECEMBER 31 1994 1993
In thousands of dollars
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 127,569 86,290
Short-term investments, at amortized cost 102,679 103,556
Accounts receivable
(less allowance for doubtful accounts:
1994-$6,645; 1993-$4,407) 138,547 118,222
Inventories-
Finished goods 59,205 47,471
Raw materials and supplies 161,904 129,325
221,109 176,796
Other current assets 25,924 11,511
Deferred income taxes-current 7,484 5,918
Total current assets 623,312 502,293
Marketable equity securities, at fair value 14,687 31,417
Deferred charges and other assets 30,581 25,881
Deferred income taxes-noncurrent 20,834 15,865
Property, plant and equipment, at cost:
Land 23,281 22,496
Buildings and building equipment 204,877 173,403
Machinery and equipment 410,305 354,978
638,463 550,877
Less accumulated depreciation 349,043 311,009
289,420 239,868
Total assets $ 978,834 815,324
</TABLE>
<PAGE>
<TABLE>
AS OF DECEMBER 31 1994 1993
In thousands of dollars
and shares
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 68,097 62,621
Accrued expenses 69,716 67,137
Dividends payable 16,269 11,640
Income and other taxes payable 55,178 17,127
Deferred income taxes-current 638 636
Total current liabilities 209,898 159,161
Deferred income taxes-noncurrent 15,760 22,716
Other noncurrent liabilities 64,706 58,265
Stockholders' equity:
Preferred stock-no par value
Authorized: 20,000 shares
Issued: None
Common stock-no par value
Common stock
Authorized: 400,000 shares
Issued: 1994-91,326 shares; 1993-90,589
shares 12,177 12,078
Class B common stock-convertible
Authorized: 80,000 shares
Issued and outstanding: 1994-25,075 shares;
1993-25,812 shares 3,343 3,442
Additional paid-in capital 1,781 1,467
Retained earnings 685,850 564,640
Foreign currency translation adjustment (13,502) (24,757)
Unrealized holding gains on marketable equity
securities 7,855 18,312
Common Stock in treasury, at cost
(1994-192 shares; 1993-0 shares) (9,034) -
Total stockholders' equity 688,470 575,182
Total liabilities and stockholders' equity $ 978,834 815,324
See accompanying accounting policies and
notes.
</TABLE>
<PAGE>
ACCOUNTING POLICIES AND NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
CONSOLIDATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements include the accounts of the
Wm. Wrigley Jr. Company and its associated companies (the Company).
The Company's principal business is manufacturing and selling
chewing gum. All other businesses constitute less than 10% of
combined revenues, operating profit and identifiable assets.
NONRECURRING GAIN ON SALE OF SINGAPORE PROPERTY
On January 12, 1994, the Company sold the real estate holdings of
its wholly owned associated company in Singapore, Malayan Guttas
Private Limited, for a gain of $38,100,000. This nonrecurring gain,
reported in the first quarter of 1994, increased net earnings by an
after tax amount of $24,765,000 or $.21 per share.
ADVERTISING
The Company expenses all advertising costs in the year incurred.
Advertising expense was $225,291,000 in 1994, $198,985,000 in 1993
and $178,557,000 in 1992.
INVESTMENTS IN DEBT & EQUITY SECURITIES
Effective December 31, 1993, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 115 "Accounting for
Certain Investments in Debt and Equity Securities". The Company's
investments in debt securities, which typically mature in one year
or less, are held to maturity and valued at amortized cost, which
approximates fair value. The aggregate fair values at December 31,
1994 and December 31, 1993 were, respectively, $69,287,000 and
$82,881,000 for municipal securities, and $33,392,000 and
$20,675,000 for other debt securities.
The Company's investments in marketable equity securities are
held for an indefinite period. Application of SFAS No. 115 resulted
in unrealized holding gains of $12,085,000 at December 31, 1994 and
$28,171,000 at December 31, 1993. The aggregate fair value of the
Company's marketable equity securities at December 31, 1994 and
1993 totaled $14,687,000 and $31,417,000 respectively. The
unrealized holding gains, net of the related tax effect, added
$7,855,000 and $18,312,000 to Stockholders' equity at December 31,
1994 and 1993, respectively. At the end of 1994, Section 170 (e)(5)
of the U.S. Internal Revenue Code expired, greatly reducing the tax
deductibility of appreciated securities contributed to private
foundations. In anticipation of this change, a contribution of
marketable equity securities having a fair value of $14,966,000 and
an original cost of $624,000 was made to the Company's charitable
foundation in 1994.
CASH AND CASH EQUIVALENTS
The Company considers all highly-liquid debt instruments with a
maturity of three months or less to be cash equivalents.
<PAGE>
INVENTORIES
Inventories at December 31, 1994 and 1993 included $109,707,000 and
$87,960,000, respectively, valued at cost on a last-in, first-out
(LIFO) basis. If current costs had been used, such inventories
would have been $46,326,000 and $42,723,000 higher than reported at
December 31, 1994 and 1993, respectively. The non-LIFO inventories
are valued at the lower of cost (principally first-in, first-out
basis) or market.
DEPRECIATION
Depreciation is provided over the estimated useful lives of the
respective assets (buildings and building equipment--12 to 50
years; machinery and equipment--3 to 20 years). The depreciation
methods and amounts were:
1994 1993 1992
In thousands of dollars
STRAIGHT-LINE $17,531 15,639 14,914
ACCELERATED 23,526 18,926 14,892
FOREIGN CURRENCY TRANSLATION AND EXCHANGE CONTRACTS
The Company has determined that the functional currency for each
associated company except for selected Eastern and Central European
entities is its local currency. Some Eastern and Central European
entities are considered to be highly inflationary and their
functional currencies are remeasured to U.S. dollars.
