<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended March 31, 2000 Commission file number:
1-800
WM. WRIGLEY JR. COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-1988190
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
410 North Michigan Avenue
Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 312-644-2121
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
91,644,066 shares of Common Stock and 22,472,399 shares of Class B Common
Stock were outstanding as of April 14, 2000.
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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
March 31,
2000 1999
<S> <C> <C>
Revenues:
Net sales $503,291 481,046
Investment and other income 3,732 3,901
Total revenues 507,023 484,947
Costs and expenses:
Cost of sales 202,806 199,724
Selling, distribution, and
general administrative 195,094 180,548
Interest 193 173
Total costs and expenses 398,093 380,445
Earnings before income taxes 108,930 104,502
Income taxes 34,325 34,853
Net earnings $74,605 69,649
Net earnings per average share
of common stock (basic
and diluted) $0.65 0.60
Dividends declared per share of
common stock $0.35 0.22
Average number of shares
outstanding for the period 114,248 116,107
</TABLE>
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)
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $ 74,605 69,649
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 15,271 13,722
Gain on sales of property, plant,
and equipment 136 58
(Increase) decrease in:
Accounts receivable (23,646) (36,418)
Inventories (7,852) (13,070)
Other current assets (1,636) 1,802
Other assets and deferred charges 911 (12,447)
Increase (decrease) in:
Accounts payable 3,104 (455)
Accrued expenses 24,565 27,401
Income and other taxes payable 19,212 21,229
Deferred taxes 276 (1,039)
Other noncurrent liabilities (54) 8,145
Net cash provided by operating activities 104,892 78,577
INVESTING ACTIVITIES:
Additions to property, plant, and equipment (21,527) (24,206)
Proceeds from property retirements 1,086 4,367
Purchases of short-term investments (19,086) (14,322)
Maturities of short-term investments 8,729 14,615
Net cash used in investing activities (30,798) (19,546)
FINANCING ACTIVITIES:
Dividends paid (39,957) (23,222)
Common stock purchased (40,121) (1,073)
Net cash used in financing activities (80,078) (24,295)
Effect of exchange rate changes on cash and
cash equivalents (4,226) (5,427)
Net(decrease)increase in cash and cash equivalents (10,210) 29,309
Cash and cash equivalents at beginning of period 288,386 214,572
Cash and cash equivalents at end of period $278,176 243,881
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $ 16,730 11,941
Interest paid $ 126 90
Interest and dividends received $ 3,394 3,309
</TABLE>
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)
March 31, December 31,
2000 1999
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 278,176 288,386
Short-term investments, at amortized cost 28,883 18,528
Accounts receivable
(less allowance for doubtful accounts;
3/31/00 - $8,565; 12/31/99 - $9,194) 201,017 181,720
Inventories - Finished goods 61,184 60,885
Raw materials and supplies 201,194 196,785
262,378 257,670
Other current assets 43,159 42,301
Deferred income taxes - current 14,951 15,141
Total current assets 828,564 803,746
Marketable equity securities at fair value 41,240 43,201
Deferred charges and other assets 113,820 114,796
Deferred income taxes - noncurrent 26,919 26,862
Property, plant, and equipment, at cost 1,066,275 1,062,775
Less accumulated depreciation 508,228 503,635
Net property, plant, and equipment 558,047 559,140
Total assets $1,568,590 1,547,745
Current liabilities:
Accounts payable $ 88,124 86,583
Accrued expenses 98,088 74,816
Dividends payable 39,981 40,073
Income and other taxes payable 67,072 49,654
Deferred income taxes - current 372 699
Total current liabilities 293,637 251,825
Deferred income taxes - noncurrent 44,334 44,963
Other noncurrent liabilities 110,746 112,182
Stockholders' equity:
Preferred stock (no par value)
Authorized - 20,000 shares
Issued - None
Common stock (no par value)
Authorized - 400,000 shares
Issued and outstanding -
93,741 shares at 3/31/00;
93,607 shares at 12/31/99 12,495 12,481
Class B common stock (convertible)
Authorized - 80,000 shares
Issued and outstanding -
22,480 shares at 3/31/00;
22,614 shares at 12/31/99 3,001 3,015
Additional paid-in capital 307 273
Retained earnings 1,356,801 1,322,137
Common stock in treasury, at cost -
(3/31/00; 2,222 shares; 12/31/99; 1,725 shares) (164,822) (125,712)
Accumulated other comprehensive income:
Foreign currency translation adjustment (113,486) (100,270)
Unrealized holding gains on marketable
equity securities 25,577 26,851
Total other comprehensive income (87,909) (73,419)
Total stockholders' equity 1,119,873 1,138,775
Total liabilities & stockholders' equity $1,568,590 1,547,745
</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 month
periods ended March 31, 2000 and 1999, the Consolidated Statement of Cash
Flows (Condensed) for the three month periods ended March 31, 2000 and
1999, and the Consolidated Balance Sheet (Condensed) at March 31, 2000,
are unaudited. In the Company's opinion, the accompanying financial
statements reflect all adjustments necessary to present fairly the results
for the periods and have been prepared on a basis consistent with the 1999
audited consolidated financial statements. These condensed financial
statements should be read in conjunction with the 1999 consolidated
financial statements and related notes, which are an integral part
thereof. Certain amounts recorded in 1999 have been reclassified to
conform to the 2000 presentation.
