<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended June 30, 2000 Commission file number 1-800
WM. WRIGLEY JR. COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 36-1988190
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
410 North Michigan Avenue
Chicago, Illinois 60611
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 312-644-2121
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes x No .
91,423,802 shares of Common Stock and 22,231,563 shares of Class B
Common Stock were outstanding as of July 14, 2000.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 570,224 533,331 1,073,515 1,014,377
Investment and other income 4,159 4,069 7,891 7,970
Total revenues 574,383 537,400 1,081,406 1,022,347
Costs and expenses:
Cost of sales 221,957 219,606 424,763 419,330
Selling, distribution, and
general administrative 217,079 191,899 412,173 372,447
Interest 187 191 380 364
Total costs and expenses 439,223 411,696 837,316 792,141
Earnings before income taxes 135,160 125,704 244,090 230,206
Income taxes 43,057 38,214 77,382 73,067
Net earnings $ 92,103 87,490 166,708 157,139
Net earnings per average share of
common stock (basic
and diluted) $ .81 .75 1.46 1.35
Dividends declared per share of
common stock $ .35 .22 .70 .44
Average number of shares
outstanding for the period 113,764 116,104 114,004 116,103
</TABLE>
All amounts in thousands except for per share values.
Notes to financial statements beginning on page 5 are an integral
part of these statements.
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONDENSED)
Six Months Ended
June 30,
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $166,708 157,139
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 28,372 28,730
Loss on sales of property, plant,
and equipment 355 228
(Increase) decrease in:
Accounts receivable (45,188) (46,667)
Inventories (4,085) (1,927)
Other current assets 4,727 1,005
Other assets and deferred charges 27,793 (15,101)
Increase (decrease) in:
Accounts payable 6,078 2,489
Accrued expenses 48,915 36,374
Income and other taxes payable 10,973 12,875
Deferred taxes 1,460 (1,765)
Other noncurrent liabilities 1,295 6,110
Net cash provided by operating activities 247,403 179,490
INVESTING ACTIVITIES
Additions to property, plant, and equipment (61,357) (51,758)
Proceeds from property retirements 1,732 5,321
Purchases of short-term investments (84,844) (29,933)
Maturities of short-term investments 74,390 29,081
Net cash used in investing activities (70,079) (47,289)
FINANCING ACTIVITIES
Dividends paid (79,933) (48,765)
Common stock purchased (75,037) (1,073)
Net cash used in financing activities (154,970) (49,838)
Effect of exchange rate changes on cash and
cash equivalents (7,741) (7,675)
Net increase in cash and cash equivalents 14,613 74,688
Cash and cash equivalents at beginning of period 288,386 214,572
Cash and cash equivalents at end of period $302,999 289,260
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid $ 67,446 60,831
Interest paid $ 380 284
Interest and dividends received $ 7,970 7,558
</TABLE>
All amounts in thousands.
Notes to financial statements beginning on page 5 are an integral part
of these statements.
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED BALANCE SHEET (CONDENSED)
June 30, December 31,
2000 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 302,999 288,386
Short-term investments, at amortized cost 28,970 18,528
Accounts receivable
(less allowance for doubtful accounts;
6/30/00 - $8,750; 12/31/99-$9,194) 220,092 181,720
Inventories -
Finished goods 61,502 60,885
Raw materials and supplies 195,245 196,785
256,747 257,670
Other current assets 36,297 42,301
Deferred income taxes - current 14,777 15,141
Total current assets 859,882 803,746
Marketable equity securities at fair value 36,394 43,201
Deferred charges and other assets 86,907 114,796
Deferred income taxes - noncurrent 25,981 26,862
Property, plant, and equipment, at cost 1,091,534 1,062,775
Less accumulated depreciation 514,214 503,635
Net property, plant, and equipment 577,320 559,140
Total assets $ 1,586,484 1,547,745
Current liabilities:
Accounts payable $ 90,106 86,583
Accrued expenses 121,886 74,816
Dividends payable 39,783 40,073
Income and other taxes payable 58,027 49,654
Deferred income taxes - current 594 699
Total current liabilities 310,396 251,825
Deferred income taxes - noncurrent 42,081 44,963
Other noncurrent liabilities 111,965 112,182
Stockholders' equity:
Preferred stock - no par value
Authorized - 20,000 shares
Issued - None
Common stock - no par value
Authorized - 400,000 shares
Issued and outstanding -
93,926 shares at 6/30/00;
93,607 shares at 12/31/99 12,500 12,481
Class B common stock - convertible
Authorized - 80,000 shares
Issued and outstanding -
22,295 shares at 6/30/00;
22,614 shares at 12/31/99 2,996 3,015
Additional paid-in capital 346 273
Retained earnings 1,409,202 1,322,137
Common stock in treasury, at cost -
(6/30/00; 2,698 shares; 12/31/99 - 1,725 shares) (199,657) (125,712)
Accumulated other comprehensive income:
Foreign currency translation adjustment (125,772) (100,270)
Unrealized holding gains on marketable
equity securities 22,427 26,851
(103,345) (73,419)
Total stockholders' equity 1,122,042 1,138,775
Total liabilities & stockholders' equity $ 1,586,484 1,547,745
</TABLE>
All amounts in thousands.