Following is an analysis of the unrealized foreign currency
translation adjustment included in the balance sheet:
In thousands of dollars
BALANCE AT 12/31/91 $ 5,719
1992 Adjustment (15,411)
BALANCE AT 12/31/92 (9,692)
1993 Adjustment (15,065)
BALANCE AT 12/31/93 (24,757)
1994 Adjustment 11,255
BALANCE AT 12/31/94 $ (13,502)
Certain foreign associated companies enter into fixed rate
currency exchange contracts as non-speculative hedges against
future material purchase commitments among associated companies. In
addition, the Parent Company enters into such contracts from time
to time as non-speculative hedges regarding known future
commitments with associated companies. Market value gains and
losses, recognized at expiration of the contracts, offset foreign
exchange gains or losses on the related transactions being hedged.
At December 31, 1994, foreign exchange rate contracts for a number
of currencies, primarily French francs, German marks, and U.S.
dollars, maturing at various dates through December 31, 1995
aggregated $180,639,000. Open foreign exchange contracts at
December 31, 1993 aggregated $137,683,000. Unrealized gains or
losses on these contracts were not significant as of either
December 31, 1994 or 1993.
ACCRUED EXPENSES
Accrued expenses at December 31, 1994 included $23,758,000 of
payroll expenses and $8,931,000 of customer allowances. Payroll
expenses of $21,906,000 and customer allowances of $11,231,000 were
included in accrued expenses at December 31, 1993.
<PAGE>
OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities include liabilities for postretirement
benefit plans of approximately $20,000,000 and $18,200,000 at
December 31, 1994 and 1993, respectively. Also included are
employee pension funds, deferred compensation, and postemployment
benefits.
COMMON STOCK
Following is a summary of activity in Common Stock, paid-in capital
and treasury stock:
<TABLE>
COMMON STOCK CLASS B COMMON ADDITIONAL TREASURY
STOCK
PAID-IN
SHARES AMOUNT SHARES AMOUNT CAPITAL SHARES
AMOUNT
In thousands of dollars and shares
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
12/31/91 116,862 $15,582 27,138 $3,618 $2,504 26,582 $(143,686)
TREASURY STOCK
PURCHASES - - - - - 671 (17,579)
TREASURY STOCK
RETIREMENT (27,166) (3,622) - - - (27,166) 158,692
CONVERSION 715 161 (715) (161) - - -
ISSUANCES - - - - (1,400) (87) 2,573
STOCK APPRECIATION
RIGHTS - - - - 695 - -
STOCK SPLIT - - - - (231) - -
BALANCE AT
12/31/92 90,411 12,121 26,423 3,457 1,568 - -
TREASURY STOCK
PURCHASES - - - - - 450 (15,077)
TREASURY STOCK
RETIREMENT (433) (58) - - - (433) 14,489
CONVERSION 611 15 (611) (15) - - -
ISSUANCES - - - - (67) (17) 588
STOCK SPLIT - - - - (34) - -
BALANCE AT
12/31/93 90,589 12,078 25,812 3,442 1,467 - -
TREASURY STOCK
PURCHASES - - - - - 292 (13,225)
CONVERSION 737 99 (737) (99) - - -
ISSUANCES - - - - 140 (100) 4,191
EXPIRED PUT
OPTION - - - - 174 - -
BALANCE AT
12/31/94 91,326 $12,177 25,075 $3,343 $1,781 192 $ (9,034)
</TABLE>
The Company's Management Incentive Plan (MIP) authorizes the
granting of up to 5,400,000 shares of the Company's new or reissued
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.
In 1988, the Company granted to certain key managers, non-
qualified stock options for 240,000 shares of Common Stock at
$11.208, the fair market price on the date of grant. These options
may be exercised through 1998. Participants may exchange a portion
of their options for stock appreciation rights. These rights
acquire value if the market price of shares of Common Stock
increases above the grant price of options. Through December 31,
1994 stock options for 85,512 shares and stock appreciation rights
for 44,488 shares have been exercised.
Each share of Class B Common Stock has ten votes, is restricted
as to transfer or other disposition and is convertible at any time
into one share of Common Stock.
Additional paid-in capital primarily represents the excess of
fair market value of Common Stock issued from treasury on the date
the shares of stock were awarded over the average acquisition cost
of the shares.
Treasury Stock is acquired for MIP plans or under a resolution
the Board of Directors adopted at its meeting of August 18, 1993
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. On August 19, 1992 the Board of Directors adopted a
resolution retiring the entire balance of shares of Common Stock
held in the corporate treasury at that time and all subsequent
acquisitions to the extent not required for issuance under the MIP
programs.
<PAGE>
Pursuant to agreements in 1991 and 1992 with the Offield Family
Foundation, the Company purchased shares of Wrigley stock in
quarterly increments of 150,000 shares based on the average New
York Stock Exchange daily closing price of the Company's Common
Stock during each quarter. Purchases during 1992 and 1993 were
600,000 shares at an average price of $25.25 and 450,000 shares at
an average price of $33.50, respectively.
On June 9, 1994, the Company agreed to an unsolicited offer from
the Wrigley Memorial Garden Foundation, to purchase 345,072 shares
of Wrigley Common Stock in four quarterly installments. The
purchase amount is based on the average New York Stock Exchange
daily closing price of the Company's Common Stock during each
quarter. Pursuant to this agreement the Company purchased 172,536
shares of Wrigley stock during 1994 at an average price of $44.19.
