<PAGE>
March 25, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, we are now filing via electronic transmission, the Wm.
Wrigley Jr. Company's annual report on Form 10-K for the fiscal
year ended December 31, 1997.
Paper copies of this report, and accompanying exhibits, are
being filed with the New York and Chicago Stock Exchanges, on which
the securities of the Company are listed.
Sincerely,
WM. WRIGLEY JR. COMPANY
Howard Malovany
Assistant Corporate Secretary
and Senior Counsel
HM/tt
<PAGE>
HIGHLIGHTS OF OPERATIONS
<TABLE>
<CAPTION>
1997 1996
In thousands of dollars except for per share amounts
<S> <C> <C>
NET SALES $1,937,021 1,835,987
EARNINGS BEFORE FACTORY CLOSURE 273,771 243,262
- --Per Share of Common Stock (basic and diluted) 2.36 2.10
NET EARNINGS 271,626 230,272
- --Per Share of Common Stock (basic and diluted) 2.34 1.99
DIVIDENDS PAID 135,680 118,308
- --Per Share of Common Stock 1.17 1.02
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT 126,509 101,977
STOCKHOLDERS' EQUITY 985,379 897,431
RETURN ON AVERAGE EQUITY 28.9% 27.2%
STOCKHOLDERS AT CLOSE OF YEAR 36,587 34,951
AVERAGE SHARES OUTSTANDING ('000) 115,964 115,983
</TABLE>
For additional historical financial data see page 24.
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 1996 1995
In thousands of dollars except for per share amounts
<S> <C> <C> <C>
EARNINGS
REVENUES:
Net sales $1,937,021 1,835,987 1,754,931
Investment and other income 17,153 14,614 14,811
---------- --------- ---------
Total revenues 1,954,174 1,850,601 1,769,742
---------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 847,366 814,483 778,019
Factory closure and related costs 3,300 19,436 --
Selling, distribution and general administrative 708,310 656,473 639,537
Interest 958 1,097 1,955
---------- --------- ---------
Total costs and expenses 1,559,934 1,491,489 1,419,511
---------- --------- ---------
EARNINGS BEFORE INCOME TAXES 394,240 359,112 350,231
INCOME TAXES 122,614 128,840 126,492
---------- --------- ---------
NET EARNINGS $ 271,626 230,272 223,739
========== ========= =========
PER SHARE AMOUNTS
NET EARNINGS PER SHARE OF COMMON STOCK
(BASIC AND DILUTED) $ 2.34 1.99 1.93
========== ========= =========
DIVIDENDS PAID PER SHARE OF COMMON STOCK $ 1.17 1.02 .96
========== ========= =========
</TABLE>
See accompanying accounting policies and notes.
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997 1996
In thousands of dollars
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 206,627 181,233
Short-term investments, at amortized cost 120,728 119,330
Accounts receivable
(less allowance for doubtful accounts:
1997--$7,524; 1996--$8,538) 175,967 165,051
Inventories--
Finished goods 63,912 52,859
Raw materials and supplies 183,480 180,338
---------- ---------
247,392 233,197
Other current assets 30,538 19,674
Deferred income taxes--current 16,421 10,939
---------- ---------
Total current assets 797,673 729,424
MARKETABLE EQUITY SECURITIES, AT FAIR VALUE 26,375 18,525
DEFERRED CHARGES AND OTHER ASSETS 59,566 69,461
DEFERRED INCOME TAXES--NONCURRENT 29,038 27,984
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 26,298 25,921
Buildings and building equipment 277,808 251,687
Machinery and equipment 566,766 530,438
---------- ---------
870,872 808,046
Less accumulated depreciation 440,398 419,897
---------- ---------
Net property, plant and equipment 430,474 388,149
---------- ---------
TOTAL ASSETS $1,343,126 1,233,543
========== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997 1996
In thousands of dollars and shares
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 71,001 75,431
Accrued expenses 78,378 66,434
Dividends payable 22,034 19,715
Income and other taxes payable 53,460 55,756
Deferred income taxes--current 943 816
---------- ---------
Total current liabilities 225,816 218,152
DEFERRED INCOME TAXES--NONCURRENT 30,874 24,390
OTHER NONCURRENT LIABILITIES 101,057 93,570
STOCKHOLDERS' EQUITY:
Preferred Stock--no par value
Authorized: 20,000 shares
Issued: None
Common Stock--no par value
Common Stock
Authorized: 400,000 shares
Issued: 1997--92,545 SHARES; 1996--92,066 shares 12,339 12,275
Class B Common Stock--convertible
Authorized: 80,000 shares
Issued and outstanding:
1997--23,676 SHARES; 1996--24,155 shares 3,157 3,221
Additional paid-in capital 226 238
Retained earnings 1,032,139 898,512
Common Stock in treasury, at cost
(1997--252 SHARES; 1996--251 shares) (13,363) (12,911)
Foreign currency translation adjustment (65,034) (14,716)
Unrealized holding gains on marketable equity securities 15,915 10,812
---------- ---------
Total stockholders' equity 985,379 897,431
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,343,126 1,233,543
========== =========
</TABLE>
See accompanying accounting policies and notes.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997 1996 1995
In thousands of dollars
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 271,626 230,272 223,739
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 50,439 47,288 43,773
Gain on sales of property, plant and equipment (1,141) (1,771) (1,090)
(Increase) decrease in:
Accounts receivable (26,318) 2,154 (28,619)
Inventories (26,916) 973 (11,422)
Other current assets (12,712) 3,777 2,164
Other assets and deferred charges 11,123 (24,075) (6,297)
Increase (decrease) in:
Accounts payable 1,549 474 6,427
Accrued expenses 16,182 3 (3,657)
Income and other taxes payable 1,779 6,095 (6,889)
Deferred income taxes (2,608) (4,496) 720
Other noncurrent liabilities 11,475 25,149 3,702
----------- -------- --------
Net cash provided by operating activities 294,478 285,843 222,551
INVESTING ACTIVITIES
Additions to property, plant and equipment (126,509) (101,977) (102,759)
Proceeds from property retirements 6,888 10,785 3,690
Purchases of short-term investments (1,301,735) (576,995) (281,065)
Maturities of short-term investments 1,298,732 559,603 277,913
----------- -------- --------
Net cash used in investing activities (122,624) (108,584) (102,221)
FINANCING ACTIVITIES
Dividends paid (135,680) (118,308) (111,401)
Common Stock purchased (3,676) (6,779) (11,811)
----------- -------- --------
Net cash used in financing activities (139,356) (125,087) (123,212)
Effect of exchange rate changes on cash
and cash equivalents (7,104) 3,336 1,038
----------- -------- --------
Net increase (decrease) in cash and cash equivalents 25,394 55,508 (1,844)
Cash and cash equivalents at beginning of year 181,233 125,725 127,569
----------- -------- --------
Cash and cash equivalents at end of year $ 206,627 181,233 125,725
=========== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 126,925 130,499 133,494
=========== ======== ========
Interest paid $ 900 631 1,957
=========== ======== ========
Interest and dividends received $ 16,598 14,477 14,639
=========== ======== ========
</TABLE>
See accompanying accounting policies and notes.
<PAGE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997 1996 1995
In thousands of dollars
<S> <C> <C> <C>
COMMON STOCK
At beginning of year $ 12,275 12,205 12,177
Conversion of Class B Common Stock 64 70 52
Retirement -- -- (24)
---------- -------- --------
At end of year 12,339 12,275 12,205
CLASS B COMMON STOCK
At beginning of year 3,221 3,291 3,343
Conversion to Common Stock (64) (70) (52)
---------- -------- --------
At end of year 3,157 3,221 3,291
ADDITIONAL PAID-IN CAPITAL
At beginning of year 238 1,625 1,781
Options exercised and stock awards granted (12) (1,387) (156)
---------- -------- --------
At end of year 226 238 1,625
RETAINED EARNINGS
At beginning of year 898,512 786,543 685,850
Net earnings 271,626 230,272 223,739
Dividends declared (137,999) (118,303) (114,852)
Treasury Stock retirement -- -- (8,194)
---------- -------- --------
At end of year 1,032,139 898,512 786,543
TREASURY STOCK
At beginning of year (12,911) (10,178) (9,034)
Purchases (3,676) (6,779) (11,811)
Options exercised and stock awards granted 3,224 4,046 2,449
Retirements -- -- 8,218
---------- -------- --------
At end of year (13,363) (12,911) (10,178)
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
At beginning of year (14,716) (8,038) (13,502)
Translation adjustment (50,318) (6,678) 5,464
---------- -------- --------
At end of year (65,034) (14,716) (8,038)
UNREALIZED HOLDING GAIN
At beginning of year 10,812 11,404 7,855
Marketable equity securities adjustment 5,103 (592) 3,549
---------- -------- --------
At end of year 15,915 10,812 11,404
---------- -------- --------
Total stockholders' equity $ 985,379 897,431 796,852
========== ======== ========
</TABLE>
See accompanying accounting policies and notes.
