<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 June 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 June 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 .
91,727,556 shares of Common Stock and 24,458,659 shares of Class B
Common Stock were outstanding as of July 15, 1996.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1
WM. WRIGLEY JR. COMPANY
STATEMENT OF CONSOLIDATED EARNINGS (CONDENSED)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 483,625 470,648 910,299 880,807
Investment and other income 3,308 4,478 6,489 7,547
Total revenues 486,933 475,126 916,788 888,354
Costs and expenses:
Cost of sales 214,217 208,076 402,081 389,837
Factory closure and related costs 17,586 0 17,586 0
Selling, distribution, and
general administrative 163,380 164,640 314,346 310,799
Interest 152 1,154 403 1,353
Total costs and expenses 395,335 373,870 734,416 701,989
Earnings before income taxes 91,598 101,256 182,372 186,365
Income taxes 34,555 37,360 67,716 67,193
Net earnings $ 57,043 63,896 114,656 119,172
Net earnings per average share of
common stock $ .49 .55 0.99 1.03
Average number of shares
outstanding for the period 115,975,497 116,079,772 115,981,397 116,131,727
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)
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net earnings $ 114,656 119,172
Adjustments to reconcile net earnings to net
cash flows from operating activities:
Depreciation 22,497 21,262
Gain on sales of property, plant, and
equipment (1,133) (570)
(Increase) decrease in:
Accounts receivable (34,278) (49,939)
Inventories 4,776 23,342
Other current assets (4,827) 1,409
Other assets and deferred charges (15,762) 750
Increase (decrease) in:
Accounts payable 13,756 6,729
Accrued expenses 17,301 9,277
Income and other taxes payable 1,312 8,527
Deferred taxes (3,790) 125
Other noncurrent liabilities 19,659 5,822
Net cash flows - operating activities 134,167 145,906
CASH FLOWS - INVESTING ACTIVITIES
Additions to property, plant, and equipment (38,386) (44,084)
Proceeds from property retirements 2,784 3,433
Purchases of short-term investments (277,531) (136,763)
Maturities of short-term investments 268,199 129,921
Net cash flows - investing activities (44,934) (47,493)
CASH FLOWS - FINANCING ACTIVITIES
Dividends paid (39,436) (32,520)
Common stock purchased (3,705) (11,677)
Net increase in Notes Payable 0 52,876
Net cash flows - financing activities (43,141) 8,679
Effect of exchange rate changes on cash and
cash equivalents (1,350) (739)
Net increase in cash and cash equivalents 44,742 106,353
Cash and cash equivalents at beginning of period 125,725 127,569
Cash and cash equivalents at end of period $170,467 233,922
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 73,219 63,630
Interest paid $ 380 1,331
Interest and dividends received $ 6,284 7,156
All dollar amounts in thousands.
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
CONSOLIDATED BALANCE SHEET (CONDENSED)
June 30, December 31,
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 170,467 125,725
Short-term investments 115,761 105,947
Accounts receivable 201,416 170,803
(less allowance for doubtful accounts;
6/30/96- $7,510; 12/31/95-$9,060)
Inventories -
Finished goods 51,061 54,231
Raw materials and supplies 177,081 181,116
228,142 235,347
Other current assets 28,575 24,683
Deferred income taxes - current 9,272 9,591
Total current assets 753,633 672,096
Marketable equity securities at fair value 18,730 19,827
Other assets and deferred charges 55,640 39,696
Deferred income taxes - Noncurrent 24,990 20,109
Property, plant and equipment, at cost 752,670 730,498
Less accumulated depreciation 396,339 383,007
356,331 347,491
Total assets $1,209,324 1,099,219
Current liabilities:
Accounts payable $ 88,112 75,815
Accrued expenses 83,838 67,958
Dividends payable 19,715 19,720
Income and other taxes payable 50,027 49,152
Deferred income taxes - current 563 768
Total current liabilities 242,255 213,413
Deferred income taxes - noncurrent 20,289 19,536
Other noncurrent liabilities 88,175 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 - 91,737,509 shares at 6/30/96;
91,540,696 shares at 12/31/95 12,232 12,205
Class B Common Stock - convertible
Authorized - 80,000,000 shares
Issued and outstanding -
24,482,980 shares at 6/30/96
24,679,793 shares at 12/31/95 3,264 3,291
Additional paid-in capital 1,108 1,625
Retained earnings 861,768 786,543
Foreign currency translation adjustment (18,491) (8,038)
Unrealized holding gain 10,946 11,404
Common Stock in treasury, at cost - (6/30/96-
245,211 shares; 12/31/95-219,394 shares) (12,222) (10,178)
Total stockholders' equity 858,605 796,852
Total liabilities & stockholders' equity $ 1,209,324 1,099,219
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 six month periods ended June 30, 1996 and 1995,
the Statement of Consolidated Cash Flows (Condensed) for
the six month periods ended June 30, 1996 and 1995, and the
Consolidated Balance Sheet (Condensed) at June 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 basis
consistent 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 translation
adjustment follows (in thousands of dollars).