INCOME TAXES
Effective January 1, 1992, the Company changed its method of
accounting for income taxes from the deferred method to the
liability method required by SFAS No. 109 "Accounting for Income
Taxes". The cumulative effect of adopting SFAS No. 109 as of
January 1, 1992 was to increase net income and decrease the
deferred tax liability by $2,865,000.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Components of deferred tax assets and (liabilities)
are as follows:
1994 1993
In thousands of dollars
ACCRUED COMPENSATION,
PENSION AND
POSTRETIREMENT BENEFITS $ 15,399 12,980
DEPRECIATION (7,933) (8,128)
UNREALIZED HOLDING GAIN (4,230) (9,860)
ALL OTHER-NET 8,684 3,439
NET DEFERRED TAX ASSET
(LIABILITY)
$11,920 (1,569)
Balance sheet classifications of deferred tax are as follows:
1994 1993
In thousands of dollars
DEFERRED TAX ASSET-
CURRENT $ 7,484 5,918
DEFERRED TAX ASSET-
NONCURRENT 20,834 15,865
DEFERRED TAX LIABILITY-
CURRENT (638) (636)
DEFERRED TAX LIABILITY-
NONCURRENT (15,760) (22,716)
NET DEFERRED TAX ASSET
(LIABILITY) $ 11,920 (1,569)
<PAGE>
Applicable U.S. income and foreign withholding taxes have not
been provided on $189,243,000 of undistributed earnings of
international associated companies at December 31, 1994. These
earnings are considered to be permanently invested and, under the
tax laws, are not subject to such taxes until distributed as
dividends. If the earnings were not considered permanently
invested, approximately $15,618,000 of deferred income taxes,
consisting primarily of foreign withholding taxes, would have been
provided. Such taxes, if ultimately paid, may be recoverable as
foreign tax credits in the U.S. Income taxes are based on pre-tax
earnings which are distributed geographically as follows:
1994 1993 1992
In thousands of dollars
DOMESTIC $ 172,194 157,431 133,508
FOREIGN 181,085 121,404 98,795
$ 353,279 278,835 232,303
Reconciliation of the provision for income taxes computed at the
U.S. Federal statutory rate of 35% for 1994 and 1993 and 34% for
1992 to the reported provision for income taxes is as follows:
1994 1993 1992
In thousands of dollars
PROVISION AT
STATUTORY RATE $ 123,648 97,592 78,983
STATE TAXES-NET 8,308 8,101 6,927
FOREIGN TAX RATES 361 405 3,595
CONTRIBUTION OF
APPRECIATED
SECURITIES (5,020) - -
OTHER-NET (4,551) (2,154) (5,775)
$ 122,746 103,944 83,730
The components of the provision for income taxes for 1994, 1993,
and 1992 were:
CURRENT DEFERRED TOTAL
In thousands of dollars
1994
FEDERAL $ 63,941 (8,171) 55,770
FOREIGN 53,560 277 53,837
STATE 13,139 - 13,139
$ 130,640 (7,894) 122,746
1993
FEDERAL $ 46,874 (3,229) 43,645
FOREIGN 48,098 (605) 47,493
STATE 12,806 - 12,806
$ 107,778 (3,834) 103,944
1992
FEDERAL $ 35,833 (3,348) 32,485
FOREIGN 41,405 (113) 41,292
STATE 9,953 - 9,953
$ 87,191 (3,461) 83,730
<PAGE>
PENSIONS
The Company maintains non-contributory defined benefit pension
plans covering substantially all of its employees. Retirement
benefits are a function of the years of service and the level of
compensation, generally for the highest three consecutive salary
years occurring within ten years prior to an employee's retirement
date, depending on the plan. The Company's policy is to fund within
ERISA or other statutory limits to provide benefits earned to date
and expected to be earned in the future. The components of
consolidated net pension cost are presented below:
<TABLE>
1994 1993 1992
DOMESTIC FOREIGN DOMESTIC FOREIGN DOMESTIC
FOREIGN
In thousands of dollars
<S> <C> <C> <C> <C> <C> <C>
SERVICE COST-
BENEFITS EARNED DURING THE YEAR $ 7,467 3,163 7,542 2,806 7,286
2,658
INTEREST COST
ON PROJECTED BENEFIT OBLIGATION 14,104 3,164 12,898 3,061 13,012
3,203
ACTUAL RETURN ON PLAN ASSETS (79) (3,820)(14,653) (3,433)
(18,957)(3,966)
NET AMORTIZATION AND DEFERRAL (15,087) (437) 629 (317) 5,058
(376)
OTHER PENSION PLANS 500 2,997 173 2,259 175 2,530
NET PENSION COST $ 6,905 5,067 6,589 4,376 6,574 4,049
Assumptions used to determine net pension cost and the actuarial present value
of the projected benefit obligation were as follows:
1994 1993 1992
DOMESTIC FOREIGN DOMESTIC FOREIGN DOMESTIC FOREIGN
In thousands of dollars
<S> <C> <C> <C> <C> <C> <C>
DISCOUNT RATES 8.0% 6.5-8.0% 7.0% 7.5-9.0% 7.75% 7.5-10.0%
LONG-TERM RATES
OF RETURN ON ASSETS 8.5% 6.5-8.0% 8.5% 5.0-9.0% 8.5% 7.0-9.0%
RATES OF INCREASE
IN COMPENSATION LEVELS 4.75% 3.5-7.0% 4.75% 5.0-8.0% 5.5% 5.0-8.0%
Domestic plan assets consist primarily of high quality marketable