<PAGE>
ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATION AND DESCRIPTION OF BUSINESS
The consolidated financial statements include the accounts of the
Wm. Wrigley Jr. Company and its associated companies (the Company).
The Company's principal business is manufacturing and selling
chewing gum. All other businesses constitute less than 10% of
combined revenues, operating profit and identifiable assets.
Preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect assets, liabilities, revenues
and expenses. Actual results may vary from those estimates.
FACTORY CLOSURE INCLUDING SUBSEQUENT EVENT
In April 1996, as part of a plan to realign U.S. production
capacity, the Company announced its intent 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 $17,000,000 for related closure costs covering
employee severance and costs to maintain and sell the property and
incurred $2,436,000 for employee relocation, training and other
transition costs related to this plan for a total charge of
$19,436,000. In 1997, the Company incurred $3,300,000 for employee
relocation, training and other transition costs. As a result of
these charges, net earnings per share are reduced by $.02 and $.11
per share in 1997 and 1996, respectively.
At December 31, 1997, a total of 305 employees have been
transferred, retired or terminated and $6,404,000 in severance and
closure costs have been incurred and charged to the reserve.
On January 22, 1998, the Company sold its real estate holding in
Santa Cruz, California. In the first quarter of 1998, the Company
expects to record a pretax gain of approximately $10,000,000 and
net earnings of approximately $6,500,000 or $.06 per share from the
sale of the property.
CASH AND CASH EQUIVALENTS
The Company considers all highly-liquid investments with original
maturity of three months or less to be cash equivalents.
ADVERTISING
The Company expenses all advertising costs in the year incurred.
Advertising expense was $279,689,000 in 1997, $247,571,000 in 1996
and $240,925,000 in 1995.
INVESTMENTS IN DEBT & EQUITY SECURITIES
The Company adheres to Statement of Financial Accounting Standards
(SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." Its investments in debt securities, which
typically mature in one year or less, are held to maturity and
valued at amortized cost, which approximates fair value. The
aggregate fair values at December 31, 1997 and December 31, 1996
were, respectively, $104,684,000 and $90,323,000 for municipal
securities, and $16,044,000 and $29,007,000 for other debt
securities. The average yield of municipal securities held at
December 31, 1997 and December 31, 1996 is 4.28%
and 4.11%, respectively.
The Company's investments in marketable equity securities are held
for an indefinite period. Application of SFAS No. 115 resulted in
unrealized holding gains of $24,484,000 at December 31, 1997 and
$16,634,000 at December 31, 1996. Unrealized holding gains, net of
the related tax effect, of $15,915,000 and $10,812,000 at December
31, 1997 and 1996, respectively, were included as components of
stockholders' equity.
INVENTORIES
Inventories are valued at cost on a last-in, first-out (LIFO) basis
for U.S. companies and at the lower of cost (principally first-in,
first-out basis) or market for international associated companies.
Inventories totaled $247,392,000 and $233,197,000 at December 31,
1997 and 1996, respectively, including $104,801,000 and
$101,523,000, respectively, valued at cost on a LIFO basis. If
current costs had been used, such inventories would have been
$40,674,000 and $44,268,000 higher than reported at December 31,
1997 and 1996, respectively.
<PAGE>
DEPRECIATION
Depreciation is provided over the estimated useful lives of the
respective assets: buildings and building equipment -- 12 to 50
years; machinery and equipment -- 3 to 20 years. Depreciation is
provided primarily by the straight-line method for international
associated companies and by the accelerated method, with a change
to straight-line in the latter years of useful life, for the U.S.
companies. The amounts were:
<TABLE>
<CAPTION>
1997 1996 1995
In thousands of dollars
<S> <C> <C> <C>
Straight-line $32,485 30,489 25,804
Accelerated $17,954 16,799 17,969
</TABLE>
OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities at December 31, 1997 included
liabilities for approximately $39,400,000 of deferred compensation
and $18,000,000 for postretirement benefit plans. At December 31,
1996, they included liabilities for approximately $26,938,000 of
deferred compensation and $16,200,000 for postretirement benefits.
FOREIGN CURRENCY TRANSLATION
AND EXCHANGE CONTRACTS
The Company has determined that the functional currency for each
associated company except for selected Eastern European entities is
its local currency. As some Eastern European entities operate in
economies which are considered to be highly inflationary, their
functional currency is the U.S. dollar.
Certain foreign associated companies enter into forward exchange
contracts and purchase currency options as nonspeculative hedges
against future purchase commitments with other associated companies
and outside vendors. In addition, the Parent Company enters into
forward exchange contracts and purchases currency options as
non-speculative hedges regarding known future royalty payments
from, and net investments in, associated companies as well as known
foreign currency commitments. Market value gains and losses,
recognized at expiration of the contracts, offset foreign exchange
gains or losses on the related transactions being hedged. At
December 31, 1997, foreign exchange rate contracts for a number of
currencies, primarily British pounds, French francs, German marks,
and U.S. dollars, maturing at various dates through December 31,
1998, aggregated $222,209,000. Open foreign exchange contracts at
December 31, 1996 aggregated $239,645,000. Unrealized gains or
losses on these contracts were not significant as of either
December 31, 1997 or 1996.
ACCRUED EXPENSES
Accrued expenses at December 31, 1997 and 1996 included $29,667,000
and $25,972,000 of payroll expenses, respectively.
COMPREHENSIVE INCOME
AND SEGMENT DISCLOSURE
In 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income," and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." These statements, which are effective for periods
beginning after December 15, 1997, modify or expand previous
disclosure requirements. The Company's statements of earnings and
cash flows will not be impacted by these statements.
EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share". This statement, which is effective for
periods ending on or after December 15, 1997, changed the method
for computing earnings per share. There is no difference between
basic and diluted earnings per share for the years ending
December 31, 1997, 1996 or 1995. SFAS No. 128 did not affect
current or previously reported earnings per share.
COMMON STOCK
The Company's 1988 Management Incentive Plan (MIP) authorized the
granting of up to 5,400,000 shares of the Company's new or reissued
Common Stock to key managers in various forms, including stock
grants and stock appreciation rights. The 1988 MIP terminated on
March 5, 1997 with no further grants permitted. On March 5, 1997,
<PAGE>
ACCOUNTING POLICIES AND NOTES (CONTINUED)
stockholders approved the Company's 1997 MIP. The 1997 MIP
authorizes the granting of up to 5,000,000 shares of the Company's
new or reissued Common Stock.
Both the 1988 MIP and 1997 MIP were designed to provide key
employees the opportunity to participate in the long-term growth
and profitability of the Company through equity-based incentives.
In accordance with either MIP, shares of Wrigley stock or deferral
share units may be awarded under the Long-Term Stock Grant, Stock
Award, and Alternate Investment and Savings Plan programs. The
1997 MIP consolidated all of the Company's executive compensation
programs, including the Executive Incentive Compensation Plan, with
the programs under the 1988 MIP. Deferral share units are also
awarded to non-employee directors. Neither the cost to provide
share and share units nor the number of shares which may be issued
is material.
Each share of Class B Common Stock has ten votes, is restricted as
to transfer or other disposition and is convertible at any time
into one share of Common Stock.
Additional paid-in capital primarily represents the excess of fair
market value of Common Stock issued from treasury on the date the
shares of stock were awarded over the average acquisition cost of
the shares.
Treasury Stock may be acquired for the 1988 and 1997 MIP plans or
under a resolution the Board of Directors adopted at its meeting of
August 18, 1993, authorizing the Company to purchase from time to
time shares of the Company's Common Stock not to exceed
$100,000,000 in aggregate price. On August 19, 1992, the Board of
Directors adopted a resolution retiring the entire balance of
shares of Common Stock held in the corporate treasury at that time
and all subsequent acquisitions to the extent not required for
issuance under the 1988 MIP. On December 22, 1995, 180,000 shares
of Common Stock were retired.
