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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] 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, 1997 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 .
92,474,728 shares of Common Stock and 23,742,290 shares of Class B
Common Stock were outstanding as of October 15, 1997.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
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Revenues:
Net sales $ 481,938 462,425 1,450,817 1,372,724
Investment and other income 4,442 3,687 11,999 10,176
Total revenues 486,380 466,112 1,462,816 1,382,900
Costs and expenses:
Cost of sales 208,931 203,782 630,345 605,863
Factory closure and related costs 92 926 3,106 18,512
Selling, distribution, and
general administrative 174,212 164,029 518,204 478,375
Interest 183 296 819 699
Total costs and expenses 383,418 369,033 1,152,474 1,103,449
Earnings before income taxes 102,962 97,079 310,342 279,451
Income taxes 33,436 35,872 101,320 103,588
Net earnings $ 69,526 61,207 209,022 175,863
Net earnings per average share of
common stock $ .60 .53 1.80 1.52
Dividends declared per share of
common stock $ .19 .17 .57 .51
Average number of shares
outstanding for the period 115,968 115,979 115,962 115,981
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All amounts in thousands except for per share values.
Notes to financial statements shown on page 5 are an integral part
of these statements.
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONDENSED)
Nine Months Ended
September 30,
1997 1996
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CASH FLOWS - OPERATING ACTIVITIES
Net earnings $209,022 175,863
Adjustments to reconcile net earnings to net
cash flows from operating activities:
Depreciation 36,421 35,096
Gain on sales of property, plant, and
equipment (897) (1,322)
(Increase) decrease in:
Accounts receivable (57,749) (28,247)
Inventories (31,917) (10,681)
Other current assets (14,238) (4,827)
Other assets and deferred charges 12,864 (17,088)
Increase (decrease) in:
Accounts payable 26,958 24,694
Accrued expenses 30,608 19,836
Income and other taxes payable 13,303 14,518
Deferred taxes 245 (5,340)
Other noncurrent liabilities 17,590 29,222
Net cash flows - operating activities 242,210 231,724
CASH FLOWS - INVESTING ACTIVITIES
Additions to property, plant, and equipment (86,579) (65,359)
Proceeds from property retirements 4,519 3,619
Purchases of short-term investments (1,262,925) (423,492)
Maturities of short-term investments 1,261,804 413,300
Net cash flows - investing activities (83,181) (71,932)
CASH FLOWS - FINANCING ACTIVITIES
Dividends paid (63,778) (59,151)
Common stock purchased (3,504) (3,757)
Net cash flows - financing activities (67,282) (62,908)
Effect of exchange rate changes on cash and
cash equivalents (9,688) (1,022)
Net increase in cash and cash equivalents 82,059 95,862
Cash and cash equivalents at beginning of period 181,233 125,725
Cash and cash equivalents at end of period $263,292 221,587
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 88,996 98,319
Interest paid $ 1,273 728
Interest and dividends received $ 11,322 10,183
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All amounts in thousands.
Notes to financial statements shown on page 5 are an integral part
of these statements.
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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,
1997 1996
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Current assets:
Cash and cash equivalents $ 263,292 181,233
Short-term investments 119,776 119,330
Accounts receivable 209,614 165,051
(less allowance for doubtful accounts;
9/30/97- $8,926; 12/31/96-$8,538)
Inventories -
Finished goods 61,342 52,859
Raw materials and supplies 194,350 180,338
259,692 233,197
Other current assets 31,983 19,674
Deferred income taxes - current 10,433 10,939
Total current assets 890,790 729,424
Marketable equity securities at fair value 22,275 18,525
Other assets and deferred charges 57,644 69,461
Deferred income taxes - Noncurrent 29,925 27,984
Property, plant and equipment, at cost 840,432 808,046
Less accumulated depreciation 425,564 419,897
414,868 388,149
Total assets $1,415,502 1,233,543
Current liabilities:
Accounts payable $ 97,170 75,431
Accrued expenses 93,456 66,434
Dividends payable 22,035 19,715
Income and other taxes payable 65,668 55,756
Deferred income taxes - current 526 816
Total current liabilities 278,855 218,152
Deferred income taxes - noncurrent 27,666 24,390
Other noncurrent liabilities 107,938 93,570
Stockholders' equity:
Preferred stock - no par value
Authorized - 20,000 shares
Issued - None
Common stock - no par value
Authorized - 400,000 shares
Issued - 92,456 shares at 9/30/97;
92,066 shares at 12/31/96 12,327 12,275
Class B common stock - convertible
Authorized - 80,000 shares
Issued and outstanding -
23,764 shares at 9/30/97
24,155 shares at 12/31/96 3,169 3,221
Additional paid-in capital 226 238
Retained earnings 1,041,436 898,512
Foreign currency translation adjustment (56,174) (14,716)
Unrealized holding gain 13,250 10,812
Common Stock in treasury, at cost - (9/30/97-
249 shares; 12/31/96-251 shares) (13,191) (12,911)
Total stockholders' equity 1,001,043 897,431
Total liabilities & stockholders' equity $ 1,415,502 1,233,543
</TABLE>
All amounts in thousands.