Notes to financial statements beginning on page 5 are an integral part
of these statements.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
1. The Consolidated Statement of Earnings (Condensed) for the three
month and six month periods ended June 30, 2000 and 1999,
respectively, the Consolidated Statement of Cash Flows (Condensed)
for the six month periods ended June 30, 2000 and 1999, and the
Consolidated Balance Sheet (Condensed) at June 30, 2000, are
unaudited. In the Company's opinion, the accompanying financial
statements reflect all adjustments necessary to present fairly the
results for the periods and have been prepared on a basis
consistent with the 1999 audited consolidated financial statements.
These condensed financial statements should be read in conjunction
with the 1999 consolidated financial statements and related notes
which are an integral part thereof. Certain amounts recorded in
1999 have been reclassified to conform to the 2000 presentation.
2. Conformity with generally accepted accounting principles requires
management to make estimates and assumptions when preparing
financial statements that affect assets, liabilities, revenues and
expenses. Actual results may vary from those estimates.
3. An analysis of the cumulative foreign currency translation
adjustment follows (in thousands of dollars).
<TABLE>
Decrease to
Stockholders' Equity
<S> <C> <C>
Second Quarter 2000 1999
Balance at April 1 $ 113,486 87,268
Translation adjustment for
the second quarter 12,286 6,870
Balance at June 30 $ 125,772 94,138
Decrease to
Stockholders' Equity
<S> <C> <C>
Six Months 2000 1999
Balance at January 1 $ 100,270 61,339
Translation adjustment for
the first six months 25,502 32,799
Balance at June 30 $ 125,772 94,138
</TABLE>
4. An analysis of comprehensive income is provided below (in
thousands of dollars).
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net earnings $ 92,103 87,490 166,708 157,139
Other comprehensive income (loss),
before tax:
Foreign currency
translation adjustments (12,286) (6,870) (25,502) (32,799)
Unrealized holding gains (losses)
on securities (4,846) 7,074 (6,807) 4,808
Other comprehensive income (loss),
before tax (17,132) 204 (32,309) (27,991)
Income tax (expense) benefit related
to items of other comprehensive
income 1,696 (2,476) 2,383 (1,683)
Other comprehensive (loss),
net of tax (15,436) (2,272) (29,926) (29,674)
Total comprehensive income $ 76,667 85,218 136,782 127,465
</TABLE>
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONDENSED)
5. Segment Information
Management organizes the chewing-gum business based on geographic
regions. During the first quarter of 2000, management realigned
certain geographic regions for internal reporting purposes. The
segment information presented for the prior periods has been
reclassified to reflect this internal reporting change and is
comparable to the current period. Information by geographic
region is as follows:
<TABLE>
Net Sales Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Americas, principally U.S. $ 242,806 216,760 457,658 414,147
Europe 241,329 239,390 442,713 447,740
Asia 64,879 55,071 129,902 109,750
Pacific 17,417 17,535 35,303 34,110
Other 3,793 4,575 7,939 8,630
Net Sales $ 570,224 533,331 1,073,515 1,014,377
</TABLE>
"Other" revenue consists primarily of sales of gumbase to customers.
<TABLE>
Operating Profits Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Americas, principally U.S. $ 61,896 60,097 111,654 111,459
Europe 68,737 64,554 120,557 115,558
Asia 18,484 12,173 36,194 25,186
Pacific 5,164 5,074 10,354 9,466
Other (22,630) (18,179) (43,023) (37,576)
Operating Profits 131,651 123,719 235,736 224,093
Other Income 3,509 1,985 8,354 6,113
Earnings Before Income Taxes $ 135,160 125,704 244,090 230,206
</TABLE>
"Other" operating profits include corporate expenses such as costs
related to research and development, information systems and certain
administrative functions.
