<PAGE>
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, 1996
[ ] 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, 1996 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 .
91,942,072 shares of Common Stock and 24,244,383 shares of Class B
Common Stock were outstanding as of October 15, 1996.
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1
WM. WRIGLEY JR. COMPANY
STATEMENT OF CONSOLIDATED EARNINGS (CONDENSED)
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 462,425 431,479 1,372,724 1,312,286
Investment and other income 3,687 3,899 10,176 11,446
Total revenues 466,112 435,378 1,382,900 1,323,732
Costs and expenses:
Cost of sales 203,782 189,939 605,863 579,776
Factory closure and related costs 926 0 18,512 0
Selling, distribution, and
general administrative 164,029 155,103 478,375 465,902
Interest 296 327 699 1,680
Total costs and expenses 369,033 345,369 1,103,449 1,047,358
Earnings before income taxes 97,079 90,009 279,451 276,374
Income taxes 35,872 31,721 103,588 98,914
Net earnings $ 61,207 58,288 175,863 177,460
Net earnings per average share of
common stock $ .53 .50 1.52 1.53
Dividends declared per share of
common stock $ .17 $ .17 $ .51 $ .45
Average number of shares
outstanding for the period 115,979,046 115,999,292 115,980,608 116,087,117
All dollar amounts in thousands except for per share values.
SEE ACCOMPANYING NOTES ON PAGE 5
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
STATEMENT OF CONSOLIDATED CASH FLOWS (CONDENSED)
Nine Months Ended
September 30
1996 1995
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net earnings $175,863 177,460
Adjustments to reconcile net earnings to net
cash flows from operating activities:
Depreciation 35,096 32,156
Gain on sales of property, plant, and
equipment (1,322) (1,313)
(Increase) decrease in:
Accounts receivable (28,247) (38,600)
Inventories (10,681) (28,146)
Other current assets (4,827) 3,012
Other assets and deferred charges (17,088) (2,616)
Increase (decrease) in:
Accounts payable 24,694 14,126
Accrued expenses 19,836 19,225
Income and other taxes payable 14,518 3,703
Deferred taxes (5,340) (420)
Other noncurrent liabilities 29,222 8,541
Net cash flows - operating activities 231,724 187,128
CASH FLOWS - INVESTING ACTIVITIES
Additions to property, plant, and equipment (65,359) (73,537)
Proceeds from property retirements 3,619 4,910
Purchases of short-term investments (423,492) (248,861)
Maturities of short-term investments 413,300 236,261
Net cash flows - investing activities (71,932) (81,227)
CASH FLOWS - FINANCING ACTIVITIES
Dividends paid (59,151) (48,760)
Common stock purchased (3,757) (11,734)
Net cash flows - financing activities (62,908) (60,494)
Effect of exchange rate changes on cash and
cash equivalents (1,022) 2,127
Net increase in cash and cash equivalents 95,862 47,534
Cash and cash equivalents at beginning of period 125,725 127,569
Cash and cash equivalents at end of period $221,587 175,103
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 98,319 98,269
Interest paid $ 728 1,862
Interest and dividends received $ 10,183 11,298
All dollar amounts in thousands.
SEE ACCOMPANYING NOTES ON PAGE 5.
