<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, no par value New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Class B Common Stock, no par value
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 .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K. [X]
As of January 31, 2000, there were outstanding 91,865,823 shares
of Common Stock, no par value, and the aggregate market value of the
Common Stock (based upon the closing price of the stock on the New
York Stock Exchange on January 31, 2000) held by non-affiliates was
approximately $5,631,137,694. As of January 31, 2000 there were
outstanding 22,522,373 shares of Class B Common Stock, no par value.
Class B Common Stock is not traded on the exchanges, is restricted
as to transfer or other disposition, and is convertible into Common
Stock on a share-for-share basis. Upon such conversion, the
resulting shares of Common Stock are freely transferable and publicly
traded. Assuming all shares of outstanding Class B Common Stock were
converted into Common Stock, the aggregate market value of Common
Stock held by non-affiliates on January 31, 2000 (based upon the
closing price of the stock on the New York Stock Exchange on such
date) would have been approximately $6,422,599,248. Determination of
stock ownership by non-affiliates was made solely for the purpose of
this requirement, and the Registrant is not bound by these
determinations for any other purpose.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement, dated
February 4, 2000 for the March 6, 2000 Annual Meeting of
Stockholders, and of the 1999 Annual Report to Stockholders, are
incorporated by reference into portions of Parts I, II, III and IV of
this Report.
<PAGE>
PART I
Item 1. Business
(a) General Development of Business.
(1) General information. From 1891 to 1903, the Company was
operated as a partnership until its incorporation in Illinois as Wm.
Wrigley, Jr. & Co. in December 1903. In November 1910, the Company
was reincorporated under West Virginia law as Wm. Wrigley Jr. Company
the ("Company"), and in October 1927, was reincorporated under the
same name under Delaware law.
Throughout its history, the Company has concentrated on one
principal line of business: manufacturing and marketing quality
chewing gum products.
(2) Not applicable.
(b) Financial Information About Industry Segments.
The Company's principal business of manufacturing and selling
chewing gum constitutes more than 90% of its consolidated worldwide
sales and revenues. All other businesses constitute less than 10% of
its consolidated revenues, operating profit and identifiable assets.
Financial information on segments, as defined under generally
accepted accounting principles, is set forth on pages 20 and 21 of
the Company's Annual Report to Stockholder's for the fiscal year
ended 1999, under the caption "Segment Information" which information
is incorporated herein by reference.
(c) Narrative Description of Business.
(1) Business conducted. The following is a description of the
business conducted and intended to be conducted by the Company and
its wholly-owned associated companies:
(i) Principal products, markets and methods of
distribution. The Company's principal business is manufacturing
and selling chewing gum, both in the United States and abroad.
The Company's brands manufactured and available in the
United States are: WRIGLEY'S SPEARMINT, DOUBLEMINT, JUICY
FRUIT, BIG RED and WINTERFRESH which account for a majority of
the Company's sales volume; FREEDENT, a specially formulated
chewing gum which does not stick to most types of dental work,
available in three flavors; EXTRA sugarfree chewing gum,
available in four flavors and as bubble gum; and ECLIPSE a
sugarfree pellet gum, available in two flavors.
Except for BIG RED and WINTERFRESH, which have limited
availability overseas, and ECLIPSE, which is currently being
test marketed in Australia, the above Wrigley brands are also
commonly available in many international markets. Additional
brands manufactured and marketed abroad are: ORBIT, EXTRA and
FREEDENT sugarfree gums in both pellet and stick form in various
flavors, ARROWMINT, COOL CRUNCH, DULCE 16, EXCEL, JUICY FRUIT
and P.K chewing gums in sugar coated pellet form, sugarfree
WRIGLEY'S SPEARMINT, DOUBLEMINT, JUICY FRUIT, AIRWAVES in
sugarfree pellet form, ICEWHITE sugarfree stick gum and bubble
gums HUBBA BUBBA in various flavors, BIG BOY and BIG G.
The Company's ten largest markets, by shipments, outside of
the United States in 1999 were, in alphabetical order,
Australia, Canada, China, France, Germany, Philippines, Poland,
Russia, Taiwan and the United Kingdom.
<PAGE>
Chewing gum is manufactured in three factories in the United
States and twelve factories in other countries. Three domestic wholly
owned associated companies also manufacture products other than
chewing gum. Amurol Confections Company, in addition to
manufacturing and marketing children's bubble gum items including
BUBBLE TAPE, BIG LEAGUE CHEW and other uniquely packaged confections,
and two adult chewing gum items, STAY ALERT caffeine gum and EVEREST
powerful mint gum, also has various non-gum items, such as a line of
suckers, dextrose candy, liquid gel candy and hard roll candies as an
important part of its total business. Amurol is also developing
export markets, currently the largest being Canada, Mexico and Japan.
The principal business of the L.A. Dreyfus Company is the production
of chewing gum base, at one domestic and one overseas factory, for
the parent and wholly owned associated companies, and for other
manufacturers of chewing gum and specialty gum products in the United
States and abroad. Northwestern Flavors, Inc. processes flavorings
and rectifies mint oil for the parent and associated companies.
In 1979, the Company organized its domestic converting
operations under the name of Wrico Packaging Division as a separate
operating unit of the Company. This division was created to help
further the Company's capability to produce improved packaging
materials. Currently, Wrico produces about 27% of the Company's
domestic printed and other wrapping supplies.
The Company markets chewing gum primarily through distributors
wholesalers, corporate chains and cooperative buying groups that
distribute the product through retail outlets. Additional direct
customers are vending distributors, concessionaires and other
established customers purchasing in wholesale quantities. Customer
orders are usually received by mail, electronically, telephone or
telefax and are generally shipped by truck from factory warehouses or
leased warehousing facilities. Consumer purchases at the retail
level are generated primarily through the Company's advertisements on
television and radio, and in newspapers and magazines.
(ii) New products. In Europe, EXTRA for Kids, ORBIT for Kids,
AIRWAVES and ICEWHITE were added to the product line. In the United
States, ECLIPSE, a sugarfree pellet product, was introduced in 1999.
Additional or improved flavors were also introduced for some product
lines in various markets.
(iii) Sources and availability of raw materials. Raw materials
blended to make chewing gum base are available from suppliers and in
the open market.
Sugar, corn syrup, flavoring oils, polyols and aspartame are
obtained in the open market, or under contracts, from suppliers in
various countries. All other ingredients and necessary packaging
materials are also purchased and available on the open market.
(iv) Patents and trademarks. The Company holds numerous
patents relating to packaging, manufacturing processes and product
formulas. Approximately fifty patents relating to product formula
and sweetener encapsulation, primarily for sugarfree gum and
continuous chewing gum manufacturing, are deemed of material
importance to the Company. Most of these patents expire in the
countries in which they are registered at various times through the
year 2017.
Trademarks are of material importance to the Company and are
registered and maintained for all brands of the Company's chewing gum
on a worldwide basis.
(v) Seasonality. On a consolidated basis, sales normally are
relatively consistent throughout the year.
(vi) Working capital items. Inventory requirements of the
Company are not materially affected by seasonal or other factors. In
general, the Company does not offer its customers extended payment
terms. The Company believes these conditions are not materially
different from those of its competitors.
(vii) Customers. The Company's products are distributed
through more than 3,000 customers throughout the United States alone.
No single domestic or foreign customer accounts for as much as 10%
of consolidated sales or revenues.
<PAGE>
(viii) Orders. It is the general custom of the wholesale trade
to purchase chewing gum requirements at intervals of approximately
ten days to two weeks to assure fresh stocks and good turnover.
Therefore, an order backlog is of no significance to the chewing gum
business.
(ix) Government business. The Company has no material portion
of its business which may be subject to renegotiation of profits or
termination of contracts at the election of the Government.
(x) Competitive conditions. The chewing gum market is an
intensely competitive one in the United States and in most
international markets. Though detailed figures are not available,
there are approximately 14 chewing gum manufacturers in the United
States. Outside sources estimate that Wrigley brands account for
approximately 50% of the total chewing gum product unit sales in the
United States. The Company's principal competitors in the United
States are the Warner-Lambert Company and RJR Nabisco Holdings Corp.
Wrigley brands are sold in over 140 countries and territories,
although in some cases these markets are relatively small. In most
international markets, there are two or three major competitors and
generally a half dozen or more other companies competing for a share
of the gum market in each instance.
In all markets in which the Company distributes its products,
principal methods of competition are a combination of competitive
profit margins to the trade, superior quality, brand recognition,
product benefit and a fair consumer price.
(xi) Research and development. The Company has for many years
maintained an active in-house research and development program, and
has also contracted outside services for developing and improving
Wrigley products, machinery and operations. In relation to the
Company's consolidated assets, revenues and aggregate operating
expenses, amounts expended in these areas during the last three
fiscal years have not been material.
(xii) Compliance with environmental laws. Compliance with
federal, state and local laws regulating the discharge of materials
into the environment, or otherwise relating to the protection of the
environment, has no material effect on capital expenditures, earnings
or the competitive position of the Company.
(xiii) Employees. As of December 31, 1999, the Company employed
approximately 9,300 persons worldwide.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales.
Information concerning the Company's operations in different
geographic areas for the years ended December 31, 1999, 1998 and 1997
is hereby incorporated by reference from the 1999 Annual Report to
Stockholders, on pages 20 and 21, under the caption "Segment
Information," and on pages 24 and 25 under the caption "Results of
Operations."
Item 2. Properties
The information below relates to the principal properties of the
Company which are primarily devoted to chewing gum production or raw
materials processing. The Company considers the properties listed
below to be in good condition, well maintained and suitable to carry
out the Company's business. All of the chewing gum factories listed
below operated at least one full shift throughout the year, all but
two operated a substantial second shift and eight operated a third
shift for much of the year. All properties are owned by the Company
unless otherwise indicated. The figures given in the table are
approximate.
<PAGE>
Floor Area
Property and Location (Square Feet)
CHEWING GUM FACTORIES
Chicago, Illinois 1,279,000
Gainesville, Georgia 495,300
Yorkville, Illinois 225,000(a)
Asquith, N.S.W., Australia 116,700
Salzburg, Austria 22,800
Don Mills, Ont., Canada 135,200
Plymouth, England 282,000
Biesheim, France 417,100
Bangalore, India 40,100
Nairobi, Kenya 79,600
Guangzhou, China, P.R.C. 199,400(b)
Antipolo, Philippines 105,700
Poznan, Poland 215,600
Taipei, Taiwan, R.O.C. 70,500
St. Petersburg, Russia 111,000
RAW MATERIALS PROCESSING FACTORIES
West Chicago, Illinois 40,300
Edison, New Jersey 536,000
Biesheim, France 72,000
OFFICE BUILDING
Wrigley Building, Chicago, Illinois 453,400(c)
(a) Does not include a 170,000 square foot leased warehouse
facility located in Naperville, Illinois.