Non-operating items such as foreign currency transaction gains and
losses, investment income, and miscellaneous income and expense are
classified as "Other Income".
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net Sales
Net sales for the second quarter were $570.2 million, up $36.9 million
or 7% versus the second quarter of 1999. Higher worldwide shipments
increased sales revenue by 8%. Additionally, favorable mix and selected
selling price increases in all regions increased sales by approximately
3%. This was offset by translation of weaker European currencies to the
U.S. dollar which reduced sales by approximately 4%.
Net sales for the first six months were $1,073.5 million, up $59.1
million or 6% versus the first six months of 1999. Higher worldwide
shipments increased sales revenue by approximately 7%. In addition,
favorable mix and selected selling price increases in all regions
increased sales by approximately 3%. These increases were offset by
translation of weaker European currencies to the U.S. dollar which
reduced sales by roughly 4%.
Investment and Other Income
Investment and other income for the second quarter was $4.2 million, up
$.1 million or 2% versus the second quarter of last year mainly due to
higher yields.
Investment and other income for the first six months was $7.9 million,
down $.1 million or 1% versus the first six months of last year mainly
due to lower cash balances in the U.S.
Costs of Sales and Gross Profit
Cost of sales for the second quarter was $222.0 million, up $2.4 million
or 1% versus the second quarter of 1999. Higher shipments across all
regions increased cost of sales by 10%. Translation of weaker European
currencies to the U.S. dollar reduced cost of sales by 5%.
Additionally, lower product costs reduced cost of sales by roughly 4%.
Gross profit was $348.3 million, up $34.5 million or 11% from the same
period last year. The gross profit percentage was 61.1%, up from 58.8%
in the second quarter of 1999.
Cost of sales for the first six months was $424.8 million, up $5.4
million or 1% versus the first six months of 1999. Higher shipments
across all regions increased cost of sales by 8%. Translation of weaker
European currencies to the U.S. dollar reduced cost of sales by 4%. In
addition, lower product costs reduced cost of sales by approximately 3%.
Gross profit was $648.8 million, up $53.7 million or 9% from the same
period last year. The gross profit percentage was 60.4%, up from 58.7%
in the first six months of 1999.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Selling, Distribution, and General Administrative Expenses
Consolidated selling, distribution, and general administrative expenses
for the second quarter were $217.1 million, up $25.2 million or 13%
from the same period last year. The increase was mainly due to higher
advertising and other marketing spending in the Americas region.
Consolidated selling, distribution, and general administrative expenses
for the first six months were $412.2 million, up $39.7 million or 11%
from the same period last year. The increase is mainly due to higher
advertising and other marketing spending in the Americas region.
As a percentage of consolidated net sales, the expenses were as follows:
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Advertising 15.4% 14.6% 15.6% 14.7%
Selling and Other Marketing 13.1% 11.8% 13.0% 12.3%
Distribution 2.4% 2.3% 2.4% 2.3%
General and Administrative 7.2% 7.3% 7.4% 7.4%
38.1% 36.0% 38.4% 36.7%
</TABLE>
Income Taxes
Income taxes for the second quarter were $43.1 million, up $4.8 million
or 13% from the second quarter of 1999. Pretax earnings were $135.2
million, an increase of $9.5 million or 8%. The consolidated effective
tax rate was 31.9% compared to 30.4% for the same period last year. The
increased effective tax rate is mainly due to higher taxes on foreign
earnings.
Income taxes for the first six months were $77.4 million, up $4.3
million or 6% from the first six months 1999. Pretax earnings were
$244.1 million, an increase of $13.9 million or 6%. The consolidated
effective tax rate was 31.7% compared to 31.7% for the same period last
year.
Net Earnings
Consolidated net earnings for the second quarter of 2000 totaled $92.1
million or $.81 per share compared to last year's net earnings of $87.5
million or $.75 per share for the same period.
Consolidated net earnings for the first six months of 2000 totaled
$166.7 million or $1.46 per share compared to last year's net earnings
of $157.1 million or $1.35 per share for the same period.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow and Current Ratio
Net cash provided by operating activities for the first six months of
2000 was $247.4 million compared with $179.5 million for the same period
in 1999.
The Company had a current ratio (current assets divided by current
liabilities) in excess of 2.7 to 1 at June 30, 2000 and in excess of 3.1
to 1 at December 31, 1999.
Additions to Property, Plant, and Equipment
Capital expenditures for 2000 are expected to approximate 1999
expenditures of $127.7 million and are expected to be funded from the
Company's cash flow from operations.