</TABLE>
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED BALANCE SHEET (CONDENSED)
September 30 December 31
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 221,587 125,725
Short-term investments 116,437 105,947
Accounts receivable 195,384 170,803
(less allowance for doubtful accounts;
9/30/96- $7,577; 12/31/95-$9,060)
Inventories -
Finished goods 52,720 54,231
Raw materials and supplies 190,803 181,116
243,523 235,347
Other current assets 28,445 24,683
Deferred income taxes - current 9,435 9,591
Total current assets 814,811 672,096
Marketable equity securities at fair value 16,916 19,827
Other assets and deferred charges 57,221 39,696
Deferred income taxes - Noncurrent 27,262 20,109
Property, plant and equipment, at cost 775,710 730,498
Less accumulated depreciation 406,223 383,007
369,487 347,491
Total assets $1,285,697 1,099,219
Current liabilities:
Accounts payable $ 98,939 75,815
Accrued expenses 86,253 67,958
Dividends payable 19,717 19,720
Income and other taxes payable 63,297 49,152
Deferred income taxes - current 564 768
Total current liabilities 268,770 213,413
Deferred income taxes - noncurrent 20,617 19,536
Other noncurrent liabilities 97,713 69,418
Stockholders' equity:
Preferred stock - no par value
Authorized - 20,000,000 shares
Issued - None
Common stock - no par value
Authorized - 400,000,000 shares
Issued - 91,964,698 shares at 9/30/96;
91,540,696 shares at 12/31/95 12,262 12,205
Class B Common Stock - convertible
Authorized - 80,000,000 shares
Issued and outstanding -
24,255,791 shares at 9/30/96
24,679,793 shares at 12/31/95 3,234 3,291
Additional paid-in capital 1,111 1,625
Retained earnings 903,258 786,543
Foreign currency translation adjustment (19,159) (8,038)
Unrealized holding gain 9,767 11,404
Common Stock in treasury, at cost - (9/30/96-
238,596 shares; 12/31/95-219,394 shares) (11,876) (10,178)
Total stockholders' equity 898,597 796,852
Total liabilities & stockholders' equity $ 1,285,697 1,099,219
All dollar amounts in thousands.
SEE ACCOMPANYING NOTES ON PAGE 5.
</TABLE>
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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, 1996 and
1995, the Statement of Consolidated Cash Flows (Condensed) for
the nine month periods ended September 30, 1996 and 1995, and
the Consolidated Balance Sheet (Condensed) at September 30,
1996 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 basisconsistent with the 1995 audited
consolidated financial statements. These condensed financial
statements should be read in conjunction with the 1995
consolidated financial statements and related notes.
2. An analysis of the cumulative foreign currency
translationadjustment follows (in thousands of dollars).
Decrease (Increase) to
Stockholders' Equity
Third Quarter 1996 1995
Balance at July 1 $ 18,491 5,344
Translation adjustment for
the third quarter 668 (285)
Balance at September 30 $ 19,159 5,059
Nine Months
Balance at January 1 $ 8,038 13,502
Translation adjustment for
the nine-month period 11,121 (8,443)
Balance at September 30 $ 19,159 5,059
3. Conformity with generally accepted accounting principles
requires management to make estimates and assumptions when
preparing financial statements that affect assets,
liabilities, revenues and expenses. Actual results may vary
from those estimates.
4. In April, 1996 the Company adopted and announced a plan to
close its Santa Cruz, California factory and transfer, retire
or terminate the 311 employees at that factory by the second
quarter of 1997. This factory closure is part of a plan to
realign U.S. production capacity. Operating income for the
third quarter of 1996 reflects a $.9 million charge for
relocation and training costs related to this plan. In the
second quarter of 1996, the Company provided $17 million in
closure costs including employee severance and costs for
holding and selling the facility, and $.6 million for
relocation and training costs incurred in that quarter. On a
year to date basis, the total reserve, relocation and training
charges incurred are $18.5 million before taxes, or $.10 per
share, net of tax. In addition to the $1.5 million of
relocation and training incurred to date, the Company expects
to incur another $5.5 million transition related costs during
the remainder of 1996 and into 1997.
At September 30, 1996 a total of 79 employees have been
transferred, retired or terminated and $.1 million in
severance costs for the terminated employees has been incurred
and charged to the factory closure reserve.
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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
Net sales for the third quarter and first nine months of 1996
exceeded the respective periods last year by 7.2% and 4.6%,
respectively. Increases are due to higher overseas volume and
selected price increases partially offset by exchange rate
translation to a stronger U.S. dollar.
Investment and Other Income
Investment and Other Income for the third quarter and first nine
months of 1996 decreased by 5% and 11% respectively when compared
with the same periods in 1995. The decreases, primarily in the
U.S., are due to lower invested balances.
Costs and Expenses
Cost of Sales
Cost of sales for the third quarter and first nine months of 1996
increased by 7.3% and 4.5% respectively, compared with the same
periods last year. The increases were primarily due to higher
international shipment volume and higher product costs in 1996.
Exchange rate translation to a stronger U.S. dollar reduced the
increases.