Notes to financial statements shown on page 5 are an integral part
of these statements.
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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 Consolidated Statement of Earnings (Condensed) for the
three and nine month periods ended September 30, 1997 and
1996, respectively, the Consolidated Statement of Cash Flows
(Condensed) for the nine month periods ended September 30,
1997 and 1996, and the Consolidated Balance Sheet (Condensed)
at September 30, 1997 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
1996 audited consolidated financial statements. These
condensed financial statements should be read in conjunction
with the 1996 consolidated financial statements and related
notes which are an integral part hereof.
2. An analysis of the cumulative foreign currency translation
adjustment follows (in thousands of dollars).
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Decrease to
Stockholders' Equity
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Third Quarter 1997 1996
Balance at June 30 $ 44,038 18,491
Translation adjustment for
the third quarter 12,136 668
Balance at September 30 $ 56,174 19,159
Nine Months
Balance at January 1 $ 14,716 8,038
Translation adjustment for
the nine month period 41,458 11,121
Balance at September 30 $ 56,174 19,159
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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. On April 23, 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. In 1996, the Company provided $17 million
for related closure costs covering employee severance and
costs to maintain and sell the property and incurred an
additional $2.4 million in relocation, training and other
transition costs related to this plan. Net earnings per share
were reduced by $.11 per share as a result of these charges in
1996. Operating income for the three and nine month periods
ended September 30, 1997 included a $.1 and a $3.1 million
charge, respectively, for relocation and training costs
related to this plan. The three and nine month results for
1996 included a $.9 and a $1.5 million charge, respectively,
for relocation and training. In addition to the $5.5 million
of relocation and training incurred to date, the Company
expects to incur another $.2 million for transition related
costs during 1997.
At September 30, 1997, a total of 302 employees have been
transferred, retired or terminated and $1.8 million in
severance costs for the terminated employees has been incurred
and charged to the factory closure reserve.
5. In February 1997, the Financial Accounting Standards Board
issued Statement No. 128 (FAS 128), Earnings Per Share, which
is required to be adopted for periods ending on or after
December 15, 1997. For the quarter ending December 31, 1997,
the Company will be required to change the method currently
used to compute earnings per share. The impact of FAS 128 on
the basic and diluted earnings per share for the third quarter
and first nine months ended September 30, 1997, and September
30, 1996, respectively, is not expected to be material.
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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 1997
increased by $19.5 million or 4.2% and $78.1 million or 5.7%,
respectively, compared with the same periods last year. The
increase was primarily due to higher overseas volume and selected
worldwide selling price increases which is partially offset by
foreign currency translation to a stronger U.S. dollar and lower
domestic volume.
Investment and Other Income
Investment and Other Income for the third quarter and first nine
months of 1997 increased by $0.8 million or 20.5% and $1.8 million
or 17.9%, respectively, compared with the same periods in 1996.
The increases are primarily due to higher invested cash balances.
COSTS AND EXPENSES
COST OF SALES
Cost of sales for the third quarter and first nine months of 1997
increased by $5.1 million or 2.5% and $24.5 million or 4.0%,
respectively, compared with the same periods last year. The
increase was primarily due to higher international shipment volume
and slightly higher product costs in 1997, partially reduced by
foreign currency translation to a stronger U.S. dollar.
The Company's consolidated gross profit percentages for the third
quarter and the first nine months of 1997 and 1996 were:
1997 1996
Third quarter 56.6% 55.9%
First nine months 56.6% 55.9%
FACTORY CLOSURE
On April 23, 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. In 1996, the Company provided $17 million for related
closure costs covering employee severance and costs to maintain and
sell the property and incurred an additional $2.4 million in
relocation, training and other transition costs related to this
plan. Net earnings per share were reduced by $.11 per share as a
result of these charges in 1996. Operating income for the three
and nine month periods ended September 30, 1997 included a $.1 and
a $3.1 million charge, respectively, for relocation and training
costs related to this plan. The three and nine month results for
1996 included a $.9 and a $1.5 million charge, respectively, for
relocation and training. In addition to the $5.5 million of
relocation and training incurred to date, the Company expects to
incur another $.2 million for transition related costs during 1997.
At September 30, 1997, a total of 302 employees have been
transferred, retired or terminated and $1.8 million in severance
costs for the terminated employees has been incurred and charged to
the factory closure reserve.
Selling, Distribution, and General Administrative
The selling, distribution, and general administrative expenses for
the third
quarter and first nine months increased by $10.2 million or 6.2%
and $39.8 million or 8.3%, respectively, compared with the same
periods last year. These increases were primarily due to higher
overall worldwide marketing expenses, partially reduced by foreign
currency translation to a stronger U.S. dollar.
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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 1997 and 1996 are shown below:
1997 1996
Third quarter 32.4% 37.0%
First nine months 32.6% 37.1%
The lower 1997 effective rate reflects tax benefits related to
increased U.S. tax credits and a more favorable corporate tax
structure in France.
