<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 September 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 September 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 .
90,737,802 shares of Common Stock and 22,158,563 shares of Class
B Common Stock were outstanding as of October 31, 2000.
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF EARNINGS (CONDENSED)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Revenues:
Net sales $533,294 $507,501 $1,606,809 $1,521,878
Investment and other income 6,109 5,240 14,000 13,210
Total revenues 539,403 512,741 1,620,809 1,535,088
Cost and expenses:
Cost of sales 210,749 208,403 635,512 627,733
Selling, distribution and
general administrative 205,693 192,942 617,866 565,389
Interest 193 174 573 583
Total costs and expenses 416,635 401,519 1,253,951 1,193,660
Earnings before income taxes 122,768 111,222 366,858 341,428
Income taxes 38,926 33,622 116,308 106,689
Net earnings $ 83,842 $ 77,600 $ 250,550 $ 234,739
Net earnings per average share of
common stock (basic
and diluted) $ 0.74 0.67 2.20 2.02
Dividends declared per share of
common stock $ 0.35 0.22 1.05 0.66
Average number of shares
outstanding for the period 113,309 116,100 113,770 116,102
</TABLE>
All amounts in thousands except for per share values.
Notes to financial statements beginning on page 5 are an integral
part of thee statements.
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<TABLE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 1 (Cont'd)
WM. WRIGLEY JR. COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (CONDENSED)
Nine Months Ended
September 30,
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings $250,550 234,739
Adjustment to reconcile net earnings to net
cash provided by operating activities:
Depreciation 42,538 44,602
Loss on sales of property, plant,
and equipment 347 315
(Increase) decrease in:
Accounts receivable (43,085) (43,711)
Inventories (30,397) (23,054)
Other current assets ( 1,067) ( 2,639)
Other assets and deferred charges 28,019 ( 8,262)
Increase (decrease) in:
Accounts payable 14,194 4,530
Accrued expenses 63,519 42,017
Income and other taxes payable 17,535 19,468
Deferred taxes 8 (2,233)
Other noncurrent liabilities 1,213 (985)
Net cash provided by operating activities 343,374 264,787
INVESTING ACTIVITIES:
Additions to property, plant and equipment (79,524) (80,145)
Proceeds from property retirements 1,898 6,053
Purchases of short-term investments (113,859) (31,690)
Maturities of short-term investments 103,146 79,031
Net cash used in investing activities (88,339) (26,751)
FINANCING ACTIVITIES
Dividends paid (119,666) (74,308)
Common stock purchased (126,577) (7,970)
Net cash used in financing activities (246,243) (82,278)
Effect of exchange rate changes on cash
and cash equivalents (16,223) (3,022)
Net increase (decrease) in cash and cash equivalents (7,431) 152,736
Cash and cash equivalents at beginning of period 288,386 214,572
Cash and cash equivalents at end of period $280,955 $367,308
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid $102,082 $ 88,272
Interest paid $ 573 $ 253
Interest and dividends received $ 14,083 $ 12,660
</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)
September 30, December 31,
2000 1999
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 280,955 $ 288,386
Short-term investments, at amortized cost 29,267 18,528
Accounts receivable
(less allowance for doubtful accounts;
9/30/00 - $8,839; 12/31/99 - $9,194) 209,654 181,720
Inventories -
Finished goods 64,774 60,885
Raw materials and supplies 212,701 196,785
277,475 257,670
Other current assets 40,343 42,301
Deferred income taxes - current 15,715 15,141
Total current assets 853,409 803,746
Marketable equity securities at fair value 32,182 43,201
Deferred charges and other assets 85,048 114,796
Deferred income taxes - noncurrent 26,223 26,862
Property, plant and equipment, at cost 1,085,465 1,062,775
Less accumulated depreciation 516,431 503,635
Net property, plant and equipment 569,034 559,140
Total assets $ 1,565,896 $ 1,547,745
Current liabilities:
Accounts payable $ 95,081 $ 86,583
Accrued expenses 133,170 74,816
Dividends payable 39,492 40,073
Income and other taxes payable 61,681 49,654
Deferred income taxes - current 544 699
Total current liabilities 329,968 251,825
Deferred income taxes - noncurrent 39,709 44,963
Other noncurrent liabilities 109,820 112,182
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 -
94,010 shares at 9/30/00;
93,607 shares at 12/31/99 12,535 12,481
Class B common stock - convertible
Authorized - 80,000 shares
Issued and outstanding -
22,211 shares at 9/30/00;
22,614 shares at 12/31/99 2,961 3,015
Additional paid-in capital 346 273
Retained earnings 1,453,140 1,322,137
Common stock in treasury, at cost -
(9/30/00; 3,387 shares; 12/31/99 - 1,725 shares) (251,243) (125,712)
Accumulated other comprehensive income:
Foreign currency translation adjustment (151,062) (100,270)
Unrealized holding gains on marketable
equity securities 19,722 26,851
(131,340) (73,419)
Total stockholders' equity 1,086,399 1,138,775
Total liabilities & stockholders' equity $1,565,896 $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 nine month periods ended September 30, 2000
and 1999, respectively, the Consolidated Statement of Cash
Flows (Condensed) for the nine month periods ended September
30, 2000 and 1999, and the Consolidated Balance Sheet
(Condensed) at September 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 reported 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. In 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No.
133, Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative
instrument be recorded on the balance sheet as either an
asset or liability measured at its fair value. The
statement requires that changes in the derivatives fair
value be recognized currently in earnings unless specific
hedge criteria are met. The Company will be required to
adopt SFAS No. 133 on January 1, 2001. 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.
4. An analysis of the cumulative foreign currency translation
adjustment follows (in thousands of dollars):
<TABLE>
Decrease to
Stockholders' Equity
Third Quarter 2000 1999
<S> <C> <C>
Balance at July 1 $ 125,772 94,138
Translation adjustment for
the third quarter 25,290 (7,697)
Balance at September 30 $ 151,062 86,441
Decrease to
Stockholders' Equity
Nine Months 2000 1999
Balance at January 1 $ 100,270 61,339
Translation adjust for
the first nine months 50,792 25,102
Balance at September 30 $ 151,062 86,441
</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. An analysis of comprehensive income is provided below (in
thousands of dollars).
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net earnings $ 83,842 77,600 250,550 234,739
Other comprehensive income (loss),
before tax:
Foreign currency
translation adjustments (25,290) 7,697 (50,792) (25,102)
Unrealized holding gains (losses)
on securities (4,212) (3,272) (11,019) 1,536
Other comprehensive income (loss),
before tax: (29,502) 4,425 (61,811) (23,566)
Income tax (expense) benefit related
to items of other comprehensive
income 1,507 1,145 3,890 (538)
Other comprehensive (loss),
net of tax (27,995) 5,570 (57,921) (24,104)
Total comprehensive income $ 55,847 83,170 192,629 210,635
</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)
6. 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 Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Americas, principally U.S. $ 227,362 210,944 685,020 625,091
Europe 234,504 228,312 677,217 676,052
Asia 49,164 44,686 179,066 154,436
Pacific 18,236 18,741 53,539 52,851
Other 4,028 4,818 11,967 13,448
Net Sales $ 533,294 507,501 1,606,809 1,521,878
"Other" revenue consists primarily of sales of gumbase to customers.
Operating Profits
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Americas, principally U.S. $ 56,667 52,284 168,321 163,743
Europe 70,388 64,420 190,945 179,978
Asia 10,272 7,799 46,466 32,985
Pacific 5,657 5,710 16,011 15,176
Other (27,984) (20,243) (71,007) (57,819)
Operating Profits 115,000 109,970 350,736 334,063
Other Income 7,768 1,252 16,122 7,365
Earnings Before Income Taxes $ 122,768 111,222 366,858 341,428
</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 third quarter were $533.3 million, up $25.8
million or 5% versus the third quarter of 1999. Higher worldwide
shipments increased sales revenue by 7%. Additionally, favorable
mix and selected selling price increases in all regions increased
sales by approximately 4%. This was offset by translation of
weaker European currencies to the U.S. dollar which reduced sales
by approximately 6%.