Following is a summary of share activity for Common Stock, Class B
Common Stock and Treasury Stock:
<TABLE>
<CAPTION>
COMMON CLASS B TREASURY
In thousands of shares
- -------------------------------------------------------
<S> <C> <C> <C>
Balance at 12/31/96 92,066 24,155 251
Conversion of Class B
Shares 479 (479) --
Treasury Stock Purchases -- -- 56
Options Exercised and
Stock Awards Granted -- -- (55)
------ ------ ---
Balance at 12/31/97 92,545 23,676 252
====== ====== ===
</TABLE>
INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Components of net deferred tax assets are as follows:
<TABLE>
<CAPTION>
1997 1996
In thousands of dollars
- -------------------------------------------------------
<S> <C> <C>
Accrued Compensation, Pension
and Postretirement Benefits $ 24,506 17,904
Depreciation (13,465) (11,704)
Unrealized Holding Gain (8,569) (5,822)
Factory Closure and Related
Costs 3,709 5,695
All Other--Net 7,461 7,644
-------- -------
Net Deferred Tax Asset $ 13,642 13,717
======== =======
</TABLE>
<PAGE>
Balance sheet classifications of deferred taxes are as follows:
<TABLE>
<CAPTION>
1997 1996
In thousands of dollars
<S> <C> <C>
Deferred Tax Asset--
Current $ 16,421 10,939
Noncurrent 29,038 27,984
Deferred Tax Liability--
Current (943) (816)
Noncurrent (30,874) (24,390)
-------- -------
Net Deferred Tax Asset $ 13,642 13,717
======== =======
</TABLE>
Applicable U.S. income and foreign withholding taxes have not been
provided on approximately $333,000,000 of undistributed earnings of
international associated companies at December 31, 1997. These
earnings are considered to be permanently invested and, under the
tax laws, are not subject to such taxes until distributed as
dividends. If the earnings were not considered permanently
invested, approximately $32,000,000 of deferred income taxes would
have been provided.
Income taxes are based on pre-tax earnings which are distributed
geographically
as follows:
<TABLE>
<CAPTION>
1997 1996 1995
In thousands of dollars
<S> <C> <C> <C>
Domestic $172,391 161,510 172,373
Foreign 221,849 197,602 177,858
-------- ------- -------
$394,240 359,112 350,231
======== ======= =======
</TABLE>
Reconciliation of the provision for income taxes computed at the
U.S. Federal statutory rate of 35% for 1997, 1996, and 1995 to the
reported provision for income taxes is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
In thousands of dollars
<S> <C> <C> <C>
Provision at
Statutory Rate $137,984 125,690 122,581
State Taxes--Net 8,133 8,284 8,963
Foreign Tax Rates (1,178) 34 2,695
Tax Credits
(principally foreign) (16,638) (376) (3,223)
Other--Net (5,687) (4,792) (4,524)
-------- ------- -------
$122,614 128,840 126,492
======== ======= =======
</TABLE>
The components of the provision for income taxes for 1997, 1996,
and 1995 were:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
In thousands of dollars
<S> <C> <C> <C>
1997
FEDERAL $ 28,054 (3,590) 24,464
FOREIGN 84,168 982 85,150
STATE 13,000 -- 13,000
-------- ------ -------
$125,222 (2,608) 122,614
======== ====== =======
1996
Federal $ 47,890 (6,205) 41,685
Foreign 72,702 1,709 74,411
State 12,744 -- 12,744
-------- ------ -------
$133,336 (4,496) 128,840
======== ====== =======
1995
Federal $ 45,770 (1,333) 44,437
Foreign 66,154 2,053 68,207
State 13,848 -- 13,848
-------- ------ -------
$125,772 720 126,492
======== ====== =======
</TABLE>
<PAGE>
ACCOUNTING POLICIES AND NOTES (CONTINUED)
RETIREMENT PLANS
The Company maintains non-contributory defined benefit pension
plans covering substantially all of its employees. Retirement
benefits are a function of the years of service and the level of
compensation, generally for the highest three consecutive salary
years occurring within ten years prior to an employee's retirement
date, depending on the plan. The Company's policy is to fund within
ERISA or other statutory limits to provide benefits earned to date
and expected to be earned in the future.
To the extent that an individual's annual retirement benefit under
the plan exceeds the limitations imposed by the Internal Revenue
Code of 1986, as amended, and the regulations thereunder, such
excess benefits may be paid from the Company's non-qualified,
unfunded, non-contributory supplemental retirement
plan.
The components of consolidated net pension cost are presented
below:
<TABLE>
<CAPTION>
1997 1996 1995
<CAPTION>
DOMESTIC FOREIGN DOMESTIC FOREIGN DOMESTIC FOREIGN
In thousands of dollars
<S> <C> <C> <C> <C> <C> <C>
Service Cost--
Benefits Earned During the Year $ 6,958 3,709 6,878 3,298 5,754 3,133
Interest Cost
on Projected Benefit Obligation 16,120 4,556 14,769 4,145 14,202 3,809
Actual Return on Plan Assets (35,984) (10,470) (26,978) (4,824) (31,984) (4,258)
Net Amortization and Deferral 16,147 4,509 8,325 (501) 16,033 (301)
Other Pension Plans 606 3,888 551 4,223 433 3,846
-------- ------- ------- ----- ------- -----
Net Pension Cost $ 3,847 6,192 3,545 6,341 4,438 6,229
======== ======= ======= ===== ======= =====
</TABLE>
Assumptions used to determine net pension cost and the actuarial
present value of the projected benefit obligation were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1995
<CAPTION>
DOMESTIC FOREIGN DOMESTIC FOREIGN DOMESTIC FOREIGN
<S> <C> <C> <C> <C> <C> <C> <C>
Discount Rates 7.25% 6.8-8.0% 7.5% 7.5-9.0% 7.25% 7.5-9.0%
Long-term Rates of Return on Assets 8.5% 4.0-8.5% 8.5% 7.0-9.0% 8.5% 7.0-9.0%
Rates of Increase in Compensation
Levels 4.75% 0.0-5.0% 4.75% 5.0-6.0% 4.75% 5.0-6.0%
</TABLE>
<PAGE>
Domestic plan assets consist primarily of high quality marketable
fixed income and equity securities. Foreign plan assets consist
primarily of contracts with insurance companies. The defined
benefit plans' funded status and the pension liability recorded in
the consolidated balance sheet were as follows:
<TABLE>
<CAPTION>
1997 1996
DOMESTIC FOREIGN DOMESTIC FOREIGN
In thousands of dollars
<S> <C> <C> <C> <C>
Plan Assets at Fair Value $266,517 76,432 240,937 61,685
Actuarial Present Value of Benefit Obligation:
Vested benefits 183,807 64,260 163,489 48,109
Nonvested benefits 6,677 894 5,897 669
-------- ------- ------- ------
Accumulated Benefit Obligation 190,484 65,154 169,386 48,778
Projected future salary increases 47,855 6,274 41,015 7,450
-------- ------- ------- ------
Projected benefit obligation 238,339 71,428 210,401 56,228
-------- ------- ------- ------
Plan Assets in Excess of Projected Benefit Obligation 28,178 5,004 30,536 5,457
Less Items Not Yet Recognized in Earnings:
Unrecognized prior service cost (9,160) (3,363) (157) (453)
Unrecognized net gain 41,482 3,228 30,624 968
Unrecognized transition asset 1,964 2,850 2,282 3,579
-------- ------- ------- ------
Accrued Pension Liability (Asset) $ 6,108 (2,289) 2,213 (1,363)
======== ======= ======= ======
</TABLE>
In addition to the defined benefit plans described above, the
Company also sponsors defined contribution plans within the U.S.
and at selected foreign associated companies. The plans cover full
time employees and provide for contributions of between 3% and 5%
of salary. The Company's expense for the defined contribution plans
totaled $4,719,000, $4,700,000, and $4,850,000 in 1997, 1996, and
1995, respectively.
<PAGE>
ACCOUNTING POLICIES AND NOTES (CONTINUED)
POSTRETIREMENT BENEFITS
The Company maintains certain plans which provide limited
postretirement healthcare benefits on a contributory basis and life
insurance benefits in the U.S. and at certain international
associated companies. The cost of postretirement benefits is
provided for during the employee's active working career.