fixed income and equity securities. Foreign plan assets consist
primarily of contracts with insurance companies. The defined
benefit plans' funded status and the pension liability recorded in
the consolidated balance sheet were as follows:
1994 1993
DOMESTIC FOREIGN DOMESTIC FOREIGN
In thousands of dollars
<S> <C> <C> <C> <C>
PLAN ASSETS AT FAIR VALUE $ 188,446 51,367 189,067 43,092
ACTUARIAL PRESENT VALUE OF BENEFIT OBLIGATION:
Vested benefits 137,991 34,973 152,685 26,561
Nonvested benefits 4,346 2,732 1,698 1,476
Accumulated benefit obligation 142,337 37,705 154,383 28,037
Projected future salary increases 39,998 6,153 38,021 8,485
Projected benefit obligation 182,335 43,858 192,404 36,522
PLAN ASSETS IN EXCESS OF (LESS THAN)
PROJECTED BENEFIT OBLIGATION 6,111 7,509 (3,337) 6,570
LESS ITEMS NOT YET RECOGNIZED IN EARNINGS:
Unrecognized prior service cost (520) (607) (1,808) 413
Unrecognized net gain (loss) 6,279 4,514 (739) 2,219
Unrecognized transition asset 3,322 4,190 3,778 4,572
ACCRUED PENSION LIABILITY $ 2,970 588 4,568 634
</TABLE>
<PAGE>
POSTRETIREMENT BENEFITS
Effective January 1, 1992, the Company adopted SFAS No. 106
relating to "Accounting for Postretirement Benefits Other Than
Pensions". The Company provides limited postretirement healthcare
benefits on a contributory basis and life insurance benefits in the
U.S. and at certain international associated companies. The cost of
postretirement benefits is provided for during the employee's
active working career.
A reconciliation of the plans' funded status to the amounts
reported in the financial statements follows:
1994 1993
In thousands of dollars
ACCUMULATED
POSTRETIREMENT
BENEFIT OBLIGATION:
Retirees $ 5,500 4,300
Active employees 14,500 14,100
Total 20,000 18,400
PLAN ASSETS 2,400 2,600
ACCUMULATED
POSTRETIREMENT
BENEFIT OBLIGATION
IN EXCESS OF PLAN ASSETS 17,600 15,800
UNRECOGNIZED
ACTUARIAL GAIN 2,400 2,400
ACCRUED
POSTRETIREMENT LIABILITY $20,000 18,200
The components of the net periodic postretirement benefit cost
are as follows:
1994 1993 1992
In thousands of dollars
SERVICE COST $ 900 1,000 900
INTEREST COST 1,500 1,500 1,400
RETURN ON PLAN ASSETS (200) (200) (200)
NET PERIODIC EXPENSE $ 2,200 2,300 2,100
Actuarial assumptions used to measure the postretirement benefit
cost are as follows:
1994 1993 1992
DISCOUNT RATE 8.0% 7.25% 8.0%
HEALTHCARE
TREND TO 2002
(IN 1994) 10.0-5.0% 12.9-5.0% 14.0-6.0%
RETURN ON PLAN
ASSETS 5.5% 5.5% 8.5%
Effects of increasing the healthcare trend rates by one
percentage point in each year are summarized below:
1994 1993 1992
In thousands of dollars
INCREASE ACCUMULATED
POSTRETIREMENT
BENEFIT
OBLIGATION BY $ 1,900 4,500 3,100
INCREASE
POSTRETIREMENT
BENEFIT COST BY 300 800 700
<PAGE>
OPERATIONS BY GEOGRAPHIC AREAS
Information concerning the Company's operations in different
geographic areas at December 31, 1994, 1993 and 1992, and for the
years then ended is presented below.
Operating profit is revenue less all costs and expenses other
than general corporate expenses, interest expense and income taxes.
Identifiable assets are those involved in the operations in each
geographic area and include all of the assets of associated
companies. Marketable equity securities held by the parent company
are not distributed to geographic areas, and the related dividend
income is included in the adjustments and eliminations line.
<TABLE>
1994 1993 1992
In thousands of dollars
<S> <C> <C> <C>
REVENUES:
North America (principally U.S.) $938,034 883,658 824,568
Europe 573,153 456,536 383,887
Asia, Pacific & Other 199,638* 140,050 136,180
Adjustments and eliminations (49,575) (39,802) (43,368)
Total revenues $1,661,250 1,440,442 1,301,267
OPERATING PROFIT:
North America (principally U.S.) $176,794 163,174 143,136
Europe 107,390 92,712 66,727
Asia, Pacific & Other 70,390* 24,353 22,705
Adjustments and eliminations 1,020 1,160 1,464
355,594 281,399 234,032
Interest and General Corporate
Expenses (2,315) (2,564) (1,729)
Earnings before income taxes and
cumulative effect of accounting
changes $ 353,279 278,835 232,303
IDENTIFIABLE ASSETS USED IN OPERATIONS:
North America (principally U.S.) $574,125 501,527 458,337
Europe 264,136 185,242 164,380
Asia, Pacific & Other 121,339 92,473 81,658
Adjustments and eliminations 4,547 4,665 4,458
964,147 783,907 708,833
Corporate Assets 14,687 31,417 2,539
Total assets $ 978,834 815,324 711,372
* Includes nonrecurring gain of $38,100 on sale of Singapore property.