Share Repurchases
During the first six months of 2000, under Board of Director authority,
1,008,400 shares of Company stock were repurchased for an aggregate
price of $75.0 million.
OTHER MATTERS
Year 2000
The Company has completed its Year 2000 readiness initiatives and did
not experience any significant problems as a result of the millennium
change.
Market Risk
Inherent in the Company's operations are certain risks related to
foreign currency, interest rates, and the equity markets. The Company
identifies these risks and mitigates their financial impact through its
corporate policies and hedging activities. The Company believes that
movements in market values of financial instruments used to mitigate
identified risks are not expected to have a material impact on future
earnings, cash flows, or reported fair values.
Forward-Looking Statements
Statements contained in this report may be considered to be forward
looking statements. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward looking statements. The Company
wishes to ensure that such statements are accompanied by meaningful
cautionary statements to comply with the safe harbor under the Act. The
Company notes that a variety of factors could cause actual results to
differ materially from the anticipated results or expectations expressed
in these forward looking statements.
Important factors that may influence the operations, performance,
development and results of the Company's business include global and
local business and economic conditions; currency exchange and interest
rates; ingredients, labor, and other operating costs; insufficient or
underutilization of manufacturing capacity; political or economic
instability in local markets; competition; retention of preferred retail
space; effective marketing campaigns or new product introductions;
consumer preferences, spending patterns, and demographic trends;
legislation and governmental regulation; and accounting policies and
practices.
<PAGE>
Form 10Q
PART I - FINANCIAL INFORMATION - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
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.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits reference is made to the Exhibit Index on page 12.
(b) The Company has not filed a Form 8-K for the three month period
ended June 30, 2000.
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FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
WM. WRIGLEY JR. COMPANY
(Registrant)
By /s/ Reuben Gamoran
Controller
Authorized Signatory and Chief
Accounting Officer
Date August 11, 2000
<PAGE>
WM. WRIGLEY JR. COMPANY
AND WHOLLY OWNED ASSOCIATED COMPANIES
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
3(i). Articles of Incorporation of the Registrant. The Registrant's
Restated Articles of Incorporation are incorporated by reference
to Exhibit 3(a) of the Company's Annual Report on Form 10-K
filed for the fiscal year ended December 31, 1992.
3(ii). By-laws of the Registrant. The Registrant's By-laws are
incorporated by reference to Exhibit 3(a) of the Company's
Annual Report on Form 10-K filed for the fiscal year ended
December 31, 1992.
4. Instruments defining the rights of security holders.
The Registrant's Articles of Incorporation contains all
definitions of the rights of the Registrant's Common and Class B
Common stock, representing all of the Registrant's outstanding
securities, and is incorporated by reference to Exhibit 3(a) of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.
10. Material Contracts
10(a). Non-Employee Directors' Death Benefit Plan. Non-Employee
Directors' Death Benefit Plan is incorporated by reference from
Exhibit 10(a) of the Company's Annual Report on Form 10-K filed
for the fiscal year ended December 31, 1994.
10(b). Senior Executive Insurance Plan. Senior Executive Insurance
Plan is incorporated by reference from Exhibit 10(b) of the
Company's Annual Report on Form 10-K filed for the fiscal year
ended December 31, 1995.
10(c). Supplemental Retirement Plan. Supplemental Retirement Plan is
incorporated by reference from Exhibit 10(c) of the Company's
Annual Report on Form 10-K filed for the fiscal year ended
December 31, 1994.
10(d). Deferred Compensation Plan for Non-Employee Directors. Deferred
Compensation Plan for Non-Employee Directors is incorporated by
reference from Exhibit 10(d) of the Company's Annual Report on
Form 10-K filed for the fiscal year ended December 31, 1995.
10(e). Stock Deferral Plan for Non-Employee Directors. The Stock
Deferral Plan for Non Employee Directors is incorporated by
reference from Exhibit 10(e) of the Company's Annual Report on
Form 10-K filed for the fiscal year ended December 31, 1995.
10(g). Wm. Wrigley Jr. Company 1997 Management Incentive Plan is
incorporated by reference from Exhibit 10(g) of the Company's
Quarterly report on Form 10-Q for the quarter ended September
30, 1997.
27. Financial Data Schedule.
--------------------
For copies of Exhibits not attached hereto, the Registrant will furnish
them upon request and upon payment to the Registrant of a fee in the
amount of $20.00 representing reproduction and handling costs.