NET EARNINGS
Consolidated net earnings for the third quarter of 1997 totaled
$69.5 million or $.60 per share, an increase of 13.2% on an
earnings per share basis compared to last year's results of $61.2
million or $.53 per share. The Santa Cruz closure decreased 1997's
quarterly net earnings by $.1 million and decreased 1996's
quarterly net earnings by $.9 million. Excluding the Santa Cruz
factory closure costs, consolidated net earnings for the third
quarter of 1997 totaled $69.6 million or $.60 per share, an
increase of $7.5 million, or 12.1%, and $.07 per share.
Consolidated net earnings for the first nine months of 1997 totaled
$209.0 million or $1.80 per share, an increase of 18.4% on an
earnings per share basis compared to last year's results of $175.9
million or $1.52 per share. The Santa Cruz closure decreased
1997's net earnings for the first nine months of 1997 by $2.2
million or $.02 per share and decreased 1996's net earnings for the
first nine months of 1996 by $12.1 million or $.10 per share.
Excluding the Santa Cruz factory closure costs, consolidated net
earnings for the first nine months of 1997 totaled $211.2 million
or $1.82 per share, an increase of $23.2 million, or 12.4%, and
$.20 per share.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company's cash and cash equivalents and
short-term investments totaled $383.1 million compared to $300.6
million at December 31, 1996, an increase of $82.5 million. The
ratio of current assets to current liabilities (current ratio) at
September 30, 1997 was 3.2 to 1 compared to 3.3 to 1 at December
31, 1996.
Capital expenditures for 1997 are expected to be above 1996
expenditures of
$102.0 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 6 - Exhibits and Reports on Form 8-K
(a) Exhibits reference is made to the Exhibit Index on page 10.
(b) The Company has not filed a Form 8-K for the three month period
ended
September 30, 1997.
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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 /s/ JOHN F. BARD
John F. Bard
Senior Vice President
Authorized Signatory and Chief Financial
Officer
Date: November 12, 1997
<PAGE>
WM. WRIGLEY JR. COMPANY
AND WHOLLY OWNED ASSOCIATED COMPANIES
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
3(i). Articles of Incorporation of the Registrant. The
Registrant's Restated Articles of Incorporation are
incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K filed for the
fiscal year ended December 31, 1992.
3(ii). By-laws of the Registrant. The Registrant's By-laws are
incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K filed for the fiscal
year ended December 31, 1992.
4. Instruments defining the rights of security holders. The
Registrant's Articles of Incorporation contains all
definitions of the rights of the Registrant's Common and
Class B Common stock, representing all of the
Registrant's outstanding securities, and is incorporated
by reference to Exhibit 3(a) of the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1992.
10. Material Contracts
10(a). Non-Employee Directors' Death Benefit Plan. Non-Employee
Directors' Death Benefit Plan is incorporated by
reference from Exhibit 10(a) of the Company's Annual
Report on Form 10-K filed for the fiscal year ended
December 31, 1994.
10(b). Senior Executive Insurance Plan. Senior Executive
Insurance Plan is incorporated by reference from Exhibit
10(b) of the Company's Annual Report on Form 10-K filed
for the fiscal year ended December 31, 1995.
10(c). Supplemental Retirement Plan. Supplemental Retirement
Plan is incorporated by reference from Exhibit 10(c) of
the Company's Annual Report on Form 10-K filed for the
fiscal year ended December 31, 1994.
10(d). Deferred Compensation Plan for Non-Employee Directors.
Deferred Compensation Plan for Non-Employee Directors is
incorporated by reference from Exhibit 10(d) of the
Company's Annual Report on Form 10-K filed for the
fiscal year ended December 31, 1995.
10(e). Non-Employee Directors' Stock Retirement Plan.
Non-Employee Directors' Stock Retirement Plan is
incorporated by reference from Exhibit 10(e) of the
Company's Annual Report on Form 10-K filed for the fiscal
year ended December 31, 1995.
10(g). Wm. Wrigley Jr. Company 1997 Management Incentive Plan,
a copy of which is attached.
99. Forward-Looking Statements. Forward-Looking Statements
are incorporated by reference from Exhibit 99 of the
Company's Annual Report on Form 10-K filed for the fiscal
year ended December 31, 1996.
- --------------------
Copies of Exhibits are not attached hereto, but the Registrant will
furnish them upon request and upon payment to the Registrant of a
fee in the amount of $20.00 representing reproduction and handling
costs.
<PAGE>
WM. WRIGLEY JR. COMPANY 1997 MANAGEMENT INCENTIVE PLAN
Effective as of January 1, 1997
I. General
1.1 Purpose. The purpose of the Wm. Wrigley Jr. Company
1997 Management Incentive Plan (the "Plan") for key employees of
the Wm. Wrigley Jr. Company (the "Company") and its subsidiaries
is to foster and promote the long-term financial success of the
Company and increase stockholder value by:
(a) attracting and retaining key personnel possessing
outstanding abilities; and
(b) motivating key employees by providing the opportunity to
participate with the stockholders in the long-term growth
and financial success of the Company.