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders and Board of Directors
of the Wm. Wrigley Jr. Company
We have audited the accompanying consolidated balance sheet of Wm.
Wrigley Jr. Company and associated companies at December 31, 1994
and 1993, and the related statements of consolidated earnings and
retained earnings and consolidated cash flows for each of the three
years in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of Wm. Wrigley Jr. Company and associated companies at
December 31, 1994 and 1993, and the consolidated results of their
operations and cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in accounting policies and notes to consolidated
financial statements, in 1992 the Company changed its method of
accounting for postretirement benefits other than pensions to
comply with Statement of Financial Accounting Standards (SFAS) No.
106 and changed its method of accounting for income taxes to comply
with SFAS No. 109.
ERNST & YOUNG LLP
Chicago, Illinois
January 30, 1995
<PAGE>
<TABLE>
SELECTED FIVE YEAR FINANCIAL
DATA
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
1994 1993 1992 1991 1990
In thousands of dollars except for per share amounts
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Net Sales $1,596,551 1,428,504 1,286,921 1,148,875 1,110,639
Cost of Sales 697,442 617,156 572,468 507,795 508,957
Income Taxes 122,746 103,944 83,730 79,362 70,897
Earnings before nonrecurring
gain on sale of Singapore
property in 1994 and
cumulative effect of
accounting changes in 1992 205,767 174,891 148,573 128,652 117,362
- Per Share of Common Stock 1.77 1.50 1.27 1.09 1.00
Net Earnings 230,533 174,891 141,295 128,652 117,362
- Per Share of Common Stock 1.98 1.50 1.21 1.09 1.00
Dividends Paid 104,694 87,344 72,511 64,609 58,060
- Per Share of Common Stock .90 .75 .62 .55 .49
- As a Percent of Net
Earnings 45% 50% 51% 50% 49%
Dividends Declared
Per Share of Common Stock .94 .75 .63 .55 .51
Average Shares Outstanding
(000) 116,358 116,511 117,055 117,517 117,743
OTHER FINANCIAL DATA
Total Property, Plant and
Equipment (Net) $289,420 239,868 222,137 201,386 188,959
Total Assets 978,834 815,324 711,372 625,074 563,665
Working Capital 413,414 343,132 299,149 276,047 229,735
Stockholders' Equity 688,470 575,182 498,935 463,399 401,386
Return on Average Equity 36.5% 32.6% 29.4% 29.8% 31.5%
Stockholders at Close of
Year 24,078 18,567 14,546 11,086 10,497
Employees at Close of
Year 7,000 6,700 6,400 6,250 5,850
Market Price of
Stock-High 53 7/8 46 1/8 39 7/8 27 19 3/4
- Low 38 1/8 29 1/2 22 1/8 16 3/8 14 7/12
</TABLE>
<PAGE>
QUARTERLY DATA
WM. WRIGLEY JR. COMPANY AND ASSOCIATED COMPANIES
CONSOLIDATED RESULTS
COST NET EARNINGS
NET OF PER
SALES SALES AMOUNT SHARE
In thousands of dollars except for per share
amounts
1994
FIRST QUARTER........$ 378,557 162,936 75,942 .65
SECOND QUARTER....... 423,048 185,761 58,347 .50
THIRD QUARTER........ 404,087 172,838 61,621 .53
FOURTH QUARTER....... 390,859 175,907 34,623 .30
TOTAL...........$ 1,596,551 697,442 230,533 1.98
1993
FIRST QUARTER........$ 332,333 145,113 42,360 .36
SECOND QUARTER....... 386,167 165,301 53,560 .46
THIRD QUARTER........ 360,541 153,679 49,114 .42
FOURTH QUARTER....... 349,463 153,063 29,857 .26
TOTAL...........$ 1,428,504 617,156 174,891 1.50
Net earnings for the first quarter 1994 included $24,765,000 or
$.21 per share from the sale of Singapore property.
MARKET PRICES
Although there is no established public trading market for the
Class B Common Stock, these shares are at all times convertible
into shares of Common Stock on a one-for-one basis and are entitled
to identical dividend payments.
The Common Stock of the Company is listed and
traded on the New York Stock Exchange. The table below presents the
high and low sales prices for the two most recent years.
1994 1993
HIGH LOW HIGH LOW
FIRST QUARTER............$53 7/8 43 1/4 34 7/8 29 1/2
SECOND QUARTER........... 52 1/4 46 7/8 36 1/4 30 1/8
THIRD QUARTER............ 48 1/2 38 1/8 45 1/2 31 3/8
FOURTH QUARTER........... 49 5/8 39 1/2 46 1/8 41 1/4
DIVIDENDS
The following table indicates the breakdown of dividends declared
per share of Common Stock and Class B Common Stock for the two most
recent years.
1994 1993
REGULAR EXTRA TOTAL REGULAR EXTRA TOTAL
FIRST QUARTER...........$ .12 .12 .10 .10
SECOND QUARTER.......... .12 .12 .10 .10
THIRD QUARTER........... .12 .12 .10 .10
FOURTH QUARTER.......... .14 .44 .58 .10 .35 .45
TOTAL............$ .50 .44 .94 .40 .35 .75
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
NET SALES
Consolidated net sales for 1994 increased $168,047,000 or 12% from
1993's level which was up $141,583,000 or 11% from 1992. Net sales
for both 1994 and 1993 were favorably affected by higher unit
volume and to a lesser extent, by selected selling price increases.