(b) In China, the Company has a 50 year lease with the Guangzhou
Economic Technological Development Zone for the land upon which the
factory is located.
(c) This building is the Company's principal non-manufacturing
property and houses the offices of the Company's corporate
headquarters. In 1999, the Company's offices occupied approximately
159,000 of the 453,400 square feet of rentable space in the building.
In the case of each factory listed above, the information also
includes some office and warehouse facilities. Also, the Company
maintains primarily leased branch sales offices and warehouse
facilities in the United States and abroad.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
<TABLE>
Executive Officers of the Registrant
All officers are elected for a term which ordinarily expires on the date of the meeting of the Board of Directors following the
Annual Meeting of Stockholders. The positions and ages listed below are as of January 31, 2000. There were no arrangements or
understandings between any of the officers and any other person(s) pursuant to which such officers were elected.
<S> <C> <C>
Effective
Name and Age Position(s) with Registrant Date(s)
William Wrigley, Jr., 36 President and Chief Executive Officer since 1999
Vice President 1991-1999
Assistant to the President 1985-1992
John F. Bard, 58 Executive Vice President since 1999
Senior Vice President 1991-1999
Peter R. Hempstead, 48 (a) Senior Vice President-International since 1999
Ronald V. Waters, 47 (b) Senior Vice President and Chief Financial Officer since 1999
Martin J. Geraghty, 63 Group Vice President-Worldwide Manufacturing since 1999
Senior Vice President-Manufacturing 1989-1999
Donald E. Balster, 55 Vice President-Manufacturing since 1999
Vice President-Production 1994-1999
Senior Director-U.S. Production 1991-1994
Gary R. Bebee, 53 Vice President-Customer Marketing since 1993
Assistant Vice President-Marketing 1989-1993
David E. Boxell, 58 Vice President-Personnel since 1992
Shaun Kim, 56 Vice President-Engineering since 1994
Senior Director-Engineering 1988-1994
Dennis R. Mally, 57 Vice President-Information Services since 1995
Director-Information Services 1993-1994
Dushan Petrovich, 46 Vice President-Organizational Development since 1999
Vice President-Controller 1996-1999
Vice President-Treasurer 1993-1995
Treasurer 1992
Wm. M. Piet, 56 Vice President-Corporate Affairs since 1988
Corporate Secretary 1984-1998
Assistant to the President since 1995
John A. Schafer, 58 Vice President-Purchasing since 1991
Philip G. Schnell, 55 Vice President-Research & Development since 1994
Senior Director-Research & Development 1988-1994
Christafor E. Sundstrom, 51 Vice President-Product and Technical Development since 1999
Vice President-Corporate Development 1988-1999
Philip G. Hamilton, 59 Vice President-International since 1993
Managing Director, The Wrigley
Company Limited, England since 1986
Jon Orving, 50 Vice President-International since 1993
Managing Director, Wrigley
Scandinavia AB, Sweden since 1983
Stefan Pfander, 56 Managing Director-Europe since 1996
Vice President-International since 1992
Co-Managing Director of Wrigley
GmbH, Munich, Germany since 1981
Reuben Gamoran, 39 (c) Controller since 1999
Controller-International 1996-1999
Philip C. Johnson, 54 Senior Director, Benefits & Compensation since 1995
Assistant Vice President-Personnel 1991-1995
Howard Malovany, 49 (d) Secretary and General Counsel since 1998
Alan J. Schneider, 54 (e) Treasurer since 1996
</TABLE>
<PAGE>
(a) Mr. Hempstead joined the Company in 1999 as Senior Vice
President-International assuming responsibility for the international
sales and marketing organization. Before joining the Company, Mr.
Hempstead had a 23 year tenure at Procter & Gamble Company, most
recently as Vice President of their European pharmaceutical
operations in the U.K., Ireland, Holland, Italy and Spain.
(b) Mr. Waters joined the Company in 1999 as Senior Vice
President and Chief Financial Officer assuming responsibility for the
Company's accounting, treasury, tax, internal audit and strategic
planning functions. Before joining the Company, Mr. Waters spent the
last seven years with The Gillette Company, most recently as
Corporate Controller.
(c) Mr. Gamoran was elected Controller in 1999 with
responsibility for the Company's accounting function. Prior to being
elected Controller, he held various positions during his 14 years
with the Company, most recently as Controller-International.
(d) Mr. Malovany joined the Company in 1996 assuming
responsibility for the Company's legal function. Before joining the
Company, from 1993-1996 Mr. Malovany was Secretary and Senior Counsel
of Outboard Marine Corporation, a manufacturer and distributor of
recreational marine products.
(e) Mr. Schneider joined the Company in August 1996 as
Treasurer with responsibility for treasury and tax functions. He
previously served CBI Industries, Inc. of Oak Brook, Illinois, an
international manufacturer of industrial gases and metal plate
surfaces, as Vice President-Finance and Chief Financial Officer,
having joined that company in 1987 and serving in various financial
capacities over the years, including Controller and Vice President.
At the meeting of the Board of Directors immediately following
the annual stockholders meeting of March 6, 2000, all officers set
forth in the schedule above were re-elected for a one-year term to
their positions in the Company.
PART II
Item 5. Market for Registrant's Common Stock, Dividend and
Stockholder
Information
At December 31, 1999, the Company had two classes of stock
outstanding: Common Stock, listed on both the New York and Chicago
Stock Exchanges, and Class B Common Stock, for which there is no
trading market. Shares of the Class B Common Stock were issued by
the Company on April 11, 1986 to stockholders of record on April 4,
1986. Class B Common Stock is entitled to ten votes per share, is
subject to restrictions on transfer or other disposition and is at
all times convertible, on a share-for-share basis, into shares of
Common Stock.
As of January 31, 2000, there were 38,138 stockholders of record
holding Common Stock and 3,594 stockholders of record holding Class
B Common Stock. Regular quarterly dividends and any extra cash
dividends as may be deemed appropriate, which are identical on both
Common Stock and Class B Common Stock, are declared at scheduled
meetings of the Board of Directors and announced immediately upon
declaration. Information regarding the high and low quarterly sales
prices for the Common Stock on the New York Stock Exchange, and
dividends declared per share on a quarterly basis for both classes of
stock, for the two-year period ended December 31, 1999, is set forth
in the Company's 1999 Annual Report to Stockholders, on page 27,
under the captions "Market Prices" and "Dividends" and is
incorporated herein by reference.
<PAGE>
Item 6. Selected Financial Data
An eleven-year summary of selected financial data for the
Company is set forth in the Company's 1999 Annual Report to
Stockholders under the following captions and page numbers:
"Operating Data" and "Other Financial Data", on pages 28 and 29, and
is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Management's discussion and analysis of results of operations
and financial condition, including a discussion of liquidity and
capital resources, is set forth in the Company's 1999 Annual Report
to Stockholders on pages 24 through 26 and is incorporated herein by
reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Disclosure about market risk is set forth on page 26 of the
Company's 1999 Annual Report to Stockholders under the heading
"Market Risk" and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Company's audited consolidated financial statements,
accounting policies and notes to consolidated financial statements,
with the report of independent auditors, at December 31, 1999 and
1998 and for each of the three years in the period ended December 31,
1999 are set forth in the Company's 1999 Annual Report to
Stockholders on pages 9 through 23 and selected unaudited quarterly
data-consolidated results, for the years ended December 31, 1999 and
1998 are set forth in the Company's 1999 Annual Report to
Stockholders on page 27, and all such pages are incorporated herein
by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors and nominees for directorship is
set forth in the Company's definitive Proxy Statement, dated February
4, 2000, for the Annual Meeting of Stockholders on March 6, 2000, on
pages 2 and 3, under the caption "Election of Directors" and is
incorporated herein by reference. For information concerning the
Company's executive officers, see "Executive Officers of the
Registrant" set forth in Part I hereof.
Item 11. Executive Compensation
Information regarding the compensation of directors and
executive officers is set forth in the Company's definitive Proxy
Statement, dated February 4, 2000, for the Annual Meeting of
Stockholders on March 6, 2000, on pages 6 and 7, and 11 through 18
under the general captions "Compensation of Directors" and "Executive
Compensation", respectively, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information regarding security ownership of certain beneficial
owners, of all directors and nominees, of the named executive
officers, and of directors and executive officers as a group, is set
forth in the Company's definitive Proxy Statement, dated February 4,
2000, for the Annual Meeting of Stockholders on March 6, 2000, on
pages 4 through 6 under the captions "Security Ownership of Directors
and Executive Officers" and "Security Ownership of Certain Beneficial
Owners" and is incorporated herein by reference.
<PAGE>
Item 13. Certain Relationships and Related Transactions
Information regarding certain relationships and related
transactions is hereby incorporated by reference from the Company's
definitive Proxy Statement, dated February 4, 2000, for the Annual
Meeting of Stockholders on March 6, 2000 under the following caption
and page number: "Security Ownership of Certain Beneficial Owners",
on page 5, regarding the Offield family and Mr. Wrigley, Jr.
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form
8-K
(1) 1,2. Financial Statements and Financial Statement Schedule
The data listed in the accompanying Index to Financial
Statements and Financial Statement Schedule, on page F-1 hereof, is
filed as part of this Report.
3. Exhibits
The exhibits listed in the accompanying Index to Exhibits, on
page F-3 hereof, are filed as part of this Report or are incorporated
by reference herein as indicated thereon.
(b) Not Applicable.
(c) Exhibits are attached hereto.
(d) See (a) 1, 2 above.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly
caused this Form 10-K Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 24, 2000 WM. WRIGLEY JR. COMPANY
(Registrant)
By: /s/ RONALD V. WATERS
Ronald V. Waters
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this Report on Form 10-K has been signed below by
the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Title
* President, Chief
William Wrigley, Jr. Executive Officer,
Director
/s/ RONALD V. WATERS Senior Vice President and
Ronald V. Waters Chief Financial Officer
/s/ REUBEN GAMORAN Controller
Reuben Gamoran (Principal Accounting Officer)
* Director
Thomas A. Knowlton
* Director
Penny Pritzker
* Director
Melinda R. Rich
* Director *By /s/ HOWARD MALOVANY
Steven B. Sample Howard Malovany
Attorney-in-Fact
* Director
Alex Shumate Date: March 24, 2000
* Director
Richard K. Smucker
<PAGE>
Exhibit 23.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on
Form 10-K of Wm. Wrigley Jr. Company of our report dated January 24,
2000, included in the 1999 Annual Report to Stockholders of Wm.
Wrigley Jr. Company.
Our audits also included the financial statement schedule of Wm.
Wrigley Jr. Company listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, the
financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration
Statements pertaining to the Special Investment and Savings Plan for
Wrigley Employees (33-15061 (1987) and 33-43738 (1991)), the Wm.
