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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 March 31, 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 .
91,617,527 shares of Common Stock and 24,568,688 shares of Class B
Common Stock were outstanding as of April 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
March 31
1996 1995
<S> <C> <C>
Revenues:
Net sales $426,674 410,159
Investment and other income 3,181 3,069
Total revenues 429,855 413,228
Costs and expenses:
Cost of sales 187,864 181,761
Selling, distribution, and
general administrative 150,966 146,159
Interest 251 199
Total costs and expenses 339,081 328,119
Earnings before income taxes 90,774 85,109
Income taxes 33,161 29,833
Net earnings $ 57,613 55,276
Net earnings per average share of
common stock $ .50 .48
Dividends declared per share of
common stock $ .17 .14
Average number of shares
outstanding for the period 115,987,298 116,184,259
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)
Three Months Ended
March 31,
1996 1995
CASH FLOWS - OPERATING ACTIVITIES
<S> <C> <C>
Net earnings $57,613 55,276
Adjustments to reconcile net earnings to net
cash flows from operating activities:
Depreciation 10,720 10,443
(Gain) Loss on sales of property, plant, and
equipment (292) 131
(Increase) decrease in:
Accounts receivable (17,565) (28,704)
Inventories (12,501) 5,411
Other current assets (3,848) (5,316)
Other assets and deferred charges (3,621) 1,826
Increase (decrease) in:
Accounts payable (1,165) 9,141
Accrued expenses 4,573 (9,722)
Income and other taxes payable 21,248 18,803
Deferred taxes (154) (261)
Other noncurrent liabilities 10,589 5,009
Net cash flows - operating activities 65,597 62,037
CASH FLOWS - INVESTING ACTIVITIES
Additions to property, plant, and equipment (17,671) (17,966)
Proceeds from property retirements 639 302
Purchases of short-term investments (113,434) (95,753)
Maturities of short-term investments 107,060 90,333
Net cash flows - investing activities ( 23,406) (23,084)
CASH FLOWS - FINANCING ACTIVITIES
Dividends paid (19,720) (16,269)
Common stock purchased (3,654) (7,742)
Proceeds from Notes Payable - 52,000
Net cash flows - financing activities (23,374) 27,989
Effect of exchange rate changes on cash and
cash equivalents 1,019 (1,026)
Net increase in cash and cash equivalents 19,836 65,916
Cash and cash equivalents at beginning of period 125,725 127,569
Cash and cash equivalents at end of period $145,561 193,485
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 14,340 13,181
Interest paid $ 213 174
Interest and dividends received $ 3,114 3,059
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)
March 31, December 31,
1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $145,561 125,725
Short-term investments 112,807 105,947
Accounts receivable
(less allowance for doubtful accounts;
3/31/96-$8,029; 12/31/95-$9,060) 186,680 170,803
Inventories -
Finished goods 58,095 54,231
Raw materials and supplies 188,574 181,116
246,669 235,347
Other current assets 28,193 24,683
Deferred income taxes - current 8,973 9,591
Total current assets 728,883 672,096
Marketable equity securities at fair value 17,900 19,827
Other assets and deferred charges 44,292 39,696
Deferred income taxes - noncurrent 21,311 20,109
Property, plant and equipment, at cost 740,032 730,498
Less accumulated depreciation 388,999 383,007
351,033 347,491
Total assets $1,163,419 1,099,219
Current liabilities:
Accounts Payable $ 73,939 75,815
Accrued Expenses 71,950 67,958
Dividends Payable 19,716 19,720
Income and other taxes payable 70,130 49,152
Deferred income taxes - current 576 768
Total current liabilities 236,311 213,413
Deferred income taxes - noncurrent 19,563 19,536
Other noncurrent liabilities 79,544 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 - 91,634,335 shares at 3/31/96; 12,218 12,205
91,540,696 shares at 12/31/95
Class B Common Stock - convertible
Authorized - 80,000,000 shares
Issued and outstanding - 3,278 3,291
24,586,154 shares at 3/31/96;
24,679,793 shares at 12/31/95
Additional paid-in capital 1,114 1,625
Retained earnings 824,440 786,543
Foreign currency translation adjustment (11,284) (8,038)
Unrealized holding gains on marketable equity
securities 10,406 11,404
Common Stock in treasury, at cost - 244,263
shares at 3/31/96; 219,394 shares at 12/31/95 (12,171) (10,178)
Total stockholders' equity 828,001 796,852
Total liabilities & stockholders' equity $1,163,419 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) and of
Consolidated Cash Flows (Condensed) for the three month
periods ended March 31, 1996 and 1995, and the Consolidated
Balance Sheet (Condensed) at March 31, 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
First Quarter 1996 1995
Balance at January 1 $ 8,038 13,502
Translation adjustment for the
first quarter 3,246 (9,328)
Balance at March 31 $11,284 4,174
3. Subsequent Event
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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
The 1996 first quarter net sales were $426.7 million, an increase
of 4% from the prior year. Higher overseas volume partially
offset by lower domestic volume and a favorable mix of products
sold account for the increase.
Costs and Expenses
Cost of Sales
Cost of sales for the first quarter 1996 increased $6.1 million
or 3% compared to the prior year. This was mainly due to
somewhat higher product costs, and higher international shipments
in 1996.
The consolidated gross profit percentage for the first quarter of
1996 was 56.0%, compared to 55.7% for the first quarter of 1995,
mainly due to selected selling price increases since the first
quarter last year.