2. 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.
3. An analysis of the cumulative foreign currency translation adjustment
follows (in thousands of dollars):
<TABLE>
Decrease to
Stockholders' Equity
2000 1999
<S> <C> <C>
First Quarter
Balance at January 1 $ 100,270 61,339
Translation adjustment for
the first quarter 13,216 25,929
Balance at March 31 $ 113,486 87,268
</TABLE>
4. An analysis of comprehensive income is provided below (in thousands of
dollars):
<TABLE>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Net earnings $ 74,605 69,649
Other comprehensive income, before tax:
Foreign currency translation
adjustments (13,216) (25,929)
Unrealized holding gains
(losses) on securities (1,961) (2,266)
Other comprehensive income
(loss), before tax (15,177) (28,195)
Income tax (expense) benefit
related to items of other
comprehensive income 687 793
Other comprehensive income
(loss), net of tax (14,490) (27,402)
Total comprehensive income $ 60,115 42,247
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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)
5. Segment Information
Management organizes the chewing-gum business based on geographic regions.
During the quarter, management realigned certain geographic regions for
internal reporting purposes. The segment information presented for the
prior period has been reclassified to reflect this internal reporting
change and is comparable to the current period. Information by geographic
region is as follows:
<TABLE>
Net Sales
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Americas, principally U.S. $ 214,852 197,387
Europe 201,384 208,350
Asia 65,023 54,679
Pacific 17,886 16,575
All Other 4,146 4,055
Net Sales $ 503,291 481,046
</TABLE>
"All Other" revenue consists primarily of sales of gumbase to customers.
<TABLE>
Operating Profits
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Americas, principally U.S. $ 49,758 51,362
Europe 51,820 51,004
Asia 17,710 13,013
Pacific 5,190 4,392
All Other (20,393) (19,397)
Operating Profits 104,085 100,374
Other Income 4,845 4,128
Earnings Before Income Taxes $ 108,930 104,502
</TABLE>
"All Other" operating profits include corporate expenses such as costs
related to research and development, information systems, and certain
administrative functions.
Non-operating items such as foreign currency transaction gains and losses,
investment income, and miscellaneous income and expense are classified as
"Other Income".
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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
Net Sales
Net sales for the first quarter were $503.3 million, up $22.2 million or 5%
versus the first quarter of 1999. Higher shipments across all regions
increased sales revenue by 5%. In addition, favorable mix mainly from
premium priced products in the Americas and Europe regions increased sales by
approximately 4%. This was offset by translation of weaker European
currencies to the U.S. dollar which reduced sales by roughly 4%.
Investment and Other Income
Investment and other income for the first quarter was $3.7 million, a
decrease of $0.2 million or 4% versus the first quarter of last year mainly
due to lower cash balances in the U.S.
Cost of Sales and Gross Profit
Cost of sales for the first quarter was $202.8 million, an increase of $3.1
million or 2% versus the first quarter of 1999. Higher shipments across all
regions increased cost of sales by 6% and translation of weaker European
currencies to the U.S. dollar reduced cost of sales by 4%.
Gross profit was $300.5 million and $281.3 million for the first quarters of
2000 and 1999, respectively. The gross profit percentage was 59.7%, up from
58.5% in the first quarter of 1999.
Selling, Distribution, and General Administrative Expenses
Consolidated selling, distribution, and general administrative expenses for
the first quarter were $195.1 million, an increase of $14.5 million or 8%
from the same period last year. The increase was mainly due to higher
advertising and other marketing spending in the Americas region.
As a percentage of consolidated net sales, the expenses were as follows:
<TABLE>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Advertising 15.8% 14.9%
Selling and Other Marketing 12.9% 12.8%
Distribution 2.4% 2.3%
General and Administrative 7.7% 7.5%
38.8% 37.5%
</TABLE>
Income Taxes
Income taxes for the first quarter were $34.3 million, down $0.5 million or
2% from the first quarter of 1999. Pretax earnings were $108.9 million, an
increase of $4.4 million or 4%. The consolidated effective tax rate was
31.5% compared to 33.4% for the same period last year. The lower effective
tax rate was mainly due to effective tax planning.
Net Earnings
Consolidated net earnings for the first quarter of 2000 totaled $74.6 million
or $0.65 per share compared to last year's net earnings of $69.6 million or
$0.60 per share for the same period.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow and Current Ratio
Net cash provided by operating activities in the first quarter of 2000 was
$104.9 million compared with $78.6 million in the first quarter of 1999.