1.2 Plan. The Committee hereinafter designated, or the Chief
Executive Officer of the Company if delegated the authority
pursuant to Section 1.5 hereof with respect to eligible key
employees of the Company, its operating units or its subsidiaries
in which it owns, directly or indirectly, a majority of the voting
stock, may grant to such eligible key employees (the
"Participants") stock awards, stock options, stock appreciation
rights, performance units, share units, money credits, annual or
long-term incentive compensation awards or combinations thereof, on
the terms and subject to the conditions stated in the Plan.
1.3 Limitation on Shares to Be Issued. The maximum number of
shares of common stock of the Company, no par value (the "Common
Stock"), to be issued pursuant to all grants made under the Plan
shall be 5,000,000 shares. Shares awarded pursuant to grants that
by reason of the expiration, cancellation or other termination of
grants prior to issuance, are not issued, and restricted shares
that are forfeited after their issuance, shall again be available
for future grants.
Shares of Common Stock to be issued may be authorized and
unissued shares of Common Stock, treasury stock, shares purchased
on the open market or a combination thereof.
1.4 Limitation on Stock Options and Stock Appreciation
Rights. During the term of the Plan, no Participant can receive
stock options or freestanding stock appreciation rights relating to
shares of Common Stock that in the aggregate exceed 15% of the
total number of shares of Common Stock authorized pursuant to the
Plan, as adjusted pursuant to the terms hereof.
1.5 Administration of Plan. The Plan and the programs
thereunder (the "Programs") shall be administered by a committee of
two or more persons selected by the Board of Directors of the
Company (the "Board of Directors" or "Board") from its own
membership, which shall be the Compensation Committee of the Board
of Directors unless another committee of the Board shall be
designated by the Board for some or all purposes of the Plan (the
"Committee," or the "Compensation Committee"). Solely with respect
to administration of the awards granted hereunder that are intended
to satisfy the applicable requirements of Section 162(m)
("Section 162(m)") of the Internal Revenue Code of 1986, as amended
(the "Code"), each member of the Committee shall be an "outside
director" within the meaning of Section 162(m), to the extent
applicable. Solely with respect to administration of the awards
that are intended to satisfy the applicable requirements of
Rule 16b-3 ("Rule 16b-3") of the General Rules and Regulations
under the Securities Exchange Act of 1934 as then in effect or any
successor provision, each member of the Committee shall be a
"Non-Employee Director" within the meaning of Rule 16b-3, to the
extent applicable.
<PAGE>
The Committee shall, subject to the limitations of the Plan,
have full power and discretion to interpret and administer the
Plan; to establish selection guidelines; to select eligible persons
for participation; and to determine the form of grant, either in
the form of money credits, share units, performance units, stock
options, stock appreciation rights, stock awards (including
restricted stock awards), annual or long-term incentive
compensation awards or combinations thereof, the number of shares
subject to the grant, the basis on which the fair market value of
the Common Stock is measured, when necessary, the restriction and
forfeiture provisions relating to restricted stock awards, the time
and conditions of vesting or exercise, the conditions, if any,
under which time of vesting or exercise may be accelerated, the
conditions, form, time, manner and terms of payment of any award
and all other terms and conditions of the grant. In addition, with
respect to awards granted under the Plan that are intended to
satisfy the applicable provisions of Section 162(m), the Committee
shall have full power and discretion to establish and administer
performance goals, establish performance periods and to certify
that performance goals have been attained, to the fullest extent
required to comply with Section 162(m).
The Committee may establish rules, regulations and guidelines
for the administration of the Plan, and impose, incidental to a
grant, conditions with respect to employment or other activities
not inconsistent with or conflicting with the Plan. The Committee
may, in its discretion, delegate to the Chief Executive Officer of
the Company the power and authority with respect to the selection
of, and grants to, eligible key employees of the Company, subject
to the rules, regulations and guidelines of general application
prescribed by the Committee.
The interpretation by the Committee of the terms and
provisions of the Plan and the administration thereof, and all
action taken by the Committee, shall be final, binding and
conclusive on the Company, its stockholders, all Participants and
employees of the Company, and upon their respective beneficiaries,
successors and assigns, and upon all other persons claiming under
or through any of them. By accepting any benefits under the Plan,
each Participant, and each person claiming under or through such
Participant, shall be conclusively deemed to have indicated
acceptance and ratification of, and consent to, all provisions of
the Plan and any action or decision under the Plan by the Company,
the Board of Directors or the Committee.
1.6 Adjustment Provisions. In the event that any
recapitalization, or reclassification, split-up or consolidation of
shares of Common Stock shall be effective, or the outstanding
shares of Common Stock are, in connection with a merger or
consolidation of the Company or a sale by the Company of all or a
part of its assets, exchanged for a different number or class of
shares of stock or other securities of the Company, or for shares
of the stock or other securities of any other corporation, or new,
different or additional shares of other securities of the Company
or of another corporation are received by the holders of Common
Stock or any distribution is made to the holders of Common Stock
other than a cash dividend, (a) the maximum number and class of
shares or other securities that may be issued or transferred under
the Plan, (b) the maximum number of shares that may be issued as
stock options, stock appreciation rights and restricted stock
awards to any Participant during the term of the Plan, and (c) the
number of share units, stock awards or the number and class of
shares or other securities that are the subject of any grant or the
deferral of any grant, shall be equitably adjusted by the Committee
under the Plan as the Committee determines will fairly preserve the
intended benefits of the Plan to the Participants and the Company,
and will fairly accomplish the purposes of the Plan.