A reconciliation of the plans' funded status to the amounts
reported in the financial statements follows:
<TABLE>
<CAPTION>
1997 1996
In thousands of dollars
<S> <C> <C>
Accumulated Postretirement Benefit
Obligation:
Retirees $ 8,700 8,000
Active Employees 19,200 17,400
------- ------
Total 27,900 25,400
Plan Assets 8,200 8,000
------- ------
Accumulated Postretirement
Benefit Obligation in Excess of
Plan Assets 19,700 17,400
Unrecognized Actuarial Gain (Loss) (1,700) (1,200)
------- ------
Accrued Postretirement Liability $18,000 16,200
------- ------
</TABLE>
The components of the net periodic postretirement benefit cost are
as follows:
<TABLE>
<CAPTION>
1997 1996 1995
In thousands of dollars
- --------------------------------------------------------
<S> <C> <C> <C>
Service Cost $1,000 1,000 800
Interest Cost 2,000 1,800 1,600
Return on Plan Assets (300) (200) (300)
------ ----- -----
Net Periodic Expense $2,700 2,600 2,100
====== ===== =====
</TABLE>
Actuarial assumptions used to measure the postretirement benefit
cost are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Discount Rate 7.25% 7.50% 7.25%
Healthcare Trend to
2002 (in 1997) 8.125-5.0% 8.75-5.0% 9.375-5.0%
Return on Plan Assets 5.5% 5.5% 5.5%
</TABLE>
Effects of increasing the healthcare trend rates by one percentage
point in each year are summarized below:
<TABLE>
<CAPTION>
1997 1996 1995
In thousands of dollars
- --------------------------------------------------------
<S> <C> <C> <C>
Increase Accumulated
Postretirement Benefit
Obligation By $2,500 2,400 2,300
Increase Postretirement
Benefit Cost By $ 400 350 300
</TABLE>
<PAGE>
OPERATIONS BY GEOGRAPHIC AREAS
Information concerning the Company's operations in different
geographic areas at December 31, 1997, 1996, and 1995, and for the
years then ended is presented below.
Operating profit is revenue less all costs and expenses other than
general corporate expenses, interest expense and income taxes.
Operating profit for North America includes costs of $3,300,000 and
$19,436,000 for 1997 and 1996, respectively, related to the closure
of the Santa Cruz factory.
Identifiable assets are those involved in the operations in each
geographic area and include all of the assets of associated
companies. Marketable equity securities held by the Parent Company
are not distributed to geographic areas, and the related dividend
income is included in the adjustments and eliminations line.
<TABLE>
<CAPTION>
1997 1996 1995
In thousands of dollars
<S> <C> <C> <C> <C>
REVENUES:
North America (principally U.S.) $ 929,015 909,540 922,185
Europe 828,415 769,671 703,349
Asia, Pacific & Other 260,848 218,043 189,619
Adjustments and Eliminations (64,104) (46,653) (45,411)
---------- --------- ---------
Total Revenues $1,954,174 1,850,601 1,769,742
========== ========= =========
OPERATING PROFIT:
North America (principally U.S.) $ 177,025 166,035 177,563
Europe 176,961 153,513 141,737
Asia, Pacific & Other 41,962 40,866 33,975
Adjustments and Eliminations 394 723 (300)
---------- --------- ---------
396,342 361,137 352,975
Interest and General Corporate Expenses (2,102) (2,025) (2,744)
---------- --------- ---------
Earnings Before Income Taxes $ 394,240 359,112 350,231
========== ========= =========
IDENTIFIABLE ASSETS USED IN OPERATIONS:
North America (principally U.S.) $ 706,309 665,172 598,214
Europe 446,523 409,154 353,625
Asia, Pacific & Other 165,400 144,933 126,931
Adjustments and Eliminations (1,481) (4,241) 622
---------- --------- ---------
1,316,751 1,215,018 1,079,392
Corporate Assets 26,375 18,525 19,827
---------- --------- ---------
Total Assets $1,343,126 1,233,543 1,099,219
========== ========= =========
</TABLE>
<PAGE>
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
Management of the Wm. Wrigley Jr. Company is responsible for the
preparation and integrity of the financial statements and related
information presented in this Annual Report. This responsibility is
carried out through a system of internal controls to ensure that
assets are safeguarded, transactions are properly authorized and
financial records are accurate.
These controls include a comprehensive internal audit program,
written financial policies and procedures, appropriate division of
responsibility, and careful selection and training of personnel.
Written policies include a Code of Business Conduct prescribing
that all employees maintain the highest ethical and business
standards.
Ernst & Young LLP have conducted an independent audit of the
financial statements, and their report appears on the facing page.
The Board of Directors exercises its control responsibility through
an Audit Committee composed entirely of outside directors. The
Audit Committee meets regularly to review accounting and control
matters. Both Ernst & Young LLP and the internal auditors have
direct access to the Audit Committee and periodically meet
privately with them.
WM. WRIGLEY JR. COMPANY
Chicago, Illinois
January 28, 1998
<PAGE>
REPORT OF INDEPENDENT AUDITORS
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF THE WM. WRIGLEY JR.
COMPANY
We have audited the accompanying consolidated balance sheet of the
Wm. Wrigley Jr. Company and associated companies at December 31,
1997 and 1996, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1997. These financial statements are
the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of the Wm. Wrigley Jr. Company and associated companies at
December 31, 1997 and 1996, and the consolidated results of their
operations and cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
January 28, 1998
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
NET SALES
Consolidated net sales for 1997 increased $101,034,000 or 6% from
1996. Net sales for 1997 were favorably impacted by higher unit
volume and selected selling price increases in international
markets, mainly in Europe, and the full year impact of 1996 price
increases in North America, primarily the U.S and Canada. Higher
shipments increased net sales 8%, while selected selling price
changes increased net sales about 3%. Translation of foreign
currency sales to a stronger U.S. dollar reduced reported net sales
by 5%. North American 1997 net sales were essentially unchanged
from 1996, as the full year impact of 1996 price increases in the
U.S. and Canada offset lower shipments. In total, North American
shipments decreased by 2% from the previous year's level mainly due
to lower unit shipments at Amurol Confections and lower U.S.
shipments of Wrigley brands.
International 1997 net sales increased by 20%, excluding the
effects of foreign currency translation. Unit volume increased 17%
in 1997, with customer shipments to emerging markets such as China
and Eastern Europe accounting for most of the volume gain.
Consolidated net sales for 1996 were up $81,056,000 or 5% from
1995. Net sales for 1996 were favorably affected by higher
international unit volume and selected selling price increases
mainly in Europe and North America. Higher shipments increased net
sales by 5%, while selected selling price changes increased net
sales about 2%. Translation of foreign currency sales to a stronger
U.S. dollar reduced reported net sales by 2%. North American 1996
net sales were down more than 1% from 1995. The 1996 price
increases in the U.S. and Canada tended to offset volume declines.
In total, North American shipments decreased by 4% from the
previous year's level. At Amurol Confections, lower unit shipments
reduced North American volume about 2%. Decreased sales to Mexico
and lower U.S. shipments of Wrigley brands reduced overall North
American volume about 2%.
International 1996 net sales increased by 15%, excluding the
effects of foreign currency translation. Unit volume increased 10%,
with customer shipments to emerging markets such as China and
Eastern Europe accounting for most of the volume gain.
INVESTMENT AND OTHER INCOME
In 1997, consolidated investment and other income increased
$2,539,000 or 17% from 1996, mainly due to higher average
investment balances worldwide.
In 1996, consolidated investment and other income decreased
$197,000 or 1% from 1995, mainly due to lower average yields.
COST OF SALES AND GROSS PROFIT
In April 1996, as part of a plan to realign U.S. production
capacity, the Company announced its intent 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 $17,000,000 for related closure costs covering
employee severance and costs to maintain and sell the property and
incurred $2,436,000 for employee relocation, training, and other
transition costs related to this plan for a total charge of
$19,436,000.
In 1997, the Company incurred $3,300,000 for employee relocation,
training and other transition costs. With the realignment of
production and related efficiencies, the Company estimates that its
U.S. operating costs were $7,700,000 lower than would otherwise
have been the case, resulting in a 1997 net savings of
approximately $4,400,000.