Wrigley Jr. Company Management Incentive Plan (33-22788 (1988)) and
the 1997 Management Incentive Plan (333-48715 (1998)), respectively,
of our report dated January 24, 2000, with respect to the
consolidated financial statements and consolidated financial
statement schedule of Wm. Wrigley Jr. Company included or
incorporated by reference in this Annual Report on Form 10-K for the
year ended December 31, 1999.
/s/ERNST & YOUNG LLP
Ernst & Young LLP
Chicago, Illinois
March 24, 2000
<PAGE>
<TABLE>
WM. WRIGLEY JR. COMPANY
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a))
Reference
Form Annual Report
10-K to
Report Stockholders
<S> <C> <C>
Data incorporated by reference from the 1999 Annual Report
to Stockholders of Wm. Wrigley Jr. Company:
Consolidated balance sheet at December 31, 1999 and 1998...... 10-11
For the years ended December 31, 1999, 1998 and 1997:
Consolidated statement of earnings........................ 9
Consolidated statement of cash flows...................... 12
Consolidated statement of stockholders' equity
including comprehensive income.................... 13
Accounting policies and notes to consolidated financial
statements........................................ 14-21
Consolidated financial statement schedule for the years ended
December 31, 1999, 1998 and 1997:
Valuation and qualifying accounts.............................. F-2
</TABLE>
All other schedules are omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the
consolidated financial statements or accounting policies and notes thereto.
With the exception of the pages listed in the above index and the Items
referred to in Items, 1,5,6,7, and 8 of this Form 10-K Report, the 1999
Annual Report to Stockholders is not to be deemed filed as part of this Form
10-K Report.
F-1
<PAGE>
<TABLE>
WM. WRIGLEY JR. COMPANY
Schedule II - Valuation and Qualifying Accounts
Years ended December 31, 1999, 1998 and 1997
(In Thousands)
<S> <C> <C> <C> <C>
Column A Column B Column C Column D Column E
Additions
Balance at Charged to
Beginning Costs and Charged to Balance at
Description of Period Expenses Other Accounts Deductions(A) End of Period
1999
Allowance for
doubtful accounts... $7,564 $4,685 -- $3,055 $9,194
1998:
Allowance for
doubtful accounts... $7,524 1,456 -- 1,416 7,564
1997:
Allowance for
doubtful accounts... $8,538 1,434 -- 2,448 7,524
</TABLE>
(A) Uncollectable accounts written-off, net of recoveries.
F-2
<PAGE>
WM. WRIGLEY JR. COMPANY AND WHOLLY OWNED ASSOCIATED COMPANIES
INDEX TO EXHIBITS
(Item 14(a))
Exhibit
Number Description of Exhibit
Proxy Statement of the Registrant, dated February 4, 2000,
for the March 6, 2000 Annual Meeting of Stockholders, is
hereby incorporated by reference.
3. Articles of Incorporation and By-laws.
3(a). Restated Certificate of Incorporation of the Registrant.
Incorporated by reference to Exhibit 3(a) of the Company's
Annual Report and Form 10-K filed for the fiscal year ended
December 31, 1992.
3(b). By-laws of the Registrant. Incorporated by reference to
Exhibit 3(a) of the Company's Form 10-K filed for the
fiscal year ended December 31, 1992.
10. Material Contracts
10(a). Non-Employee Directors' Death Benefit Plan. Incorporated
by reference to the Company's Form 10-K filed for the
fiscal year ended December 31, 1994.
10(b). Senior Executive Insurance Plan. Incorporated by reference
to the Company's Form 10-K filed for the fiscal year ended
December 31, 1995.
10(c). Supplemental Retirement Plan. Incorporated by reference to
the Company's Form 10-K filed for the fiscal year ended
December 31, 1994.
10(d). Deferred Compensation Plan for Non-Employee Directors.
Incorporated by reference to the Company's Form 10-K filed
for the fiscal year ended December 31, 1995.
10(e). Non-Employee Directors' Stock Retirement Plan.
Incorporated by reference to the Company's Form 10-K filed
for the fiscal year ended December 31, 1995.
10(f). Wm. Wrigley Jr. Company 1997 Management Incentive Plan.
Incorporated by reference to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30,
1997.
13. 1999 Annual Report to Stockholders of the Registrant.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors. (See page 10)
24. Power of Attorney.
27. Financial Data Schedule.
99. Forward-Looking Statements.
Copies of Exhibits are not attached hereto, but the Registrant will
furnish them upon request and upon payment to the Registrant of a fee
in the amount of $20.00 representing reproduction and handling costs.
F-3
<PAGE>
THE GLOBE AND SPEAR
WM. WRIGLEY JR. COMPANY ANNUAL REPORT 1999
The Wrigley Spear has been associated with the established brands
of Wrigley's chewing gum since it was first used in 1893 and is
recognized by consumers worldwide as a symbol of quality.
Back in the early 1970's, to reflect the Company's growing
international presence, a Wrigley artist first depicted the Spear
encircling the globe. The Globe and Spear is now a registered
trademark of the Wm. Wrigley Jr. Company. Wrigley brands are
produced in 14 factories around the world and sold in over 140
countries. Wrigley's chewing gum represents a truly American
product known throughout the world and enjoyed daily by millions.
<TABLE>
<CAPTION>
<C> <S>
CONTENTS
2 Wrigley at a Glance
4 President's Letter
8 Highlights
9 Consolidated Statement of Earnings
10 Consolidated Balance Sheet
12 Consolidated Statement of Cash Flows
13 Consolidated Statement of Stockholders' Equity Including Comprehensive Income
14 Accounting Policies and Notes to Consolidated Financial Statements
22 Report of Management
23 Report of Independent Auditors
24 Management's Discussion and Analysis
27 Quarterly Data
28 Selected Financial Data
31 Elected Officers
32 Board of Directors
34 Stockholder Information
36 Corporate Facilities and Principal Associated Companies
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WRIGLEY at a glance
<C> <C> <C>
CHEWING GUM/BUBBLE GUM
Company: Wrigley
Countries Served: Over 140
Website: www.wrigley.com
Major Brands: [Airwaves Logo] [Hubba Bubba Logo]
[Big Red Logo] [Ice White Logo]
[Doublemint Logo] [Juicy Fruit Logo]
[Eclipse Logo] [Orbit Logo]
[Excel Logo] [P.K. Logo]
[Extra Logo] [Wrigley's Spearmint Logo]
[Freedent Logo] [Winterfresh Logo]
BUBBLE GUM/CONFECTIONS
Company: Amurol Confections
Countries Served: Over 50
Websites: www.bubblegum.com
www.confections.com
Major Brands: [Big League Chew Logo] [Bubble Tape Logo]
[Blasters Logo] [Bug City Candy Tarts Logo]
[Bubble Jug Bubble Gum Logo] [Everest Powerful Mint Gum Logo]
GUM BASE
Company: L.A. Dreyfus
Website: www.ladreyfus.com
FLAVORING
Company: Northwestern Flavors
</TABLE>
<PAGE>
[WRIGLEY LETTERHEAD]
TO THE STOCKHOLDERS AND EMPLOYEES OF THE WM. WRIGLEY JR. COMPANY
At the Wrigley Company, we have always chosen to look to the future
rather than focus on the past. At the beginning of a new era,
however, some reflection on the past will help provide an
understanding of the foundation that has been laid to allow the
Company to take full advantage of promising opportunities on the
horizon.
In many ways, 1999 was a transitional year for us, as we came to
grips with a number of changes both within and outside the Company.
We also faced a wide range of market conditions that affected our
business performance.
The U.S. chewing gum market had lost momentum over the past few
years. Wrigley shipment trends reached a low point in mid-1999, as
our second quarter U.S. volume experienced a sharp drop from the
prior year, reflecting competitive activity and retail inventory
consolidations. Our management and marketing teams took a fresh
look at the situation and revised our business plans for the second
half of 1999. With some new trade initiatives, additional
advertising investments, and a recharged sales team, we were able
to inject new vitality into our U.S. business. Strong shipment
increases during the second half of the year offset the volume
shortfall experienced through June. This initial business momentum
is encouraging and puts us on stronger footing heading into 2000,
particularly with new product initiatives and new advertising
efforts planned for the U.S. market throughout the year.
Turning to our overseas business, we weathered some economic
upheavals in Russia without slowing down our plant construction in
St. Petersburg or reducing the size of our hard-working local team.
As market conditions have improved, the same employee enthusiasm
and entrepreneurial spark that helped Wrigley products become top-
sellers in Russia prior to the current economic turmoil are again
being applied to advance our business interests. While Russia
remains unsettled because its economy and government are still in
transition, we continue to be positive about the long-term market
prospects.
Our business in the Philippines, also complicated by difficult
economic conditions, improved during the second half of 1999,
though it was below 1998 levels for the full year. At our new and
expanded factory, located in Antipolo City, our Philippine
associates continue to gear up production capacity to serve
recovering export markets across Southeast Asia.
<PAGE>
Overall, our international operations remained an engine of growth
for our business. Excluding Russia and the Philippines,
international volume increased by a healthy 6%. The biggest
contributors to the gain were existing products in a mix of
developed and emerging markets--China, Poland, France, and Vietnam-
- -which averaged growth in excess of 20%. New product rollouts also
continued, particularly across Europe, as Airwaves(R) and Ice
White(R) were made available to a growing number of markets.
The continuing shift of our business base to international markets
has served the Company well overall, but there are risks associated
with operating a truly global enterprise. In addition to political
risk, highlighted by this past year's conflict in the Balkans,
there is currency risk. Over the long haul, the ebbs and flows of
currency fluctuations tend to even out. During the past couple of
years, however, currency devaluations have reduced the impact of
our solid underlying international volume growth when overseas
sales and earnings results were translated back to U.S. dollars.
While we expect currency changes to remain an issue as we go
forward, we think the potential benefits of expanding the
international presence of Wrigley brands far outweigh the risks.
The common thread of each new action initiated during 1999 was a
focus on growth. Our Company's greatest assets are its people and
its brands, and we sought out ways to support our people and
invigorate our brands. As in past years, I spent a good portion of
1999 on the road. At each and every Wrigley location I visited, our
global associates continued to impress me with their ideas, energy,
and commitment to the business.
Through the whirlwind of events and activities of the last twelve
months, the most enduring image in my mind is that of my father. No
one worked longer or harder or with more passion for the Company
than William Wrigley. It was a privilege to have worked and learned
at his side for the past fourteen years, and no one feels his loss
more deeply than do I.
The overall vitality of the Company is a testimonial to the hard
work and vision of my father, grandfather and great grandfather.
William Wrigley Jr., the Company's founder and the ultimate
salesman, took chance after chance in order to make Wrigley a
household name across the United States and gain toeholds in
various international markets. My grandfather, Philip K. Wrigley,
guided the Company through the hardships of the Great Depression
and the shortages of World War II; and with innovative advertising
and an increasing focus on world markets, he firmly established our
Company's foundation. My father, William Wrigley, made the Company
truly global - consolidating its strength in the U.S. home market,
while dramatically increasing its presence across Europe, Asia and
the Pacific.