1.7 Purchase of Shares of Common Stock. It is contemplated
that the Company, although under no legal obligation to do so, may
from time to time purchase shares of Common Stock for the purpose
of paying all or any portion of any award payable in or measured by
the value of shares of Common Stock, or for the purpose of
replacing shares issued or transferred in payment of all or part of
an award. All shares so purchased shall, unless and until
transferred in payment of an award, be at all times the property of
the Company available for any corporate purpose, and no Participant
or employee or beneficiary, individually or as a group, shall have
any right, title or interest in any shares of Common Stock so
purchased.
<PAGE>
1.8 Effective Date and Term of Plan. The Plan shall be
submitted to the stockholders of the Company for approval at the
1997 Annual Meeting of Stockholders of the Company scheduled to be
held on March 5, 1997, and shall be effective retroactively to
January 1, 1997, subject to such approval by the stockholders of
the Company. The Plan shall terminate ten years after it becomes
effective unless terminated prior thereto by action of the Board of
Directors of the Company. No further grants shall be made under
the Plan after termination, but termination shall not affect the
rights of any Participant under any grants made prior to
termination.
1.9 Amendments and Termination. The Plan and Programs may be
amended or terminated by the Board of Directors of the Company at
any time and in any respect, except that, unless otherwise
determined by the Board, no amendment may be made without
stockholder approval if, and to the extent that, such approval
would be required to comply with any applicable provisions of
Section 162(m) or Rule 16b-3, or any successor to the foregoing.
Similarly, subject to obtaining the consent of the Participant
where required by applicable law, the Committee may alter, amend or
modify any award or grant made pursuant to the Plan or Programs in
any respect not in conflict with the provisions of the Plan or
Programs, as the case may be, if the Committee deems such
alterations, amendment or modification to be in the best interests
of the Participant or the Company by reason of changes or
interpretations in tax, securities, other applicable laws, or other
business purposes.
1.10 Prior Plans. Any grants made under the Wm. Wrigley Jr.
Company Management Incentive Plan (the "Prior Plan"), shall be
covered by the terms and conditions of the Prior Plan. Any grants
made under the Programs prior to the effective date of the Plan
shall be covered by the terms and conditions of such Programs and
the Prior Plan.
1.11 Terms and Conditions. Awards granted under the Plan
shall contain such terms and conditions as the Committee shall
specify, including without limitation those terms and conditions
described in Article IX hereof, and restrictions on the sale or
other disposition of the shares of Common Stock, or the forfeiture
of certain awards upon termination of employment prior to the
expiration of a designated period of time or the occurrence of
other events.
II. Stock Awards
2.1 Form of Award. The Committee may in its discretion
provide that a Participant shall receive stock awards, whether
performance awards, performance shares or fixed awards, in the form
of shares of Common Stock, but which may be forfeitable and/or with
restrictions on transfer in any form as hereinafter provided.
2.2 Performance Awards. Awards may be made in terms of a
stated potential maximum number of shares, with the actual number
earned to be determined by reference to the level of achievement of
corporate, group, division, individual or other specific objectives
over a period or periods of not less than one nor more than ten
years. No right or interests of any kind shall be vested in an
individual receiving a performance award until the conclusion of
the period or periods and the determination of the level of
achievement specified in the award, and the time of vesting
thereafter shall be as specified in the award.
2.3 Fixed Awards. Awards may be made that are not contingent
on the performance of objectives but that are contingent on the
Participant's continuing in the employ of the Company, rendering
consulting services or refraining from competitive activities for
a period to be specified in the award, which period shall be not
less than one year.
<PAGE>
2.4 Rights With Respect to Restricted Stock Awards. Awards
may be made in the form of shares that are subject to restrictions
on transfer, as determined by the Committee. Unless otherwise
provided by the Committee, the Participant who receives shares of
restricted Common Stock shall have the right to vote the shares and
to receive dividends thereon from the dated of issuance, unless and
until forfeited.
2.5 Terms and Conditions. Shares of restricted Common Stock
issued pursuant to an award shall be released from the restrictions
at the times determined by the Committee. The award shall be paid
to the Participant either in shares of Common Stock having a fair
market value equal to the maturity value of the award, or in cash
equal to the maturity value of the award, or in such combination
thereof as the Committee shall determine.
III. Share Units
3.1 Credits. The Committee may in its discretion provide
that a Participant shall receive a credit of share units, each of
which is equivalent to a share of Common Stock except for the power
to vote and the entitlement to current dividends.