Net sales in 1994 were increased by translating foreign currency
sales to U.S. dollars at higher average foreign currency rates. In
1993, translation decreased reported sales due to lower average
foreign currency rates than in 1992.
Consolidated unit volume of chewing gum increased 9% in 1994
from 1993's shipments, which were up 13% from 1992. Sugarfree
brands continued to make a significant contribution to volume gains
in both years. Selected selling price changes increased net sales
about 2% in both 1994 and 1993.
In North America, U.S. unit volume of Wrigley brands increased
3% in 1994 from 1993 which was up 6% over 1992. Winterfresh(R), a
new sugar product, accounted for most of the gain in 1994. Unit
volume of Extra(R) was the largest contributor to the gain in 1993.
Established brands' Value Priced 5-stick packages also added to the
1993 gain. Increased sales to Mexico added 2% to North American
unit volume in both 1994 and 1993. At Amurol Confections Company,
1994 unit sales increased 2% from 1993 after being up 12% from
1992.
Overseas, unit volume increased 15% in 1994 from 1993 which
increased 20% from 1992. Customer shipments in Eastern and Central
Europe, the U.K. and Germany accounted for over two-thirds of the
overseas gains in both 1994 and 1993. Asia/Pacific 1994 unit volume
gains were relatively small as a decline in the Philippines
following a selling price increase tended to offset the volume
increases in China and other markets. Asia/Pacific volume gains in
1993 were mainly from the Philippines, China and Australia.
INVESTMENT AND OTHER INCOME
Consolidated investment and other income increased in 1994 by
$14,659,000 or 123% mainly due to recognition of $14,342,000 market
appreciation of the marketable equity securities contributed to the
Company's charitable foundation. This gain is offset by
contribution expense classified in Selling, Distribution and
General Administrative Expenses. The contribution was made in
anticipation of a change in the income tax deductibility of such
contributions after 1994.
In 1993, investment and other income decreased $2,408,000 or 17%
from 1992 essentially due to the 1992 sale of vacant land in the
U.S. not recurring in 1993.
COST OF SALES AND GROSS PROFIT
Consolidated cost of sales increased $80,286,000 or 13% in 1994
from 1993. Most of this increase was from the higher worldwide
sales volume and increased costs including import duties in Central
and Eastern Europe. Translation of foreign currency costs at higher
average exchange rates also added to the increase from 1993.
<PAGE>
In 1993, cost of sales increased $44,688,000 or nearly 8% from
1992. Most of this increase was from the higher worldwide sales
volume. Translation of foreign currency transactions at lower
average exchange rates from 1992 partially offset the 1993 volume
increase.
Consolidated gross profit in 1994 was $899,109,000, an increase
of $87,761,000 or 11% from 1993 which had increased $96,895,000 or
13% from 1992. The consolidated gross profit margin on net sales
was 56.3% for 1994, 56.8% for 1993 and 55.5% for 1992. Sales growth
in markets with lower margins led to the slightly lower
consolidated margin in 1994 compared to 1993. Lower unit product
costs contributed to the margin improvement in 1993 from 1992.
SELLING, DISTRIBUTION AND GENERAL ADMINISTRATIVE EXPENSES
Consolidated selling, distribution and general administrative
expenses increased $66,095,000 or 12% in 1994 from 1993 which was
up $47,621,000 or nearly 10% from 1992. The increase in 1994
includes the Company's contribution of appreciated marketable
equity securities to its charitable foundation previously discussed
in Investment and Other Income. Excluding the nonrecurring amount
of the 1994 contribution, results in an increase of $52,095,000 or
nearly 10% from 1993 and comparable to the 1993 increase from 1992.
Worldwide selling and marketing expenditures were a major factor in
those increases each year.
As a percentage of consolidated net sales, these expenses have
been as follows:
1994 1993 1992
SELLING AND MARKETING 26.1% 25.9% 26.6%
DISTRIBUTION AND
GENERAL ADMINISTRATIVE 12.0% 12.1% 11.9%
38.1% 38.0% 38.5%
INCOME TAXES
The effective consolidated income tax rate was 34.7% in 1994, 37.3%
in 1993 and 36.0% in 1992. The lower effective rate in 1994 is
mainly from the tax benefit of the contribution of appreciated
securities to the Company's foundation noted above. Excluding the
effect of this transaction, the 1994 effective tax rate would have
been about 36.2%. The effective rate increase in 1993 reflects the
legislated U.S. corporate rate change to 35% from 34% for the year.
Income taxes in 1994 increased by $18,802,000 or 18% from 1993
which increased $20,214,000 or 24% from the prior year.
NET EARNINGS
Net earnings in 1994 increased by $55,642,000 and $.48 per share or
32% from 1993. However, the nonrecurring sale of real estate
holdings in Singapore during the first quarter added $24,765,000
after taxes or $.21 per share to the 1994 increase. Excluding the
nonrecurring gain from Singapore, 1994 net earnings increased by
$30,877,000 and $.27 per share or 18%.
Net earnings in 1993 increased by $33,596,000 and $.29 per share
or 24% from 1992. In 1992, the Company adopted SFAS No. 106
"Accounting for Postretirement Benefits Other than Pensions" and
SFAS No. 109 "Accounting for Income Taxes." The cumulative effect
of adopting these accounting standards lowered 1992 consolidated
earnings by the one-time charge of $7,278,000 or $.06 per share.