Consolidated cost of sales for 1997 increased $32,883,000 or 4%
from 1996. Excluding the effect of foreign currency translation,
1997 cost of sales increased by about 9% from 1996 mainly due to
increased international volume. Excluding the Santa Cruz factory
closure costs, consolidated gross profit in 1997 was
$1,089,655,000, an increase of $68,151,000 or nearly 7% from 1996.
The consolidated gross profit margin on net sales was 56.3% for
1997, up nearly 1% from the 1996 gross margin of 55.6%, reflecting
lower international product costs and savings from the above
mentioned realignment.
In 1996, consolidated cost of sales increased $36,464,000 or nearly
5% from 1995 mainly due to international volume gains and higher
product costs. Excluding the effect of foreign currency
translation, the cost of sales increase was about 8% from 1995.
Excluding the Santa Cruz factory closure costs, consolidated gross
profit in 1996 was $1,021,504,000, an increase of $44,592,000 or
nearly 5% from 1995. The consolidated gross profit margin on net
sales was 55.6% for 1996, compared to a gross margin of 55.7% for
1995.
PAGE>
SELLING, DISTRIBUTION, AND GENERAL
ADMINISTRATION EXPENSES
Consolidated 1997 selling, distribution, and general administration
expenses increased $51,837,000 or 8% from 1996. Excluding the
effects of foreign currency translation, the increase was about 13%
in 1997, mainly due to higher international selling and marketing
expenditures.
In 1996, consolidated selling, distribution, and general
administration expenses increased $16,936,000 or 3% from 1995.
Excluding the effects of foreign currency translation, the increase
was about 5% in 1996, mainly due to higher international selling
and marketing activities.
As a percentage of consolidated net sales, the expenses were:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Selling and Marketing 26.5% 25.5% 26.0%
Distribution and General
Administration 10.1% 10.3% 10.4%
----- ----- -----
36.6% 35.8% 36.4%
----- ----- -----
</TABLE>
INCOME TAXES
Income taxes in 1997 decreased $6,226,000 or 5% from 1996. The
effective consolidated income tax rate was 31.1% in 1997 and 35.9%
in 1996. The lower effective tax rate in 1997 is mainly from tax
credits.
Income taxes in 1996 increased $2,348,000 or 2% from 1995. The
effective consolidated income tax rate was 35.9% in 1996 and 36.1%
in 1995.
NET EARNINGS
Consolidated net earnings in 1997, including costs related to the
Santa Cruz factory closure, increased $41,354,000 and $0.35 per
share or 18% from 1996. Excluding factory closure costs, 1997 net
earnings increased $30,509,000 and $.26 per share or 12%.
Consolidated net earnings in 1996, including costs related to the
Santa Cruz factory closure, increased $6,533,000 and $.06 per share
or 3% from 1995. Excluding factory closure costs, 1996 net
earnings increased $19,523,000 and $.17 per share or 9%.
LIQUIDITY AND CAPITAL RESOURCES
ADDITIONS TO PROPERTY, PLANT, AND EQUIPMENT
Capital expenditures for 1997 were $126,509,000, an increase of
$24,532,000 from 1996 capital expenditures of $101,977,000. The
1996 capital expenditures were essentially even with 1995 capital
expenditures. All of the capital expenditures for 1997 and 1996
were funded from the Company's cash flow from operations.
Additions to property, plant, and equipment in 1998 are expected to
be above 1997 capital expenditures and are also planned to be
funded from the Company's cash flow from operations.
CURRENT RATIO
The Company has a current ratio (current assets divided by current
liabilities) in excess of 3 to 1 at December 31, 1997 and 1996.
OTHER MATTERS
SALE OF THE SANTA CRUZ FACTORY
On January 22, 1998, the Company sold its real estate holding in
Santa Cruz, California. In the first quarter of 1998, the Company
expects to record a pretax gain of approximately $10,000,000 and
net earnings of approximately $6,500,000 or $.06 per share from the
sale of the property.
YEAR 2000
The Company recognizes the potential business impacts related to
the Year 2000 technology issue. The issue is one where computer
systems may recognize the designation "00" as 1900 when it means
2000, resulting in processing failures or errors. The Company began
to address this issue in 1995, and is currently implementing
appropriate measures to ensure its business operations are not
impeded by the millennium change. The Company has made and will
continue to make investments in its computer systems and business
processes to ensure they are year 2000 compliant. In 1997, the
Company incurred approximately $5,000,000 related to this issue and
expects to incur approximately $10,000,000 in 1998. Costs incurred
after 1998 are not expected to be significant.
MARKET RISK
Inherent in the Company's operations are certain risks related to
foreign currency, interest rates, and the equity markets. The
Company identifies these risks and mitigates their financial impact
through its corporate policies and hedging activities. The Company
has determined that movements in market values of financial
instruments used to mitigate identified risks are not expected to
have a material impact on future earnings, cash flows, or reported
fair values.
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1997 1996 1995 1994
<S> <C> <C> <C> <C>
OPERATING DATA
Net Sales $1,937,021 1,835,987 1,754,931 1,596,551
Cost of Sales 847,366 814,483 778,019 697,442
Income Taxes 122,614 128,840 126,492 122,746
Earnings before factory closure in
1997 and 1996, nonrecurring
gain on sale of Singapore
property in 1994, and
cumulative effect of accounting
changes in 1992 273,771 243,262 223,739 205,767
--Per Share of Common Stock 2.36 2.10 1.93 1.77
(basic and diluted)
Net Earnings 271,626 230,272 223,739 230,533
--Per Share of Common Stock 2.34 1.99 1.93 1.98
(basic and diluted)
Dividends Paid 135,680 118,308 111,401 104,694
--Per Share of Common Stock 1.17 1.02 .96 .90
--As a Percent of Net Earnings 50% 51% 50% 45%
Dividends Declared
--Per Share of Common Stock 1.19 1.02 .99 .94
Average Shares Outstanding 115,964 115,983 116,066 116,358
- ---------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA
Net Property, Plant and Equipment $ 430,474 388,149 347,491 289,420
Total Assets 1,343,126 1,233,543 1,099,219 978,834
Working Capital 571,857 511,272 458,683 413,414
Stockholders' Equity 985,379 897,431 796,852 688,470
Return on Average Equity 28.9% 27.2% 30.1% 36.5%
Stockholders at Close of Year 36,587 34,951 28,959 24,078
Employees at Close of Year 8,200 7,800 7,300 7,000
Market Price of Stock--High 82.063 62.875 54.000 53.875
--Low 54.563 48.375 42.875 38.125
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989 1988 1987
In thousands of dollars and shares except for per share amounts
<S> <C> <C> <C> <C> <C> <C>
1,428,504 1,286,921 1,148,875 1,110,639 992,853 891,392 781,059
617,156 572,468 507,795 508,957 451,773 392,460 338,081
103,944 83,730 79,362 70,897 64,277 53,491 52,863
174,891 148,573 128,652 117,362 106,149 87,236 70,145
1.50 1.27 1.09 1.00 .90 .73 .56
174,891 141,295 128,652 117,362 106,149 87,236 70,145
1.50 1.21 1.09 1.00 .90 .73 .56
87,344 72,511 64,609 58,060 53,506 43,591 35,080
.75 .62 .55 .49 .45 .36 .28
50% 51% 50% 49% 50% 50% 50%
.75 .63 .55 .51 .47 .37 .29
116,511 117,055 117,517 117,743 118,035 120,308 125,006
- ------------------------------------------------------------------------------------
239,868 222,137 201,386 188,959 171,951 155,260 151,425
815,324 711,372 625,074 563,665 498,624 440,400 407,350
343,132 299,149 276,047 229,735 186,588 165,430 149,154
575,182 498,935 463,399 401,386 342,994 308,538 288,965
32.6% 29.4% 29.8% 31.5% 32.6% 29.2% 24.1%
18,567 14,546 11,086 10,497 10,218 9,440 9,351
6,700 6,400 6,250 5,850 5,750 5,500 5,500
46.125 39.875 27.000 19.750 17.917 13.750 11.833
29.500 22.125 16.375 14.583 11.833 10.667 6.500
</TABLE>
<PAGE>
QUARTERLY DATA
CONSOLIDATED RESULTS
<TABLE>
<CAPTION>
NET SALES COST OF SALES NET EARNINGS
AMOUNT PER SHARE
In thousands of dollars except for per share amounts
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
FIRST QUARTER $ 447,607 196,066 62,849 .54
SECOND QUARTER 521,272 225,348 76,647 .66
THIRD QUARTER 481,938 208,931 69,526 .60
FOURTH QUARTER 486,204 217,021 62,604 .54
---------- --------- ------- -----
TOTAL $1,937,021 847,366 271,626 2.34
========== ========= ======= =====
1996
First Quarter $ 426,674 187,864 57,613 .50
Second Quarter(1) 483,625 214,217 57,043 .49
Third Quarter 462,425 203,782 61,207 .53
Fourth Quarter 463,263 208,620 54,409 .47
---------- --------- ------- ----
Total $1,835,987 814,483 230,272 1.99
========== ========= ======= ====
</TABLE>
(1) Net earnings and earnings per share for the 2nd quarter 1996
included charges of $11,200,000 and $.10 respectively from the
closure of the Santa Cruz factory.