Selling, Distribution, and General Administrative
The selling, distribution, and general administrative expenses
for the first quarter of 1996 increased $4.8 million or 3% from
the prior year. Marketing and selling expenses accounted for the
increase.
Income Taxes
The consolidated effective tax rate was 36.5% for the first
quarter 1996 compared to 35.1% for the same quarter last year.
The 1995 effective rate benefited primarily from foreign tax
credits.
Net Earnings
Net earnings for the first quarter of 1996 were $57.6 million or
$.50 per share compared to last year's results of $55.3 million
or $.48 per share for the same period.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996 the Company's cash and cash equivalents and
short-term investments totaled $258.4 million compared to $231.7
million at December 31, 1995 - an increase of $26.7 million. The
ratio of current assets to liabilities (current ratio) at both
March 31, 1996 and December 31, 1995 was 3.1 to 1.
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.
Subsequent Event--Factory Closure
On April 23, 1996 the Company made the decision and then
announced the next day a plan to close its Santa Cruz, California
factory by the second quarter of 1997. Total costs to close the
factory are estimated at $24 million. An estimated charge of $19
million for these costs will be included in the Company's results
for the quarter ending June 30, 1996 and will reduce earnings by
$.10 per share. This second quarter estimated charge of $19
million will consist of $17 million for employee severance and
costs to maintain and sell the property and another $2 million
for employee relocation and training and other costs. Also, the
Company expects to incur the remaining $5 million during the next
year for employee relocation and training, transition, and other
costs associated with the closure. These costs will be expensed
as incurred. 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.
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FORM 10-Q
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to Vote of Security Holders
The Annual Meeting of Stockholders of the Wm. Wrigley Jr.
Company was held on March 6, 1996 to consider the following
proposals: (1) the election of nine directors to serve for the
ensuing year; (2) ratification of the appointment of Ernst &
Young as the Company's independent auditors for 1996; and, (3)
that the directors of the company consider discontinuance of all
options, rights, SAR's, awards, etc. to top management officials
of the company after expiration of existing programs. The
results of the voting on each matter, as determined by the
independent inspectors of election, are as follows:
Proposal 1. Election of nine directors. With each class
of stock voting together, a total of 338,083,946 votes
were eligible to be cast and a total of 309,913,211 were
submitted with respect to each nominee as follows:
Nominee For % For Withheld
Charles F. Allison III 309,316,766 99.81 596,445
Douglas S. Barrie 309,415,031 99.84 498,180
Lee Phillip Bell 309,366,033 99.82 547,178
Robert P. Billingsley 309,314,444 99.81 598,767
Gary E. Gardner 309,093,414 99.74 819,797
Penny Pritzker 308,987,690 99.70 925,521
Richard K. Smucker 309,295,825 99.80 617,386
William Wrigley 309,406,947 99.84 506,264
William Wrigley, Jr. 309,399,470 99.83 513,741
Proposal 2. Ratification of Auditors. With each class
of stock voting together, a total of 338,083,946 votes
were eligible to be cast and a total of 309,913,211 were
submitted as follows:
For Against Abstain
309,122,203 488,645 302,363
Proposal 3. That the directors of the company consider
discontinuance of all options, rights, SAR's, awards, etc. to top
management officials of the company after expiration of existing
programs. With each class of stock voting together, a total of
338,083,946 votes were eligible to be cast and a total of
309,913,211 were submitted as follows:
<TABLE>
For Against Abstain Uninstructed
<S> <C> <C> <C> <C>
7,296,979 288,965,251 3,992,113 9,658,868
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FORM 10-Q
PART II - OTHER INFORMATION
Item 5 - Other Information
At its meeting of August 18, 1993, the Board of Directors
adopted a resolution authorizing the Company to purchase from
time to time shares of the Company's Common Stock not to exceed
$100,000,000 in aggregate price.
The Company's Management Incentive Plan (MIP) authorizes the
granting of up to 5,400,000 shares of the Company's Common Stock
(including 492,222 shares issued under the predecessor 1984 Stock
Award Plan) to key managers in various forms including stock
grants and stock appreciation rights. Shares so awarded may be
issued from the Company Treasury or purchased in the open market.
The Company Stock Retirement Plan for Non-employee Directors
authorizes award of up to 300,000 shares in the aggregate to non-
employee directors upon their retirement from the Board. Shares
so awarded may be issued from the Company Treasury or purchased
in the open market.
Under this resolution and these plans, the Company acquired and
distributed stock in the first quarter 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
Treasury shares held at 12/31/95 219,394
Total Treasury shares at 3/31/96 244,263
</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 March 31, 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
Corporate Controller
By
Dushan Petrovich
Vice President - Treasurer
Date April 24, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 145,561
<SECURITIES> 130,707
<RECEIVABLES> 194,709
<ALLOWANCES> 8,209
<INVENTORY> 246,669
<CURRENT-ASSETS> 728,883
<PP&E> 740,032
<DEPRECIATION> 388,999
<TOTAL-ASSETS> 1,163,419
<CURRENT-LIABILITIES> 236,311
<BONDS> 0
0
0
<COMMON> 15,496
<OTHER-SE> 812,505
<TOTAL-LIABILITY-AND-EQUITY> 1,163,419
<SALES> 426,674
<TOTAL-REVENUES> 429,855
<CGS> 187,864
<TOTAL-COSTS> 339,081
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 251
<INCOME-PRETAX> 90,774
<INCOME-TAX> 33,161
<INCOME-CONTINUING> 57,613
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,613
<EPS-PRIMARY> 0.50
<EPS-DILUTED> 0.50
</TABLE>