The Company had a current ratio (current assets divided by current
liabilities) in excess of 2.8 to 1 at March 31, 2000 and in excess of 3.1 to
1 at December 31, 1999.
Additions to Property, Plant, and Equipment
Capital expenditures for 2000 are expected to be about the same as 1999
expenditures of $127.7 million and are expected to be funded from the
Company's cash flow from operations.
Share Repurchases
During the first quarter of 2000, under Board of Director authority, 547,300
shares of Company stock were repurchased for an aggregate price of $40.1
million.
OTHER MATTERS
Year 2000
The Company has completed its Year 2000 readiness initiatives and did not
experience any significant problems as a result of the millennium change. In
the first quarter of 2000, the Company did not experience any continued
business impacts related to this issue.
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 believes 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.
Forward-Looking Statements
Statements contained in this report may be considered to be forward looking
statements. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. The Company wishes to ensure
that such statements are accompanied by meaningful cautionary statements to
comply with the safe harbor under the Act. The Company notes that a variety
of factors could cause actual results to differ materially from the
anticipated results or expectations expressed in these forward-looking
statements.
Important factors that may influence the operations, performance, development
and results of the Company's business include global and local business and
economic conditions; currency exchange and interest rates; ingredients,
labor, and other operating costs; insufficient or underutilization of
manufacturing capacity; political or economic instability in local markets;
competition; retention of preferred retail space; effective marketing
campaigns or new product introductions; consumer preferences, spending
patterns, and demographic trends; legislation and governmental regulation;
accounting policies and practices.
We caution the reader that the list of factors may not be exhaustive. The
Company undertakes no obligation to update any forward looking statement,
whether as a result of new information, future events, or otherwise.
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FORM 10-Q
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to Vote of Security Holders
The Annual Meeting of Stockholders of the Wm. Wrigley Jr. Company was held
on March 6, 2000 to consider the following proposals: (1) the election of
directors to serve for the ensuing year; (2) ratification of the appointment
of Ernst & Young LLP as the Company's independent auditors for 2000; and (3)
a stockholder proposal. The results of the voting on each matter, as
determined by the independent inspectors of election, are as follows:
Proposal 1. Election of directors. With each class of stock voting
together, a total of 317,401,707 votes were eligible to be cast and a
total of 280,051,367 votes were submitted for each nominee as follows:
<TABLE>
<S> <C> <C> <C> <C>
Nominee For % For Withheld
John F. Bard 279,072,132 99.65 979,235
Thomas A. Knowlton 279,057,082 99.64 994,285
Penny Pritzker 279,025,498 99.63 1,025,869
Melinda R. Rich 279,037,224 99.64 1,014,143
Steven B. Sample 279,027,621 99.63 1,023,746
Alex Shumate 278,988,372 99.62 1,062,995
Richard J. Smucker 279,109,431 99.66 941,936
William Wrigley, Jr. 279,106,106 99.66 945,261
</TABLE>
Proposal 2. Ratification of Auditors. With each class of stock voting
together, a total of 317,401,707 votes were eligible to be cast and a
total of 280,051,367 were submitted as follows:
For Against Abstain
279,170,860 289,776 590,731
Proposal 3. Stockholder Proposal. With each class of stock voting
together, a total of 317,401,707 were eligible to be cast and a
total of 280,051,367 were submitted as follows:
For Against Abstain Uninstructed
5,851,312 259,389,151 2,597,551 12,213,353
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits reference is made to the Exhibit Index on page 11.
(b) No form 8-K's were filed during this reporting period.
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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
Reuben Gamoran
Controller
Authorized Signatory and
Chief Accounting Officer
Date: May 11, 2000
<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). Stock Deferral Plan for Non-Employee Directors. The Stock Deferral
Plan for Non Employee Directors 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 is
incorporated by reference from Exhibit 10(g) of the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997.
27. Financial Data Schedule.
For copies of Exhibits not attached hereto, 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.
[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-START] JAN-1-2000
[PERIOD-END] MAR-31-2000
[CASH] 278,176
[SECURITIES] 70,123
[RECEIVABLES] 209,582
[ALLOWANCES] 8,565
[INVENTORY] 262,378
[CURRENT-ASSETS] 828,564
[PP&E] 1,066,275
[DEPRECIATION] 508,228
[TOTAL-ASSETS] 1,568,590
[CURRENT-LIABILITIES] 293,637
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 15,496
[OTHER-SE] 1,104,377
[TOTAL-LIABILITY-AND-EQUITY] 1,568,590
[SALES] 503,291
[TOTAL-REVENUES] 507,023
[CGS] 202,806
[TOTAL-COSTS] 398,093
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 193
[INCOME-PRETAX] 108,930
[INCOME-TAX] 34,325
[INCOME-CONTINUING] 74,605
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 74,605
[EPS-BASIC] 0.65
[EPS-DILUTED] 0.65
</TABLE>