3.2 Rights With Respect to Share Units. If share units are
credited to a Participant, amounts equal to dividends otherwise
payable on a like number of shares of Common Stock after the
crediting of the units may, in the discretion of the Committee, be
paid to the Participant as and when paid, or converted into
additional share units which shall be credited to the Participant
and held until later forfeited or paid out. Share units may be
paid to the Participant in the form of cash, shares of Common Stock
or a combination thereof, according to such requirements and
guidelines as the Committee shall deem appropriate.
IV. Money Credits
4.1 Credits. The Committee may in its discretion provide
that a Participant shall receive a credit of money credits, which
shall be in units of a dollar or a fraction thereof.
4.2 Rights With Respect to Money Credits. If a Participant
is credited with money credits, a money account shall be
established for the Participant which shall be credited with
interest equivalents on amounts previously credited to the account,
or an amount equal thereto paid to the Participant, on a calendar
quarter basis compounded at such rate as the Committee determines
to be appropriate from time to time. Money credits may be paid to
the Participant in the form of cash, shares of Common Stock or a
combination thereof, according to such requirements and guidelines
as the Committee shall deem appropriate.
V. Stock Options
5.1 Grants. The Committee may in its discretion provide that
a Participant shall receive an option to purchase shares of Common
Stock.
5.2 Terms and Conditions of Options. Options shall contain
such terms and conditions as the Committee shall specify, may
either be "incentive stock options" as defined in Section 422(b) of
the Code or nonqualified stock options, and, at the discretion of
the Committee, may include a reload feature. No option shall be
exercisable more than ten years after the date of grant. The per
share option price shall be not less than 100% of the fair market
value at the time the option is granted, unless otherwise
determined by the Committee. Upon exercise, the option price may
be paid in cash, in shares of Common Stock having a fair market
value equal to the option price or a combination thereof, or in
such other manner as the Committee, in its discretion, either at
the time of grant or thereafter, may provide, and the Committee
may, in its discretion, require as a condition of exercise that the
optionee pay to the Company any federal, state or local withholding
tax or employment tax required by law to be paid over as a result
of such exercise, which payment may be made in cash, in shares of
Common Stock, or in a combination thereof, having a market value
equal to the amount of the required withholding tax. Unless
otherwise determined by the Committee, options shall not be
transferable, except that such options may be exercised by the
executor, administrator or personal representative of a deceased
optionee through a period not to exceed the date on which the
option expires or three years after the death of such optionee,
whichever is earlier. Options may be exercised during the
optionee's continued employment with the Company and for a three
year period thereafter, or for such other period thereafter as the
Committee may determine, but in no event after the date on which
the option expires.
<PAGE>
5.3 Incentive Stock Options. With respect to incentive stock
options, to the extent that the aggregate fair market value
(determined at the time the option is granted) of the Common Stock
with respect to which incentive stock options are exercisable for
the first time by such individual during any calendar year (under
all plans of the Company) exceeds $100,000, such options shall be
treated as nonqualified stock options. The per share option price
for an incentive stock option shall not be less than 100% of the
fair market value of a share of Common Stock at the time the option
is granted (110% of the fair market value of a share of Common
Stock at the time the option is granted in the case of an incentive
stock option granted to an employee, who, at the time the incentive
stock option is to be granted to such employee, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, a parent or a subsidiary within
the meaning of Sections 422(e) and 422(f), respectively, of the
Code (a "Ten-Percent Stockholder"). Further, no incentive stock
option shall be exercisable after the expiration of ten years from
the date such option is granted (five years in the case of an
incentive stock option granted to a Ten-Percent Stockholder).
VI. Stock Appreciation Rights
6.1 Grants. The Committee may in its discretion provide that
a Participant shall receive rights entitling such Participant to
receive cash or shares of Common Stock having a fair market value
equal to the appreciation in market value of a stated number of
shares of Common Stock from the date of grant, or in the case of
rights granted in tandem with or by reference to a stock option
granted simultaneously with or prior to the grant of such rights,
from the date of grant of the related stock option to the date of
exercise.
6.2 Terms of Grant. Such rights may be granted in tandem
with or with reference to a related stock option, in which event
the grantee may elect to exercise either the option or the right
(as to the same shares of Common Stock subject to the option and
the right), or the right may be granted independently of a stock
option. The right shall be exercisable not more than ten years
after the date of grant. Stock appreciation rights shall not be
transferable, except that such rights may, if the grant so
provides, be exercised by the executor, administrator or personal
representative of the deceased grantee within three months after
the death of the grantee, and rights may be exercised during the
individual's continued employment with the Company and for a period
not in excess of three months following termination of employment,
or for such longer period thereafter as the Committee may
determine, but in no event after the date on which such stock
appreciation rights expire, provided that if the grantee is a
member of the Board of Directors, the stock appreciation rights
may, if the term of the grant so provides, be exercised following
termination of employment for three months or during such longer
period as the grantee shall continue to serve as a member of the
Board of Directors, or for such longer period thereafter as the
Committee may determine, but in no event after the date on which
such stock appreciation rights expire.