Excluding the cumulative effect of the 1992 accounting changes,
1993 net earnings increased by $26,318,000 and $.23 per share or
18%.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
COMMON STOCK PURCHASES
The Company paid $13,225,000 in 1994, $15,077,000 in 1993 and
$17,579,000 in 1992 from internal cash to acquire 292,000, 450,000
and 671,000 shares of its Common Stock, respectively. The Company
remained in a strong financial position after these disbursements.
Further purchases of Common Stock in 1995 are also likely to be
from internally generated funds.
CURRENT RATIO
The Company has maintained a strong financial position with a
current ratio (current assets divided by current liabilities) of
3.0 to 1 for the periods under discussion (1992-1994).
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Capital expenditures for 1994 increased from 1993 by $23,918,000 or
38%, and 1993 capital expenditures decreased from 1992 by
$3,587,000 or 5%. All of the capital expenditures for 1994 and 1993
were funded from the Company's operations and internal sources
including the proceeds from the sale of real estate holdings in
Singapore during 1994. Additions to property, plant and equipment
in 1995 are likely to exceed 1994 expenditures and are also
expected to be funded from internal sources.
<PAGE>
NONFINANCIAL INFORMATION
<PAGE>
WM. WRIGLEY JR. COMPANY
COMMITTEES OF
THE BOARD OF DIRECTORS
AUDIT
Charles F. Allison III
Chairman
Gary E. Gardner
Penny Pritzker
Richard K. Smucker
COMPENSATION
Robert P. Billingsley
Chairman
Charles F. Allison III
Lee Phillip Bell
NOMINATING
Lee Phillip Bell
Chairman
Robert P. Billingsley
Richard K. Smucker
WILLIAM WRIGLEY
President & Chief Executive Officer
Wm. Wrigley Jr. Company
R. DARRELL EWERS
Executive Vice President
Wm. Wrigley Jr. Company
<PAGE>
RICHARD K. SMUCKER
President
The J. M. Smucker Company
CHARLES F. ALLISON III
Senior Vice President
Booz, Allen & Hamilton
JOSEPH H. FLOM
Partner
Skadden, Arps, Slate, Meagher & Flom
(Retired March 8, 1994)
IRVING SEAMAN, JR.
Senior Consultant
Burson-Marsteller
(Retired March 8, 1994)
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BOARD OF DIRECTORS
LEE PHILLIP BELL
President
Bell-Phillip Television Productions
GARY E. GARDNER
President & Chief Executive Officer
Soft Sheen Products
WILLIAM WRIGLEY, JR.
Vice President
Wm. Wrigley Jr. Company
ROBERT P. BILLINGSLEY
Executive Vice President
WLD Enterprises
PENNY PRITZKER
President
Classic Residence by Hyatt
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ELECTED OFFICERS--1994
WILLIAM WRIGLEY
President & Chief Executive Officer
R. DARRELL EWERS
Executive Vice President
DOUGLAS S. BARRIE
Group Vice President-International
RONALD O. COX
Group Vice President-Marketing
JOHN F. BARD
Senior Vice President
MARTIN J. GERAGHTY
Senior Vice President-Manufacturing
WILLIAM WRIGLEY, JR.
Vice President
GARY R. BEBEE
Vice President-Customer Marketing
DAVID E. BOXELL
Vice President-Personnel
J. E. DY-LIACCO
Vice President-International
SUSAN S. FOX
Vice President-Consumer Marketing
PHILIP G. HAMILTON
Vice President-International
JON ORVING
Vice President-International
DUSHAN PETROVICH
Vice President-Treasurer
STEFAN PFANDER
Vice President-International
WM. M. PIET
Vice President-Corporate Affairs & Secretary
JOHN A. SCHAFER
Vice President-Purchasing
CHRISTAFOR E. SUNDSTROM
Vice President-Corporate Development
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DONALD E. BALSTER
Vice President-Production
H. J. KIM
Vice President-Engineering
PHILIP G. SCHNELL
Vice President-Research & Development
JOHN H. SUTTON
General Manager-Converting Division
DENNIS J. YARBROUGH
Corporate Controller
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CORPORATE FACILITIES AND ASSOCIATED COMPANIES-1994
DOMESTIC FACILITIES
CORPORATE OFFICES
Wrigley Building
410 North Michigan Avenue
Chicago, Illinois 60611
PRODUCTION FACILITIES
Chicago, Illinois
Gainesville, Georgia
Santa Cruz, California
OPERATING ASSOCIATED COMPANIES
DOMESTIC
AMUROL CONFECTIONS COMPANY*
Yorkville, Illinois 60560
FOUR-TEN CORPORATION
Chicago, Illinois 60611
L. A. DREYFUS COMPANY*
Edison, New Jersey 08820
NORTHWESTERN FLAVORS, INC.*
West Chicago, Illinois 60185
INTERNATIONAL
THE WRIGLEY COMPANY PTY. LIMITED*
Sydney, Australia
WRIGLEY AUSTRIA GES.M.B.H.*
Salzburg, Austria
WRIGLEY CANADA INC.*
Don Mills, Ontario, Canada
WRIGLEY CHEWING GUM COMPANY LTD.*
Guangzhou, Guangdong,
People's Republic of China
WRIGLEY S.R.O.
Prague, Czech Republic
THE WRIGLEY COMPANY LIMITED*
Plymouth, England, U.K.
OY WRIGLEY SCANDINAVIA AB
Turku, Finland
WRIGLEY S.A.*
Biesheim, France
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WRIGLEY G.M.B.H.
Munich, Germany
WRIGLEY N.V.
Amsterdam, Holland
THE WRIGLEY COMPANY (H.K.) LIMITED
Hong Kong, B.C.C.