<PAGE>
Their record of accomplishments is both a marvelous legacy and a
daunting challenge. As a result of these three leaders and the
dedicated teams of employees who supported them, Wrigley brands are
well known, widely respected and readily available around the
world.
But, in today's marketplace, we need to do even more. It is
critical that our brands, our people and, therefore, our business
continue to grow and evolve. Our corporate vision and challenge is
to "weave Wrigley brands into the fabric of everyday life around
the world." In order to reap the rewards of this long-range
perspective, everyone across our global organization--whether in
production, sales, research and development, finance, or the
supporting groups for these activities--will have to push and
stretch as never before.
For our business to thrive in the future, we must steadfastly hold
to certain values that have been keys to our historic success,
while changing our pace and mode of operation. The Company's
foundation remains one of talented people, quality products,
widespread distribution, bold merchandising and effective
advertising. Our corporate culture remains one that affords people
trust, dignity and respect. In terms of change, an intensified
sense of urgency will help us respond to the ever more competitive
business environment we face. Also essential for advancing the
Wrigley Company's business around the world and achieving long-term
success are a spirit of innovation, a willingness to take measured
risk, and strong global communications. In addition, we must make
sure that we have a deep understanding of our trade customers and
our ultimate consumers. To reinforce our relationships with the
trade and consumers, we must also put responsibility and
accountability in the hands of those closest to them. Some of these
principles and practices are already being employed, but they need
to become instinctive throughout our organization. As the year 2000
unfolds, we will strive to have this model for success pervade all
our operations.
As we step forward into this new year, challenges and opportunities
abound. We have a very solid base of business upon which to build.
While we remain focused on producing strong operating results, we
must also properly develop our longer-term, strategic business
opportunities. The growth we seek is the kind that can carry us
across generations. We always strive to increase shareholder value,
but we do so with a time horizon that goes beyond the next quarter
and can range beyond the next year. Our design is to constantly
invest for the future while harvesting the results of previous
investments. Though we establish growth targets, there can be some
variability in results depending upon the particular investments
required to ensure the long-term vitality of the business.
<PAGE>
In recent years, we stepped up capital investments in order to
create sufficient capacity to deliver the right products to the
right places and to meet projected demand. For the first time in
five years, capital spending declined in 1999, and it is expected
to moderate again in 2000. Although we are making a major
investment to enable the manufacturing of sugarfree pellet
products, such as Eclipse(R), in the United States, no new plants
are scheduled for construction in the coming year. It is important
to note, however, that other significant investments--in people,
information technology, product development and advertising--will
be required to address new opportunities and stimulate business
growth.
Times of transition and challenge can either weaken or strengthen
an organization. Our Company has gained vitality despite the
difficulties of this past year, primarily because so many
individuals have risen to the occasion and performed above and
beyond the call of duty. In addition to friends and family, the
employees and stockholders of this Company have provided me with
tremendous support, and I am deeply appreciative of all your good
wishes.
Now, the year of transition is over, and a new era has begun.
While mindful of the many competitive and economic challenges the
Company faces, I am energized by the possibilities and the
potential of our business. With your continued support, I look
forward to the accelerated evolution and aggressive expansion of
our Company and our brands around the world.
Sincerely,
[WRIGLEY, JR. SIGNATURE]
William Wrigley, Jr.
<PAGE>
HIGHLIGHTS OF OPERATIONS
<TABLE>
<CAPTION>
1999 1998
In thousands of dollars except for per share amounts
<S> <C> <C>
NET SALES $ 2,061,602 $ 2,004,719
Earnings before factory sale $ 308,183 $ 297,738
- --Per Share of Common Stock (basic and diluted)$ 2.66 $ 2.57
NET EARNINGS $ 308,183 $ 304,501
- --Per Share of Common Stock (basic and diluted)$ 2.66 $ 2.63
DIVIDENDS PAID $ 153,812 $ 150,835
- --Per Share of Common Stock $ 1.33 $ 1.30
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT $ 127,733 $ 148,027
STOCKHOLDERS' EQUITY $ 1,138,775 $ 1,157,032
RETURN ON AVERAGE EQUITY 26.8% 28.4%
STOCKHOLDERS AT CLOSE OF YEAR 38,626 38,052
AVERAGE SHARES OUTSTANDING (000) 115,861 115,964
For additional historical financial data see page 28.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
<TABLE>
<CAPTION>
1999 1998 1997
In thousands of dollars except for per share amounts
<S> <C> <C> <C>
EARNINGS
REVENUES:
Net sales $ 2,061,602 2,004,719 1,937,021
Investment and other income 17,636 18,636 17,153
Total revenues 2,079,238 2,023,355 1,954,174
COSTS AND EXPENSES:
Cost of sales 854,931 848,363 847,366
Costs (Gains) related to factory closure and sale --- (10,404) 3,300
Selling, distribution and general administrative 779,168 743,902 708,310
Interest 709 615 958
Total costs and expenses 1,634,808 1,582,476 1,559,934
EARNINGS BEFORE INCOME TAXES 444,430 440,879 394,240
INCOME TAXES 136,247 136,378 122,614
NET EARNINGS $ 308,183 304,501 271,626
PER SHARE AMOUNTS
NET EARNINGS PER SHARE OF COMMON STOCK
(BASIC AND DILUTED) $ 2.66 2.63 2.34
DIVIDENDS PAID PER SHARE OF COMMON STOCK $ 1.33 1.30 1.17
See accompanying accounting policies and notes.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
1999 1998
In thousands of dollars
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 288,386 $ 214,572
Short-term investments, at amortized cost 18,528 137,112
Accounts receivable
(less allowance for doubtful accounts:
1999 -- $9,194; 1998--$7,564) 181,720 171,537
Inventories--
Finished goods 60,885 64,934
Raw materials and supplies 196,785 191,174
257,670 256,108
Other current assets 42,301 48,816
Deferred income taxes--current 15,141 15,027
Total current assets 803,746 843,172
MARKETABLE EQUITY SECURITIES, AT FAIR VALUE 43,201 39,888
DEFERRED CHARGES AND OTHER ASSETS 114,796 92,183
DEFERRED INCOME TAXES--NONCURRENT 26,862 25,522
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 37,527 36,013
Buildings and building equipment 312,663 310,212
Machinery and equipment 712,585 642,556
1,062,775 988,781
Less accumulated depreciation 503,635 468,691
Net property, plant and equipment 559,140 520,090
TOTAL ASSETS $1,547,745 $ 1,520,855
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 1998
In thousands of dollars and shares
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 86,583 76,691
Accrued expenses 74,816 67,848
Dividends payable 40,073 23,222
Income and other taxes payable 49,654 49,491
Deferred income taxes--current 699 1,374
Total current liabilities 251,825 218,626
DEFERRED INCOME TAXES--NONCURRENT 44,963 40,312
OTHER NONCURRENT LIABILITIES 112,182 104,885
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: 1999--93,607 SHARES; 1998--93,007 shares 12,481 12,401
Class B Common Stock--convertible
Authorized: 80,000 shares
Issued and outstanding:
1999--22,614 SHARES; 1998--23,214 shares 3,015 3,095
Additional paid-in capital 273 272
Retained earnings 1,322,137 1,184,617
Common Stock in treasury, at cost
(1999--1,725 SHARES; 1998--111 shares) (125,712) (6,712)
Accumulated other comprehensive income--
Foreign currency translation adjustment (100,270) (61,339)
Unrealized holding gains on marketable equity
securities 26,851 24,698
(73,419) (36,641)
Total stockholders' equity 1,138,775 1,157,032
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,547,745 1,520,855
See accompanying accounting policies and notes.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1999 1998 1997
In thousands of dollars
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 308,183 304,501 271,626
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 61,225 55,774 50,439
(Gain) Loss on sales of
property, plant and equipment 390 168 (1,141)
Gain related to factory sale -- (10,404) --
(Increase) Decrease in:
Accounts receivable (21,174) (12,297) (19,977)
Inventories (9,894) (6,299) (26,916)
Other current assets 2,807 1,310 (19,053)
Other assets and deferred charges (22,277) (17,350) 11,123
Increase (Decrease) in:
Accounts payable 13,519 4,499 1,549
Accrued expenses 9,734 (3,869) 16,182
Income and other taxes payable 2,649 (4,445) 1,779
Deferred income taxes 2,024 9,826 (2,608)
Other noncurrent liabilities 10,850 2,433 11,475
Net cash provided by operating activities 358,036 323,847 294,478
INVESTING ACTIVITIES
Additions to property, plant and equipment (127,733) (148,027) (126,509)
Proceeds from property retirements 7,909 10,662 6,888
Purchases of short-term investments (32,078) (109,292) (156,553)
Maturities of short-term investments 150,300 92,676 153,550
Net cash used in investing activities (1,602) (153,981) (122,624)
FINANCING ACTIVITIES
Dividends paid (153,812) (150,835) (135,680)
Common Stock purchased (121,268) (7,679) (3,676)
Net cash used in financing activities (275,080) (158,514) (139,356)
Effect of exchange rate changes
on cash and cash equivalents (7,540) (3,407) (7,104)
Net increase in cash and cash equivalents 73,814 7,945 25,394
Cash and cash equivalents at beginning of year 214,572 206,627 181,233
Cash and cash equivalents at end of year $ 288,386 214,572 206,627
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 130,562 133,530 126,925
Interest paid $ 709 1,164 900
Interest and dividends received $ 17,579 19,458 16,598
See accompanying accounting policies and notes.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
INCLUDING COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Total
Common Class B Additional Common Other Stock-
Shares Common Common Paid-In Retained Stock in Comprehensive Holders'
Outstanding Stock Stock Capital Earnings Treasury Income Equity
In thousands of dollars and shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1996 91,815 $12,275 3,221 238 898,512 (12,911) (3,904) 897,431
Net earnings 271,626 271,626
Other comprehensive income:
Currency translation (50,318) (50,318)
Unrealized holding gain on
marketable equity securities,
net of $2,748 tax 5,103 5,103
Total comprehensive income 226,411
Dividends to shareholders (137,999) (137,999)
Treasury share purchases (56) (3,676) (3,676)
Options exercised and
stock awards granted 55 (12) 3,224 3,212
Conversion from
Class B Common to
Common 479 64 (64) --
BALANCE DECEMBER 31, 1997 92,293 12,339 3,157 226 1,032,139 (13,363) (49,119) 985,379
Net earnings 304,501 304,501
Other comprehensive income:
Currency translation 3,695 3,695
Unrealized holding gain on
marketable equity securities,
net of $4,729 tax 8,783 8,783
Total comprehensive income 316,979
Dividends to shareholders (152,023) (152,023)
Treasury share sales,
net of purchases 104 4,078 4,078
Options exercised and
stock awards granted 37 46 2,573 2,619
Conversion from
Class B Common to
Common 462 62 (62) --
BALANCE DECEMBER 31, 1998 92,896 12,401 3,095 272 1,184,617 (6,712) (36,641) 1,157,032
Net earnings 308,183 308,183
Other comprehensive income:
Currency translation (38,931) (38,931)
Unrealized holding gain on
marketable equity securities,
net of $1,160 tax 2,153 2,153
Total comprehensive income 271,405
Dividends to shareholders (170,663) (170,663)
Treasury share purchases (1,637) (120,861) (120,861)
Options exercised and
stock awards granted 23 1 1,861 1,862
Conversion from
Class B Common to
Common 600 80 (80) --
BALANCE DECEMBER 31, 1999 91,882 $12,481 3,015 273 1,322,137 (125,712) (73,419) 1,138,775
See accompanying accounting policies and notes.