<PAGE>
6.3 Payment on Exercise. Upon exercise of a right, the
grantee shall be paid the excess of the then fair market value of
the number of shares to which the right relates over the exercise
price of the right or of the related stock option, as the case may
be. Such excess shall be paid in cash or in shares of Common Stock
having a fair market value equal to such excess, or a combination
thereof, as the Committee shall determine.
VII. Performance Units
The Committee may in its discretion provide that a Participant
shall receive performance units, subject to such terms and
conditions as the Committee in its discretion shall determine. The
Committee shall establish a dollar value for each performance unit,
the performance goals to be attained in respect of the performance
unit, the various percentages of performance unit value to be paid
out upon the attainment, in whole or in part, of the performance
goals and such other performance unit terms, conditions and
restrictions, as the Committee shall deem appropriate. As soon as
practicable after the termination of the performance period, the
Committee shall determine the payment, if any, which is due on the
performance unit in accordance with the terms thereof. The
Committee shall determine, among other things, whether the payment
shall be made in the form of cash or shares of Common Stock, or a
combination thereof.
VIII. Incentive Compensation Awards
The Committee in its discretion may establish annual and
long-term incentive compensation programs pursuant to which
incentive compensation awards may be granted to selected
Participants, subject to such terms and conditions as the Committee
in its discretion shall determine.
IX. Section 162(m) Awards
9.1 Performance Based Awards. The Committee shall determine
the amount of each annual or long-term incentive compensation
award, stock award, restricted stock award, money credit award,
share, performance or phantom unit award or other performance based
award, and shall specify with respect thereto Performance Goals (as
defined in Section 9.2 below) and a performance period during which
such Performance Goals are required to be achieved. Any award that
is conditioned on the achievement of performance goals that are not
defined as Performance Goals in this Section 9.1 shall be
bifurcated into separate awards so that the awards subject to this
Article IX shall be conditioned solely on the achievement of
Performance Goals. Unless otherwise provided by the Committee in
connection with either a specified termination of employment or the
occurrence of a Change in Control (as defined in Section 11.2
hereof), payment in respect of awards granted pursuant to this
Article IX shall be made only if and to the extent the Performance
Goals with respect to such performance period are attained.
Performance Goals may include a level of performance below which no
payment shall be made and levels of performance at which specified
percentages (which may be greater than 100) of the award shall be
paid or credited.
9.2 Performance Goals and Performance Periods. The
Performance Goals underlying the awards granted pursuant to this
Article IX shall be the performance goals established by the
Committee, which must be met during the applicable performance
period as a condition of the Participant's receipt of payment (or,
in the case of stock awards or restricted stock awards, the lapse
of restrictions) with respect to an award, and which are based on
the attainment of thresholds with respect to one or more of the
following objective business criteria: earnings per share, return
on equity, pre-tax profit, post-tax profit, consolidated net
income, stock price, market share, sales, unit sales volume, return
on assets, return on invested capital, cash flow, discounted cash
flow, economic value added, costs, production, unit production
volume, total shareholder return.
<PAGE>
With respect to annual incentive compensation awards, the
performance period shall mean each calendar year, or, if different,
each plan year. With respect to long-term incentive compensation
awards, the performance period shall mean the period of consecutive
plan years or such other period (which in no case may be less than
one plan year) as may be determined by the Committee.
9.3 Maximum Limitation on Section 162(m) Awards (Other than
Stock Options and Stock Appreciation Rights). In no event shall
payment be made with respect to annual incentive compensation
awards granted pursuant to this Article IX for any plan year valued
as of the end of such plan year, in an amount that exceeds the
lesser of 125% of such Participant's annual rate of base salary as
in effect as of the first day of the applicable plan year, without
regard to any optional or mandatory deferral of base salary
pursuant to any salary deferral arrangement ("Annual Base Salary")
and $1,200,000. In addition, during the term of the Plan, no
Participant can receive restricted stock awards relating to shares
of Common Stock that in the aggregate exceed 375,000 shares of
Common Stock, as adjusted pursuant to the terms hereof. Further,
with respect to all awards granted pursuant to this Article IX that
are not annual incentive compensation awards, stock options, stock
appreciation rights or restricted stock awards, in no event shall
payment be made with respect to such awards for any three-year
period, valued as of the end of such three-year period, in an
amount that exceeds the lesser of 100% of such Participant's Annual
Base Salary and $900,000.
9.4 Time and Form of Payment. Amounts in respect of awards
granted under this Article IX shall be paid after the end of the
applicable performance period, at such time as the Committee shall
determine. Unless otherwise determined by the Committee, such
payments shall be made only after achievement of the Performance
Goals has been certified by the Committee. Payments shall be made
either in cash, in Common Stock, in such other form as determined
by the Committee or in a combination of the foregoing, as
determined by the Committee.
With respect to all employees who are Covered Employees (as
defined in Section 162(m)), the foregoing provisions shall apply to
the extent necessary for the awards granted pursuant to this
Article IX to satisfy the applicable requirements of
Section 162(m).