WRIGLEY HUNGARIA, LTD.
Budapest, Hungary
WRIGLEY INDIA PRIVATE LIMITED**
Bangalore, Karnataka, India
WRIGLEY & COMPANY, LTD., JAPAN
Tokyo, Japan
THE WRIGLEY COMPANY (EAST AFRICA) LIMITED*
Nairobi, Kenya
THE WRIGLEY COMPANY (MALAYSIA) LIMITED
Kuala Lumpur, Malaysia
THE WRIGLEY COMPANY (N.Z.) LIMITED
Auckland, New Zealand
WRIGLEY SCANDINAVIA AS
Oslo, Norway
THE WRIGLEY COMPANY (P.N.G). PTY. LTD.
Port Moresby, Papua, New Guinea
WRIGLEY PHILIPPINES, INC.*
Pasig, Metro Manila, Philippines
WRIGLEY POLAND SP ZO. O**
Poznan, Poland
WRIGLEY ROMANIA PRODUSE
Zaharoase SRL
Bucharest, Romania
WRIGLEY D.O.O.
Ljubljana, Slovenia
WRIGLEY CO., S.A.
Santa Cruz de Tenerife
Canary Islands, Spain
WRIGLEY SCANDINAVIA AB
Stockholm, Sweden
WRIGLEY TAIWAN, LIMITED*
Taipei, Taiwan, R.O.C.
* Denotes production facility.
** Under construction
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STOCKHOLDER INFORMATION
STOCKHOLDER INQUIRIES
Any inquiries about your Wrigley stockholdings should be directed
to:
Stockholder Relations
Wm. Wrigley Jr. Company
410 North Michigan Avenue
Chicago, Illinois 60611
1-800-824-9681
CAPITAL STOCK
Common Stock of the Wm. Wrigley Jr. Company is traded on the New
York Stock Exchange. The Company's symbol is WWY.
Class B Common Stock, issued to stockholders of record on April
4, 1986, has restricted transferability and is not traded on the
New York Stock Exchange. It is at all times convertible, on a
share-for-share basis, into Common Stock and once converted is
freely transferable and publicly traded. Class B Common Stock also
has the same rights as Common Stock with respect to cash dividends
and treatment upon liquidation.
DIVIDENDS
Regular quarterly dividends are paid in advance on the first
business day of February, May, August, and November with the record
date for each payment falling on or about the 15th of the prior
month. The Company also has a long history of paying "extra"
dividends. In recent years, a single "extra" dividend has been paid
at year end.
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan (DRP) is open to all stockholders of
record. The Plan is administered by the Company and uses cash
dividends on both Common Stock and Class B Common Stock, along with
voluntary cash contributions, to purchase additional shares of
Common Stock. Cash contributions can be made monthly for a minimum
of $50 and a maximum of $5,000. The Company pays all brokerage and
administrative costs associated with the DRP.
All shares purchased through the Plan are retained in a DRP
account, so there are no certificates that could be lost,
misplaced, or stolen. Additionally, once a DRP account is
established, a participant can deposit any Wrigley stock
certificates held outside the Plan into the account for
safekeeping.
Just over 12,700 or 52.8% of the Company's stockholders of
record currently participate in the DRP. A brochure fully
describing the Plan and its enrollment procedure is available upon
request.
DIRECT DIVIDEND DEPOSIT SERVICE
The Direct Dividend Deposit Service allows stockholders to receive
cash dividends through automatic deposits into their checking or
savings account.
STOCK CERTIFICATES
For security and tax purposes, stockholders should keep a record of
all of their stock certificates. The record should be kept in a
separate place from the certificates themselves and should contain
the following information for each certificate: exact registration,
number of shares, certificate number, date of certificate, and the
original cost of the shares.
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If a stock certificate is lost or stolen, notification should be
sent to the Company immediately. The transfer agent has two
requirements to be met before a new certificate will be issued - a
completed affidavit and payment for an indemnity bond based on the
current market value of the lost or stolen stock. The replacement
of a certificate will take about a week to ten days. Even if a
certificate is lost or stolen, the stockholder will continue to
receive dividends on those shares while the new certificate is
being issued.
A transfer of stock is required when the shares are sold or when
there is any change in name or ownership of the stock. To be
accepted for transfer, the stockholder's signature on the
certificate or stock power must be guaranteed by an Eligible
Guarantor Institution such as a commercial bank, trust company,
securities broker/dealer, credit union, or savings association
participating in a Medallion program approved by the Securities
Transfer Association. A verification by a notary public is not
sufficient. Anytime a certificate is mailed, it should be sent
registered mail, return receipt requested.
CONSOLIDATION OF MULTIPLE ACCOUNTS
To avoid receiving duplicate mailings, stockholders with more than
one Wrigley account may want to consolidate their shares. For more
information, please contact the Company.
COMPANY PUBLICATIONS
The Company's 1994 annual report to the Securities and Exchange
Commission on Form 10-K is expected to be available on or about
April 3, 1995.
The Wrigley Way: Continuing Our Legacy Of Social Responsibility is
a currently available document covering the Wrigley Company's role
as a corporate citizen and emphasizing the importance it places on
employee and community relations.
A copy of either publication will be provided without charge to any
stockholder of record submitting a request. Such requests should be
addressed to Corporate Affairs at the main office of the Company.
TRANSFER AGENT AND REGISTRAR
The First Chicago Trust Company of New York
14 Wall Street, Suite 4680
New York, New York 10005
1-800-446-2617