</TABLE>
<PAGE>
ACCOUNTING POLICIES AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except for per share figures
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.
Certain amounts reported in 1997 and 1998 have been reclassified to
conform to the 1999 presentation.
FACTORY SALE
In the first quarter of 1998, the Company sold its real estate
holding in Santa Cruz, California and recorded a pretax gain of
approximately $10,404 and net earnings of approximately $6,763 or
$.06 per share. Proceeds from the sale of $7,434 are included in
proceeds from property retirements in the consolidated statement of
cash flows.
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 $303,220 in 1999, $291,344 in 1998 and
$279,689 in 1997.
INVESTMENTS IN DEBT & EQUITY SECURITIES
The Company's investments in debt securities, which typically
mature in one year or less, are held to maturity and are valued at
amortized cost, which approximates fair value. The aggregate fair
values at December 31, 1999 and December 31, 1998 were,
respectively, $15,567 and $124,645 for municipal securities, and
$2,961 and $12,467 for other debt securities. The average yield of
municipal securities held at December 31, 1999 and December 31,
1998 is 3.35% and 4.03%, respectively.
The Company's investments in marketable equity securities are held
for an indefinite period. Application of Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," resulted in unrealized
holding gains of $41,310 at December 31, 1999 and $37,997 at
December 31, 1998. Unrealized holding gains, net of the related tax
effect, of $26,851 and $24,698 at December 31, 1999 and 1998,
respectively, are included as components of accumulated other
comprehensive income in 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 $257,670 and $256,108 at December 31, 1999 and
1998, respectively, including $106,581 and $106,750, respectively,
valued at cost on a LIFO basis. If current costs had been used,
such inventories would have been $29,673 and $37,330 higher than
reported at December 31, 1999 and 1998, respectively.
DEPRECIATION
Depreciation is provided over the estimated useful life of the
respective asset: 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>
1999 1998 1997
<S> <C> <C> <C>
Straight-line $41,976 35,602 32,485
Accelerated $19,249 20,172 17,954
</TABLE>
ACCRUED EXPENSES
Accrued expenses at December 31, 1999 and 1998 included $29,616 and
$27,606 of payroll expenses, respectively.
LINE OF CREDIT
In 1999, the Company entered into a $100,000 line of credit. There
were no borrowings outstanding under this line at December 31,
1999. The line of credit expires in October 2000.
<PAGE>
OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities at December 31, 1999, included
liabilities for approximately $53,000 of deferred compensation and
$17,400 for postretirement benefits. At December 31, 1998, they
included liabilities for approximately $49,100 of deferred
compensation and $17,600 for postretirement benefits.
FOREIGN CURRENCY TRANSLATION AND EXCHANGE CONTRACTS
The Company has determined that the functional currency for each
associated company except for certain 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 non-speculative hedges
against future purchase transactions with other associated
companies and outside vendors. In addition, the Corporate
headquarters 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 the expiration of the contracts, offset
foreign exchange gains or losses on the related transactions being
hedged. At December 31, 1999, open foreign exchange contracts for a
number of currencies, primarily British pounds, Euros, and U.S.
dollars, maturing at various dates through December 31, 2000,
aggregated $111,289. Open foreign exchange contracts at December
31, 1998, aggregated $163,765. Unrealized gains or losses on these
contracts were not significant as of either December 31, 1999 or
1998.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging
Activities." This statement, which is effective for fiscal years
beginning after June 15, 2000, establishes accounting and reporting
standards which require derivatives to be measured at fair value
and recognized as assets or liabilities in the balance sheet. The
Company does not anticipate that the balance sheet or statements of
earnings and cash flows will be materially impacted by this
statement upon adoption.
COMMON STOCK
In addition to its Common Stock, the Company has Class B Common
Stock outstanding. 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 Company's Management
Incentive Plan (1997 MIP) or under a resolution adopted by the
Board of Directors. On August 18, 1993, the Board of Directors
authorized a share repurchase program to purchase up to $100,000 of
shares in the open market. On October 27, 1999, the Company's Board
of Directors authorized an additional $200,000 in share
repurchases. During 1999, the Company purchased 1,608,800 shares at
an aggregate price of $118,819 under the 1993 and 1999 authorities.
No shares were repurchased prior to 1999 under the 1993 authority.
During the fourth quarter of 1999, in connection with the stock
repurchase program, the Company sold put options to an independent
third party that entitle the holder of the options to sell shares
of Company Common Stock to the Company on certain dates at
specified prices. On December 31, 1999, two options were
outstanding (representing 250,000 shares in aggregate) with a
strike price of $83.47 per share. The put options expire between
March 2000 and June 2000. The outstanding put options permit a net
share settlement at the Company's option and do not result in a put
option liability on the balance sheet.
<PAGE>
ACCOUNTING POLICIES AND NOTES (CONTINUED)
STOCK BASED COMPENSATION PLANS
On March 5, 1997, stockholders approved the 1997 MIP. The 1997 MIP
authorizes the granting of up to 5,000,000 shares of the Company's
new or reissued Common Stock. The 1997 MIP was designed to provide
key employees the opportunity to participate in the long-term
growth and profitability of the Company through cash and equity-
based incentives. In accordance with the 1997 MIP, shares of
Wrigley stock or deferral share units may be granted under the
Wrigley Stock Option program or awarded under the Long-Term Stock
Grant and Stock Award programs. Deferral share units are also
awarded to non-employee directors. Options outstanding have been
granted at prices which are equal to the fair market value of the
stock on the date of grant. Generally, options vest over a four-
year period and expire ten years from the date of grant. No options
were granted or outstanding during 1998 or 1997. The status of the
Company's Stock Option program is summarized below:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
NUMBER OF SHARES EXERCISE PRICE
<S> <C> <C>
Outstanding at December 31, 1998 -- --
Granted 551,000 $86.0600
Exercised -- --
Cancelled 12,000 $87.5625
Outstanding at December 31, 1999 539,000 $86.0266
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25 and
related interpretations in accounting for stock based compensation
plans. Accordingly, as the exercise price equaled the fair market
value on the date of grant, no compensation cost has been
recognized for the Stock Option program. Compensation costs for
other stock based compensation plans were not material. Had
compensation cost for the Stock Option program been determined
based on fair value of the options at the date of grant, consistent
with SFAS No. 123, the Company's net earnings and earnings per
share would have been reduced as follows:
<TABLE>
<CAPTION>
BASIC AND DILUTED
NET EARNINGS EARNINGS PER SHARE
<S> <C> <C>
As reported $308,183 $2.66
Pro forma $306,965 $2.65
</TABLE>
The fair value of each option on the date of grant is estimated
using the Black-Scholes option-pricing model. The weighted average
fair value of each option granted using the model was $25.29 in
1999. The table below summarizes the key assumptions for 1999:
<TABLE>
<CAPTION>
INTEREST RATE DIVIDEND YIELD EXPECTED VOLATILITY EXPECTED LIFE
<S> <C> <C> <C> <C>
6.00% 1.60% 22.6% 6 years
</TABLE>
The table below summarizes key information about stock options
at December 31, 1999:
<TABLE>
<CAPTION>
OUTSTANDING STOCK OPTIONS EXERCISABLE STOCK OPTIONS
WEIGHTED-AVG WEIGHTED WEIGHTED-
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE CONTRACTUAL EXERCISE EXERCISE
PRICES SHARES LIFE PRICE SHARES PRICE
<S> <C> <C> <C> <C> <C>
$70-79 82,000 10 77.8388 -- --
$80-89 457,000 10 87.4983 -- --
</TABLE>
<PAGE>
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 balances are as
follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Accrued Compensation, Pension and
Postretirement Benefits $ 26,111 25,592
Depreciation (15,583) (14,300)
Unrealized Holding Gains (14,459) (13,297)
Factory Closure and Related Costs 54 239
All Other--Net 218 629
Net Deferred Tax Liability $ (3,659) (1,137)
</TABLE>
Balance sheet classifications of deferred taxes are as follows:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Deferred Tax Asset--
Current $ 15,141 15,027
Noncurrent 26,862 25,522
Deferred Tax Liability--
Current (699) (1,374)
Noncurrent (44,963) (40,312)
Net Deferred Tax Liability $ (3,659) (1,137)
</TABLE>
Applicable U.S. income and foreign withholding taxes have not been
provided on approximately $498,703 of undistributed earnings of
international associated companies at December 31, 1999. These
earnings are considered to be permanently invested and, under the
tax laws, are not subject to such taxes until distributed as
dividends. Tax on such potential distributions would be
substantially offset by foreign tax credits. If the earnings were
not considered permanently invested, approximately $40,000 of
deferred income taxes would be provided.
Income taxes are based on pre-tax earnings which are distributed
geographically as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Domestic $ 154,240 188,472 172,391
Foreign 290,190 252,407 221,849
$ 444,430 440,879 394,240
</TABLE>
Reconciliation of the provision for income taxes computed at the
U.S. Federal statutory rate of 35% for 1999, 1998, and 1997 to the
reported provision for income taxes is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Provision at U.S. Federal
Statutory Rate $ 155,551 154,276 137,984
State Taxes--Net 6,414 5,588 8,133
Foreign Tax Rates (14,835) (13,634) (1,178)
Tax Credits
(principally foreign) (9,189) (3,575) (16,638)
Other--Net (1,694) (6,277) (5,687)
$ 136,247 136,378 122,614
</TABLE>
The components of the provision for income taxes for 1999, 1998,
and 1997 are:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
<S> <C> <C> <C>
1999
Federal $ 20,262 (1,807) 18,455
Foreign 103,253 4,674 107,927
State 10,708 (843) 9,865
$ 134,223 2,024 136,247
1998
Federal $ 34,083 5,116 39,199
Foreign 83,623 4,710 88,333
State 8,846 -- 8,846
$ 126,552 9,826 136,378
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
</TABLE>
RETIREMENT AND POSTRETIREMENT PLANS
The Company maintains noncontributory defined benefit plans
covering substantially all of its employees in the U.S. and at
certain international associated companies. Retirement benefits are
a function of 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.