Net sales for the first nine months were $1,606.8 million, up
$84.9 million or 6% versus the first nine 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 4%. These
increases were offset by translation of weaker European
currencies to the U.S. dollar which reduced sales by roughly 5%.
Investment and Other Income
Investment and other income for the third quarter was $6.1
million, up $.9 million or 17% versus the third quarter of last
year mainly due to higher worldwide yields.
Investment and other income for the first nine months was $14.0
million, up $.8 million or 6% versus the first nine months of
last year mainly due to higher worldwide yields.
Cost of Sales and Gross Profit
Cost of sales for the third quarter was $210.7 million, up $2.3
million or 1% versus the third quarter 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 6%. Additionally, lower product cost/mix reduced cost
of sales by roughly 1%.
Gross profit was $322.5 million, up $23.4 million or 8% from the
same period last year. The gross profit percentage was 60.5%, up
from 58.9% in the third quarter of 1999.
Cost of sales for the first nine months was $635.5 million, up
$7.8 million or 1% versus the first nine 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 5%. In addition, lower product cost/mix
reduced cost of sales by approximately 2%.
Gross profit was $971.3 million, up $77.2 million or 9% from the
same period last year. The gross profit percentage was 60.4%, up
from 58.7% in the first nine months of 1999.
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FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Selling, Distribution and General Administrative Expenses
Consolidated selling, distribution, and general administrative
expenses for the third quarter were $205.7 million, up $12.8
million or 7% from the same period last year. The increase was
mainly due to higher advertising and other marketing spending in
Europe and increased research and administrative expenses.
Consolidated selling, distribution, and general administrative
expenses for the first nine months were $617.9 million, up $52.5
million or 9% from the same period last year. The increase is
mainly due to higher worldwide advertising and other marketing
spending and increased research and administrative expenses.
As a percentage of consolidated net sales, the expenses were as
follows:
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Advertising 14.4% 14.9% 15.2% 14.8%
Selling and Other Marketing 13.7% 12.6% 13.2% 12.4%
Distribution 2.5% 2.4% 2.4% 2.3%
General and Administrative 8.0% 8.1% 7.7% 7.7%
38.6% 38.0% 38.5% 37.2%
</TABLE>
Income Taxes
Income taxes for the third quarter were $38.9 million, up $5.3
million or 16% from the third quarter of 1999. Pretax earnings
were $122.8 million, an increase of $11.5 million or 10%. The
consolidated effective tax rate was 31.7% compared to 30.2% 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 nine months were $116.3 million, up
$9.6 million or 9% from the first nine months 1999. Pretax
earnings were $366.9 million, an increase of $25.4 million or 7%.
The consolidated effective tax rate was 31.7% compared to 31.2%
for the same period last year. The increased effective tax rate
is mainly due to higher taxes on foreign earnings.
Net Earnings
Consolidated net earnings for the third quarter of 2000 totaled
$83.8 million or $.74 per share compared to last year's net
earnings of $77.6 million or $.67 per share for the same period.
Consolidated net earnings for the first nine months of 2000
totaled $250.6 million or $2.20 per share compared to last year's
net earnings of $234.7 million or $2.02 per share for the same
period.
<PAGE>
FORM 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow and Current Ratio
Net cash provided by operating activities for the first nine
months of 2000 was $343.4 million compared with $264.8 million
for the same period in 1999.
The Company had a current ratio (current assets divided by
current liabilities) in excess of 2.5 to 1 at September 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.
Shares Repurchases
During the first nine months of 2000, under Board of Directors'
authorities, 1,696,200 shares of Company Common Stock were
repurchased for an aggregate price of $126.4 million. As of
September 30, 2000, approximately $50 million remained under
these Board of Directors' authorities. Further, on October 25,
2000, the Board of Directors authorized the Company to purchase
additional shares of the Company's Common Stock up to $100
million in aggregate price.
OTHER MATTERS
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 10-Q
PART I - FINANCIAL INFORMATION - ITEM 2 (Cont'd)
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 13.
(b) The Company has not filed a Form 8-K for the three month
period ended September 30, 2000.
<PAGE>
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
Reuben Gamoran
Controller
Authorized Signatory and
Chief Accounting Officer
Date: November 13, 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.