MARKET PRICES
Although there is no established public trading market for the
Class B Common Stock, these shares are at all times convertible
into shares of Common Stock on a one-for-one basis and are entitled
to identical dividend payments.
The Common Stock of the Company is listed and traded on the New
York Stock Exchange. The table below presents the high and low
sales prices for the two most recent years.
<TABLE>
<CAPTION>
1997 1996
HIGH LOW HIGH LOW
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter $62 1/2 54 9/16 62 7/8 52 1/4
Second Quarter 71 3/8 55 3/4 59 5/8 49
Third Quarter 77 5/16 67 1/8 61 3/8 48 3/8
Fourth Quarter 82 1/16 64 7/8 62 55 1/8
</TABLE>
DIVIDENDS
The following table indicates the quarterly breakdown of aggregate
dividends declared per share of Common Stock and Class B Common
Stock for the two most recent years.
<TABLE>
<CAPTION>
1997 1996
REGULAR EXTRA TOTAL REGULAR EXTRA TOTAL
<S> <C> <C> <C> <C> <C> <C>
First Quarter $.19 .19 .17 .17
Second Quarter .19 .19 .17 .17
Third Quarter .19 .19 .17 .17
Fourth Quarter .19 .43 .62 .17 .34 .51
----- --- ----- --- --- ----
Total $.76 .43 1.19 .68 .34 1.02
===== === ===== === === ====
</TABLE>
<PAGE>
ELECTED OFFICERS -- 1997
William Wrigley
President & Chief Executive Officer
Douglas S. Barrie
Group Vice President
Ronald O. Cox
Group Vice President
John F. Bard
Senior Vice President
Martin J. Geraghty
Senior Vice President -- Manufacturing
William Wrigley, Jr.
Vice President
Donald E. Balster
Vice President -- Production
Gary R. Bebee
Vice President -- Customer Marketing
David E. Boxell
Vice President -- Personnel
J. E. Dy-Liacco
Vice President -- International
(retired December 31, 1997)
Susan S. Fox
Vice President -- Consumer Marketing
Philip G. Hamilton
Vice President -- International
Shaun Kim
Vice President -- Engineering
Dennis R. Mally
Vice President -- Information Services
Jon Orving
Vice President -- International
Dushan Petrovich
Vice President -- Controller
Stefan Pfander
Vice President -- International and
Managing Director -- Europe
Wm. M. Piet
Vice President -- Corporate Affairs,
Secretary and Assistant to the President
John A. Schafer
Vice President -- Purchasing
Philip G. Schnell
Vice President -- Research & Development
Christafor E. Sundstrom
Vice President -- Corporate Development
Philip C. Johnson
Senior Director -- Benefits and Compensation
Alan J. Schneider
Treasurer
John H. Sutton
General Manager -- Converting Division
<PAGE>
BOARD OF DIRECTORS -- 1997
LOGO
- -------------------------------------------------
WILLIAM WRIGLEY
Director of the Company since 1960
Joined the Wm. Wrigley Jr. Company in 1956
President & Chief Executive Officer since 1961
Director, Texaco, Inc., since 1974
Director, American Home Products Corp., since 1981
Director, Grocery Manufacturers of America, since 1983
COMMITTEES OF THE
BOARD OF DIRECTORS
AUDIT
CHARLES F. ALLISON III chairman
THOMAS A. KNOWLTON
PENNY PRITZKER
STEVEN B. SAMPLE
RICHARD K. SMUCKER
COMPENSATION
ROBERT P. BILLINGSLEY chairman
CHARLES F. ALLISON III
LEE PHILLIP BELL
THOMAS A. KNOWLTON
NOMINATING
RICHARD K. SMUCKER chairman
LEE PHILLIP BELL
ROBERT P. BILLINGSLEY
PENNY PRITZKER
LOGO
CHARLES F. ALLISON III
Director of the Company since 1980
Joined Booz-Allen & Hamilton in 1958
Partner of Counsel since 1996
Senior Vice President (1977-96)
LOGO
DOUGLAS S. BARRIE
Director of the Company since 1996
Joined the Wm. Wrigley Jr. Company in 1983
Group Vice President since 1984
LOGO
LEE PHILLIP BELL
Director of the Company since 1981
Director, Bell Phillip TV Productions, since 1980
Co-Creator, The Bold and the Beautiful and
The Young and the Restless
<PAGE>
LOGO
ROBERT P. BILLINGSLEY
Director of the Company since 1977
Executive Vice President, WLD Enterprises (1987-94)
Vice President, Northern Trust Bank of Florida (1981-86)
Vice President, Northern Trust Company (1966-81)
(retiring March 3, 1998)
LOGO
THOMAS A. KNOWLTON
Director of the Company since 1996
Joined the Kellogg Company in 1980
Executive Vice President since 1992
President, Kellogg North America, since 1994
President, Kellogg Europe (1992-94)
LOGO
PENNY PRITZKER
Director of the Company since 1994
President, Classic Residence by Hyatt, since 1987
Partner, Pritzker & Pritzker, since 1985
President, Penguin Group L.P., since 1989
Director, Coast-to-Coast Financial Corporation, since 1990
LOGO
STEVEN B. SAMPLE
Director of the Company since 1997
President, University of Southern California, since 1991
President, State University of New York, Buffalo (1982-91)
Director, Presley Companies, since 1991
Director, Unova, Inc., since 1997
LOGO
ALEX SHUMATE
Director of the Company since 1998
Joined law firm of Squire, Sanders & Dempsey in 1988
Managing Partner of the Columbus Office since 1991
Chief Counsel and Deputy Chief of Staff
to Governor of Ohio (1985-88)
Director, Banc One Corporation, since 1993
Director, Intimate Brands, Inc., since 1996
(elected January 28, 1998)
LOGO
RICHARD K. SMUCKER
Director of the Company since 1988
Joined The J. M. Smucker Company in 1972
President since 1987 and Director since 1975
Director, Sherwin-Williams Company, since 1991
Director, International Multifoods, Inc., since 1997
LOGO
WILLIAM WRIGLEY, JR.
Director of the Company since 1988
Joined the Wm. Wrigley Jr. Company in 1985
Vice President since 1991
Assistant to the President (1985-92)
Director, The J. M. Smucker Company, since 1991
<PAGE>
STOCKHOLDER INFORMATION
STOCKHOLDER INQUIRIES
Any inquiries about your Wrigley stockholdings should be directed
to:
Stockholder Relations
Wm. Wrigley Jr. Company
410 North Michigan Avenue
Chicago, Illinois 60611
1-800-824-9681
For additional information about the Company, please visit our
Internet home
page at: http://www.wrigley.com
- --------------------------------------------------------
CAPITAL STOCK
Common Stock of the Wm. Wrigley Jr. Company is traded on the New
York Stock Exchange. The Company's symbol is WWY.
Class B Common Stock, issued to stockholders of record on April 4,
1986, has restricted transferability and is not traded on the New
York Stock Exchange. It is at all times convertible, on a
share-for-share basis, into Common Stock and once converted is
freely transferable and publicly traded. Class B Common Stock also
has the same rights as Common Stock with respect to cash dividends
and treatment upon liquidation.
DIVIDENDS
Regular quarterly dividends are paid in advance on the first
business day of February, May, August, and November with the record
date for each payment falling on or about the 15th of the prior
month. The Company also has a long history of paying "extra"
dividends. In recent years, a single "extra" dividend has been paid
in December.
DIRECT DIVIDEND DEPOSIT SERVICE
The Direct Dividend Deposit Service allows stockholders to receive
cash dividends through electronic deposits into their checking or
savings account.