<PAGE>
ACCOUNTING POLICIES AND NOTES (CONTINUED)
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, noncontributory supplemental retirement plan.
Domestic plan assets consist primarily of marketable equity and
fixed income securities. Foreign plan assets consist primarily of
marketable equity and fixed income securities, and contracts with
insurance companies.
In addition, the Company maintains certain postretirement plans
which provide limited health care 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 during the employee's active working career.
The funded status of the defined benefit plans and postretirement
benefit plans were as follows:
<TABLE>
DEFINED BENEFIT PLANS POSTRETIREMENT BENEFIT PLANS
1999 1998 1999 1998
CHANGE IN BENEFIT OBLIGATION
<S> <C> <C> <C> <C>
Benefit Obligation at Beginning of Year$ 345,600 309,800 $ 26,700 27,900
Service Cost 12,600 11,400 1,100 900
Interest Cost 22,800 22,200 1,900 1,700
Plan Participants' Contributions 400 300 -- --
Actuarial Loss (Gain) (43,200) 16,100 (3,000) (3,100)
Other (300) (700) -- --
Benefits Paid (16,100) (13,500) (1,300) (700)
Benefit Obligation at End of Year $ 321,800 345,600 $ 25,400 26,700
CHANGE IN PLAN ASSETS
Fair Value at Beginning of Year $ 373,700 343,000 $ 11,500 8,200
Actual Return on Plan Assets 28,900 34,300 1,600 1,100
Employer Contribution 1,800 8,300 1,800 2,900
Plan Participants' Contributions 2,100 1,800 -- --
Other 400 (200) -- --
Benefits Paid (16,100) (13,500) (1,300) (700)
Fair Value at End of Year $ 390,800 373,700 $ 13,600 11,500
Funded (Underfunded) Status
of the Plan $ 69,000 28,100 (11,800) (15,200)
Unrecognized Net Actuarial Gain (71,300) (31,100) (5,600) (2,400)
Unrecognized Prior Service Costs 9,200 10,800 -- --
Unrecognized Transition Asset (3,100) (3,900) -- --
Prepaid (Accrued) Benefit Cost $ 3,800 3,900 $ (17,400) (17,600)
</TABLE>
The following table provides amounts recognized in the balance
sheet as of December 31:
<TABLE>
<CAPTION>
DEFINED BENEFIT PLANS POSTRETIREMENT BENEFIT PLANS
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Prepaid Benefit Cost $ 9,200 8,900 $ -- --
Accrued Benefit Liability (5,400) (5,000) (17,400) (17,600)
Net Amount Recognized $ 3,800 3,900 $ (17,400) (17,600)
</TABLE>
<PAGE>
The Company's non-qualified, unfunded, noncontributory supplemental
retirement plan has an accumulated benefit obligation in the amount
of $5,100 and $5,800 at December 31, 1999 and 1998, respectively.
The components of net pension and net periodic postretirement
benefit costs are as follows:
<TABLE>
<CAPTION>
DEFINED BENEFIT PLANS POSTRETIREMENT BENEFIT PLANS
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
Service Cost $ 12,600 11,400 10,900 $ 1,100 900 1,000
Interest Cost 22,800 22,200 21,000 1,900 1,700 2,000
Expected Return on
Plan Assets (31,800) (30,400) (25,600) (1,000) (300) (300)
Amortization of
Unrecognized
Transition Assets (800) (900) (800) -- -- --
Prior Service Costs
Recognized 1,600 1,500 1,400 -- -- --
Recognized Net
Actuarial Loss (500) (1,200) (800) (100) (100) --
Other Pension Plans 3,600 3,400 3,900 -- -- --
Net Periodic Benefit
Cost $ 7,500 6,000 10,000 $ 1,900 2,200 2,700
Assumptions used to determine net pension and net periodic postretirement benefit
costs are as follows:
DEFINED BENEFIT PLANS POSTRETIREMENT BENEFIT PLANS
1999 1998 1997 1999 1998 1997
<S> <C> <C> <C> <C> <C> <C>
DISCOUNT RATE
Domestic 7.75% 6.75% 7.25% 7.75% 6.75% 7.25%
Foreign 6.25-7.50% 6.0-8.0% 6.8-8.0% 7.75% 6.75% 7.25%
LONG-TERM RATES OF RETURN ON PLAN ASSETS
Domestic 9.00% 9.00% 8.50% 9.00% 5.50% 5.50%
Foreign 6.5-8.0% 7.0-8.0% 4.0-8.5% -- -- --
RATES OF INCREASE IN COMPENSATION LEVELS
Domestic 4.75% 4.75% 4.75% -- -- --
Foreign 3.0-6.0% 3.3-6.0% 0.0-5.0% -- -- --
</TABLE>
A 6.875% annual rate of increase in the per capita cost of covered
postretirement benefits was assumed for 2000. The rate was assumed
to decrease gradually to 5.0% for 2002 and remain at that level
thereafter.
Increasing or decreasing the health care trend rates by one
percentage point in each year would have the following effect:
<TABLE>
<CAPTION>
1% INCREASE 1% DECREASE
<S> <C> <C>
Effect on Postretirement Benefit Obligation $2,300 (2,000)
Effect on Total of Service and Interest Cost Components $400 (300)
</TABLE>
In addition to the defined benefit plans and postretirement benefit
plans described above, the Company also sponsors defined
contribution plans within the U.S. and at certain international
associated companies. The plans cover full time employees and
provide for contributions between 3% and 5% of salary. The
Company's expense for the defined contribution plans totaled
$4,613, $4,100, and $4,719 in 1999, 1998, and 1997, respectively.
<PAGE>
ACCOUNTING POLICIES AND NOTES (CONTINUED)
SEGMENT INFORMATION
Management organizes the Company's chewing-gum business based on
geographic regions. Intercompany suppliers of flavors, gumbase, and
wrapping materials are classified as "All Other". For operating
profits, "All Other" also includes costs incurred at the corporate
office, net of royalties received from associated companies.
Information by geographic region at December 31, 1999, 1998, and
1997 and for the years then ended is as follows:
<TABLE>
<CAPTION>
NET SALES 1999 1998 1997
<S> <C> <C> <C>
North America, principally U.S. $ 842,129 820,411 828,773
Europe 905,137 898,954 828,351
Asia/Pacific/Latin America 296,724 269,085 262,156
All Other 17,612 16,269 17,741
Net Sales $ 2,061,602 2,004,719 1,937,021
</TABLE>
"All Other" revenues consists primarily of sales of gumbase
to customers.
<TABLE>
<CAPTION>
OPERATING PROFITS 1999 1998 1997
<S> <C> <C> <C>
North America, principally U.S. $ 201,701 217,888 208,471
Europe 200,893 185,693 164,833
Asia/Pacific/Latin America 59,266 40,333 35,381
All Other (26,255) (21,930) (22,046)
Operating Profits 435,605 421,984 386,639
Other Income 8,825 8,491 10,901
Earnings Before Income Taxes,
Factory Closure and Sale 444,430 430,475 397,540
Gains (Costs) Related to Factory
Closure and Sale -- 10,404 (3,300)
Earnings Before Income Taxes $ 444,430 440,879 394,240
</TABLE>
Management separates non-operating items such as foreign currency
transaction gains and losses, investment income, and miscellaneous
income and expense from operating profits. The non-operating items
are classified as "Other Income".
<PAGE>
<TABLE>
<CAPTION>
ASSETS 1999 1998 1997
<S> <C> <C> <C>
North America, principally U.S. $ 514,941 448,565 439,098
Europe 609,805 562,356 466,120
Asia/Pacific/Latin America 198,011 188,041 172,340
All Other 90,229 87,223 69,049
Assets Used in Operating Activities 1,412,986 1,286,185 1,146,607
Corporate 134,759 234,670 196,519
Total Assets $ 1,547,745 1,520,855 1,343,126
</TABLE>
Assets are categorized based upon the geographic segment where they
reside. Assets in "Corporate" consist principally of short-term
investments and marketable equity securities which are held at the
corporate office, as well as certain fixed assets.
<TABLE>
<CAPTION>
DEPRECIATION EXPENSE 1999 1998 1997
<S> <C> <C> <C>
North America, principally U.S. $ 15,545 15,961 16,077
Europe 25,408 19,886 17,098
Asia/Pacific/Latin America 8,302 6,784 5,464
All Other 3,194 3,415 3,046
Depreciation Expense Related to
Operating Activities 52,449 46,046 41,685
Corporate 8,776 9,728 8,754
Total Depreciation Expense $ 61,225 55,774 50,439
</TABLE>
Depreciation expense is categorized consistent with the geographic
region where the asset resides.
<TABLE>
<CAPTION>
CAPITAL EXPENDITURES 1999 1998 1997
<S> <C> <C> <C>
North America, principally U.S. $ 35,984 32,870 22,899
Europe 69,593 86,761 49,965
Asia/Pacific/Latin America 10,461 19,074 31,872
All Other 3,507 6,825 3,370
Capital Expenditures for Operating
Activities 119,545 145,530 108,106
Corporate 9,234 2,938 20,065
Gross Capital Expenditures 128,779 148,468 128,171
Intersegment Asset Transfers (1,046) (441) (1,662)
Net Capital Expenditures $ 127,733 148,027 126,509
</TABLE>
Capital expenditures are categorized based upon the geographic segment
where the expenditure occurred. Intersegment asset transfers are
primarily due to sales between production facilities worldwide. Asset
sales are typically transferred at net book value.
<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 independent 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 24, 2000
<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,
1999 and 1998 and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999. 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 auditing standards
generally accepted in the United States. 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, 1999 and 1998, and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
January 24, 2000
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Dollar amounts in thousands except for per share figures
RESULTS OF OPERATIONS
NET SALES
Consolidated net sales for 1999 increased $56,883 or 3% from 1998.
Net sales for 1999 were favorably affected by product mix, higher
international unit volume and selected selling price increases.
Favorable mix from premium priced products in Europe and North
America increased net sales by 2%. In addition, higher
international shipments increased net sales by 2%, while selected
selling price changes increased net sales by 1%. Translation of
foreign currency sales to a stronger U.S. dollar reduced reported
net sales by approximately 3%.
North American 1999 net sales increased approximately 3% compared
to 1998. While the U.S. maintained volume, net sales increased 1%
as a result of favorable product mix primarily due to the launch of
Eclipse(R), a new product in 1999. Higher unit volume and favorable
product mix at Amurol Confections along with higher unit volume in
the Canadian market increased North American net sales 2%.