X. Loans
The Committee may, in its discretion, authorize loans by the
Company to Participants in connection with the grant of stock
awards, other awards hereunder or the exercise of options or stock
appreciation rights. The loans shall be subject to such terms and
conditions not inconsistent with the Plan as the Committee shall
impose from time to time. Every loan shall meet all applicable
laws, regulations and rules of the Internal Revenue Service, the
Federal Reserve Board and any other governmental agency having
jurisdiction.
XI. Miscellaneous
11.1 Withholding. In addition to any other withholding
provisions set forth in Section 5.2 hereof, the Company or a
corporation or other form of business association of which shares
(or other ownership interests) having 50% or more of the voting
power are owned or controlled directly or indirectly, by the
Company (an "Associated Company") may make such provisions as it
may deem appropriate for the withholding of any taxes that the
Company or Associated Company determines is required to be withheld
in connection with any award or distribution hereunder, including
permitting Participants to authorize the Company to withhold shares
of Common Stock earned with respect to any grant or award.
<PAGE>
11.2 Change in Control. For purposes of the Plan and the
Programs, a "Change in Control" shall be deemed to have occurred:
(a) if and when any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) in a transaction or series of transactions, is or
becomes a beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities acquired by
an employee benefit plan of the Company or any subsidiary
thereof, or any trustee or other fiduciary holding securities
under any such employee benefit plan), representing 5% or more
of the combined voting power of the Company's then outstanding
securities and there is outstanding an exchange or tender
offer for securities of the Company (other than any such
exchange or tender offer by the Company or by members of the
Wrigley and Offield families); or
(b) if any "person" (as above-referenced but excluding
members of the Wrigley and Offield families) is or becomes a
beneficial owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power
of the Company's then outstanding securities (not including in
the securities beneficially owned by such person any
securities acquired by an employee benefit plan of the Company
or any subsidiary thereof or any trustee or other fiduciary
holding securities under any such employee benefit plan).
11.3 Certain Provisions Relating to Participation. No
Participant shall have any claim to be granted any award under the
Plan, and there is no obligation for uniformity of treatment for
Participants.
Except as otherwise required by applicable law, no rights
under the Plan or Programs, contingent or otherwise, shall be
assignable or subject to any encumbrance, pledge or charge of any
nature, except that, under such rules and regulations as the
Committee may establish, a Participant may designate a beneficiary
to receive, in the event of death, any amount that would otherwise
have been payable to the Participant or that may become payable on
account of or following his or her death except that, if any amount
shall become payable to the executor or administrator of the
Participant, such executor or administrator may transfer the right
to the payment of any such amount to the person, persons or entity
(including a trust) entitled thereto under the will of the
Participant or, in case of intestacy, under the laws relating to
intestacy.
By accepting any benefits under the Plan or Programs, each
Participant and each person claiming under or through a Participant
shall be conclusively deemed to have indicated their acceptance and
ratification of and consent to any action or decision taken or made
or to be taken or made under the Plan or Program, as the case may
be, by the Committee, the Company or the Board of Directors.
Subject to any applicable forfeiture provisions provided in
the Programs, each Participant shall have a vested, unconditional
and nonforfeitable right to receive a distribution or distributions
of the amount credited to such Participant's respective accounts,
but only at, and not until, the time or times and only in the
manner provided for in the Plan or applicable Programs. However,
no funds, securities or other property of any nature shall be
segregated or earmarked for any current or former Participant,
beneficiary or other person. Accordingly, no current or former
Participant, beneficiary or other person, individually or as a
member of a group, shall have any right, title or interest in an
account in any fund or specific sum of money, in any asset or in
any shares of stock that may be acquired by the Company in respect
of its obligations hereunder, the sole right of the Participant
being to receive distributions, as set forth in the Plan or
Programs, as a general creditor of the Company with an unsecured
claim against the Company's general assets.
The Plan and Programs shall be binding upon, and shall inure
to the benefit of, the Company and its successors and assigns and
the Participants and their heirs, administrators and personal
representatives.
<PAGE>
11.4 Governing Law. The Plan and Programs shall be construed
in accordance with and governed by the laws of the State of
Delaware.
XII. Interpretation
The Plan and the Programs thereunder are designed and, to the
extent determine by the Committee, in its discretion, intended to
comply with Rule 16b-3 and Section 162(m), in each case, to the
extent applicable, and all provisions hereof shall be construed in
a manner to so comply.
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 263,292
<SECURITIES> 142,051
<RECEIVABLES> 218,540
<ALLOWANCES> 8,926
<INVENTORY> 255,692
<CURRENT-ASSETS> 890,790
<PP&E> 840,432
<DEPRECIATION> 425,564
<TOTAL-ASSETS> 1,415,502
<CURRENT-LIABILITIES> 278,855
<BONDS> 0
0
0
<COMMON> 15,496
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<TOTAL-LIABILITY-AND-EQUITY> 1,415,502
<SALES> 1,450,817
<TOTAL-REVENUES> 1,462,816
<CGS> 633,451
<TOTAL-COSTS> 1,152,474
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 819
<INCOME-PRETAX> 310,342
<INCOME-TAX> 101,320
<INCOME-CONTINUING> 209,022
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<EPS-PRIMARY> 1.80
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</TABLE>