DIVIDEND REINVESTMENT PLAN
The Dividend Reinvestment Plan (DRP) is open to all stockholders of
record. The Plan is administered by FIRST CHICAGO TRUST COMPANY OF
NEW YORK and uses cash dividends on both Common Stock and Class B
Common Stock, along with voluntary cash contributions, to purchase
additional shares of Common Stock. Cash contributions can be made
monthly for a minimum of $50 and a maximum of $5,000.
All shares purchased through the Plan are retained in a DRP
account, so there are no certificates that could be lost,
misplaced, or stolen. Additionally, once a DRP account is
established, a participant can deposit any Wrigley stock
certificates held outside the Plan into the account for
safekeeping. The Company pays all brokerage and administrative
costs associated with the DRP.
Nearly 27,000 or 73% of the Company's stockholders of record
currently participate in the DRP. A brochure fully describing the
Plan and its enrollment procedure is available upon request.
STOCK CERTIFICATES
For security and tax purposes, stockholders should keep a record of
all of their stock certificates. The record should be kept in a
separate place from the certificates themselves and should contain
the following information for each certificate: exact registration,
number of shares, certificate number, date of certificate, and the
original cost of the shares.
If a stock certificate is lost or stolen, notification should be
sent to the Company immediately. The transfer agent has two
requirements to be met before a new certificate will be issued --
a completed affidavit and payment for an indemnity bond based on
the current market value of the lost or stolen stock. The
replacement of a certificate will take about a week to ten days.
Even if a certificate is lost or stolen, the stockholder will
continue to receive dividends on those shares while the new
certificate is being issued.
<PAGE>
A transfer of stock is required when the shares are sold or when
there is any change in name or ownership of the stock. To be
accepted for transfer, the stockholder's signature on the
certificate or stock power must receive a Medallion Signature
Guarantee by a qualified financial institution that participates in
the Medallion Guarantee program. A verification by a notary public
is not sufficient. Anytime a certificate is mailed, it should be
sent registered mail, return receipt requested.
CONSOLIDATION OF MULTIPLE ACCOUNTS
To avoid receiving duplicate mailings, stockholders with more than
one Wrigley account may want to consolidate their shares. For more
information, please contact the Company.
COMPANY PUBLICATIONS
The Company's 1997 annual report to the Securities and Exchange
Commission on Form 10-K is expected to be available on or about
April 3, 1998.
Other publications that are currently available include:
The Wrigley Way: Continuing our Legacy of
Social Responsibility
The Story of Chewing Gum and the
Wm. Wrigley Jr. Company
A Historical Look at the Wrigley Building
Requests for these publications should be addressed to Corporate
Communications at the main office of the Company. They are also
available for review at our Internet home page
(http://www.wrigley.com).
TRANSFER AGENT AND REGISTRAR
The First Chicago Trust Company of New York
P. O. Box 2500
Jersey City, New Jersey 07303-2500
1-800-446-2617
<PAGE>
CORPORATE FACILITIES AND PRINCIPAL ASSOCIATED COMPANIES -- 1997
CORPORATE FACILITIES PRINCIPAL ASSOCIATED COMPANIES
HEADQUARTERS
Wrigley Building
410 North Michigan Avenue
Chicago, Illinois 60611
PRODUCTION FACILITIES
Chicago, Illinois
Gainesville, Georgia
DOMESTIC
Amurol Confections Company*
Yorkville, Illinois 60560
Four-Ten Corporation
Chicago, Illinois 60611
L. A. Dreyfus Company*
Edison, New Jersey 08820
Northwestern Flavors, Inc.*
West Chicago, Illinois 60185
INTERNATIONAL
The Wrigley Company Pty. Limited*
Sydney, Australia
Wrigley Austria Ges.m.b.H.*
Salzburg, Austria
Wrigley Bulgaria EooD
Sofia, Bulgaria
Wrigley Canada Inc.*
Don Mills, Ontario, Canada
Wrigley Chewing Gum Company Ltd.*
Guangzhou, Guangdong,
People's Republic of China
Wrigley s.r.o.
Prague, Czech Republic
The Wrigley Company Limited*
Plymouth, England, U.K.
Oy Wrigley Scandinavia Ab
Turku, Finland
Wrigley France S.N.C.*
Biesheim, France
Wrigley G.m.b.H.
Munich, Germany
Wrigley N.V.
Amsterdam, Holland
The Wrigley Company (H.K.) Limited
Hong Kong
Wrigley Hungaria, Kft.
Budapest, Hungary
Wrigley India Private Limited*
Bangalore, Karnataka, India
Wrigley Israel Ltd.
Herzeliya-Pituach, Israel
Wrigley & Company, Ltd., Japan
Tokyo, Japan
The Wrigley Company (East Africa)
Limited*
Nairobi, Kenya
The Wrigley Company (Malaysia)
Sdn. Bhd.
Kuala Lumpur, Malaysia
The Wrigley Company (N.Z.) Limited
Auckland, New Zealand
Wrigley Scandinavia AS
Oslo, Norway
The Wrigley Company (P.N.G.)
Pty. Ltd.
Port Moresby, Papua, New Guinea
Wrigley Philippines, Inc.*
Pasig, Metro Manila, Philippines
Wrigley Poland Sp zo.o.*
Poznan, Poland
Wrigley Romania Produse
Zaharoase SRL
Bucharest, Romania
Wrigley T.O.O.
Moscow, Russia
St. Petersburg, Russia (branch)**
Wrigley Slovakia, s.r.o.
Banska Bystrica, Slovakia
Wrigley d.o.o.
Ljubljana, Slovenia
Wrigley Co., S.A.
Santa Cruz de Tenerife
Canary Islands, Spain
Wrigley Scandinavia AB
Stockholm, Sweden
Wrigley Taiwan, Limited*
Taipei, Taiwan, R.O.C.
* Denotes production facility.
** Under construction.
<PAGE>
<TABLE>
Parents and Subsidiaries of Registrant
<S> <C>
State or Country
Name of Company of Corporation
Wm. Wrigley Jr. Company.............................. Delaware
Companies included in consolidation -- all 100%
owned by Parent Company:
Northwestern Flavors, Inc. .......................... Illinois
L.A. Dreyfus Company ................................ Delaware
Four-Ten Corporation ................................ Illinois
Amurol Confections Company .......................... Illinois
Wrigley Enterprises, Inc. ........................... Delaware
The Wrigley Company Pty. Limited .................... Australia
Wrigley Austria Ges.m.b.H. .......................... Austria
Wrigley Bulgaria EOOD ............................... Bulgaria
Wrigley Canada Inc. ................................. Canada
Wrigley (Cayman) Ltd. ............................... Cayman Islands
Wrigley Chewing Gum Co. Ltd. ........................ People's Republic of China
Wrigley Taiwan, Limited ............................. Republic of China
Wrigley s.r.o. ...................................... Czech Republic
The Wrigley Company Limited ......................... England
Wrigley France SNC .................................. France
Wrigley GmbH ........................................ Germany
Wrigley N.V. ........................................ Holland
The Wrigley Company (H.K.) Limited .................. Hong Kong
Wrigley Hungaria, Kbt ............................... Hungary
Wrigley India Private Limited ....................... India
Wrigley Israel Ltd. ................................. Israel
Wrigley & Company Ltd., Japan ....................... Japan
The Wrigley Company (E.A.) Ltd. ..................... Kenya
The Wrigley Company (Malaysia) Limited .............. Malaysia
The Wrigley Company (N.Z.) Limited .................. New Zealand
Wrigley Philippines, Inc. ........................... Philippines
Wrigley Poland Sp. zo.o. ............................ Poland
Wrigley Romania Produse Zaharoase SRL ............... Romania
Wrigley T.O.O. ...................................... Russia
Wrigley Slovakia, s.r.o. ............................ Slovakia
Wrigley d.o.o. ...................................... Slovenia
Wrigley Co., S.A. ................................... Spain
Companies included in consolidation which are owned
by wholly-owned associated companies of the Parent
Company:
100% owned by The Wrigley Company Limited, England-
Wrigley Scandinavia AB.......................... Sweden
100% owned by Wrigley Scandinavia, AB Sweden-
OY Wrigley Scandinavia Ab....................... Finland
Wrigley Scandinavia AS.......................... Norway
100% owned by The Wrigley Company Pty.