International 1999 net sales increased by 8%, excluding the effects
of foreign currency translation. International net sales were
favorably affected by higher unit volume, product mix and selected
selling price increases. Unit volume increased net sales by 3%,
with higher shipments in China and certain European markets
offsetting lower volume in Russia and the Philippines. Favorable
mix from premium priced products in Europe, including the
introduction of new products, increased international net sales by
3%. Finally, selected selling price changes increased international
sales by 2%. International net sales were reduced 4% as a result of
currency translation to a stronger U.S. dollar.
Consolidated net sales for 1998 increased $67,698 or 3% from 1997.
Net sales for 1998 were favorably affected by higher international
unit volume and selected selling price increases. Higher shipments
increased net sales by 4%, while selected selling price changes
increased net sales by 2%. Translation of foreign currency sales to
a stronger U.S. dollar reduced reported net sales by approximately
3%.
North American 1998 net sales decreased approximately 1% compared
to 1997. The U.S. and Canadian markets maintained volume and net
sales levels consistent with the prior year. At Amurol Confections,
lower unit shipments reduced North American volume by about 1%.
International 1998 net sales increased by 11%, excluding the
effects of foreign currency translation. Unit volume increased over
6%, with higher customer shipments in emerging markets such as
Central and Eastern Europe and China offsetting lower volume in
Russia and the Philippines.
INVESTMENT AND OTHER INCOME
In 1999, consolidated investment and other income decreased $1,000
or 5% from 1998. The decrease was primarily due to lower yields on
investments in the U.S. and in Europe.
In 1998, consolidated investment and other income increased $1,483
or 9% from 1997. The increase was mainly due to higher average
investment balances worldwide.
COST OF SALES AND GROSS PROFIT
In 1999, consolidated cost of sales increased $6,568 or less than
1% from 1998. Excluding the effect of foreign currency translation,
the cost of sales increase was approximately 4% from 1998. Higher
shipments in certain international markets and product mix
increased cost of sales by 4%. Consolidated gross profit in 1999
was $1,206,671, an increase of $50,315 or 4% from 1998. The
consolidated gross profit margin on net sales was 58.5% for 1999,
up 0.8% from the 1998 gross margin of 57.7%, mainly due to a
favorable mix of products in Europe.
In 1998, consolidated cost of sales increased $997, essentially
constant with 1997. Excluding the effect of foreign currency
translation, the cost of sales increase was about 3% from 1997.
Excluding the effects of the Santa Cruz closure and sale,
consolidated gross profit in 1998 was $1,156,356, an increase of
$66,701 or 6% from 1997. The consolidated gross profit margin on
net sales was 57.7% for 1998, up over 1% from the 1997 gross margin
of 56.3%, mainly reflecting lower product costs.
<PAGE>
SELLING, DISTRIBUTION, AND GENERAL ADMINISTRATIVE EXPENSES
Consolidated 1999 selling, distribution, and general administrative
expenses increased $35,266 or 5% from 1998. Excluding the effects
of foreign currency translation, the increase was approximately 7%
in 1999, mainly due to higher advertising and other marketing
expenditures in the U.S., Europe and China.
Consolidated 1998 selling, distribution, and general administrative
expenses increased $35,592 or 5% from 1997. Excluding the effects
of foreign currency translation, the increase was approximately 8%
in 1998, mainly due to higher international selling and marketing
expenditures.
As a percentage of consolidated net sales, the expenses were:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Advertising 14.7% 14.5% 14.4%
Selling and Other Marketing 12.6% 12.4% 12.1%
Distribution 2.4% 2.3% 2.3%
General and Administrative 8.1% 7.9% 7.8%
37.8% 37.1% 36.6%
</TABLE>
INCOME TAXES
Income taxes in 1999 decreased $131 or less than 1% from 1998. The
effective consolidated income tax rate was 30.7% in 1999 and 30.9%
in 1998.
Income taxes in 1998 increased $13,764 or 11% from 1997. The
effective consolidated income tax rate was 30.9% in 1998 and 31.1%
in 1997.
NET EARNINGS
Consolidated net earnings in 1999 increased $3,682 and $.03 per
share or 1% from 1998. Excluding the effects of the 1998 Santa Cruz
sale, 1999 net earnings increased $10,445 and $.09 per share or 4%.
Consolidated net earnings in 1998, including the gain related to
the Santa Cruz transaction, increased $32,875 and $.29 per share or
12% from 1997. Excluding the effects of the Santa Cruz closure and
sale, 1998 net earnings increased $23,967 and $.21 per share or 9%.
LIQUIDITY AND CAPITAL RESOURCES
OPERATING CASH FLOW AND CURRENT RATIO
Net cash provided by operating activities in 1999 was $358,036
compared with $323,847 in 1998 and $294,478 in 1997.
The Company has a current ratio (current assets divided by current
liabilities) in excess of 3.1 to 1 at December 31, 1999 and in
excess of 3.8 to 1 at December 31, 1998. The decrease in the 1999
ratio was primarily attributable to lower cash and investment
balances as a result of Company common stock repurchases.
ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT
Capital expenditures for 1999 were $127,733, a decrease of $20,294
from 1998 capital expenditures of $148,027. The 1998 capital
expenditures represented an increase of $21,518 from the 1997
capital expenditures of $126,509. All of the capital expenditures
for 1999 and 1998 were funded from the Company's cash flow from
operations. Additions to property, plant, and equipment in 2000 are
expected to approximate 1999 capital expenditures and are also
planned to be funded from the Company's cash flow from operations.
SHARE REPURCHASES
In 1999, under Board of Director authorities, 1,608,800 shares of
Company stock were repurchased for an aggregate price of $118,819,
net of proceeds received from the sale of put options on Company
stock.
OTHER MATTERS
SALE OF THE SANTA CRUZ FACTORY
In the first quarter of 1998, the Company sold its real estate
holding in Santa Cruz, California and recorded a pretax gain of
approximately $10,404 and net earnings of approximately $6,763 or
$.06 per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
YEAR 2000 READINESS DISCLOSURE
The Company has completed its Year 2000 readiness initiatives and
did not experience any significant problems as a result of the
millennium change. The Company does not anticipate any continued
business impacts related to this issue.
The Company incurred approximately $15,400, including approximately
$2,300 of capital spending, on all of its Year 2000 efforts.
Approximately $5,000 was incurred in 1997, $7,500 in 1998, and
$2,900 in 1999.
EURO CONVERSION
On January 1, 1999, the exchange rates of eleven countries
(Germany, France, the Netherlands, Austria, Italy, Spain, Finland,
Ireland, Belgium, Portugal, and Luxembourg) were fixed amongst one
another and became the currencies of the EURO. The currencies of
the eleven countries will remain in circulation until mid-2002. The
EURO currency will be introduced on January 1, 2002. The Company
does not expect future balance sheets and statements of earnings
and cash flows to be materially impacted by the EURO conversion.
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.
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; and failure of the
Company's suppliers, customers or business partners to be Year 2000
ready.
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.
<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>
1999
First Quarter $481,046 199,724 69,649 .60
Second Quarter 533,331 219,606 87,490 .75
Third Quarter 507,501 208,403 77,600 .67
Fourth Quarter 539,724 227,198 73,444 .64
Total $2,061,602 854,931 308,183 2.66
1998
First Quarter(1) $469,319 200,393 76,106 .66
Second Quarter 541,162 226,854 84,542 .73
Third Quarter 493,955 207,140 73,095 .63
Fourth Quarter 500,283 213,976 70,758 .61
Total $2,004,719 848,363 304,501 2.63
(1) Net earnings and earnings per share for the 1st quarter 1998 included gains of $6,763 and $.06, respectively, related to the
sale of the Santa Cruz factory.
</TABLE>
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 and Chicago Stock Exchanges. The table below presents the high
and low sales prices for the two most recent years on the New York
Stock Exchange.
<TABLE>
<CAPTION>
1999 1998
High Low High Low
<S> <C> <C> <C> <C>
First Quarter $100 5/8 83 83 1/2 73 1/2
Second Quarter 98 81 5/8 104 5/16 78
Third Quarter 89 5/8 66 7/8 102 72 15/16
Fourth Quarter 84 7/16 66 1/2 91 3/8 70 15/16
</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. Beginning in 2000, there will no longer
be an extra dividend payment made each December.
<TABLE>
<CAPTION>
1999 1998
Regular Extra Total Regular Extra Total
<S> <C> <C> <C> <C> <C> <C>
First Quarter $.22 .22 .20 .20
Second Quarter .22 .22 .20 .20
Third Quarter .22 .22 .20 .20
Fourth Quarter .35 .47 .82 .20 .51 .71
Total $1.01 .47 1.48 .80 .51 1.31
</TABLE>
<PAGE>
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1999 1998 1997 1996
<S> <C> <C> <C> <C>
OPERATING DATA
Net Sales $2,061,602 2,004,719 1,937,021 1,835,987
Cost of Sales 854,931 848,363 847,366 814,483
Income Taxes 136,247 136,378 122,614 128,840
Earnings before factory closure and
sale in 1998-96, nonrecurring gain
on sale of Singapore property in 1994,
and cumulative effect of accounting
in 1992 308,183 297,738 273,771 243,262
--Per Share of Common Stock
(basic and diluted) 2.66 2.57 2.36 2.10
Net Earnings 308,183 304,501 271,626 230,272
--Per Share of Common Stock
(basic and diluted) 2.66 2.63 2.34 1.99
Dividends Paid 153,812 150,835 135,680 118,308
--Per Share of Common Stock 1.33 1.30 1.17 1.02
--As a Percent of Net Earnings 50% 50% 50% 51%
Dividends Declared
--Per Share of Common Stock 1.48 1.31 1.19 1.02
Average Shares Outstanding 115,861 115,964 115,964 115,983
OTHER FINANCIAL DATA
Net Property, Plant and Equipment $559,140 520,090 430,474 388,149
Total Assets $1,547,745 1,520,855 1,343,126 1,233,543
Working Capital $551,921 624,546 571,857 511,272
Stockholders' Equity $1,138,775 1,157,032 985,379 897,431
Return on Average Equity 26.8% 28.4% 28.9% 27.2%
Stockholders at Close of Year 38,626 38,052 36,587 34,951
Employees at Close of Year 9,300 9,200 8,200 7,800
Market Price of Stock--High $100.625 104.313 82.063 62.875
--Low $66.500 70.938 54.563 48.375
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
In thousands of dollars and shares except for per share amounts
<S><C> <C> <C> <C> <C> <C> <C>
1,754,931 1,596,551 1,428,504 1,286,921 1,148,875 1,110,639 992,853
778,019 697,442 617,156 572,468 507,795 508,957 451,773
126,492 122,746 103,944 83,730 79,362 70,897 64,277
223,739 205,767 174,891 148,573 128,652 117,362 106,149
1.93 1.77 1.50 1.27 1.09 1.00 .90
223,739 230,533 174,891 141,295 128,652 117,362 106,149
1.93 1.98 1.50 1.21 1.09 1.00 .90
111,401 104,694 87,344 72,511 64,609 58,060 53,506
.96 .90 .75 .62 .55 .49 .45
50% 45% 50% 51% 50% 49% 50%
.99 .94 .75 .63 .55 .51 .47
116,066 116,358 116,511 117,055 117,517 117,743 118,035
347,491 289,420 239,868 222,137 201,386 188,959 171,951
1,099,219 978,834 815,324 711,372 625,074 563,665 498,624
458,683 413,414 343,132 299,149 276,047 229,735 186,588
796,852 688,470 575,182 498,935 463,399 401,386 342,994
30.1% 36.5% 32.6% 29.4% 29.8% 31.5% 32.6%
28,959 24,078 18,567 14,546 11,086 10,497 10,218
7,300 7,000 6,700 6,400 6,250 5,850 5,750
54.000 53.875 46.125 39.875 27.000 19.750 17.917
42.875 38.125 29.500 22.125 16.375 14.583 11.833
</TABLE>
<PAGE>
NONFINANCIAL INFORMATION
<PAGE>
ELECTED OFFICERS--1999
WILLIAM WRIGLEY, JR.