Decrease (Increase) to
Stockholders' Equity
Second Quarter 1996 1995
Balance at April 1 $ 11,284 4,174
Translation adjustment for
the second quarter 7,207 1,170
Balance at June 30 $ 18,491 5,344
Six Months
Balance at January 1 $ 8,038 13,502
Translation adjustment for
the six-month period 10,453 (8,158)
Balance at June 30 $ 18,491 5,344
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 second quarter of 1996 reflects a $17.6 million charge
consisting of a $17 million reserve for expected factory
closure costs and $.6 million for relocation, training and
other costs incurred in the second quarter of 1996.
The second quarter net income effect is $.10 per share for
these charges. This reserve consists of $7 million for
employee severance related costs and $10 million for
maintaining and selling the property. In addition to the $.6
million relocation, training and other costs incurred in the
second quarter of 1996, the Company expects to incur another
$6 million in transition related costs during the remainder of
1996 and into 1997.
At June 30, 1996 a total of 28 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 second quarter and first six months of 1996
exceeded the respective periods last year by 2.8% and 3.3%,
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 Interest Income
Investment and Other Interest Income for the second quarter and
first six months of 1996 decreased by 26% and 14% 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 second quarter and first six months of 1996
increased by 3.0% and 3.1% 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 for the second
quarter and the first half of 1996 and 1995 were:
1996 1995
Second Quarter 55.7% 55.8%
First Half 55.8% 55.7%
FACTORY CLOSURE
In April, 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 employee severance and costs to hold and
sell the factory. In addition, the Company incurred $.6 million in
the second quarter for employee relocation and training. It is
expected that another $6 million in transition related 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 about $6 million in 1997 and $12
to $13 million annually starting in 1998. At June 30, 1996 a total
of 28 employees have been transfered, retired or terminated.
Selling, Distribution, and General Administrative
The selling, distribution, and general administrative expenses for
the second quarter decreased by .8%, and increased by 1.1% for the
first six months of 1996. These changes were primarily due to
higher advertising, marketing and selling expenses in International
operations, but offset by exchange rate translation to a strong
U.S. dollar primarily during the second quarter.
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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 second quarter and first half of
1996 and 1995 are shown below:
1996 1995
Second quarter 37.7% 36.9%
First half 37.1% 36.1%
The 1995 effective rate benefited primarily from use of foreign tax
credits.
Net Earnings
Consolidated net earnings totaled $57.0 million or $.49 per share
for the second quarter of 1996, a decrease of $6.9 million (10.7%)
and $.06 per share from the second quarter of 1995. Excluding the
Santa Cruz factory closure costs, consolidated net earnings totaled
$68.2 million or $.59 per share for the second quarter of 1996, an
increase of $4.3 million (6.8%) and $.04 per share.
Total net earnings for the first half of 1996 were $114.7 million,
a decrease of $4.5 million or 3.8%. On a per share basis, earnings
were $.99, a decrease of $.04 or 3.9%. Excluding the Santa Cruz
factory closure costs, consolidated net earnings for the first half
of 1996 were $125.8 million and $1.09 per share, an increase of
$6.7 million (5.6%) and $.06 per share.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company's cash and cash equivalents and
short-term investments totaled $286.2 million compared to $231.7
million at December 31, 1995 - an increase of $54.5 million. The
ratio of current assets to current liabilities (current ratio) at
June 30, 1996 was 3.11 to 1 compared to 3.15 to 1 at December 31,
1995.
Capital expenditures for 1996 are expected to be higher than 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 half 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
Total-1996 61,720 $ 3,705,319 35,903 25,817
Treasury shares held at 12/31/95 219,394
Total Treasury shares at 6/30/96 245,211
</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 June 30, 1996.
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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
Dennis J. Yarbrough
Corporate Controller
By DUSHAN PETROVICH
Dushan Petrovich
Vice President - Treasurer
Date August 13, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 170,467
<SECURITIES> 134,491
<RECEIVABLES> 208,926
<ALLOWANCES> 7,510
<INVENTORY> 228,142
<CURRENT-ASSETS> 753,633
<PP&E> 752,670
<DEPRECIATION> 396,339
<TOTAL-ASSETS> 1,209,324
<CURRENT-LIABILITIES> 242,255
<BONDS> 0
0
0
<COMMON> 15,496
<OTHER-SE> 843,109
<TOTAL-LIABILITY-AND-EQUITY> 1,209,324
<SALES> 910,299
<TOTAL-REVENUES> 916,788
<CGS> 419,667
<TOTAL-COSTS> 734,416
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 403
<INCOME-PRETAX> 182,372
<INCOME-TAX> 67,716
<INCOME-CONTINUING> 114,656
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 114,656
<EPS-PRIMARY> 0.99
<EPS-DILUTED> 0.99
</TABLE>