Limited, Australia-
The Wrigley Company (P.N.G.) Pty. Ltd........... Papua, New Guinea
</TABLE>
NOTE: The list above excludes 100% owned subsidiaries which
are primarily inactive and taken singly, or as a group, do not
constitute significant subsidiaries.
William Wrigley, President, Chief Executive Officer, a
director and beneficial owner of more than 5% of both classes of
the outstanding shares of the Company, may be deemed to be a
"Parent" of the Wm. Wrigley Jr. Company under the rules and
regulations promulgated by the Securities and Exchange Commission.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director and/or executive officer of WM. WRIGLEY JR. COMPANY, a
Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints William M. Piet, Howard Malovany and
Christopher Perille, and either of them (with full power to act
without the other), as the undersigned's true and lawful attorneys-
in-fact and agents, with full power and authority to act in any and
all capacities for and in the name, place and stead of the
undersigned in connection with the filing of: (i) any and all
registration statements and all amendments and post-effective
amendments thereto (collectively, "Registration Statements") under
the Securities Act of 1933, as amended, with the Securities and
Exchange Commission, and any and all registrations, qualifications
or notifications under the applicable securities laws of any and
all states and other jurisdictions, with respect to the securities
of the Company of whatever class, including without limitation
thereon the Company's Common Stock and Class B Common Stock,
however offered sold, issued, distributed, placed or resold by the
Company, by any of its subsidiary companies, or by any other person
or entity, that may be required to effect: (a) any such filing, (b)
any primary or secondary offering, sale, distribution, exchange, or
conversion of the Company's securities, (c) any acquisition,
merger, reorganization or consolidation involving the issuance of
the Company's securities, (d) any stock option, restricted stock
grant, incentive, investment, thrift, profit sharing, or other
employee benefit plan relating to the Company's securities, or (e)
any dividend reinvestment or stock purchase plan relating to the
Company's securities; (ii) the Company's Annual Report to the
Securities and Exchange Commission for the year ended December 31,
1997, on Form 10-K, and any and all amendments thereto on Form 8 or
otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial
Ownership of Securities on Form 4 or Form 5 (or such other forms as
may be designated from time to time for such purposes), pursuant to
Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of
authority, such attorneys-in-fact and agents, or either of them,
are hereby granted full power and authority, on behalf of and in
the name, place and stead of the undersigned, to execute and
deliver all such Registration Statements, registrations,
qualifications, or notifications, the Company's Form 10-K, any and
all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such
other and further action as such attorneys-in-fact and agents, or
either of them, deem necessary or appropriate. The powers and
authorities herein to such attorneys-in-fact and agents, and either
of them, also include the full right, power and authority to effect
necessary or appropriate substitutions or revocations. The
undersigned hereby ratifies, confirms, and adopts, as his own act
and deed, all action lawfully taken pursuant to the powers and
authorities herein granted by such attorneys-in-fact and agents, or
either of them, or by their respective substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto signed as of
the of , 1998.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
director and/or executive officer of WM. WRIGLEY JR. COMPANY, a
Delaware corporation (the "Company"), hereby makes, designates,
constitutes and appoints William Wrigley, William M. Piet and
Howard Malovany, and either of them (with full power to act without
the other), as the undersigned's true and lawful attorneys-in-fact
and agents, with full power and authority to act in any and all
capacities for and in the name, place and stead of the undersigned
in connection with the filing of: (i) any and all registration
statements and all amendments and post-effective amendments thereto
(collectively, "Registration Statements") under the Securities Act
of 1933, as amended, with the Securities and Exchange Commission,
and any and all registrations, qualifications or notifications
under the applicable securities laws of any and all states and
other jurisdictions, with respect to the securities of the Company
of whatever class, including without limitation thereon the
Company's Common Stock and Class B Common Stock, however offered
sold, issued, distributed, placed or resold by the Company, by any
of its subsidiary companies, or by any other person or entity, that
may be required to effect: (a) any such filing, (b) any primary or
secondary offering, sale, distribution, exchange, or conversion of
the Company's securities, (c) any acquisition, merger,
reorganization or consolidation involving the issuance of the
Company's securities, (d) any stock option, restricted stock grant,
incentive, investment, thrift, profit sharing, or other employee
benefit plan relating to the Company's securities, or (e) any
dividend reinvestment or stock purchase plan relating to the
Company's securities; (ii) the Company's Annual Report to the
Securities and Exchange Commission for the year ended December 31,
1997, on Form 10-K, and any and all amendments thereto on Form 8 or
otherwise, under the Securities Exchange Act of 1934, as amended
("Exchange Act"), and (iii) Statements of Changes of Beneficial
Ownership of Securities on Form 4 or Form 5 (or such other forms as
may be designated from time to time for such purposes), pursuant to
Section 16(a) of the Exchange Act.
Without limiting the generality of the foregoing grant of
authority, such attorneys-in-fact and agents, or either of them,
are hereby granted full power and authority, on behalf of and in
the name, place and stead of the undersigned, to execute and
deliver all such Registration Statements, registrations,
qualifications, or notifications, the Company's Form 10-K, any and
all amendments thereto, statements of changes, and any and all
other documents in connection with the foregoing, and take such
other and further action as such attorneys-in-fact and agents, or
either of them, deem necessary or appropriate. The powers and
authorities herein to such attorneys-in-fact and agents, and either
of them, also include the full right, power and authority to effect
necessary or appropriate substitutions or revocations. The
undersigned hereby ratifies, confirms, and adopts, as his own act
and deed, all action lawfully taken pursuant to the powers and
authorities herein granted by such attorneys-in-fact and agents, or
either of them, or by their respective substitutes.
IN WITNESS WHEREOF, the undersigned has hereunto signed as of
the of , 1998.
<PAGE>
FORWARD-LOOKING STATEMENTS
From time to time, the Company may publish forward-looking
statements relating to such matters as anticipated financial
performance, business prospects, capital expenditures,
technological developments, new products, research and development
activities and similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor,
the Company notes that a variety of important factors could cause
the Company's actual results and experience to differ materially
from the anticipated results or other expectations expressed in the
Company's forward-looking statements. The important factors that
may affect the operations, performance, development and results of
the Company's business include the following:
- - In those markets where the Company maintains market
leadership, it will most likely retain preferred retail space
allocation which enhance results.
- - Availability, pricing and sourcing of raw materials has been
relatively stable and a competitive advantage but failure to
maintain these could negatively impact results.
- - The Company has historically been successful marketing to
different segments of the population. Failure to adequately
anticipate and react to changing demographics and product
preferences could negatively impact results.
- - Both manufacturing and sales of a significant portion of the
Company's products are outside the United States and could be
negatively impacted by volatile foreign currencies and
markets.
- - The Company competes worldwide with other well established
manufacturers of chewing gum. The Company's results may be
negatively impacted by a failure of new or existing products
to be favorably received, by ineffective advertising, or by
failure to sufficiently counter aggressive competitive
actions.
- - Underutilization of or inadequate manufacturing capacity due
to unanticipated movements in consumer demands could
materially affect manufacturing efficiencies and costs.
- - Discounting and other competitive actions may make it more
difficult for the Company to maintain its historically strong
operating margins.
- - Governmental regulations with respect to import duties,
tariffs and environmental controls, both in and outside the
U.S., could negatively impact the Company's costs and ability
to compete in domestic or foreign markets.
- - The Company has not had any material labor stoppages,
nevertheless, such disputes or strikes could negatively affect
shipments from suppliers or shipment of finished product.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 206,627
<SECURITIES> 147,103
<RECEIVABLES> 183,491
<ALLOWANCES> 7,524
<INVENTORY> 247,392
<CURRENT-ASSETS> 797,673
<PP&E> 870,872
<DEPRECIATION> 440,398
<TOTAL-ASSETS> 1,343,126
<CURRENT-LIABILITIES> 225,816
<BONDS> 0
0
0
<COMMON> 15,496
<OTHER-SE> 969,883
<TOTAL-LIABILITY-AND-EQUITY> 1,343,126
<SALES> 1,937,021
<TOTAL-REVENUES> 1,954,174
<CGS> 850,666
<TOTAL-COSTS> 1,559,934
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 958
<INCOME-PRETAX> 394,240
<INCOME-TAX> 122,614
<INCOME-CONTINUING> 271,626
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271,626
<EPS-PRIMARY> 2.34
<EPS-DILUTED> 2.34
</TABLE>