President and Chief Executive Officer
DOUGLAS S. BARRIE
President--International
(retired as of January 1, 2000)
RONALD O. COX
Group Vice President
(retired as of September 1, 1999)
JOHN F. BARD
Executive Vice President
MARTIN J. GERAGHTY
Group Vice President--Worldwide Manufacturing
PETER R. HEMPSTEAD
Senior Vice President--International
RONALD V. WATERS
Senior Vice President and Chief Financial Officer
DONALD E. BALSTER
Vice President--Manufacturing
GARY R. BEBEE
Vice President--Customer Marketing
DAVID E. BOXELL
Vice President--Personnel
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--Organizational Development
STEFAN PFANDER
Vice President--International and
Managing Director-Europe
WM. M. PIET
Vice President--Corporate Affairs and
Assistant to the President
JOHN A. SCHAFER
Vice President--Purchasing
PHILIP G. SCHNELL
Vice President-Research & Development
CHRISTAFOR E. SUNDSTROM
Vice President-Product & Technical Development
REUBEN GAMORAN
Controller
PHILIP C. JOHNSON
Senior Director-Benefits & Compensation
HOWARD MALOVANY
Secretary and General Counsel
ALAN J. SCHNEIDER
Treasurer
<PAGE>
BOARD OF DIRECTORS -- 1999
WILLIAM WRIGLEY
(passed away on March 8, 1999)
COMMITTEES OF THE
BOARD OF DIRECTORS
AUDIT
RICHARD K. SMUCKER Chairman
THOMAS A. KNOWLTON
MELINDA R. RICH
ALEX SHUMATE
COMPENSATION
THOMAS A. KNOWLTON Chairman
PENNY PRITZKER
STEVEN B. SAMPLE
ALEX SHUMATE
NOMINATING
PENNY PRITZKER Chairman
STEVEN B. SAMPLE
RICHARD K. SMUCKER
PHOTO
WILLIAM WRIGLEY, JR.
Director of the Company since 1988
Joined the Wm. Wrigley Jr. Company in 1985
President & Chief Executive Officer since 1999
Senior Vice President (1999)
Vice President (1991-98)
Assistant to the President (1985-92)
Director, The J. M. Smucker Company, since 1991
PHOTO
JOHN F. BARD
Director of the Company since 1999
Joined the Wm. Wrigley Jr. Company in 1991
Executive Vice President since 1999
Senior Vice President (1991-99)
PHOTO
THOMAS A. KNOWLTON
Director of the Company since 1996
Executive Vice President, Kellogg Company (1992-98)
President, Kellogg North America (1994-98)
President, Kellogg Europe (1992-94)
<PAGE>
PHOTO
PENNY PRITZKER
Director of the Company since 1994
Chairman, Classic Residence by Hyatt, since 1987
President, Pritzker Realty Group L.P., since 1987
Director, Coast-to-Coast Financial Corporation, since 1990
PHOTO
MELINDA R. RICH
Director of the Company since 1999
Joined Rich Products Corp. in 1986
Executive Vice President of Innovation since 1997
and Director since 1998
President, Rich Entertainment Group, since 1994
Director, M & T Bank Corp. (Buffalo, NY), since 1994
PHOTO
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
PHOTO
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, Bank One Corporation, since 1993
Director, Intimate Brands, Inc., since 1996
PHOTO
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
<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, IL 60611
1-800-874-0474
You can access your Wrigley stock account information via the
Internet at the following address--http://gateway.equiserve.com.
Additional information about the Wrigley Company in general can be
found on our Internet home page at the following address--
http://www.wrigley.com.
CAPITAL STOCK
Common Stock of the Wm. Wrigley Jr. Company is traded on the New
York and Chicago Stock Exchanges. 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.
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 DRP is administered First Chicago Trust Company, a
division of EquiServe 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 DRP 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 DRP into the account for safekeeping. The Company pays all
brokerage and administrative costs associated with the DRP.
Over 29,000 or 77% of the Company's stockholders of record
currently participate in the DRP. A brochure fully describing the
DRP and its enrollment procedure is available upon request.
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.
ELECTRONIC RECEIPT OF PROXY MATERIALS AND PROXY VOTING
If you are a stockholder of record and would like to receive your
copy of the annual report and proxy statement via the Internet in
the future, you need to complete an online consent form at the
following address--
http://www.econsent.com/wwy. If there are problems with accessing
the form or any questions about it, please contact First Chicago
Trust Company.
<PAGE>
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
seven 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.
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.
COMPANY PUBLICATIONS
The Company's 1999 annual report to the Securities and Exchange
Commission on Form 10-K is expected to be available on or about
April 5, 2000.
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
First Chicago Trust Company,
a division of EquiServe
P. O. Box 2500
Jersey City, NJ 07303-2500
1-800-446-2617
Internet: http://www.equiserve.com
<PAGE>
CORPORATE FACILITIES AND PRINCIPAL ASSOCIATED COMPANIES--1999
CORPORATE FACILITIES
HEADQUARTERS
Wrigley Building
410 North Michigan Avenue
Chicago, Illinois 60611
PRODUCTION FACILITIES
Chicago, Illinois
Gainesville, Georgia
PRINCIPAL ASSOCIATED COMPANIES
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*
Don Mills, Ontario, Canada
WRIGLEY CHEWING GUM COMPANY LTD.*
Guangzhou, Guangdong,
People's Republic of China
WRIGLEY ZAGREB D.O.O.
Zagreb, Croatia
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.) LTD.
Port Moresby, Papua New Guinea
WRIGLEY PHILIPPINES, INC.*
Antipolo City, Philippines
WRIGLEY POLAND SP. ZO.O.*
Poznan, Poland
WRIGLEY ROMANIA PRODUSE ZAHAROASE SRL
Bucharest, Romania
OOO WRIGLEY
Moscow, Russia
St. Petersburg, Russia*
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.
WRIGLEY GIDA TICARET LIMITED SIRKETI
Istanbul, Turkey
WRIGLEY UKRAINE TZOV
Kiev, Ukraine
*Denotes production facility.
<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 ...................................... Canada
Wrigley (Cayman) Ltd. ............................... Cayman Islands
Wrigley Chewing Gum Co. Ltd. ........................ People's Republic of China
Wrigley Taiwan, Limited ............................. Republic of China
Wrigley Zagreb d.o.o ................................ Croatia
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, Kft ............................... 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) Sdn. Bhd. ............ 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
OOO Wrigley ......................................... Russia
Wrigley Slovakia, s.r.o. ............................ Slovakia
Wrigley d.o.o. ...................................... Slovenia
Wrigley Co., S.A. ................................... Spain
Wrigley Gida Ticaret Limited Sirketi ................ Turkey
Wrigley Ukraine TzoV ................................ Ukraine
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.) 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.
<PAGE>
I understand that the information I am furnishing to you herein
will be used by the Company in the preparation of its 2000 Proxy
Statement or its Annual Report to the SEC on Form 10-K for the year
ended December 31, 1999, or both.
If I am a nominee for director, I shall be deemed to have
consented, by virtue of executing this questionnaire, to being
named as such in the Proxy Statement and to serve if elected. I
also understand that should I discontinue my principal position,
association or other identification that existed outside of the
Company at the time of my most recent election to the Board of the
Company, other than by reason of disability or retirement in
accordance with the policies relative to that position, I shall
tender my resignation as a director for consideration by the
Nominating Committee and the full Board promptly following the date
of my discontinuance of such position, association or
identification. Further, should I consider any new or additional
association or affiliation, such as directorships or similar
positions by whatever title, with public or privately-held
commercial enterprises, or should any preexisting association or
affiliation substantially alter the nature of its activities or
purposes, I shall advise the Chairman of the Board, and if there is
no Chairman, the Chief Executive Officer of the Company, so that
any potential conflict of interest or obligation, potential
embarrassment to the Company, or possible inconsistency with
Company policies, values or standards may be identified and
assessed.
In addition, by signing this Questionnaire, I hereby appoint
William M. Piet, Howard Malovany and each of them as my full and
lawful Power of Attorney to sign on my behalf, after my review, the
Annual Report on Form 10-K to be prepared and filed with the
Securities and Exchange Commission for the year ended December 31,
1999.
Date Signature
<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 and operations, 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 influence
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 the inability
to maintain this stability could modify 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 affect results.
- - Both manufacturing and sales of a significant portion of the
Company's products are outside the United States and could be
disadvantaged by volatile foreign currencies and markets.
- - The Company competes worldwide with other well established
manufacturers of chewing gum. The Company's results may be
adversely affected 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 unfavorably affect
shipments from suppliers or shipment of finished product.
- - The failure of basic infrastructure (i.e., utilities) could
impede the ability of the Company's factories to continue
operating.
- - The failure of the Company's suppliers, customers or business
partners to be Year 2000 ready could interrupt the Company's
ability to continue to operate unimpeded into the Year 2000 and
beyond.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<CASH> 288,386
<SECURITIES> 61,729
<RECEIVABLES> 190,914
<ALLOWANCES> 9,194
<INVENTORY> 257,670
<CURRENT-ASSETS> 803,746
<PP&E> 1,062,775
<DEPRECIATION> 503,635
<TOTAL-ASSETS> 1,547,745
<CURRENT-LIABILITIES> 251,825
<BONDS> 0
0
0
<COMMON> 15,496
<OTHER-SE> 1,123,279
<TOTAL-LIABILITY-AND-EQUITY> 1,547,745
<SALES> 2,061,602
<TOTAL-REVENUES> 2,079,238
<CGS> 854,931
<TOTAL-COSTS> 1,634,808
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 709
<INCOME-PRETAX> 444,430
<INCOME-TAX> 136,247
<INCOME-CONTINUING> 308,183
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 308,183
<EPS-BASIC> 2.66
<EPS-DILUTED> 2.66
</TABLE>