The Company's consolidated gross profit percentages were as
follows:
1996 1995
Third quarter 55.9% 56.0%
First nine months 55.9% 55.8%
FACTORY CLOSURE
On April 23, 1996 the Company adopted and announced a plan to close
its Santa Cruz, California factory. This factory closure is part
of a plan to realign U.S. production capacity. The Company
provided a $17 million reserve in the second quarter of 1996 for
related costs including employees severance and costs to hold and
sell the factory. In addition, the Company has incurred $.6
million in the second quarter and $.9 in the third quarter for
employee relocation and training costs. It is expected that
another $5.5 million in transition costs will be incurred over the
remainder of 1996 and into 1997. With this realignment of
production and related efficiencies, U.S. operating costs are
expected to be lower by amount $6 million in 1997 and $12 to $13
million annually starting in 1998. At September 30, 1996 a total
of 79 employees have been transferred, retired or terminated.
Selling, Distribution, and General Administrative
The selling, distribution, and general administrative expenses for
the third quarter and first nine months of 1996 increased by 5.8%,
and 2.7% respectively when compared with the same periods last
year. These changes were primarily due to higher advertising,
marketing and selling expenses in International operations,
partially offset by exchange rate translation to a somewhat
stronger U.S. dollar during the second and third quarters.
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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 1996 and 1995 are shown below:
1996 1995
Third quarter 37.0% 35.2%
First nine months 37.1% 35.8%
The 1995 effective rate benefited primarily from use of foreign tax
credits.
Net Earnings
Consolidated net earnings totaled $61.2 million or $.53 per share
for the third quarter of 1996, an increase of $2.9 million (5.0%)
and $.03 per share from the third quarter of 1995. Excluding the
Santa Cruz factory closure costs, consolidated net earnings totaled
$62.1 million or $.53 per share for the third quarter of 1996, an
increase of $3.8 million (6.6%) and $.03 per share.
Total net earnings for the first nine months of 1996 were $175.9
million, a decrease of $1.6 million or .9%. On a per share basis,
earnings were $1.52, a decrease of $.01 or .7%. Excluding the
Santa Cruz factory closure costs, consolidated net earnings for the
first nine months of 1996 were $188.0 million and $1.62 per share,
an increase of $10.5 million (5.9%) and $.09 per share.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company's cash and cash equivalents and
short-term investments totaled $338.0 million compared to $231.7
million at December 31, 1995 - an increase of $106.3 million. The
ratio of current assets to current liabilities (current ratio) at
September 30, 1996 was 3.03 to 1 compared to 3.15 to 1 at December
31, 1995.
Capital expenditures for 1996 are expected to be comparable to
1995's expenditures of $102.8 million and are expected to be funded
from the Company's operations and internal sources.
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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 the 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.
Under this resolution and these plans, the Company acquired and
distributed stock in the first nine months of 1996 as follows:
<TABLE>
Aggregate Shares
Shares Purchase Shares in
Period Acquired Price Distributed Treasury
<S> <C> <C> <C> <C>
1st Quarter 60,772 $ 3,653,618 35,903 24,869
2nd Quarter 948 51,701 0 948
3rd Quarter 1,010 51,914 7,625 (6,615)
Total-1996 62,730 $ 3,757,233 43,528 19,202
Treasury shares held at 12/31/95 219,394
Total Treasury shares at 9/30/96 238,596
</TABLE>
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, 1996.
<PAGE>
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
Dennis J. Yarbrough
Controller - Corporate Accounting
By DUSHAN PETROVICH
Dushan Petrovich
Vice President - Controller
Date November 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 221,587
<SECURITIES> 133,353
<RECEIVABLES> 202,961
<ALLOWANCES> 7,577
<INVENTORY> 243,523
<CURRENT-ASSETS> 814,811
<PP&E> 775,710
<DEPRECIATION> 406,223
<TOTAL-ASSETS> 1,285,697
<CURRENT-LIABILITIES> 268,770
<BONDS> 0
0
0
<COMMON> 15,496
<OTHER-SE> 883,101
<TOTAL-LIABILITY-AND-EQUITY> 1,285,697
<SALES> 1,372,724
<TOTAL-REVENUES> 1,382,900
<CGS> 624,375
<TOTAL-COSTS> 1,103,449
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 699
<INCOME-PRETAX> 279,451
<INCOME-TAX> 103,588
<INCOME-CONTINUING> 175,863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 175,863
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.52
</TABLE>
